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Market Wrap, August 14: Sensex ends 353 pts higher; pharma stocks slip

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Stocks to watch: Coal India, Future Retail, ONGC, Grasim Ind, IDBI Bank


· Markets make a strong comeback, Sensex surges 353 points while Nifty reclaims 11,000-mark to end at 11,029, up 104 points on across-the-board buying;


· Nifty Pharma index hits 5-year low; Glenmark at 7-year low post Q1 results;



· HDFC Life Insurance slumped 7% post block deal, but recovered later


Benchmark indices ended nearly a per cent higher on Wednesday amid across-the-board buying and positive global cues. Investor sentiment got a major boost as the US President Donald Trump’s decision to delay imposition of additional tariff on Chinese imports doused trade-war concerns. Further, benign inflation back home, opened room for more rate cuts by the Reserve Bank of India (RBI).


The benchmark S&P BSE Sensex settled at 37,311 levels, up 353 points or 0.96 per cent, lifted by Reliance Industries, Infosys, ICICI Bank, and HDFC. Vedanta, Tata Steel, YES Bank, and Tech Mahindra were the top gainers on the index, while Sun Pharma, ONGC, Tata Motors, and Asian Paints emerged as the top laggards. The broader Nifty50 added 104 points, or 0.95 per cent, to end at 11,029.


On the sectoral front, all the sectors, except pharmaceuticals, ended the day with gains. Nifty Pharma index shed 4 per cent in the intra-day trade to hit a 5-year low on BSE. The index ended 1.4 per cent lower.


On the contrary, Nifty metal was the top gainer, up over 2 per cent, followed by Nifty public sector bank index, up over 1 per cent.


In the broader market, S&P BSE mid-cap settled at 13,487 level, up 124 points or 0.93 per cent. The S&P BSE small-cap, on the other hand, closed at 12,580 levels, up 61 points or 0.48 per cent.


Among individual stocks, shares of HDFC Life Insurance Company slumped as much as 7.5 per cent to Rs 490 apiece on the BSE in the early trade on Wednesday after reports said co-promoter Standard Life sold more than 3 per cent stake in the company via block deal. The stock, however, pared losses to end at Rs 515.20, down just 0.75 per cent.


On the other hand, Dixon Technologies surged 19 per cent in the intra-day trade on the back of strong June quarter results before settling at Rs 2,347, up over 18 per cent.


That’s all we have for you in today’s post-market podcast. For the latest news on business, markets, and more, please log on to Business-Standard.com

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Market Updates

Vodafone Idea falls 6% as CEO Balesh Sharma resigns

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Balesh Sharma


Vodafone Idea shares slid 6 per cent to Rs 5.60 in early morning trade on the BSE on Tuesday after Balesh Sharma stepped down as company’s chief executive officer (CEO) with immediate effect due to personal reason. Ravindar Takkar has been appointed as managing director and CEO for period of three years.


Over the past one year, Vodafone Idea has continued to be plagued by rapidly falling stock prices, dropping 83 per cent from level of Rs 32, against 2 per cent decline in the S&P BSE Sensex.



Sharma will be taking up a new role with Vodafone Group, which will be announced later. He has been the CEO of Vodafone Idea since the completion of the merger of the two telcos in August 2018. Prior to that, he was the chief operating officer of Vodafone India. He has also overseen the successful integration of Vodafone Idea, resulting in the estimated timescale to complete the integration process.’


Sharma has driven the strategy of the combined business since its formation and has also spearheaded the largest-ever equity raise in India.


“That (the CEO’s resignation) will put pressure. They are not able to increaae their share price. At least the drop has been minimal. But the growth that Reliance Jio is showing, it is going to be negative for other telecom players. And with Vodafone, there are high number of complaints about call quality and call dropping. So, with these kinds of problems and their huge debt, the turnaround is difficult.” AK Prabhakar, head of research, IDBI Capital said.


At 9:51 AM, the stock was trading 5.01 per cent lower at Rs 5.69 as compared to a 0.02 per cent gain in the benchmark S&P BSE Sensex.

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Market Updates

Sterling and Wilson Solar lists at 9% discount to issue price of Rs 780

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Brokers trade at their computer terminals at a stock brokerage firm in Mumbai. Photo: Reuters

Shares of Sterling and Wilson Solar (SWSL) debuted at Rs 706 apiece on the NSE, a discount of 9.48 per cent to the issue price of Rs 780. On the BSE, the stock got listed at Rs 700, 10 per cent lower against the issue price.

SWSL is promoted by the Shapoorji Pallonji Group and is the demerged Solar EPC Division of Sterling and Wilson (SWPL). The company commenced operations in 2011 as the Solar EPC Division of SWPL and demerged from SWPL with effect from April 1, 2017.


The company’s initial public offering (IPO), which ran between August 6 and August 8, was subscribed 92 per cent. The qualified institutional buyer (QIB) portion of the issue, however, garnered full subscription. The high networth individual (HNI) portion of the issue was subscribed 89 per cent, while retail investor portion was subscribed 30 per cent.

The total issue size was Rs 3,125 crore, of which around Rs 1,400 crore was raised from anchor investors.

The price band for the issue was Rs 775 and Rs 780 per share. At the top end, the company is valued at Rs 12,500 crore.

As per reports, SWSL reported a 44.4 per cent compound annual growth rate (CAGR) rise in consolidated operating revenue over FY16-19 to Rs 8,240.41 crore in FY19. Revenue was primarily aided by 43.9 per cent CAGR rise in the business from EPC contracts. EBITDA (earnings before interest, tax, depreciation and amortisation) grew at a CAGR of 50.4 per cent during the same period while Reported PAT increased by 72.1 per cent CAGR.

Most brokerages had assigned ‘subscribe’ rating to the issue.

SWSL is likely to benefit from the fact that is the the largest global EPC contractor in an industry that is seeing a massive thrust towards renewable energy, Motilal Oswal Financial Services (MOFSL) had said in an IPO note. Other factors that seem favourable are its asset-light business model, and strong parentage. “However, considering the current market environment and absence of past comparable financials, investors can Subscribe only from a Long Term perspective,” the brokerage had written.

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Market Updates

Mahanagar Gas zooms nearly 12% on reports of stake sale by British Gas

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WPI inflation soars to 14-mth high; rises to 4.43% in May from 3.18% in Apr


Shares of Mahanagar Gas (MGL) rallied as much as 11.55 per cent to Rs 878.35 apiece on the BSE in intra-day trade on Tuesday, after reports said BG Asia Pacific Holdings (BGAPH), a wholly owned subsidiary of Shell, sold 10 per cent stake in the company via block deals.


At 09:25 am, the stock was trading over 8 per cent higher at Rs 852.40 apiece on the BSE. A total of 4,12,292.6 million shares have been traded on BSE and NSE at the time of writing this report. In comparison, the benchmark S&P BSE Sensex was ruling flat at 37,439 levels, up 37 points or 0.10 per cent.


Earlier in April, Shell had reduced its shareholding in Mahanagar Gas from 32.5 per cent to 24 per cent. “This is part of Shell’s ongoing portfolio optimisation to transform Shell into a simpler company, delivering stronger returns,” Shell had said in its media statement. CLICK TO READ FULL ARTICLE

There was an indirect change in holding of one promoter of the company, when in February 2016, Royal Dutch Shell acquired BG (British Gas) worldwide.


For the quarter ended June 30, 2019, the company reported a 22.9 per cent year-on-year (YoY) increase in its revenue at Rs 831.2 crore, profit after tax (PAT) grew 32.7 per cent YoY to Rs 170.2 crore. EBITDA (earnings before interest, tax, depreciation and amortisation) saw an increase of 31.2 per cent to Rs 276.8 crore.






Analysts say the development is positive for the company and recommend investors buy the stock from a long-term perspective.

“We think this could be a good opportunity to accumulate the stock given attractive valuations at 12x FY20E P/E in the context of nearly 6 per cent free cash flow (FCF) yield and nearly 10 per cent FY19-22E earnings CAGR (compound annual growth rate), driven by margin expansion (from Rs 8.2/scm in FY19 to Rs 9/scm in FY20-22E) and nearly 6 per cent volume CAGR. Maintain Buy,” said foreign brokerage firm Jefferies in its recent report.


Those at ICICI Securities, too, remain positive on the road ahead for the counter and maintain a ‘buy’ rating on the stock with a target price of Rs 950.

“The government’s priority allocation of domestic gas to CGD sector has enabled MGL to access cheaper gas for CNG and domestic business segments, constituting nearly 85 per cent of total sales volume. MGL’s strong gas pipeline infrastructure and expanding operations in Mumbai, its adjoining areas and Raigad district will enable MGL to capture the benefits of the large and growing market given the low penetration,” wrote analysts at ICICI Securities in a results review note dated August 9.


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