UPDATES:
>> Titan (BUY): Headwinds precede tailwinds
> We attended Titan's analyst meet yesterday. 4QFY16 revenue growth is likely to be weak due to the ongoing jewellery strike from March (introduction of excise duty in Budget) coupled with weak demand. Management guidance for jewellery revenue growth of 15%-20% in FY17E is on the back of market share gain (decreasing competitive intensity); like-to-like growth from new collection and high value diamond jewellery; and store expansion of Tanishq. Margins in the watch business are unlikely to improve given higher brand spends; but Titan indicated scope to reduce employee cost in the division. While we maintain our BUY stance, we cut TP by 5% to Rs384 led by 9%/8% cuts to our FY17/FY18 EPS estimates. Valuation of 29x FY17E P/E looks expensive but attractive when viewed in light of strong 21% EPS CAGR over FY16-19 and 400bps improvement in ROE over the same period. (Abhishek Ranganathan, CFA, +91 22 3043 3085)
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> DERIVATIVES:
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> Alpha This Week: An alternative take on the markets
> The Nifty continued its upward movement last week after the breakout from 7550 levels, before encountering gap resistance near 7740 yesterday. Going forward, even if the index were to continue its upmove and clear the gap resistance, the clearance of 7800 levels – which denotes the trendline that has stalled all index upmoves since the Mar'15, remains critical for a sustained upmove to materialize and for the corrective phase of the last several months to be decisively over. On stocks, we initiate fresh longs on Cipla and fresh shorts on Yes Bank whilst continuing with our longs on Asian Paints and Titan. We recommend booking profits on Sun Pharma shorts. (Prashant Mittal, CFA, +91 22 3043 3218)
> (Click here for detailed note)
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> ANALYST NOTES:
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> Dish TV: Management reaffirms subscriber addition guidance
> Management, in a recent call with us, reiterated subscriber addition guidance despite phase III delays. Management said: (1) delays not unexpected; company on course to add 0.5mn net subscribers in 4QFY16 (guided in 3QFY16 call); (2) digitisation-linked momentum will drive net addition of 1.8mn-2.1mn in FY17 (1.5mn in FY16; 12-15% growth); (3) given large magnitude of subscriber addition driven by low-ARPU phase III/IV markets, ARPU growth would be a muted 3-4% in FY17. Dish TV has followed rivals price hike of 4-8% across packages; (4) content inflation, a key challenge, would be moderate, at 10-12%, in FY17 (5% in FY16). This reaffirms our thesis on Dish TV of digitisation driving robust volume growth, leading to scale benefits (moderate content inflation). Hence, higher STB deployment by large MSOs vis-à-vis DTH is expected and doesn't impact thesis (see "Digitisation – expected logjam continues" dated 22nd March 2016). (Vivekanand Subbaraman, CFA, +91 22 3043 3261)
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> For the list of listed stocks where AMBIT Capital and/or its affiliates hold investment equal to or greater than 5% of their aggregate net worth, please click here
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