DLF: 100-112 Zone May Be Big Hurdle In The Days Ahead

Sustaining below 100-88, may fall up to 65-60 in the near term

With a actual TTM EPS of 3.30, DLF is quoting around 30 PE 
Against industry PE of 22 & Nifty PE of 20
Is it too much expensive ?
  

CMP: 93

Either sell below 88 or on rise around 100-106;

TGTS: 80-77-65-60 (1-12M)

TSL> 108/112

Note: Consecutive closing above 112 for at least 3 days, DLF may rally up to 125-140 in the alternative bullish scenario.

DLF reported a 24.4% (QOQ) and (-) 55.5% growth (YOY)  in consolidated Q3FY16 PAT for Rs.163.95 cr against Rs.131.50 cr & Rs.368.62 cr respectively.

Q3 diluted EPS was at 0.92 against consensus of 1.05 (QOQ-0.74 & YOY-2.07).

Q3FY16 profit was largely supported on account of gains made from sale of assets/lands to GIC (SGX) at gross consideration of Rs.1992 cr against total revenue of Rs.2827.66 cr. 

As par some street estimates, consolidated total revenue including the GIC deal was expected around Rs.3970 cr in Q3FY16. 

 

As par BG metrics and current market parameters:
(Based on consolidated diluted TTM & FWD EPS)

Current median value of DLF may be around: 93 (FY:15-16/TTM)

Projected fair valuation might be around: 98-120 (FY:17-18/FWD)

But considering the present real estate market conditions and the average actual EPS for the last three FY (which is around 2.75), projected FY-18 EPS of 5.25 by the analysts may be on the higher side as nearly 90% growth in earnings is required by FY-18 !!

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	Low	High	Median	200-DEMA	10-DEMA
DLF	3.3	153.49	25	99.86	89.10	94.48	120.8662	96.2306

DLF

3.2

162.75

25

98.33

87.74

93.04

120.8662

96.2306

DLF

3.55

170.95

25

103.57

92.41

97.99

120.8662

96.2306

DLF

5.25

179.45

25

125.95

112.38

119.17

120.8662

96.2306

 
 

Analytical Charts:

Bank Nifty Fut(Feb): Expect Some Support Around 15300-200 Zone On The RBI Day

Sustaining above 15300, BNF may rally up to 15685-795;

But, in the near term, it need to stay above 15795-845 for any further meaningful rally;

Otherwise, may fall towards 14730-690

Although, its virtually zero probability for any RBI surprise today, 

Still he is "Raghu Ram Rajan" and "he do what's he likes to do" !!! 

Trading Levels:BNF-Feb

LTP: 15354

SL=+/-	25 POINTS	FROM	SLR
For	Intraday Swing	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	15275		15390-425	15485-525	15585-685*	15725-795*	15845-945	<15225
Weak <	15225		15160-050	14985-865	14715-690*	14635-615	14550-415	>15275
FOR	Conservative	Positional	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	15275		15425	15525	15685*	15795*	15945	<15225
Weak <	15225		15050	14865	14690*	14615	14415	>15275

Apart from global cues, all eyes will be on RBI today for any surprise and the overall commentary tone (dovish/hawkish).

Although there is very little probability for any rate cut (@0.25%) today, there are some market buzz that Rajan may surprise again today to complete the full rate cut cycle by 150 bps to 6.50% as Jan'16 inflation (CPI) is well within below 6% target range of RBI and now stands around 5.73%.

But majority of the analysts feel that RBI may take "wait & watch" policy with some dovish stance and cautious tone about the ongoing global market turmoil & currency wars with emphasis more on structural reforms rather than monetary stimulus (QQE).

RBI may like to keep real rate of interest at 1.5-2.00% and if the average CPI will be around 4-5% for 2016, then the targeted repo rate may be kept around 6.00-6.75% in FY-17.  

In all probability, RBI may not act today, because it will like to see the actual budget & fiscal deficit guidance, previous rate cut transmissions cycle by the banks and FED stance in March'16 meeting. Also in the last few months, inflation (both WPI & CPI) begin to march upwards, which may cause some hawkishness on the part of the RBI Gov, who is a known "inflation warrior".

 

Depending upon the budget cues and fiscal discipline road map and FED stance, RBI may act by cutting 0.25% in an out of policy day (Again Holy Gift to the nation ??) or in the April meet.

If FED indicate that it will be in no hurry for successive hikes as par the  dot-plots and may opt for only one hike @0.25% in Dec'16, then RBI may cut by total 0.50-0.75% in FY-17 to keep the USDINR interest differential and other monetary aspects in balance. 

But proper full transmissions by the banks are necessary to help in the expected economic recovery. Again, with the current RBI directives about disclosure of stressed assets and clean the balance sheets may continue to put pressure on the banks in the days ahead and with the current state of huge NPA, banks may show some unwillingness to pass on the full RBI rate cut to the borrowers.

Banks (BNF) has a significant weightage in our market and unless they recover, it may be quite hard for the overall market (Nifty) for any significant sustainable rally in the months ahead.

Analytical Charts:

 

Nifty Fut (Feb): 7625-7655 Zone Now Vital For More Up Side----

Sustaining above 7625-7655 zone may rally up to 7850-8005

Otherwise, consecutive closing below 7580-7540, may again revisit 7385-7215

Oil & China may be the drivers along with RBI & Budget hopes

Trading Levels:Nifty Fut(Feb)

SGX NF: 7600 (CMP)

NSE-NF: 7565 (LTP)

	SL (+/-) 10 POINTS	FROM SLR
For	Intraday Swing	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7655		7690-710*	7730-760	7801-860*	7901-950	7985-8005	<7635
Weak <	7635		7617-580*	7540-520	7485-445*	7405-385*	7350-315	>7655
FOR	Conservative	Positional	Trader
			T1	T2	T3	T4	T5	SLR
Strong >	7655		7710*	7760	7860*	7950	8005-55	<7635
Weak <	7635		7580*	7520	7445*	7385*	7315-215	>7655

The current global rally (dead cat bounce ?) started with some market buzz about Oil production cut by every producing country by 5%. Apparently, Russia took some serious initiative, but Iran denied it soon. It may be a pure fantasy to think that all oil producing countries will cut production by even 5%, including US shale oil companies. 

In any way, technically Crude has to sustain above $33.80-35.50 zone for any serious short covering and big rally up to 40-48; otherwise, below 31, we may see again 27.50 & 24 level in the near term.

As we all know, Japan shocked/surprised the world on last Friday with its negative interest stance (above certain balance of current A/C of Institutions parked with bank) as a part of its evergreen QQE. But, some experts also feel that excessive QQE in Japan, can also cause a Chinese style of capital out flow.

Now, ECB & BOJ blazing all the guns along with stabilization effort of PBOC, the king of all the central bankers, i.e. FED may take a "wait & watch" stance with dovish bias to keep the USD under control and will not opt for hike in March'15. FED may take more dovish stance, keeping in mind the present market turmoil and tepid inflation trend in US and will not allow USD to get more strength at this stage, because of policy divergence between it & other major central bankers. 

FFR is now virtually indicating one hike @0.25% only in Dec'16. If the present sentiment of "gloom & doom" continues for some more months, there are some market buzz that FED may come forward with some other version of QQE-4 and may also take the negative interest stance as of ECB & BOJ to stimulate its own economy. But, the big question is that, will another QQE be helpful for the Oil as it is the easy money, which encouraged for the present state of over production/capacity in Oil and other commodities and in contrast, demand was not grown as expected.

In any way, SPF also need to sustain above 1920-1940 zone for any meaningful rally from here.

Back home, be it Oil/BOJ or some market talk about RBI cut tomorrow, our market rallied quite smartly. Also there are some hopes on forthcoming parliament session for a dream budget and passage of key bills, including GST. 

Although, there is a great probability that this time GST may be passed after some drama on the Hyderabad student incident, unless global sentiment improves, nothing will help our broader market in the near term, even after some dead cat bounce. Passage of GST this time may be more sentimental and will not be a game changer as in the near term, market need to see much real better corporate earnings. On the other side, a non-event type of budget and failure of GST getting passed this time, we may see Nifty running towards 7000-6300 level in the months ahead.

Analytical Charts:

 

JSW Steel: Trading Around A PE Of 69 At Q2 TTM EPS Against Avg Industry PE of 6---Is It Selling Steel Or Gold ??

Q3 & Q2-FY16 TTM EPS at (-) 36.59 & 15.21

and even after considering the one off exceptional loss item, 

Q3 results are way below street estimates

CMP: 1057

Either Sell below 1030-1015 or on rise around 1075-1090/1100-1125;

TGT1: 989-967-954*-924 (1-3M)

TGT2: 889*-856-800-750 (5-12M)

TSL>1145

Note: Closing above 1145 for at least 3 consecutive days for any reason, JSW may rally up to 1230-1275 & 1365-1405 zone in the mid to long term.

Consolidated Q3FY16 PAT was (-) Rs.923 cr against estimate of (-) Rs.60 cr (Loss);  

(YOY- 329 cr & QOQ-117 cr Profit).

Q3 EBITDA was Rs.141 cr down by around 90% YOY (Rs.1419 cr) and 87% QOQ (Rs.1047 cr).

Q3 P/L before exceptional items & tax was at around Rs.670 cr (-) against YOY- 482 cr and QOQ-250 cr; i.e. down by almost 240% and 170% !!!

Q3 Tax benefit/savings at around Rs. 1810 cr against expenses of around Rs.175 cr (YOY) and Rs.142 cr (QOQ).

Q3FY16 EPS at (-) 38.54 against 13.26 (YOY) and 4.49 (QOQ).

Q3 TTM EPS was at (-) 36.59 against Q2 TTM EPS of 15.21; i.e. average EPS of around 3.80 per quarter prior to Q3FY16. As par this trend Q4FY16 TTM EPS may be around (-) 35.02 and 17.50 by Q4FY17, even with 15% implied growth. 

The recent best QTR EPS was 13.26 at Q4FY15. Even for the sake of argument, if we assume an EPS of around 53.05-61.00 (@13.26*4=53.05 +15% growth), the fair value of the stock may be around 800-915 (FY:17-18) with an average implied PE of 15.

(against present average steel industry PE of 6).

Analytical Charts: