Stock market analysis and stories by Akshat Singh

Akshat Singh

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Akshat was a research & content analyst at Trendlyne. He recently completed his MBA in finance from Narsee Monjee Institute of Management Studies, Mumbai, in 2023, and holds a graduate degree in civil engineering from Mukesh Patel School of Technology Management and Engineering.

Prior to joining Trendlyne, Akshat gained valuable experience working with Tata Consultancy Services' venture capital firm. His passion lies in analyzing economic and financial market trends. He enjoys gaming and avidly follows Formula 1 racing.

Articles by Akshat Singh

The Baseline

18 Jul 2023, 12:17PM

Chart of the Week: The biggest hits and misses by analysts over the past year

By Akshat Singh

The stock market is a fast-changing environment, where winners and losers can shift rapidly. Analysts closely monitor stocks to identify potential investment opportunities, and provide target prices that reflect their expectations for a stock's future performance. These target prices and recommendations can have a significant impact on the stock price as well.

But we all know how difficult it is, trying to predict the stock market. Picking future stock winners often feels like looking for a black cat in a dark room. In this edition of Chart of the Week, we look at a few Nifty500 stocks over the past year, comparing their actual stock performance to the analyst target upsides in June 2022.

This analysis is based on a Trendlyne screener that tracks broker calls with the rewind feature.

Sonata Software, Varun Beverages outperform analyst targets

Sonata Software, an IT consulting & software firm, has seen a 98% rally in its stock price over the past year, surpassing the average target upside of 34.1%. It has also exceeded KRChoksey’s expectations of an upside of 74.1% over its June ‘22 share price, beating it by 23.9 percentage points. The brokerage gave Sonata Software a target price of Rs 931 due to supply chain disruptions and a marginal increase in its international IT service segment income in Q4FY22.

However, Sonata Software surprised analysts with an overall 20% growth in net profit in FY23. The majority of analysts including KRChoksey had projected a net profit decline of -1% to 7% in FY23. But the company benefited from lower finance and inventory expenses, and robust growth in the recently incubated healthcare and BFSI segments.

In addition, Sonata Software acquired US-based IT firm Quant Systems and received an order worth $160 million in March 2023. The company also formed multiple domestic and international partnerships.

Now let’s consider ABB India, a heavy electricals major. It has exceeded the average target upside of 1.8% given by analysts a year ago by 73.9 percentage points. It also outperformed ICICI Direct's target upside of 16.4% by a staggering 58.6 percentage points in the past year.

The company’s estimated net profit growth fell from 27% to 24% from May to November 2022, while the forward PE valuation stood at 65-67x during the same period. HDFC Securities believed that such high valuations would limit the upside from cyclical recovery. However, the firm surpassed analysts' average growth estimates of 24% by achieving a 95% increase in net profit, reaching Rs 1,016 crore in CY22.

Multiple large-scale orders from companies like ArcelorMittal Nippon Steel and Kanpur Metro helped ABB record order inflows of Rs 3,125 crore, an increase of 36.4% YoY in Q1CY23. The recovery prompted UBS to upgrade the stock to ‘buy’ with a target of Rs 5,000 in June 2023. This upgrade represents an upside of 14% from the price on July 14.

The other two outperformers in our list are tyre manufacturer, Apollo Tyres and Pepsico franchisee Varun Beverages. Apollo Tyres surpassed the average broker target upside of 31.3% last year by 74.7 percentage points and the target upside of 73.6% set by ICICI Securities by 32.3 percentage points. Apollo Tyres delivered sales growth of 17.3% YoY in FY23, as compared to estimates of 11-12%.

The stock that surpassed broker targets the most, Varun Beverages went above the average broker target upside of 17.5% by 75.9 percentage points, also easily beating among the more optimistic calls, such as the target upside of 23% projected by Bonanza India Research.

It has seen its stock price surge by 93.4% in the past year. Despite the impact of rising raw material prices on the industry, Varun Beverages remained resilient. It managed rising inflation in raw material costs, while benefiting from post-pandemic demand and expansion into other PepsiCo verticals. Along with strong revenue and net profit growth of 48% and 115.8% in 2022, the company's new ventures like the indigenous energy drink ‘Sting’ and additional PepsiCo factories contributed to the stock's rally.

Aarti Industries, Adani Ports disappoint

From outperformers, let’s move on to the underperformers. Aarti Industries had an average analyst upside of 42.5% one year ago, but its stock price fell by 38.8% in the past year. This specialty chemicals company fell short of the optimistic upside of 66.5% given by HDFC Securities.

The company demerged its pharma business, Aarti Pharmalabs, which contributed around 18% to the revenue. As a result, there was an 82.3% YoY decline in net profit in Q3FY23. The net profit fell by 58.3% in FY23, contradicting analyst expectations of 20-24% growth.

Similarly, Amara Raja Batteries, an auto industry underperformer, saw its stock price fall by 10.3% over the year, far below the average broker target upside of 57.9%, and a target upside of 41.5% by Chola Wealth Direct in June 2022. The company’s net profit growth dropped from 52.4% QoQ in Q2 to -37.2% QoQ in Q4FY23. The rising raw material prices due to the Russia-Ukraine war, led to shrinking margins. This downward trend in profitability has persisted from FY21 to FY23.

Adani Ports & SEZ, an Adani Group stock, has fallen by 2% in the past year, but a year ago had an average broker target upside of 62.3% and a target upside of 26.4% by ICICI Direct. This drop was due to the shock Hindenburg report release in January 2023, which alleged accounting fraud and stock manipulation within the conglomerate. This led to an average fall in share price of 23% across the group’s stocks over the year.

In the software & services sector, MPhasis had an average analyst upside of 52% a year ago, and a target upside of 52.6% by Anand Rathi. But it fell 10.8% in the past year with the decline in the broader IT sector. The company’s insurance and banking & financial services segments, which form around 60% of its revenue, have been sequentially declining from Q2FY22. Following the collapse of Silicon Valley Bank on March 10, the stock saw a correction of around 18.1% in the subsequent 12 trading sessions. The fall was driven by concerns regarding the company's exposure to the bank.

The Baseline

10 Jul 2023

Chart of the Week: The changing wealth of India’s billionaires

By Akshat Singh

The dollar billionaire is a fairly recent species. The first such example was in 1913 with the rise of the American oil billionaire John D Rockefeller. His net wealth in current terms would be around $27 billion, which puts him nowhere near the top of the wealthiest list - the current world’s richest person, Elon Musk, is worth much more at $243 billion.

Since Rockefeller however, the number of billionaires has multiplied. Their individual wealth has also risen rapidly. In the first half of 2023, the world's 500 richest people collectively added $852 billion to their fortunes, according to Bloomberg. In this edition of Chart of the Week, we look at the wealth profiles of India’s top 14 richest people, providing insights into their industries, holdings, and strategies of wealth accumulation.

For a long time, Mukesh Ambani stood unrivaled at the top among Indian billionaires. The Chairman of Reliance Industries, is currently the richest Indian with a net worth of $90.6 billion (approximately Rs 7.5 lakh crore) as of July 4, 2023. He climbed the ranks rapidly eight years ago, when Reliance Retail became India's top revenue-generating retailer in FY14, earning Rs 17,640 crore. This led to his net worth surging by $ 0.8 billion to $21.1 billion in 2014.

Jio's launch in 2016 and the introduction of the Jio Phone in 2017 propelled Ambani's net worth to $40.2 billion, a significant surge of 77.1%. However, the COVID-19 pandemic caused a decline of 36.6% in his net worth to $37.7 billion in March 2020 from $59.5 billion in December 2019. Yet, with Google's investment in Jio Platforms and the introduction of Jio Mart and Jio 5G, his net worth rebounded to $76.9 billion by the end of the year.

The only real Indian challenger to Ambani’s nosebleed levels of wealth has been Gautam Adani.Adani, the Founder and Chairman of the Adani Group, is the second richest Indian with a net worth of $61.4 billion (approximately Rs 5.1 lakh crore) as of July 4, 2023. He briefly surpassed Ambani to claim the top spot from April 2022 to January 2023, with a net worth of $121 billion. Adani has witnessed an extraordinary surge in his wealth, with his net worth growing 12x since 2014. He holds majority stakes in all of the Adani Group's listed companies.

Between 2018 and 2022, Adani's stocks experienced substantial gains ranging from 12x to 80x growth in stock prices. With acquisitions such as Holcim India’s businesses and NDTV, Adani surpassed Ambani in 2022, reaching a net worth of $121 billion.

However, in January 2023, a now famous report by Hindenburg accused the conglomerate of accounting fraud and stock manipulation. This sent Adani stocks into free fall, and saw Gautam Adani suffer the largest one-day loss of net worth in history for any billionaire. His wealth plummeted by $20.8 billion on January 27, 2023.

Following this setback, Adani’s wealth bottomed out in February 2023, when his net worth dropped to $37.7 billion. Of course, that is still massively wealthy by any standard - no Adani was going to the bank to take gold out of the family locker.

Since then, Adani stocks have regained around 40% of their value on average, resulting in a 63% recovery in his net worth by June 2023 to $61.4 billion.

Shapoor Mistry, the Chairman of Shapoorji Pallonji group, shares his wealth with his late brother Cyrus Mistry. He was named the Chairman after the death of his brother in September 2022. This led to a sudden increase in his net worth in November 2022 to $29 billion. The stakes previously held by Cyrus Mistry in Tata Sons, amounting to 18.4%, were also credited to Shapoor Mistry and his family due to unclear succession arrangements.

HCL Technologies’ Shiv Nadar is currently the wealthiest tech billionaire in India (net worth of $27.4 billion), followed by Wipro’s Azim Premji with $24 billion. The majority of Nadar’s wealth is held in public holdings of HCL Technologies and HCL Infosystems, with equity stakes of 61% and 63% respectively. Azim Premji, on the other hand, holds a 62% stake in Wipro. Apart from this, he has an additional 10.5% outstanding shares in his company through two irrevocable charitable trusts.

Lakshmi Mittal, the Chairman of ArcelorMittal, the world’s largest steel company outside of China, has a net worth of $19 billion as of July 4, 2023. The majority of his wealth is from the 38% stake he holds in ArcelorMittal.

Radhakishan Damani, the founder of Avenue Supermarts (D-Mart), is a passive investor who features in Trendlyne’s superstars list. The bulk of his net worth is from the 60% equity holdings in Avenue Supermarts, which he holds via a promoter group consisting of Bright Star, his wife, and three trusts. According to Bloomberg's billionaire index, Damani lost the most wealth ($2.8 billion or 15.1% of his net worth) from November 2022 to March 2023, followed by Adani ($69.8 billion) and Ambani ($13.4 billion).

Two pharmaceutical magnates, Sun Pharmaceuticals’ Dilip Shanghvi and Serum Institute’s Cyrus Poonawalla, also feature in the list. Serum Institute is most famous for having produced around 30 crore doses of Covid vaccine from March 2020 to June 2021. This led Poonawalla’s net worth to spike by 68.2% to $24.4 billion, helping him become the richest Indian in the pharma sector, followed by Dilip Shanghvi. Apart from this, Poonawalla also owns a 62% stake in Poonawalla Fincorp. Dilip Shanghvi, the managing director of Sun Pharmaceuticals, has a significant portion of his wealth tied to his ownership stakes in Sun Pharmaceutical Industries (54%), Sun Pharma Advanced Research (66%) and Suzlon Energy (12%).

Savitri Jindal, Uday Kotak, Kumar Birla and Sunil Mittal have derived their net worth from majority stakes in their respective companies. Savitri Jindal, the richest Indian woman and chairperson emeritus of Jindal Steel & Power, has a 40% stake in O.P.Jindal group, which operates JSW Steel, Jindal Steel & Power, JSW Energy, Jindal Saw, Jindal Stainless and JSW Holdings. On average, these stocks have risen by 31.1% in the past six months. This resulted in her net worth growing 18.7% to $16.5 billion in the same period.

Uday Kotak, the Executive Vice-Chairman and Managing Director of Kotak Mahindra Bank, is the richest banker in India. With a 26% stake in Kotak Mahindra Bank, his net worth has modestly risen by 4.3% to $14.3 billion in the past six months. The bank’s stock price marginally rose by 1.5% during the same period.

Kumar Birla, the Chairman of Aditya Birla Group, owns 30% of Hindalco Industries, 34% of Grasim Industries, 10% of Vodafone Idea and 14% of Aditya Birla Capital. Sunil Mittal, the Founder and Chairperson of Bharti Enterprises, owns 28% of Bharti Airtel stocks, which have seen an 8% surge in price, leading to a 12% increase in Mittal’s net worth to $14 billion in the past six months.

The Baseline

03 Jul 2023

Chart of the Week: InterGlobe Aviation is increasingly dominant in the airline industry

By Akshat Singh

InterGlobe Aviation has been in the news with a landmark agreement to purchase 500 aircraft. The company also crossed a milestone of Rs 1 trillion in market capitalization on June 28, 2023 – it’s one of just 56 companies to hit this number. In this edition of Chart of the Week, we analyse the factors driving the performance of InterGlobe Aviation's stock from July 2021 to June 2023.

InterGlobe Aviation's stock price has picked up pace in the past six months, after rising by 14.4% in 2022. IndiGo has held on to its position as the market leader, with a market share of 55.7% in Q1CY23 and an average market share of 56% from January 2021 to May 2023.

Indigo’s dominance as a budget airline confirms what many airline companies across the world are discovering - customers may complain about bad food, limited legroom and zero perks, but finally it’s the cheap ticket that is the main deciding factor.

In July 2021, the aviation company’s share price gained 15.6% due to considerable improvements in market share, passenger load factor, and available seat kilometres (ASK). ASK represents the total capacity available for sale by the airline and is a key indicator of its ability to fill up its capacity, and its operational performance.

IndiGo resumed UAE flights on August 20, 2021, after 17 months, leading to a 14.2% increase in share price during August-September. However, in November 2021, despite the government permitting 100% capacity, IndiGo's passenger load factor only improved by 2.5%, lagging behind Air India and GoAir (now GoFirst). As a consequence, the stock price dropped by 12.4% during the month. It was reported that IndiGo received 36 new planes during Jan-Nov 2021.

With a 20% growth in its stock price in 2021, InterGlobe Aviation entered 2022 on a high. But on January 10, 2022, the company reduced its capacity by 20% due to another Covid-19 wave. From March to May, the company lost 20.2% of its share price on the back of weak Q4FY22 results. It posted a net loss of Rs 1,681.8 crore amid weak market sentiment. However, there was a significant recovery in air traffic in June 2022. During this month, IndiGo’s market share grew by 1.3 percentage points MoM, resulting in a 16.3% rise in stock price.

In July 2022, the price of aviation turbine fuel remained unchanged at an all-time high of Rs 1.4 lakh per kilolitre. Additionally, the Indian currency depreciated 6.3% against the US dollar from the start of the year. This has a significant impact because while a large portion of an airline's expenses (around 70%) are in dollars, including fuel, rental, and maintenance costs, most of its revenue is earned in rupees. When the rupee depreciates, it results in higher expenses, impacting the airline's profit margins.

Another factor was multiple technical snags faced by SpiceJet, resulting in the DGCA ordering the airline to operate only 50% of its flights for eight weeks. As a result, InterGlobe’s market share increased by 1.9% to 58.9%. This resulted in an 8% growth in its stock price in July 2022.

Promoter Rakesh Gangwal sold a 2.8% equity stake in the company on September 8, 2022, as part of his plans to exit the business by FY25. This caused the stock to plunge by 5% in the week ending September 11, 2022. In addition, the Chief Executive Officer (CEO), Ronojoy Dutta, retired on September 30, resulting in an 8% drop in its share price during the month.

With the entry of budget airline Akasa Air on August 7, 2022, IndiGo had to offer a 20-25% discount on fares. This led to an 11.6% fall in its share price during August-September. On November 15, the company began operating its inaugural A321 Freighter aircraft on the Delhi-Mumbai route. Additionally, on November 23, 2022, it started services to Portugal and Switzerland through a codeshare collaboration with Turkish Airlines. These developments helped the stock price surge by 11% in November 2022.

In 2022, the stock price experienced a modest 8% gain. However, 2023 has been more promising, with the stock already soaring 28% as of June. The year began with the airline’s international operations recovering to pre-COVID levels, accounting for 23% of total capacity, while the fleet size expanded to 300 aircraft. On February 16, the Gangwal family sold another 4% equity stake in the company.

Domestic passenger traffic in Q4FY23 grew by an impressive 51.7% YoY, leading to a 2.4% market share gain for IndiGo in January-March 2023. In February 2023, the company observed a 6.3% MoM decline in ASK. GoFirst filed for insolvency on May 3, 2023, enabling IndiGo to capture an additional 4% market share previously held by GoFirst. This sparked an 8% rally in InterGlobe's shares.

The company’s recent purchase agreement - the largest in commercial aviation - of 500 Airbus aircraft on June 19, 2023, indicates a strategy shift. IndiGo is now purchasing aircraft instead of leasing them, and its debt levels have consequently increased at a three-year CAGR of 28.7%.

As a result, annual interest expenses have also been increasing at a five-year CAGR of 55.9%. In contrast, lease rentals decreased by 93% to Rs 311.7 crore in FY22. This, along with crossing a market capitalization of Rs 1 trillion, drove the stock to gain 29.7% in value during May-June

The Baseline

26 Jun 2023

Chart of the Week: How has the net worth of Indian superstar investors changed over the past eight years?

By Akshat Singh

India’s superstar investors have over the past decade, become famous for their stock picks and proven track record. Retail investors closely follow their investments and the sectors they favour, drawing inspiration from their investing strategies. A Kacholia buy for instance, can move the price of the stock the next day by a fair amount. In this edition of Chart of the Week, we take a look at superstar investors’ public portfolio holdings from December 2015 to June 2023 and analyse their preferred sectors and investing strategies.

Trendlyne's superstar dashboard shows that superstars have significantly invested in retailing, software & services, textiles, apparels & accessories, and banking & finance. Notably, Indian retail sales recorded strong growth, of 34% YoY in FY23.

The textiles, apparels & accessories sector outperformed the Nifty 50 by 23.3 percentage points in the past year. On the other hand, the software & services sector saw a moderate growth of 9.2%, underperforming the Nifty 50 by 11.9 percentage points. Meanwhile, the banking & finance sector rose 35.4% over the same period. Prominent investors like Jhunjhunwala (now managed by RARE Enterprises), Kedia, and Damani saw significant changes in their net worth from June 2018 to June 2023, with a noticeable slowdown from Dec 2021 to Sep 2022.

Radhakishan Damani, the promoter of retail chain DMart and the third richest Indian according to Forbes 100 richest Indian 2022, holds the biggest public stock portfolio among superstar investors. As of June 2023, this superstar investor’s net worth stood at Rs 1.8 lakh crore. The majority of his holdings are in retail (97.1%), food, beverages & tobacco (1.2%), and cement & construction (0.8%). In December 2015, he ranked 3rd in net worth, but after DMart went public in March 2017, his net worth soared to Rs 35,827 crore. During the COVID-19 pandemic in March 2020, Damani gained the pole position in portfolio net worth, surpassing Premji and Associates. Damani is a largely passive investor who has exited only four positions in the past two years: Man Infraconstruction, Prozone Intu Properties, Food & Inns, and Metropolis Healthcare. He has also trimmed holdings in three companies from December 2021 to March 2023: United Breweries in March 2023, Avenue Supermarts in March 2022, and India Cements in December 2021.

Another superstar investor who ranks high in net worth is Premji and Associates with a net worth of Rs 1.5 lakh crore as of June 2023. Its portfolio consists of only three stocks, with Wipro accounting for over 99% of the total holding. This means that this superstar investor’s public holding value completely depends on Wipro’s share price. Premji and Associates holds a 72.9% stake in Wipro as of March 2023. Damani overtook Premji in 2019 due to a 2% muted growth in revenue in the IT sector, during which Wipro lost 10% of its share value. The superstar investor’s net worth fell in 2022 as Wipro underperformed amid high inflation and rising rates, which led to slowed revenue growth and deal wins.

The late Rakesh Jhunjhunwala, also known as the big bull, has a portfolio consisting of 29 stocks, currently managed by Rare Enterprises. Its preferred sectors include textiles, apparels & accessories (36.6%), banking & finance (25.3%), and retail (10.3%). Despite the investment slowdown, Rare made additions to the portfolio in March 2023, including a 1.9% stake in Sun Pharma ARC and a 5.2% stake in Raghav Productivity Enhancers. Rare Enterprises also increased its stake in Jhunjhunwala's top pick, Titan, by 0.1%, while reducing stakes in Edelweiss Financial Services, Autoline Industries and Singer India by 0.2%, 0.4%, and 1% respectively in March 2023. Over the past year, Jhunjhunwala’s portfolio exited eight positions, with popular names like Delta Corp, TV18 Broadcast and Indiabulls Real Estate among them.

Like Jhunjhunwala, Akash Bhansali also prefers textiles, apparels & accessories (9.9%) and banking & finance (8.9%). However, Bhansali stands out with a significant investment in the chemicals & petrochemicals (50.3%) sector. He holds substantial stakes in Sudarshan Chemicals (8.1%) and Gujarat Fluorochemicals (4.9%), which serve as the main drivers of his portfolio.

Ashish Kacholia prefers textiles, apparels & accessories and general industrial chemicals & petrochemicals. His portfolio has a mix of small-cap and mid-cap stocks. In March 2023, he added micro-cap stocks like Aditya Vision (1.1%), Virtuoso Optoelectronics (5.4%), DU Digital Global (5%). Kacholia actively manages his investments, regularly adding new stocks, increasing stakes, and exiting positions. In the past year, he entered and exited 7 positions, including popular ones such as VRL Logistics, Marksans Pharma, and Mahindra Logistics.

Sunil Singhania’s Abakkus Fund holds 24 out of 27 stocks from small-cap and mid-cap companies, with a focus on software & services (22.1%), consumer durables (14%) and cement & construction (12.5%). During the March 2020 quarter, Singhania’s portfolio fell by 24.3% due to the downturn in software stocks. Currently, he has added a 2.3% stake in Uniparts India and increased his stakes in IT consulting firm Mastek and commercial, services & supplies company Technocraft Industries by 0.2% each, reaching 2.3% and 3.2% respectively. In contrast, he has reduced his stakes in Tracxn Technologies and The Anup Engineering by 0.4% and 0.2% respectively. These quarterly updates in Singhania's portfolio make him an active investor.

Vijay Kedia focuses mainly on the telecom services (26.3%) sector, while Nemish Shah’s portfolio is dominated by the general industrial (62.8%) sector and Ashish Dhawan favours the banking & finance (46.14%) sector.

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