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The Baseline
16 May 2023
Five analyst picks trading in the PE Buy Zone post Q4 results
By Suhas Reddy

This week, we take a look at five analyst picks trading in the PE Buy Zone (a stock is in the PE Buy Zone if it is trading at a PE lower than its historical PE average). These stock picks also have PE TTM lower than their respective industry, as well as revenue and profit growth of more than 10% YoY.

  1. Chalet Hotels: IDBI Capital maintains its ‘Buy’ rating on this hotel chain with a target price of Rs 457, implying an upside of 9.2%. The company is trading in the PE Buy zone and its current PE TTM is lower than the hotel industry’s PE average. Over the past year the company has gained 45.5%. 

In Q4FY23, Chalet posted a net profit of Rs 39.3 crore, an improvement compared to a loss of Rs 11.6 crore in Q4FY22. Its revenue has also jumped 128.3% YoY.  

Analyst Archana Gude states that the firm beat her estimates on various key parameters and “the company continued its robust operational performance in Q4FY23 as well, which resulted in highest-ever quarterly net sales and best ever margins”. The analyst believes that the company’s foray into the leisure segment by acquiring Dukes Retreat, Lonalvla, is encouraging, as it will add inventory, particularly in an industry facing rising demand and supply shortages.

The analyst believes that the hotel is well-placed to benefit from the growing demand for corporate travel in the near  term. She anticipates the company’s revenue to grow at a CAGR of 21.5% over FY23-25. 

  1. Equitas Small Finance Bank: ICICI Securities keeps its ‘Buy’ rating on this bank and increases its target price to Rs 100 from Rs 70. This implies an upside of 27.1%. The stock is trading in the PE Buy zone, and its current PE TTM is lower than the banking industry’s average. Over the past year the stock rose by 44.2%.

    In Q4FY23, the bank’s net profit rose 59% YoY to Rs 190 crore and revenue grew by 29%. Analysts Renish Bhuva, Jai Prakash Mundhra and Chintan Shah attribute the bank's profitability growth to a sustained rise in advances, stable NIMs, and a decline in the cost/income ratio. They believe that continued investments towards building capabilities and new product launches have aided growth momentum. They add, “Disbursements in its newly launched products (e.g. affordable housing,  used car financing, etc) continue to gain momentum”.

    Bhuva, Mundhra and Shah highlight that the bank’s asset quality has improved on the back of slippages moderating sharply in Q4. They are also optimistic about the bank’s ability to maintain its credit cost within its guided range of 1.2%-1.25% in FY24. The analysts expect the bank’s net profit to grow at a CAGR of 42.1% over FY23-25.  

  2. Craftsman Automation: Motilal Oswal reiterates its ‘Buy’ call on this auto parts manufacturer with a target price of Rs 3,950, indicating an upside of 12.8%. The company is currently trading in the PE Buy Zone, and its PE TTM is lower than the auto parts and equipment industry’s average. Its price changed by 59.9% in the past year.

    In Q4FY23, Craftsman Automation’s profit grew by 50.9% YoY to Rs 77.7 crore, and revenue increased 49.1% YoY. According to analysts Jinesh Gandhi, Amber Shukla and Aniket Desai, the company’s growth has been driven by the auto powertrain, Al products and Industrials & storage segments.

The analysts say, “Craftsman’s track record of creating and gaining market leadership organically is uncommon in the auto component industry.” They believe that this has enabled it to deliver a good balance of strong growth and superior capital efficiency. The analysts expect growth in the aluminum division and industrials to drive overall growth in FY24/25. They estimate consolidated revenue and profit CAGR of 27% and 37%, respectively, for FY24-25.

  1. Mahanagar Gas: ICICI Direct maintains its ‘Buy’ call on this utilities provider with a target price of Rs 1,300, indicating an upside of 22.5%. The company is currently trading in its PE Buy Zone, and its PE TTM is lower than the non-electrical utilities industry average. Its price rose by 44.5% in the past year.

    In Q4FY23, Mahanagar Gas’s net profit increased by 103.9% YoY to Rs 268.8 crore and its revenue grew by 35.8% YoY to Rs 1,644.1 crore (in line with the brokerage’s estimate). 

Harshal Mehta and Payal Shah note that the company has passed on the benefits of revised APM gas prices to its customers  while still maintaining profitability. In Q1FY24, spot LNG prices have further softened. Owing to these reasons the analysts say, “growth in sales volume will be a key factor to monitor, going ahead.” 

Mehta and Shah remain positive as they believe Mahanagar Gas will benefit from India’s aim to increase the share of natural gas in the energy mix from 6% to 15% by 2030, and also due to the company’s debt-free balance sheet and consistent dividend payout.

  1. DCB Bank: Axis Securities maintains its 'Buy' rating on this bank with a target price of Rs 140, indicating an upside of 20.5%. The company is currently trading in the PE Buy Zone, and its PE TTM is lower than that of the banking industry. Its price rose by 39.1% in the past year. In Q4FY23, DCB Bank's operating revenue increased by 28.19% YoY to Rs 1,179.28 crore, and its net profit grew by 25.36% YoY to Rs 142.21 crore.

According to analysts Dnyanada Vaidya, Prathamesh Sawant, and Bhavya Shah, DCB Bank will sustain its growth momentum as it looks to double its balance sheet in the next four years. They believe the bank is on track to deliver a 1% RoA and an RoE of 11-13% over the medium term.

The analysts expect advances growth of 18% CAGR over FY24-25 due to strong traction in disbursements with continuous sequential growth. They opine that the stock currently trades at attractive valuations as the bank aims to double its balance sheet to Rs 1 trillion in four years.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

(You can find all analyst picks here)

 
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The Baseline
15 May 2023
By Abdullah Shah

Foreign portfolio investors (FPIs) have been net buyers in the Indian equity market in April, the second consecutive month in 2023 after selling equities earlier in the year due to the Adani-Hindenburg debacle.

FPIs started buying Indian equities in November 2022, as they turned optimistic with falling inflation and slowing rate hikes. We take a look at the sectors that have attracted them to the market over the past twelve months.

In April 2022, the market saw a sell-off of Rs 17,141 crore from FPIs, on the back of rising interest rates and inflation. The financial services and IT sectors had the highest outflows of Rs 12,891 crore and Rs 8,579 crore respectively. However, FPIs invested Rs 5,231 and Rs 1,756 crore in the healthcare and FMCG sectors respectively, indicating that they shifted towards a defensive play due to fears of an economic downturn. 

June 2022 saw a massive selling spree that resulted in Rs 50,203 crore being wiped out from the market. All major sectors witnessed an outflow with the financial services and IT sectors experiencing the largest outflows. 

However, FPIs became net buyers of equities in August 2022, as companies posted strong results for the June quarter. The month saw a net inflow of Rs 51,206 crore, with investments in all sectors. Financial services and healthcare had the largest investments of Rs 12,799 crore and Rs 8,509 crore, respectively, in August.

However, there were two more months of outflows from FPIs in September and October. This trend  reversed in November, as FPIs became net buyers with an inflow of Rs 36,240 crore in equities. Financial services had the highest investment of Rs 14,205 crore that month, while sectors like FMCG, IT, automobile & auto components and consumer services saw a healthy inflow. 

FPIs made these  investments  with the hope that rate hikes would slow down due to falling inflation. This sentiment continued in December 2022, with FPIs net buyers of Rs 11,120 crore in equities.

In contrast FPIs sold equities worth Rs 28,851 crore in January 2023, with Indian markets losing ground to China  as lockdown restrictions there were lifted. The second half of January was marred by the explosive Adani-Hindenburg saga, which further discouraged foreign investors. Financial services and oil, gas & consumable fuels sectors saw the highest outflows of Rs 15,204 crore and Rs 7,596 crore respectively during the month.

In the past year, FPIs have made a net investment of Rs 11,629 crore in the market as inflation and rate hikes  have eased up. Most of the major sectors had a net inflow during the month, with financial services attracting the highest investment and IT experiencing the highest outflow.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
15 May 2023
Market closes higher, DLF's Q4FY23 net profit rises 40.6% YoY to Rs 570 crore

Trendlyne Analysis

Nifty 50 closed at 18,398.85 (84.1, 0.5%), BSE Sensex closed at 62,345.71 (317.8, 0.5%) while the broader Nifty 500 closed at 15,549.70 (72.4, 0.5%). Of the 1,983 stocks traded today, 1,006 were gainers and 902 were losers.

Indian indices closed in the green, with the volatility index, India VIX, rising above 13%. The benchmark Nifty 50 index rose over 80 points but closed just below the 18,400 mark. DLF rose over 7.2% after its Q4 net profit increased by 40.6% YoY to Rs 570 crore due to declining costs of land and finance costs.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, outperforming the benchmark index. Nifty Media and Nifty Bank closed higher than their Friday closing levels. According to Trendlyne’s sector dashboard, realty was the top-performing sector of the day.

European indices traded in the green, in line with the US indices futures. Most major Asian indices closed in the green amid positive global cues. Investors keep an eye on US debt ceiling talks and Turkish election results. Brent crude oil futures traded marginally higher after falling for three consecutive trading sessions.

  • Relative strength index (RSI) indicates that stocks like Siemens, ABB India, Chalet Hotels and Intellect Design Arena are in the overbought zone.

  • Kalyan Jewellers India is falling as its Q4FY23 net profit declines 3.1% YoY to Rs 70.1 crore due to a loss of Rs 33.3 crore arising from the disposal of non-core assets. However, its revenue rises by 18.4% YoY, driven by healthy demand in India and the middle east. The stock shows up in a screener for companies with book value per share improving over the past two years.

  • Century Plyboards is rising as its net profit increases by 29.5% YoY to Rs 114.6 crore in Q4FY23. The company's revenue also grows by 7.1% YoY, driven by the plywood and container freight station services sectors. It features in a screener of stocks with high volume and gain.

  • Zydus Lifesciences, ITC and Krishna Institute of Medical Sciences’ weekly average delivery volumes rise ahead of their Q4FY23 results on Thursday.

  • Sumitomo Chemical India and PVR INOX touch their 52-week lows of Rs 388.9 and Rs 1,416.3 per share respectively. The former has fallen .2% over the past month, while the latter declined 4.6%.

  • Media stocks like Navneet Education, Network 18 Media & Investments, Sun TV Network, Zee Entertainment Enterprises and PVR INOX are rising in trade. The broader sectoral index Nifty Media is also trading in the green.

  • Naresh Patel, Chairman and Managing Director of Ami Organics, says the company will continue to grow by 20-25%. He also anticipates an improvement in the margin of the pharma business, projecting it to reach 22-25%.

  • Karur Vysya Bank rises as its Q4FY23 profit increases 58.3% YoY to Rs 337.8 crore and revenue improves 34.3% YoY. The growth in revenue is primarily driven by the retail banking and treasury segments. The company appears in a screener for stocks with low debt.

  • DLF rises to touch its 52-week high as its Q4FY23 net profit surges 40.6% YoY to Rs 570 crore on the back of declining costs of land, finance costs and other expenses. However, its revenue falls by 5.9% YoY despite robust growth in new sales bookings in Q4. The stock shows up in a screenerfor companies with net profits increasing sequentially over the past four quarters.

  • Hindustan Petroleum Corp is falling despite its net profit growing 78.8% YoY to Rs 3,608.32 crore in Q4FY23. Revenue rises 8.7% YoY while excise duty declines, helping the EBITDA margin to improve by 188 bps YoY. The company shows up in a screener of stocks trading near their 52-week highs with significant volumes.

  • Bank of Baroda, Granules India and Jindal Steel & Power fall 0.7%, 1.2% and 2% respectively over the past week, ahead of their Q4FY23 results tomorrow.

  • IT stocks like Tech Mahindra, Infosys, Coforge, L&T Technology Services and Wipro are rising in trade. All the constituents of the broader sectoral index Nifty IT are also trading in the green.

  • India’s WPI inflation falls to -0.92% in April from 1.34% in March. The decrease is due to a fall in the prices of basic metals, food products, mineral oil and textiles, among others.

  • ICICI Securities downgrades its rating on Hindustan Aeronautics to ‘Add’ from ‘Buy’ but raises the target price to Rs 3,385 from Rs 2,850, implying an upside of 12.1%. The brokerage remains optimistic about the firm’s growth prospects given its robust order book but believes any delay in executing the LCA Tejas Mk1A orders is a key risk, leading to the downgrade in rating.

  • Antony Cherukara, CEO of VST Tillers Tractors, expects the company to grow by 20% in FY24, led by the small farm mechanisation segment. He adds that VST is on track to achieve its revenue target of Rs 3,000 crore by FY26.

  • Data Patterns is falling as its net profit declines 10.2% YoY to Rs 55.4 crore in Q4FY23. However, revenue grows 8.5% YoY on the back of improving order book. The order book for FY23 stands at Rs 900 crore. The company shows up in a screener of stocks with declining net profit and profit margin (YoY).

  • Rail Vikas Nigam is rising as its joint venture with SCC Infrastructure bags an order for the design and construction of high canals to provide irrigation facilities for a land area of 41,903 hectares in Rajasthan. The project is worth Rs 2,248.9 crore.

  • India’s CPI inflation eases to 4.7%% in April, down from 5.66% in March. The fall is due to a decline in food inflation which stands at 3.84%.

  • Great Eastern Shipping Co is rising as its Q4FY23 net profit jumps by 282% YoY to Rs 721.9 crore, while its revenue rises 58.9% YoY on the back of 70.9% growth in the shipping segment. The company shows up in a screener for stocks in the PE Buy zone with a high durability score and rising momentum score.

  • Realty stocks like DLF, Sobha, Mahindra Lifespace Developers and Godrej Properties are rising in trade. The broader sectoral indices Nifty Realty and BSE Realty are also trading in the green.

  • Goldman Sachs maintains ‘Buy’ on Tata Motors with a target price of Rs 600, citing favourable demand from JLR and the domestic EV segment. JLR is expected to report over 6% EBIT margin in FY24.

  • Porinju Veliyath adds Thejo Engineering to his portfolio in Q4FY23, buys a 1.2% stake in the company.

  • Birla Corp’s wholly owned subsidiary acquires limestone mining rights on 889.7 hectares of land in a tripartite agreement with the Madhya Pradesh government and Sanghi Infrastructure. The acquisition cost is Rs 51.5 crore. The stock ranks high on Trendlyne's checklist score.

  • Ashish Kacholia buys a 0.1% stake in Beta Drugs in Q4FY23. He now holds 5.8% in the company.

  • Avenue Supermarts (D-Mart) is falling despite reporting a 7.8% YoY increase in net profit to Rs 460 crore in Q4FY23. Its revenue has increased 21% YoY, led by increased sales in the FMCG and staples segments. Neville Noronha, MD & CEO, says lower consumer spending in general merchandise and apparel has impacted the margin, which fell 110 bps YoY to 7.3% in Q4.

  • Tata Motors is back in the black as it reports a net profit of Rs 5,407.8 crore in Q4FY23 against a net loss of Rs 1,032.8 crore in Q4FY22. According to the management, volumes have improved in India and supplies increased at Jaguar Land Rover. Its revenue has increased 35% YoY on improved average selling prices (ASPs). The company has declared a final dividend of Rs 2 per share subject to shareholders’ approval.

Riding High:

Largecap and midcap gainers today include DLF Ltd. (468.15, 7.39%), Oberoi Realty Ltd. (986.90, 4.87%) and Max Healthcare Institute Ltd. (519.90, 4.01%).

Downers:

Largecap and midcap losers today include Adani Total Gas Ltd. (777.45, -5.00%), Adani Transmission Ltd. (840.60, -5.00%) and Avenue Supermarts Ltd. (3,523.40, -4.19%).

Crowd Puller Stocks

31 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Zensar Technologies Ltd. (384.15, 13.15%), Sobha Ltd. (554.05, 11.78%) and Elgi Equipments Ltd. (467.30, 8.70%).

Top high volume losers on BSE were Home First Finance Company India Ltd. (694.20, -4.29%), Avenue Supermarts Ltd. (3,523.40, -4.19%) and Aegis Logistics Ltd. (364.35, -3.52%).

Mahindra Lifespace Developers Ltd. (402.15, 6.71%) was trading at 21.2 times of weekly average. Great Eastern Shipping Company Ltd. (721.50, 6.61%) and Hikal Ltd. (296.65, -0.47%) were trading with volumes 14.5 and 6.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

24 stocks took off, crossing 52-week highs, while 3 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Akzo Nobel India Ltd. (2,460.00, -0.42%), Colgate-Palmolive (India) Ltd. (1,673.65, 2.82%) and Cyient Ltd. (1,279.60, 5.84%).

Stocks making new 52 weeks lows included - PVR INOX Ltd. (1,465.05, 1.24%) and Affle (India) Ltd. (921.40, 0.16%).

21 stocks climbed above their 200 day SMA including Elgi Equipments Ltd. (467.30, 8.70%) and Mahindra Lifespace Developers Ltd. (402.15, 6.71%). 9 stocks slipped below their 200 SMA including Edelweiss Financial Services Ltd. (61.20, -5.70%) and Rashtriya Chemicals & Fertilizers Ltd. (105.15, -1.59%).

 
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The Baseline
12 May 2023
Five Interesting Stocks Today
  1. Godrej Consumer Products: This FMCG company is trading near its 52-week high of Rs 992.5 after reporting strong Q4 results on Thursday. Godrej Consumer’s net profit has grown 24.5% YoY to Rs 452.1 crore, beating Trendlyne’s Forecaster estimates by 1.8%. Its revenue also increased by 10% YoY, led by a volume growth of 6%. The personal care (which contributes to 58% of total revenue) and home care (39% of total revenue) segments grew by 17% and 14% respectively. 

Commenting on the results, Managing Director and CEO, Sudhir Sitapati, says that the performance is broad-based, with the India-branded business experiencing a 13% increase in volumes.

In International markets, the Africa, USA, and Middle East cluster delivered 8% sales growth, while the Latin American region witnessed a 3% decline. The performance in Nigeria was impacted by the election and demonetisation. 

Post the results, ICICI Securities maintains its ‘Add’ rating and raises the target price to Rs 1,050, implying an upside of 6.9%. The brokerage believes that Godrej Consumer’s margins have improved, led by a moderation in input costs. As a result, the company features in a screener of companies where brokers have upgraded their recommendations or target prices in the past three months.

  1. KEI Industries: This electrical cables and wires manufacturer has risen 10.8% till Friday since announcing its Q4FY23 results on May 2. Its net profit rose 19.1% YoY to Rs 138.1 crore and revenue grew 9.1% YoY in Q4, driven by growth across all its segments. This healthy performance has enabled the stock to show up in a screener for companies with net profits rising sequentially for the past three quarters. According to Trendlyne’s Forecaster, the consensus recommendation from 13 analysts on the company is ‘Buy’. 

The company’s sales volume increased by 13% YoY on the back of lower metal prices, but this also meant selling prices fell in Q4FY23. However, the decline in raw material costs boosted its EBITDA margin by 66 bps YoY to 10.7%. Also, the management’s focus on increasing the contribution of the retail and extra-high voltage segments towards revenue aided margin expansion. 

The management believes that the firm is well-placed to capitalise on the Centre’s infrastructure push, given its capex plans to increase production capacity. Anil Gupta, Chairman and MD of KEI Industries, says, “We'll be spending around Rs 250 crore to Rs 300 crore every year over the next three years to maintain a revenue CAGR of 17% to 18% per annum, as against achieved CAGR of around 15% during the last 15 years.” He adds that the capex requirements will be entirely funded by internal accruals. The management aims to improve EBITDA margins by increasing retail sales, exports, and optimising costs in the coming quarters. 

  1. Shoppers Stop Ltd: Thisretailing firm owned by Raheja group has a pan-India presence with 280 stores in 54 cities, and an online channel that contributes to nearly 33% of its revenue. According to Trendlyne Technicals, its share price has increased 13.5% in the past month. Shoppers Stop has expanded itself in major Tier 1 and Tier 2 cities, which are high-growth areas with major sales in private brand labels. The firm has done Rs 280 crore capex for store expansion and technology, and plans a capex of Rs 150-200 crore for FY24.

In Q4FY23, Shoppers Stop reported its highest-ever revenue and gross margins at Rs 1,175 crore and 43.2% respectively. The increase in the volume mix of private labels has been driving margins, with revenue from the private brand and beauty segments growing 35% and 29% YoY respectively. The firm’s average transaction value (ATV) per customer and average selling price of products (ASP) grew 6% (to Rs 4,086) and 9% YoY (to Rs 1,540), respectively. This has led to growth in the bottom line. The firm increased its Q4FY23 profit by 35% YoY by pruning loss-making stores and optimizing store sizes and its distribution network. 

It expects growth in its beauty segments and categories (loungewear, innerwear, athleisure) by partnering with international brands. The stock shows up in thescreener for stocks that have been efficiently managing their assets to generate profits and improve ROA over the past two years.

HDFC Securities says Shoppers Stop’s aggressive focus on store expansion and assortment management reflects its outperformance in key performance indicators. However, business relevance and longevity remains an open question, as the company directly contends with deep-pocketed e-tailers. The brokerage has maintained a ‘Sell’ rating on the stock on account of higher valuation.

  1. Escorts Kubota: This commercial vehicles manufacturer traded lower on Tuesday and Wednesday but recovered on Thursday. However, the stock closed 0.34% lower on Friday. Its Q4FY23 earnings report showed a 14% YoY increase in consolidated net profit to Rs 216.4 crore. However, the company still faces challenges due to the high cost of materials, with input costs rising 38% YoY in Q4. Despite this, the stock gained 4% in the past week, outperforming the automobiles & auto components sector by nearly 1%.

The company’s domestic wholesales have fallen 5.5% YoY in FY24, according to its recent business update. Its exports fell by more than 50%. Retail sales were also impacted by unseasonal rainfall and crop damage in certain regions. However, the management remains positive about demand revival and expects rural demand to bounce back in Q2FY24, driven by better crop prices. Bharat Madan, CFO of Escorts Kubota, says the company is targeting a 25% growth in exports in FY24, once supply chain issues ease up. 

The management plans to double tractor capacity and invest Rs 350 crore in capex (a 40% YoY increase) in FY24. With the government's continued support for infrastructure projects and strong demand, the company's earnings are expected to improve. The management expects margins to improve further as commodity prices decline. It also forecasts mid-single-digit growth in wholesales in FY24. According to Trendlyne’s consensus recommendation, five analysts maintain a ‘Buy’, seven recommend ‘Hold’, and 10 maintain ‘Sell’ on the stock. 

  1. Dr. Reddy's Laboratories: This pharmaceutical company announced its Q4FY23 results on Wednesday, reporting a significant increase in net profit to Rs 960.1 crore – up nearly 10x YoY. The surge in profit was due to a high base of expenses on the impairment of non-current assets in Q4FY22, when the profit had fallen 82.6% YoY.

The impairment cost of non-current assets decreased from Rs 741 crore in Q4FY22 to Rs 54 crore in Q4FY23. If the charges are adjusted, the profit has risen only 22.3% YoY during Q4FY23. According to the Q4FY22 earnings call, the high impairment charges were partially caused by the decrease in market potential of Tepilamide Fumarate Extended-Release Tablets (PPC-06) valued at Rs 430 crore, and also the impairment of Shreveport plant assets and goodwill of Rs 310 crore. 

Even with the adjustment, the pharma company is still profitable in YoY terms. Its revenue increased 15.3% YoY to Rs 6,453.7 crore. The management attributed the growth to new product launches, though it was partly offset by price erosion. Dr. Reddy's Laboratories features in a screener for stocks that have seen improvement in net profits, operating profit margin and revenues in recent quarters. 

Despite the positive results, the company’s share price fell 8.2% since results, as it did not meet its estimates. According to Trendlyne’s Forecaster estimates, the pharma company missed net profit estimates by 6.3% for Q4FY23.

Trendlyne's analysts identify stocks that are seeing interesting price movements, analyst calls, or new developments. These are not buy recommendations.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
12 May 2023
Market closes flat, HAL's Q4FY23 net profit declines 8.8% YoY to Rs 2,831.2 crore

Trendlyne Analysis

Nifty 50 closed at 18,314.80 (17.8, 0.1%), BSE Sensex closed at 62,027.90 (123.4, 0.2%) while the broader Nifty 500 closed at 15,477.35 (-6.7, 0.0%). Of the 1,944 stocks traded today, 825 showed gains, and 1,043 showed losses.

Indian indices recover from the days low and closed in the green, with Nifty 50 rising above the key 18,300 mark. The volatility index, India VIX dropped below 13 at close. On Thursday, MSCI cut weights of 15 Nifty 50 stocks which might result in USD 1 billion outflow.

Nifty Smallcap 100 and Nifty Midcap 100 closed sharply lower despite the benchmark index closing in the green. Nifty Auto and Nifty Bank closed higher than Thursday’s closing levels. Nifty IT closed lower, despite the tech-heavy Nasdaq 100 closing in the green on Thursday. According to Trendlyne’s sector dashboard, forest materials was the top-performing sector of the day as it rose over 1.5%.

Most European indices traded in the green tailing the US indices futures, which are trading higher than Thursday’s closing levels. On Thursday, the data released by US Labor Department indicated April CPI at 4.9% against an expectation of 5.0%. This raises hopes of the Federal Reserve’s pausing interest rate hikes.

  • Glenmark Pharmaceuticals sees a short buildup in its May 25 future series as its open interest rises 28.4% with a put-call ratio of 1.

  • Vedanta is falling as its net profit plunges 56.9% YoY to Rs 3,132 crore in Q4FY23. Revenue has also dropped by 5.4% due to reduced revenue from its zinc, oil & gas, and aluminium segments. The company features in a screener of stocks where mutual funds have decreased their holding in the past quarter.

  • Cipla is rising as its net profit improves by 45.2% YoY to Rs 525.6 crore in Q4FY23. Revenue also grows 8.5% YoY to Rs 5,665.9 crore on the back of an increase in pharmaceutical sales. The company shows up in a screener of stocks with improving net profit for the past three consecutive quarters.

  • Polycab India and Tata Motors touch their 52-week highs of Rs 3,390 and Rs 520.5 respectively. Polycab has risen 10.2% in the past month, while the other increased by 12.7%.

  • Sapphire Foods India is falling despite a 411% YoY rise in Q4FY23 profit to Rs 135.5 crore while its revenue rises 12.9% YoY. Its profit has been boosted by the reassessment of the recoverability of unrecognised deferred tax assets. The company features in a screener for highly durable stocks with EPS growth.

  • Metal stocks like Jindal Stainless, Hindalco Industries, Hindustan Copper, Vedanta and Jindal Steel & Power are falling in trade. All constituents of the broader sectoral index, Nifty Metal, are also trading in the red.

  • Hindustan Aeronautics is falling as its Q4FY23 net profit declines 8.8% YoY to Rs 2,831.2 crore due to higher input costs and impairment loss. On the other hand, the company’s revenue rises 8.1% YoY to Rs 12,494.7 crore. The stock shows up in a screener for companies with declining net cash flows.

  • Ramesh Kumar Dua, CEO of Relaxo Footwear, expects the company’s volume to grow in double digits in FY24. He adds that it will maintain a margin of 15% moving forward.

  • Marico rises 10.2% over the past week. The company ranks high on Trendlyne’s Checklist, scoring 60.9%. It features in a screener of stocks near their 52-week highs.

  • ICICI Securities downgrades its rating on Indian Hotels Co to ‘Add’ from ‘Buy’ and maintains its target price of Rs 399. This implies an upside of 12%. The brokerage attributes the rating downgrade to the recent run-up in the stock price. However, it remains optimistic about the firm’s prospects given the healthy demand trends.

  • Zee Entertainment is falling in trade following reports that the NSE and BSE may reconsider their approval regarding the Sony-Zee merger. This comes as the market regulator, SEBI, alleges Shirpur Gold Refinery of abusing insolvency law and divesting funds to its promoter entities. Shirpur Gold Refinery is owned by Essel Group, a promoter of Zee Entertainment.

  • Max Healthcare Institute, Eicher Motors and Glenmark Pharmaceuticals are trading above their third resistance or R3 level.

  • The Society of Indian Automobile Manufacturers (SIAM) reports that two-wheeler sales have risen to 13.4 lakh units in April, compared to 12.9 lakh units in March. Passenger vehicle sales stand at 3.3 lakh units.

  • Utilities stocks like Adani Transmission, Power Grid Corp of India, NTPC and Gujarat Industries Power are falling in trade. The broader sectoral index BSE Utilities is also trading in the red.

  • Goldman Sachs sells stakes worth Rs 161.6 core in Cholamandalam Investment & Finance, Jubilant Foodworks, Titan, Varun Beverages, Affle (India) and Devyani International through various block deals on Thursday. The shares have been picked up by Sector Investment Funds through other block deals.

  • Adani Total Gas and Adani Transmission are falling as Morgan Stanley Capital International (MSCI) has removed them from the MSCI India Standard Index in its May 2023 rejig. Due to the removal, an outflow of $201 million for Adani Transmission and $186 million for Adani Total Gas is expected.

  • Ittira Davis, Managing Director of Ujjivan Small Finance Bank, says that the net interest margin (NIM) of the bank is expected to be around 9.1% in H1FY24 and is likely to improve in H2. He expects loan disbursals of around Rs 4,800 crore in Q1FY24.

  • Reports suggest that Maruti Suzuki plans to invest $5.5 billion to double its production capacity to 40 lakh vehicles by 2030. The stock ranks high on Trendlyne checklist score and is trading near its 52-week high. It shows up in a screener of stocks where brokers have upgraded their recommendations in the past three months.

  • South Indian Bank surges as its Q4FY23 profit rises by 22.6% YoY to Rs 333.5 crore, while revenue grows by 26% YoY, mainly driven by the corporate banking and retail banking segments. The company shows up in the screener for stocks with strong annual EPS growth.

  • Goldman Sachs maintains its ‘Neutral’ rating on Dr. Lal Pathlabs with a target price of Rs 1,950. The brokerage says that the company’s EBITDA margin is below its estimates by 29 bps, and adds that the non-Covid revenue has fallen marginally QoQ in Q4FY23.

  • Zensar Technologies is rising despite its Q4FY23 net profit declining by 8.2% YoY to Rs 119.2 crore due to higher employee costs and other expenses. The company’s revenue increases 5.1% YoY, led by the digital and application services segment. The company shows up in a screener for stocks near their 52-week highs and that have significant volumes.

  • NBCC rises as it announces the receipt of orders worth Rs 1,264.8 crore in April. The stock is trading near its 52-week high.

  • Deepak Nitrite falls as its Q4FY23 net profit decreases 12.5% YoY to Rs 233.8 crore on rising expenses of power, fuel and input costs. However, revenue has increased by 4.8%, led by improving revenue across the advanced intermediates and phenolics segment in Q4. The board has declared a final dividend of Rs 7.5 per share for FY23.

  • Siemens touches a 52-week high as its Q4FY23 net profit rises 38.6% YoY to Rs 471.4 crore, despite a 26% YoY increase in expenses. Its revenue grows 28% led by growth across all segments like energy, smart infrastructure, mobility and digital industries. The company has also bagged new orders worth Rs 31,151 crore in Q4.

  • Eicher Motors’ Q4FY23 net profit rises 48.4% YoY to Rs 905.6 crore and revenue grows 19.1% YoY, driven by robust growth across all its business segments. The company’s board of directors has declared a final dividend of Rs 37 per share for FY23 and approved a cash outlay of more than Rs 1,000 crore towards capex for FY24.

Riding High:

Largecap and midcap gainers today include Dr. Lal Pathlabs Ltd. (2,040.90, 7.06%), Eicher Motors Ltd. (3,626.35, 6.49%) and Polycab India Ltd. (3,388.95, 4.75%).

Downers:

Largecap and midcap losers today include Adani Total Gas Ltd. (818.35, -4.29%), Hindalco Industries Ltd. (404.75, -3.83%) and ICICI Prudential Life Insurance Company Ltd. (433.30, -3.71%).

Volume Shockers

23 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Intellect Design Arena Ltd. (531.35, 13.93%), Zensar Technologies Ltd. (339.50, 9.43%) and Dr. Lal Pathlabs Ltd. (2,040.90, 7.06%).

Top high volume losers on BSE were Jindal Stainless Ltd. (277.95, -6.13%), Balrampur Chini Mills Ltd. (386.60, -5.38%) and Adani Total Gas Ltd. (818.35, -4.29%).

Eureka Forbes Ltd. (373.00, -0.75%) was trading at 10.6 times of weekly average. Eicher Motors Ltd. (3,626.35, 6.49%) and Max Healthcare Institute Ltd. (499.85, 3.26%) were trading with volumes 9.2 and 7.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

24 stocks took off, crossing 52-week highs, while 1 stock hit their 52-week lows.

Stocks touching their year highs included - Akzo Nobel India Ltd. (2,470.45, 0.05%), Bajaj Auto Ltd. (4,538.90, -0.20%) and Cera Sanitaryware Ltd. (7,201.10, 5.62%).

Stock making new 52 weeks lows included - Orient Electric Ltd. (218.75, -1.44%).

20 stocks climbed above their 200 day SMA including Intellect Design Arena Ltd. (531.35, 13.93%) and Grindwell Norton Ltd. (2,000.00, 5.25%). 13 stocks slipped below their 200 SMA including Manappuram Finance Ltd. (109.95, -4.81%) and Hindalco Industries Ltd. (404.75, -3.83%).

 
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The Baseline created a screener Revenue and Net Profit …
12 May 2023
 
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The Baseline
11 May 2023
Which stocks did superstar investors buy in Q4FY23?
By Abhiraj Panchal

Investors closely follow the portfolios of superstar investors to identify interesting trends and stocks to invest in. We take a look at some of the stocks superstar investors bought or added to their portfolios during Q4FY23.

The superstars tracked here have diverse investing interests, as can be seen in the chart below, which shows the sectors that make up the largest share of each investor’s portfolio. 

Rare Enterprises favoured textiles, apparels and accessories sector, while Sunil Singhania preferred software and services, and Ashish Kacholia and Mohnish Pabrai preferred chemicals and petrochemicals. Vijay Kedia’s favoured sector was telecom services, Porinju’s preference was diversified consumer services, and Dolly Khanna preferred oil and gas.

Rare Enterprises (Rakesh Jhunjhunwala) adds two new stocks

Rakesh Jhunjhunwala’s portfolio fell 4.6% QoQ to Rs 31,988.1 crore in Q4FY23. The late big bull’s portfolio is currently being managed by his wife, Rekha Jhunjhunwala, and Rare Enterprises. Despite a slowdown in buying in Q4, the portfolio had two new additions, a fresh 1.9% stake in Sun Pharma Advanced Research Co, a clinical-stage biopharmaceutical firm, and a 5.2% stake in Raghav Productivity Enhancers, an industrial goods manufacturer.  

Rekha Jhunjhunwala was also allotted 6 lakh shares of Raghav Productivity Enhancers upon the conversion of 6 lakh unsecured compulsorily convertible debentures (CCD). The unsecured CCDs were originally allotted to Rakesh Jhunjhunwala. The transfer brings her ownership to 5.2% of the company.

Rare Enterprises increased its stake in only one company in Q4. It bought an additional 0.1% stake in Titan Co, bringing its holding to 5.3%.

Sunil Singhania’s Abakkus Fund adds Uniparts India to the roster

Sunil Singhania’s Abakkus Fund’s net worth grew by 4.2% QoQ to Rs 2,166.1 crore in Q4FY23. It added heavy electrical equipment manufacturer Uniparts India to its portfolio by buying a 2.3% stake in the company. The fund also bought a 0.2% stake in Technocraft Industries (India), a commercial services and supplies company, increasing its total stake to 3.2%. 

Abakkus Fund purchased a 0.2% stake each in industrial machinery company Dynamatic Technologies and IT consulting firm Mastek, increasing its stake in them to 2.8% and 3.2%, respectively. It also bought an additional 0.1% stake in Stylam Industries (forest products manufacturer) and Sarda Energy & Minerals (metal and mining company). It now holds 2.5% and 2.2%, respectively. 

The fund also purchased minor stakes in Siyaram Silk Mills (now holds 2.1%), Ion Exchange (India) (total now 3.3%), IIFL Securities (3.2%), HIL (3.1%), Rupa & Company (4.1%), and Hindware Home Innovation (4.9%).

Ashish Kacholia adds one small-cap and one micro-cap company to his portfolio

Ashish Kacholia’s net worth fell by 11.6% QoQ to Rs 1,656.6 crore in Q4FY23. He added Aditya Vision and Virtuoso Optoelectronics to his portfolio, buying a 1.1% stake in the specialty retailing company and a 5.4% stake in the consumer durables manufacturer, respectively. 

Apart from these, the marquee investor added a 0.2% stake in the transportation services provider Knowledge Marine & Engineering Works, taking his total stake to 2.5%. He also increased his stake in specialty chemical companies Fineotex Chemical and Yasho Industries to 2.8% and 4% respectively by buying a 0.2% stake in each. He also purchased a 0.2% stake in Garware Hi-Tech Films (containers and packaging company), increasing his stake to 4.2%.

Kacholia bought an additional 0.1% stake in Faze Three and Gravita India, and now holds 5.2%, and 2.2% respectively. He also increased his stake in Repro India.

Porinju Veliyath adds two new micro-cap companies

Porinju V Veliyath’s net worth declined by 12.5% QoQ to Rs 137.9 crore in Q4FY23. He added two new micro-cap companies to his portfolio – he bought a 1.1% stake in Ansal Properties & Infrastructure, a realty firm. He also purchased a 1.1% stake in  Kovilpatti Lakshmi Roller Flour Mills, a flour milling company.

The ace investor increased his stake in Ansal Buildwell by 1.4% to 3.4%. He raised his stake in a special consumer services company, Kaya, by 0.6% to 3% in Q4, after previously adding 1% to his holding in Q3FY23.

Vijay Kedia buys a big stake in Atul Auto

Vijay Kedia’s net worth dropped 7% QoQ to Rs 596.1 crore in Q4FY23. He added a 1.3% stake of Patel Engineering (a construction and engineering company) and a 1.1% stake of Precision Camshafts (an auto parts manufacturer) to his portfolio during the quarter. The investor bought a 1.1% stake in Affordable Robotic & Automation in H2FY23, and now holds 13.4% of the company. 

Kedia’s biggest buy of the quarter was adding a 6.9% stake in Atul Auto, an auto components manufacturer. He now holds an 8.4% stake in the company. He also increased his holding in Neuland Laboratories and Heritage Foods to 1.2% each by buying a 0.2% stake and a 0.1% stake, respectively. 

Kedia bought a minor stake in Repro India and Siyaram Silk Mills during the quarter, and holds 7.1% and 1.1%, respectively.

Dolly Khanna’s cautious approach leads to minor changes in portfolio 

Dolly Khanna’s net worth marginally dropped by 0.1% QoQ in Q4FY23, likely due to her bearish outlook given the market volatility. The investor added just one new company to her portfolio, Som Distilleries & Breweries, in which she acquired a 1.3% stake. 

Khanna also increased her stake in Control Print, a commodity printing/stationery company, by a small margin. 

Mohnish Pabrai adds stake in Edelweiss Financial Services for two consecutive quarters

Mohnish Pabrai’s net worth in Q4FY23 fell by 14.6% QoQ to Rs 1,054.2 crore. He bought an additional 0.2% stake in Edelweiss Financial Services and increased his holding to 6.7%. This marks the second consecutive quarter where Pabrai has added to his stake in Edelweiss, with no other changes made to his portfolio during the period. 

 
Trendlyne Marketwatch
Trendlyne Marketwatch
11 May 2023
Market closes flat, Asian Paints' Q4 profit rises by 44% YoY to Rs 1,258.4 crore

Trendlyne Analysis

Nifty 50 closed at 18,297.00 (-18.1, -0.1%), BSE Sensex closed at 61,904.52 (-35.7, -0.1%) while the broader Nifty 500 closed at 15,484.05 (18, 0.1%). Of the 1,947 stocks traded today, 1,143 showed gains, and 716 showed losses.

Indian indices closed flat after switching between losses and gains on a volatile day of trade. The benchmark Nifty 50 settled just below the 18,300 mark. Asian Paints closed over 3.3% higher after its Q4 net profit rose 44% YoY to Rs 1,258.41 crore and its revenue increased by 11.5% YoY.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, outperforming the benchmark index. Nifty FMCG and Nifty Bank closed higher than Wednesday’s close. According to Trendlyne’s sector dashboard, commercial services & supplies was the top-performing sector of the day.

European stocks traded in the green, following US indices futures, which also traded higher. However, major Asian indices closed flat or lower amid mixed global cues. Brent crude oil futures traded lower but crude oil prices are up over 5% in the last five trading sessions.

  • Money flow index (MFI) indicates that stocks like Samvardhana Motherson International, Chemplast Sanmar, Lux Industries and Adani Power are in the overbought zone.

  • Dr. Lal Pathlabs is falling as its net profit declines by 8.2% YoY to Rs 57 crore in Q4FY23. Although its revenue has risen marginally by 1.1% YoY, revenue from the covid segment has plunged by 83.4% YoY. The company shows up in a screener of stocks with a low Piotroski score.

  • NBCC is rising as it bags an order worth Rs 264.1 crore to carry out construction and development projects on the Mahanadi campus of Ravenshaw University, Cuttack, Odisha.

  • Education, forest products and airlines industries rise over 17% over the past month.

  • Varun Beverages, Ambuja Cements and SBI Cards & Payments outperform the Nifty 50 index over the week post their Q4FY23 results.

  • Alkyl Amines Chemicals is falling despite its Q4FY23 net profit rising 4.8% YoY to Rs 48.6 crore. Its EBITDA margin also grows by 170 bps YoY to 18.7%. However, its revenue has declined 3.2% YoY. The stock shows up in a screener for companies with declining net cash flows.

  • Bharat Madan, CFO of Escorts Kubota, says the company targets a 25% growth in exports in FY24. He adds that the top-line growth will be around high single-digit to double-digit, and that margins are expected to improve in the near term.

  • Sanofi India surges more than 5% in trade as its board of directors approve the demerger of its consumer healthcare business into its wholly owned subsidiary named Sanofi Consumer Healthcare India. It shows up in a screener of stocks with high volume and high gain.

  • Asian Paints' Q4FY23 profit rises by 44% YoY to Rs 1,258.41 crore, while its revenue increases by 11.5% YoY. The rise in profit is due to volume and value growth in decorative and non-automotive industrial businesses. The company shows up in a screener for stocks with an improving book value per share for the past two years.

  • SoftBank's SVF India Holdings (Cayman) sells a 2.1% stake in One97 Communications (Paytm) in multiple open market transactions since February 2023 to comply with market regulator SEBI's takeover regulations.

  • The Bank of England is expected to raise interest rates by 25 bps to 4.5%, the highest level since 2008, in order to combat high inflation in the UK.

  • HDFC Securities downgrades its rating on Aditya Birla Fashion & Retail (ABFRL) to ‘Add’ from ‘Buy’ and lowers the target price to Rs 215 from Rs 270. This implies an upside of 7%. The downgrade is on the back of concerns that ABFRL’s acquisition of TCNS Clothing Co will increasingly weaken its balance sheet.

  • Adani Enterprises is rising as its board of directors considers raising funds through the sale of equity shares. The company has not yet disclosed the amount of capital it aims to raise through this plan. The board meeting to discuss the approval of this fundraising strategy is scheduled for May 13.

  • PSU banks like Central Bank of India, Indian Bank, Bank of Maharashtra, Indian Overseas Bank and Punjab & Sind Bank are rising in trade. All constituents of the broader sectoral index, Nifty PSU Bank, are also trading in the green.

  • R Chandramogan, Chairman of Hatsun Agro Products, says the company’s Q4 margins have been affected by dairy inflation, but expects it to improve as commodity prices cool down. He also expects double-digit revenue growth for the company in FY24.

  • BSE Capital Goods is falling despite most stocks trading in the green. The sectoral index's decline can be attributed to the drop in the price of its constituent, Larsen & Toubro.

  • Procter & Gamble Hygiene & Healthcare is rising after reporting a 60.4% YoY increase in net profit to Rs 165 crore in Q4FY23, aided by one-time tax returns of Rs 57.5 crore. However, the company's revenue declines by 9.3% YoY due to a reduction in sales. It appears in a screener of stocks with declining quarterly revenue.

  • Gujarat Gas is rising despite its Q4FY23 net profit declining 16.3% YoY to Rs 370.5 crore and revenue falling by 14.7% YoY. The company’s total gas volumes have risen 22% QoQ due to the sharp correction in spot LNG prices, which it passed on to its industrial customers. The stock shows up in a screener for companies with low debt.

  • Jefferies maintains its ‘Buy’ rating on Nazara Technologies with a target price of Rs 700, citing an attractive valuation despite a poor margin outlook. However, the brokerage, lowers revenue estimates by 2-3% and margin estimates by 50-80 bps for FY24/25.

  • Reports suggest that the Income Tax Department is conducting searches at Mankind Pharma’s offices in New Delhi, causing the stock to fall by 4.5%. The stock was listed on the bourses on May 9.

  • Dr. Reddy's Laboratories is falling despite reporting a nearly 10x YoY rise in profit to Rs 960.1 crore in Q4FY23, while revenue increases 15.3%. The profit rise is due to the high impairment cost of non-current assets in Q4FY22. The board recommends a final dividend of Rs 40 per share for FY23. The company features in the screener for stocks with a current PE ratio of less than three, five and ten years PE.

  • A consortium of Rail Vikas Nigam and Siemens bags an order worth Rs 300 crore for building and installing substations for the Mumbai metro line. Rail Vikas Nigam has touched its 52-week high in the past week, while Siemens reached its 52-week high in today's trading session.

  • Godrej Consumer Products is rising as its Q4FY23 net profit increases by 24.5% YoY to Rs 452 crore. The company's raw material costs have declined by 3.4% and sales revenue improved by 9.6% YoY during the same period. Sales have grown across India, Indonesia, Africa, the USA and the Middle East, but fell in Latin America markets.

  • Larsen & Toubro’s Q4FY23 net profit rises 10% YoY to Rs 3,986.7 crore despite a 20% increase in input costs. Its revenue also increases across all segments, with hi-tech manufacturing, IT & Technology growing by more than 20% YoY. The company’s order book at the end of FY23 stands at Rs 4 lakh crore.

Riding High:

Largecap and midcap gainers today include Vodafone Idea Ltd. (7.15, 5.93%), Gujarat Gas Ltd. (488.25, 5.49%) and SBI Cards and Payment Services Ltd. (865.65, 5.02%).

Downers:

Largecap and midcap losers today include Dr. Reddy's Laboratories Ltd. (4,532.00, -6.89%), Larsen & Toubro Ltd. (2,242.15, -5.17%) and Aditya Birla Capital Ltd. (163.95, -4.07%).

Crowd Puller Stocks

27 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included TeamLease Services Ltd. (2,273.55, 9.59%), Sanofi India Ltd. (6,205.50, 8.86%) and Ratnamani Metals & Tubes Ltd. (2,389.30, 6.68%).

Top high volume losers on BSE were Dr. Reddy's Laboratories Ltd. (4,532.00, -6.89%), Larsen & Toubro Ltd. (2,242.15, -5.17%) and Hindalco Industries Ltd. (420.85, -3.57%).

Quess Corp Ltd. (389.05, 5.55%) was trading at 31.5 times of weekly average. Procter & Gamble Hygiene & Healthcare Ltd. (13,775.00, 0.44%) and Gujarat Gas Ltd. (488.25, 5.49%) were trading with volumes 15.7 and 8.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

22 stocks hit their 52-week highs,

Stocks touching their year highs included - Bajaj Auto Ltd. (4,540.40, -0.34%), Bharat Petroleum Corporation Ltd. (372.55, 0.11%) and Cera Sanitaryware Ltd. (6,831.00, 1.53%).

22 stocks climbed above their 200 day SMA including Sanofi India Ltd. (6,205.50, 8.86%) and Gujarat Gas Ltd. (488.25, 5.49%). 8 stocks slipped below their 200 SMA including Hindalco Industries Ltd. (420.85, -3.57%) and Divi's Laboratories Ltd. (3,329.20, -2.80%).

 
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The Baseline
10 May 2023
The New Oil: Shortages emerge in a key metal needed for EVs | Stocks outperforming post Q4 results
By Tejas MD

Sometimes it's hard to see how fast things are changing, until you take a step back. Look at transportation, for example. Electric vehicles used to be tiny, funny looking cars. Remember the Reva? Everything about the Reva was small - the battery life, mileage and leg room. You could sit in the backseat but not stretch your legs.

In the last ten years however, electric vehicles have become expensive, futuristic, and can walk like a crab into a parking space.

Electric cars are just one part of the big shift in the global energy landscape, as countries move from fossil fuels to renewable energy. Countries have set ambitious plans for how and when they will achieve 'net-zero' in emissions - the US and Europe plan to reach this goal by 2050, while India is targeting 2070. However, India also wants to decarbonize 50% of its energy consumption by 2030, just seven years from now. Hitting these targets will need bold regulation, as well as critical metals and minerals. 

Electric vehicles (EVs) are gaining popularity fast, and their sales surged by 60% in 2022. Now one in every seven cars sold globally is electric, and this is set to increase as battery costs fall: 

Despite the semiconductor shortageaffecting EV supply in 2021 and 2022, car buyers are snapping up electric vehicles. But the higher selling price of EVs, compared to traditional internal combustion engine (ICE) cars is a challenge. And a new chokepoint is now emerging: a copper supply crunch. 

High EV demand is expected to drive up the price of copper to $15,000 per tonne by 2025 (approx 60% above current prices). Copper is becoming the ‘new oil’, and holds the key to the switch to electric. 

In this week’s Analyticks: 

  • The 'new oil': Copper supply shortage will hamper the move to electric
  • Screener: Outperformers of Q4, which beat analyst estimates and are beating the Nifty after strong results

Looming copper supply issues put clean energy at risk

Governments globally are pushing for more renewable energy use, to address the climate and energy crisis. This has led to growing demand for electric vehicles (EVs), solar panels and transmission cables.

Clean energy generation has high copper usage, typically four to six times more than fossil fuels. Electric cars and bikes in particular, rely heavily on copper for the motor coil that drives the engine. 

As a result, copper demand is set to soar in the coming years. Bloomberg NEF predicts a copper supply deficit of more than six million tonnes per year by the early 2030s.

Countries are now scrambling to lock down imports and production of copper, the ‘new oil’. The world's attention is on top copper mining nations like Chile and Peru, which together produced about 34% of the total mined copper in 2022.  

According to S&P Global, the US is expected to import over 60% of its copper by 2035. Amid growing concerns about political instability in Chile and Peru, the US is shifting its focus to the African continent. 

In December 2022, US-based startup KoBold Metals announced plans to invest around $150 million to develop a new copper mine in Zambia. This is a significant move. Zambia is the second-largest copper producer in Africa, and China has the biggest presence there. China is Zambia’s largest infrastructure creditor, and also became the largest importer of copper ores in 2021. China imported over 34% of total copper by value globally in 2021. 

India however, has been slow to secure copper resources. Khanij Bidesh India, a joint venture between three PSUs - National Aluminium Company, Hindustan Copper and Mineral Exploration and Consultancy - was formed to obtain the minerals critical for India’s industrial growth, but it has not been very successful. 

Since the closure of the Sterlite copper plant in Tamil Nadu in 2018, which catered to around 40% of the domestic demand, India has been a net importer of copper. The plant's closure came after protests by locals, social and environmental activists who were worried about pollution. Vedanta-owned Sterlite Copper is now exploring plans to reopen the manufacturing facility.

As a net importer of copper, India could face shortages and fail to achieve its 30% EV vision by 2030. The country's copper demand is forecast to reach three million tonnes by 2030, even as it mines only 2.5% of the copper it needs. 

Copper supply deficit will worsen amid demand growth and roadblocks to mining

A 2001 Copper Association report predicted a copper supply shortfall after 65 years, based on the production rate at the time. But the report did not account for the increasing demand for copper as technologies changed. Now, copper demand is expected to rise by more than 50% between 2023 and 2040. But the metal’s supply is projected to increase by only 16%. 

A major driver of copper demand is the growth in electric vehicles. A decade ago, copper demand for transport was less than half of that in construction. By 2040, transportation demand is expected to be 33% higher. 

S&P Global’s worst-case projection puts the copper shortfall at around 20% of consumption by 2035. 

Although it seems logical for mining companies to raise production to meet growing demand, several factors make this difficult. A new copper mining project can take over ten years to complete and start production. In fact, no new copper discoveries are expected to be operational in the next three years.

Additionally, miners now use ore grades of 0.5% copper, a quarter of the concentration used a century ago, making mining more challenging and costly. 

Nobody wants a mine in their backyard

Mining companies are not very popular, because of the environmental impact. In leading copper mining countries like Chile and Peru, mining firms are facing political unrest and disagreements over taxes. In August 2022, mining CEOs warned during investor calls that Chile must reduce a proposed tax increase on copper production or risk losing investments. 

India needs to focus on ramping up its sources of copper, as the metal becomes central in the clean energy transition. As we already saw with Covid-era semiconductor shortages, supply chain issues can significantly impact manufacturing plans. The looming shortage of copper is no small problem. Countries like the US and China are proactively securing copper imports, and India must do the same. 

Screener: Outperformers of Q4, which beat estimates and are on the rise

In this edition, we look at a screener of stocks that have outperformed the Nifty 50 over the past week. These stocks have also seen a rise in operating profits, while beating Trendlyne's forecaster estimates for revenue or net profit in Q4FY23.

The screener includes stocks from the automobiles & auto components, oil & gas, banking & finance and hotels, restaurants & tourism sectors. Major stocks that show up in the screener are Bajaj Auto, Indian Hotels, Sona BLW Precision Forgings, IndiaMART InterMESH, KEI Industries and AU Small Finance Bank.

Bajaj Auto surpassed Forecaster’s revenue estimates by 5.2%, with a revenue of Rs 9,192.7 crore in Q4. The auto company saw a 21.8% YoY improvement in its operating profit, and increased its operating profit margin by 150 bps YoY to 18.5%. The stock rose 2.7% over the past week, outperforming the Nifty 50 index by 150 bps.

Indian Hotels’ revenue grew by 73.3% YoY to Rs 1,654.5 crore in Q4FY23, beating Forecaster estimates by 4.2%. The hotel company’s operating profit increased by an impressive 236.8% YoY, and the operating profit margin surged by 14.7 percentage points YoY to 32.9%. The stock rose 9.1% over the past week.

Sona BLW Precision Forgings saw its revenue increase by 32.6% YoY to Rs 748.5 crore in Q4FY23, beating estimates by 2.7%. The company’s operating profit grew by 48.8% YoY, helping its operating profit margin rise 246 bps YoY to 27.1% during the quarter. "I hope I never get tired of saying this," CEO Vivek Vikram Singh said, "but this was our best quarter ever, and our best financial year ever." The stock rose by 8.3% over the past week.

You can find more screeners here.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
10 May 2023
Market closes higher, BofA Securities maintains 'Neutral' rating on Zomato

Trendlyne Analysis

Nifty 50 closed at 18,315.10 (49.2, 0.3%), BSE Sensex closed at 61,940.20 (178.9, 0.3%) while the broader Nifty 500 closed at 15,466.05 (45.5, 0.3%). Of the 1,955 stocks traded today, 1,029 were in the positive territory and 868 were negative.

Indian indices maintained their gains from the afternoon session and closed in the green. The Nifty 50 rose nearly 50 points and closed above the key 18,300 mark. The volatility index, India VIX rose above 13 at close.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the green following the benchmark index. Nifty Media and Nifty Realty closed higher than Tuesday’s closing levels. Nifty IT closed lower, tailing the tech-heavy Nasdaq 100 closing in the red on Tuesday. According to Trendlyne’s sector dashboard, media was the top-performing sector of the day as it rose over 2%.

Most European indices traded in the red, tailing the US indices futures, which are trading lower than Tuesday’s closing levels. US President Joe Biden and Republican House Speaker Kevin McCarthy met on Tuesday to discuss raising the debt ceiling, which is essential to prevent the economy from defaulting on its debt. However, they have yet to reach an agreement.

  • Relative strength index (RSI) indicates that stocks like Apollo Tyres, Indian Hotels, InterGlobe Aviation and Syngene International are in the overbought zone.

  • Tata Motors touches a 52-week high of Rs 512.9 ahead of its Q4FY23 results on Friday. Reports suggest that the company is likely to report an improved performance as total wholesales for Jaguar Land Rover have seen a steady recovery. Trendlyne’s Forecaster expects a 16% QoQ rise in net profit for the company in Q4.

  • Deepak Nitrite, Aditya Birla Capital and Eicher Motors are rising ahead of their Q4FY23 results tomorrow.

  • Latent View Analytics falls over 10% in trade today as the company’s Q4FY23 net profit decreases 34.8% QoQ to Rs 34.2 crore. The company features in a screener of companies with declining net profits and profit margins (QoQ).

  • Amit Jatia, Vice-Chairman of Westlife Foodworld, says that the company targets sales growth of 7-9% moving forward. He expects the company’s margins to improve above 17% in FY24.

  • Sanofi India's board approves the demerger of its consumer healthcare business into a wholly-owned subsidiary, Sanofi Consumer Healthcare India, subject to the approval of its shareholders, as well as regulatory bodies such as the Securities and Exchange Board of India, BSE and NSE.

  • Varun Beverages and Equitas Small Finance Bank touch their 52-week highs of Rs 1,585 and Rs 78.95 respectively. Varun Beverage has risen 13.3% in the past month, while the latter increased by 11.55%.

  • Alkyl Amines Chemicals, Gujarat State Petronet and Balrampur Chini Mills fall 1.4%, 2.5% and 2.5% respectively over the past week, ahead of their Q4FY23 results tomorrow.

  • BofA Securities maintains its ‘Neutral’ rating on Zomato with a target price of Rs 72. The brokerage expects ONDC (Open Network For Digital Commerce), the new entrant, to be an important platform in the food delivery space.

  • IndusInd Bank, Cummins India, Petronet LNG and Sundaram Finance are trading above their second resistance or R2 level.

  • Electronic components, forest products and construction materials industries rise more than 14% in the past month.

  • Alembic Pharma receives an Establishment Inspection Report (EIR) from the US FDA for the inspection carried out at its solid-oral formulation facility at Jarod, Vadodara. The company has also started receiving ANDA approvals for this facility. Despite a flat market, the stock is trading in the green.

  • Cipla, Hindustan Petroleum and Max Financial Services’ weekly average delivery volumes rise ahead of their Q4FY23 results on Friday.

  • Amit Agarwal, the Group CFO of Raymond, says that the company’s branded apparel segment has achieved a top-line growth of 19% in Q4. He adds that the Ethnix brand is an important segment and the company targets to add 300 stores over three years. Raymond's PAT has surged 103% YoY to Rs 529 crore in Q4.

  • PSU bank stocks like Punjab National Bank, Indian Bank, Canara Bank and Bank of Baroda are falling in trade. The broader sectoral index Nifty PSU Bank is also trading in the red.

  • The expert panel set up by the Supreme Court to investigate allegations of fraud and stock manipulation by Adani Group (reported in the Hindenburg report) submitted its report to the Court yesterday. The matter is up for hearing before the Chief Justice of India, DY Chandrachud, on May 12.

  • Lupin reports a net profit of Rs 235.96 crore in Q4FY23, as against a loss of Rs 517.98 crore in Q4FY22. Its revenue rises 14.6% YoY. The company attributes the profit to a fall in deferred tax expenses. It shows up in a screener for stocks with low debt.

  • Castrol India is falling after reporting a decline in net profit by 11.3% YoY to Rs 202.5 crore in Q4FY23. Input costs rise 12% YoY, while revenue increases 4.7%. Managing Director Sandeep Sangwan says that the company’s Q4 performance has been impacted due to high inflation, input costs and fluctuating forex. The company expects forex fluctuations to continue in 2023.

  • B Thiagarajan, Managing Director of Blue Star, says the company aims to increase the company's market share from the current 13.5% to 15% by FY25. He adds that the company targets a margin of 8-8.5% in the RAC (room air-conditioning) category.

  • Godrej Agrovet is falling as its Q4FY23 net profit declines 74.6% YoY to Rs 31 crore, while its revenue drops marginally by 1.2%. Commenting on profits, Managing Director BS Yadav says, "Consolidated profitability was adversely impacted mainly due to a drop in operating margins of crop protection, animal feed and dairy businesses."

  • JSW Steel's crude steel production in April grows 7% YoY to 17.77 lakh tonnes. Production of rolled flat products increases 16% YoY, while rolled long products fall 9%.

  • JP Morgan maintains its ‘Overweight’ rating on Mahanagr Gas with a target price of Rs 1,240. The brokerage says the company’s Q4 results beat estimates on the back of high margins, and adds that the volume growth remains strong.

  • BNP Paribas Arbitrage buys a 0.6% stake in Manappuram Finance in a bulk deal on Tuesday.

  • Birla Corporation’s Q4FY23 net profit falls 24% YoY to Rs 84.9 crore due to increased expenses, with total expenses rising 13% because of high power, fuel and transport costs. Revenue surges 8.8% YoY in Q4 on rising sales volumes despite sluggish demand in key markets. The stock ranks high on the Trendlyne checklist score.

  • Apollo Tyres' Q4FY23 net profit surges 3.7X YoY to Rs 427.4 crore on lower input cost which fell 11.2%. Revenue rises 12% YoY on strong vehicle wholesales and price hikes taken by tyre companies in Q4. Sales have improved across the Asia Pacific, Middle East & Africa (APMEA) and Europe markets. The company declares a final dividend of Rs 4 per share for FY23.

Riding High:

Largecap and midcap gainers today include Varun Beverages Ltd. (1,606.40, 6.71%), Sona BLW Precision Forgings Ltd. (539.40, 3.39%) and Samvardhana Motherson International Ltd. (78.30, 3.16%).

Downers:

Largecap and midcap losers today include Punjab National Bank (48.50, -3.48%), Aditya Birla Fashion and Retail Ltd. (198.95, -2.74%) and Abbott India Ltd. (21,391.00, -2.45%).

Volume Shockers

29 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included EPL Ltd. (191.80, 11.38%), TV18 Broadcast Ltd. (32.75, 8.99%) and Cyient Ltd. (1,257.35, 8.13%).

Top high volume losers on BSE were Latent View Analytics Ltd. (335.20, -10.19%), Aarti Industries Ltd. (507.25, -8.96%) and Rain Industries Ltd. (149.75, -4.50%).

Sanofi India Ltd. (5,700.45, 2.29%) was trading at 13.6 times of weekly average. Godrej Industries Ltd. (466.20, 4.95%) and Jubilant Pharmova Ltd. (342.25, 5.68%) were trading with volumes 9.4 and 8.9 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

18 stocks took off, crossing 52-week highs, while 1 stock hit its 52-week lows.

Stocks touching their year highs included - Aurobindo Pharma Ltd. (618.80, 0.76%), Bharat Petroleum Corporation Ltd. (372.15, 1.39%) and Cyient Ltd. (1,257.35, 8.13%).

Stock making new 52 weeks lows included - Aditya Birla Fashion and Retail Ltd. (198.95, -2.74%).

18 stocks climbed above their 200 day SMA including Jubilant Pharmova Ltd. (342.25, 5.68%) and Vardhman Textiles Ltd. (328.95, 4.00%). 11 stocks slipped below their 200 SMA including Latent View Analytics Ltd. (335.20, -10.19%) and ITI Ltd. (104.45, -2.06%).