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The Baseline
09 Jun 2023
Five Interesting Stocks Today
  1. Hindustan Aeronautics (HAL): This defence company has risen 21.5% over the past week till Friday, marking an uptrend for six consecutive sessions. The company also shows up in a screener for stocks with strong momentum. This follows reports of an upcoming agreement between HAL and General Electric to co-produce the new F414-INS6 jet engine in India, which will be used in the Tejas Mark-2 fighter jet. 

According to reports, a similar deal was proposed between the two companies in 2012, but it failed to materialise as the Indian government was not satisfied with the level of transfer of technology (ToT) being offered. However, this time, the ToT and the use of local components are expected to cross 60%, as per ICICI Securities.

In Q4FY23, HAL’s standalone revenue grew 8.1% YoY, while its net profit fell by 8.4% YoY to Rs 2,841.3 crore. However, it beat Trendlyne Forecaster’s revenue and net profit estimates by 3.5% and 32% respectively.  

The company’s order book at the end of FY23 stood at Rs 81,800 crore, including manufacturing orders worth Rs 60,500 crore. For FY24, the management maintains its revenue guidance of 8-9%, while Forecaster estimates the firm’s standalone revenue to grow by 6.8%. The management expects double-digit revenue growth in FY25, driven by its manufacturing segment and the execution of aircraft and fighter jet orders. 

ICICI Direct foresees growth driven by the manufacturing and repair segments from FY25 onwards. The firm also expects to bag an order worth Rs 12,000 crore from the Indian Air Force for the production of 12 Sukhoi-30 MKI fighter jets in FY25. From FY26 onwards, HAL expects revenue growth to stabilise at 12-13%. The consensus recommendation from eight analysts on the company is ‘Buy’.  

  1. Mazagon Dock Shipbuilders: This shipping company touched its all-time high of Rs 1,079.3 per share on Thursday following the signing of a memorandum of understanding (MoU) with ThyssenKrupp Marine Systems. The MoU, valued at $5.2 billion, is for the construction of six submarines for the Indian Navy. The stock has risen 30.1% over the past month, helping it appear in a screener of stocks that have risen more than 20% during the same period. As per the MoU, ThyssenKrupp will provide engineering and design expertise, while Mazagon will undertake the construction and delivery of the submarines. 

This recent rise in stock price is also supported by its Q4FY23 net profit and revenue, which exceeded Trendlyne’s Forecaster estimates by 42.2% and 17.9% respectively. This helped the company feature in a screener of stocks with increasing revenue every quarter for the past two quarters. 

The company’s order book is also on an uptrend and stands at Rs 38,755 crore as of Q4FY23. The management expects the revenue to improve by 8-10% in FY24, and they have submitted bids for construction projects of vessels worth Rs 3,000 crore for the Indian coast guard and Rs 1,000 crore from international clients.

However, ICICI Securities has maintained a ‘Sell’ rating on the stock with an unchanged target price of Rs 600. This indicates a potential downside of 42%. The brokerage believes that the company’s lack of order visibility to offset its strong revenue growth estimates calls for an unfavourable risk-reward at the current market price. However, market sentiment for defence stocks has been positive over the past week on the back of talks between India and the US regarding the co-production of jet engines, long-range artillery, and infantry vehicles.

  1. Suzlon Energy: This heavy electric equipment company has risen 25.6% in the past week till Friday, outperforming the Nifty 500 by 24.6%. This is despite a 7% decline on Thursday after rising for three consecutive sessions. The sharp variation in price and volume has led to Suzlon being placed under the Additional Surveillance Measure (ASM Stage 1) by the BSE. 

The recent share price appreciation could be attributed to its strong Q4FY23 results and large new orders. In Q4, the company posted a net profit of Rs 279.9 crore, compared to a net loss of Rs 204.3 crore in Q4FY22. The energy provider has also reduced its net debt by 80% YoY to Rs 1,800 crore and is trying to monetize its non-core assets to further reduce the debt.

In the post-results earnings call, JP Chalasani, the Group CEO, stated that the company's cumulative orders of 1,542 MW (as on May 30, 2023) are the highest since 2019. Suzlon Energy’s robust order book is driven by its new turbine named S144, which delivers 40-43% higher energy generation compared to the earlier S120. 

The firm ranks medium on Trendlyne’s Checklist score and is in the PE Buy Zone as its current PE is lower than its historical PE ratios. 

  1. Ajanta Pharma: Thispharmaceutical firm derives 72% of its revenue from branded generics. The stockrose 9.8% last week and touched a 52-week high, backed by a turnaround in performance. The firm’sQ4FY23 earnings have shown a revenue growth of 1.9% and EBIDTA margin contraction of 681 bps YoY. The slowdown in emerging markets like Asia and Africa drove the firm's muted performance. Factors such as strikes in France, supply chain issues, lack of funds in non-profit institutions, forex losses, and higher employee costs have impacted the top line.  However, the US and India segments reported a 17% YoY increase, with the US growth being driven by stabilised prices of branded drugs and moderation in freight costs.

As raw material costs  ease, the management expects gross margins for FY24 to expand to 74-75% from the current level of 72%. They also anticipate the EBITDA to return to historical levels of 24% from the current 17%. The increase in freight costs had a significant impact of almost 200 bps in FY23. Normalization of freight costs, moderation in drug prices in the US, and lower  employee and input costs are expected to drive margin expansion in FY24. The firm is optimistic about achieving a 13-15% growth in its branded generics business. The stock shows up in a screener for stocks with prices above short, medium and long-term moving averages.

The firm has a capex outlay plan of Rs 200 crore for FY25, compared to Rs 160 crore in FY23. It also has plans to launch five products and submit 6-8 abbreviated new drug applications (ANDA) in FY24.  

Motilal Oswal says that with headwinds of FY23 easing out for Ajanta Pharma, the firm is likely to see 10.4% and 18.1% growth in revenue and profits respectively. The brokerage maintains its ‘Buy’ rating on the company.

  1. Torrent Power: This electric utility service provider has been on the rise for five consecutive days, with its  stock price increasing by 23.3% since the beginning of June. As a result, the company features in a screener for stocks that have gained more than 20% in one month. The price surge comes after the company’s impressive financial performance in Q4FY23, reporting a net profit of Rs 449.1 crore compared to a loss of Rs 488 crore in Q4FY22. Its revenue also grew by 59.7% YoY to Rs 6,133.7 crore. It shows up in a screener for stocks with growth in quarterly net profit and increasing profit margin. 

Samir Mehta, Chairman of Torrent Power, says that the company has successfully integrated five acquisitions and licensed distribution businesses in Daman & Diu and Dadra Nagar Haveli. According to the management, the rise in revenue can be attributed to consistent performance in the distribution business, achieved by reducing losses, meeting the growing electricity demand, and improved operations in the Union Territory.

Geojit Financial Services has given an ‘Accumulate’ rating to Torrent Power on the back of increased productivity in distribution businesses and its ambition to boost the top line. The brokerage expects a 28% rise in renewable capacity and projects an ROE of 16% in FY25.

Torrent Power also hit its all-time high of Rs 748.9 on Thursday. The stock price surged on Wednesday and Thursday as the company signed a memorandum of understanding with the Government of Maharashtra for the development of three pumped storage hydro projects of 5,700 MW capacity. The projects are expected to require an investment of about Rs 27,000 crore. 

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

 
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Trendlyne Marketwatch
09 Jun 2023
Market closes lower, HDFC Sec downgrades rating on Hero MotoCorp to ‘Reduce’ from ‘Buy’

Trendlyne Analysis

Nifty 50 closed at 18,563.40 (-71.2, -0.4%) , BSE Sensex closed at 62,625.63 (-223.0, -0.4%) while the broader Nifty 500 closed at 15,877.40 (-43.7, -0.3%). Of the 1,969 stocks traded today, 874 were in the positive territory and 1,031 were negative.

Indian indices extended their losses from the afternoon session and closed in the red, with the Nifty 50 closing below the 18,600 mark. However, the benchmark Nifty 50 index ended the week marginally higher and is just around 1.7% away from its all-time high. The volatility index, Nifty VIX, fell over 1% and closed just above the 11% mark.

Nifty Smallcap 100 and Nifty Midcap 100 closed flat, despite the benchmark index closing in the red. Nifty FMCG and Nifty Pharma closed lower than Thursday’s close. According to Trendlyne’s sector dashboard, Hardware Technology & Equipment was the top-performing sector of the week.

Major Asian indices closed in the green, except for India’s BSE Sensex, which closed lower. European stocks traded mixed after opening lower, in line with US indices futures. Brent crude oil futures traded in the green after falling over 1.6% on Thursday.

  • India Cements sees a long buildup in its June 29 future series as its open interest rises 15.2% with a put-call ratio of 0.76.

  • Medplus Health Services falls more than 3% and ranks low on Trendlyne's checklist with a score of 35%. The stock is in the 'Sell' zone and appears in a screener with declining RoCE.

  • Foreign institutional investors invest Rs 2,685.7 crore in the equity market over the past week, according to Trendlyne's FII dashboard. Meanwhile, index options witness the highest outflow of Rs 13,817.8 crore from foreign investors.

  • Motilal Oswal maintains its ‘Buy’ rating on Tata Motors with a target price of Rs 650, implying an upside of 15.8%. The brokerage believes the company will benefit from the commercial vehicle upcycle, while its passenger vehicle segment will witness stable growth due to the easing of supply-side issues and falling commodity prices. It also expects a significant improvement in cash flows, which will lead to debt reduction.

  • KPR Mill and Max Healthcare Institute touch their 52-week highs of Rs 639 and Rs 577.4 respectively. KPR Mill has risen 8.8% in the past month, while the other increased by 18.5%.

  • Hardware technology & equipment, general industrials and telecommunications equipment sectors rise more than 5% in the past week.

  • HDFC Life Insurance Co, Apollo Hospitals Enterprise, Nestle India and Titan Co’s TTM price-to-earnings ratios trade above those of their respective industries.

  • Five Star Business Finance is rising as CareEdge Ratings upgrades its rating from 'A+ Stable' to 'AA- Stable', according to reports. The rating agency attributes the upgrade to the company's increased market capitalization and growth in the gross loan portfolio.

  • HDFC Securities downgrades its rating on Hero MotoCorp to ‘Reduce’ from ‘Buy’ and lowers the target price to Rs 2,512 from Rs 2,959. This implies a downside of 14.2%. The brokerage believes the shift in motorcycle demand towards 125cc from the 100cc segment will hurt the company, given that the 100cc segment contributes 78% of its volumes. It also adds that the firm’s significant loss of market share in the 125cc segment makes matters worse.

  • Biocon rises as its Bengaluru-based active pharmaceutical ingredient (API) factory receives good manufacturing practice (GMP) compliance approval from the competent authority of Germany after inspections. The stock appears in a screener for stocks with upgraded broker recommendations.

  • Bank of Maharashtra, HDFC Life Insurance Company, Voltas and ICICI Lombard General Insurance Company are trading below their third support or S3 levels.

  • Mutual Funds' net inflow declines 52.5% MoM to Rs 57,420 crore in May from Rs 1.21 lakh crore in April, according to data released by the Association of Mutual Funds in India (AMFI).

  • Aether Industries touches a new 52-week high today after signing a licensing deal with Saudi Aramco Industries for the commercialization of Converge polyols technology. The company is targeting a market of 850,000 MT per year with a CAGR of 5% for these novel polyols. It appears in a screener for stocks with strong quarterly growth in recent results.

  • PSU banks like Bank of Maharashtra, Punjab & Sind Bank, UCO Bank, State Bank of India and Bank of Barodaare falling in trade. Barring Indian Bank, all constituents of the broader sectoral index, Nifty PSU Bank, are also trading in the red.

  • Visa restrictions and investment clearance issues for Chinese nationals and firms are affecting Indian businesses. Dixon Technologies' proposed Rs 400 crore refrigerator manufacturing unit has also been impacted. Atul Lall, the company's MD, emphasizes the need for government support in clearing visas for Chinese engineers, particularly for production-linked incentive (PLI) holders.

  • Avenue Supermarts is rising as Motilal Oswal Securities upgrades its rating on the stock to a ‘Buy’ from ‘Neutral’ earlier and increases the target price to Rs 4,200. The brokerage expects a recovery in the company’s same-store sales growth (SSSG) due to easing inflation. It says robust store additions and a reduction in raw material costs could aid SSSG.

  • Sugar stocks like Shree Renuka Sugars, EID Parry (India), Balrampur Chini Mills, Bannari Amman Sugars and Dalmia Bharat Sugar and Industries are rising in trade. The broader sugar industry is also trading in the green.

  • Indian Energy Exchange (IEX) is falling as the Power Ministry reportedly orders the Central Electricity Regulatory Commission (CERC) to implement ‘market coupling’ for spot power trading. This could reduce IEX's trading volumes, impacting its market share. SN Goel, Chairman and MD of IEX, says CERC will initiate a stakeholder consultation before the implementation process.

  • Macquarie downgrades its rating on HDFC Life, ICICI Prudential Life and SBI Life to 'Neutral' from 'Outperform' and also cuts the target price over concerns regarding long-term growth prospects and emerging regulatory risks.

  • HAL touches a new 52-week high today following reports of an upcoming board meeting on June 27 to discuss and approve a proposal for the sub-division of equity shares of the company. It appears in a screener for stocks with strong momentum.

  • GAILis rising as it emerges as the successful bidder in the resolution process of JBF Petrochemicals, investing a total of Rs 2,101 crore. This acquisition adds purified terephthalic acid to its existing petrochemical portfolio. The stock appears in a screener for companies with low debt.

  • Canada Pension Fund sells 1.7% equity (3.4 crore shares) amounting to Rs 6,336 crore in Kotak Mahindra Bank in a large trade today, according to reports.

  • IRB Infrastructure rises as its monthly toll collection increases 19.7% YoY to Rs 411 crore. The increase in toll revenue is driven by IRB's Madhya Pradesh expressway and Kishangarh Gulabpura tollways. It appears in a screener of stocks with growing quarterly revenue.

  • Ashish Kacholia sells a 0.78% stake in United Drilling Tools for approx Rs 3 crore in a bulk deal on Thursday.

  • Greenlam Industries rises as its subsidiary, HG Industries, begins commercial production at one of its greenfield projects. The project has the potential to generate an annual revenue of Rs 400 crore when operating at full capacity. The estimated capex for the project amounts to Rs 130 crore.

  • Tata Power’s arm, TP Vardhaman Surya, inks a pact with Tata Steel to set up a 966 MW hybrid renewable power project. The project will include 379 MW of solar power and 587 MW of wind power. It is expected to be commissioned by June 1, 2025. The company shows up in a screener for stocks with book value per share improving over the past two years.

Riding High:

Largecap and midcap gainers today include Hindustan Aeronautics Ltd. (3,732.90, 5.83%), One97 Communications Ltd. (814.30, 5.48%) and Tata Communications Ltd. (1,469.75, 3.92%).

Downers:

Largecap and midcap losers today include ICICI Prudential Life Insurance Company Ltd. (495.05, -3.46%), Voltas Ltd. (777.95, -3.35%) and SRF Ltd. (2,429.70, -3.35%).

Volume Shockers

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

Top high volume gainers on BSE included India Cements Ltd. (230.35, 6.97%), Sonata Software Ltd. (1,032.85, 3.85%) and Just Dial Ltd. (751.00, 3.77%).

Top high volume losers on BSE were Indian Energy Exchange Ltd. (122.60, -10.15%), Bank of Maharashtra (28.35, -6.59%) and Clean Science & Technology Ltd. (1,377.15, -2.07%).

Five-Star Business Finance Ltd. (593.40, 1.79%) was trading at 6.9 times of weekly average. Poly Medicure Ltd. (986.90, -0.62%) and Balrampur Chini Mills Ltd. (404.70, 2.31%) were trading with volumes 5.4 and 5.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

30 stocks made 52 week highs, while 3 stocks hit their 52 week lows.

Stocks touching their year highs included - AIA Engineering Ltd. (3,223.20, 3.21%), Apollo Tyres Ltd. (405.30, 2.30%) and Astral Ltd. (1987.85, 1.84%).

Stocks making new 52 weeks lows included - V-Mart Retail Ltd. (1,990.00, -0.94%) and Indian Energy Exchange Ltd. (122.60, -10.15%).

9 stocks climbed above their 200 day SMA including India Cements Ltd. (230.35, 6.97%) and HFCL Ltd. (70.15, 1.89%). 14 stocks slipped below their 200 SMA including Indian Energy Exchange Ltd. (122.60, -10.15%) and HDFC Asset Management Company Ltd. (1,934.25, -2.98%).

 
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Trendlyne Marketwatch
08 Jun 2023
Market closes lower, IKIO Lighting’s IPO gets bids for 66.3X the available shares on offer

Trendlyne Analysis

Nifty 50 closed at 18,634.55 (-91.9, -0.5%), BSE Sensex closed at 62,848.64 (-294.3, -0.5%) while the broader Nifty 500 closed at 15,921.05 (-85.7, -0.5%). Of the 1,982 stocks traded today, 677 were on the uptrend, and 1,264 went down.

Indian indices extend the losses from afternoon session and close in the red, with Nifty 50 hovering below 18,700 mark. The volatility index, Nifty VIX, drops below 12 at the close. RBI in its policy meet has kept the interest rate unchanged. RBI guided CPI inflation at 5.1% and GDP growth at 6.5% for FY24.  

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Energy closed higher than Wednesday’s closing levels. All other major sectoral indices closed lower. According to Trendlyne’s sector dashboard, metals and mining emerged as the top-performing sector of the day with a rise of over 0.2%. 

Most European indices trade higher except for UK’s FTSE 100 trading in the red. US indices futures trade flat as investors are gauging the impact of the Bank of Canada’s rate hike decision on the US Fed policy meeting.

  • Relative strength index (RSI) indicates that stocks like Birla Corp, IDFC, Suzlon Energy and Torrent Powerare in the overbought zone.

  • Supreme Industries and Cholamandalam Investment & Finance touch their all-time highs of Rs 2,890 and Rs 1,081.7 per share, respectively. The former has risen 2.8% over the past month, while the latter grew by 7.2% over the same period.

  • One97 Communications (Paytm) rises over 6% in trade as BofA Securities upgrades its rating on the company to 'Buy' and revises the target price to Rs 885. The brokerage is optimistic about the company's potential for positive operational leverage. It adds that Paytm enjoys a favourable position due to limited competition.

  • Housing and Urban Development Corporation falls more than 3% and ranks low on Trendlyne's checklist with a score of 35%. The stock is in the 'Strong Sell' zone and appears in a screener with low Piotroski score.

  • Zydus Lifesciences receives the final approval from the US Food and Drug Administration for the oral suspension of esomeprazole magnesium, which is used to treat acid reflux and ulcers. The company will manufacture the product at its facility in Ahmedabad, Gujarat. As of April 2023, the drug has recorded annual sales of $42 million.

  • IKIO Lighting’s Rs 607 crore IPO gets bids for 66.3X the available 1.5 crore shares on offer on the third day of bidding. The retail investor quota gets bids for 13.9X of the available 76.9 lakh shares on offer.

  • Realty stocks like DLF, Macrotech Developers, Brigade Enterprises and Oberoi Realty are falling in trade. The broader sectoral indices, Nifty Realty and BSE Realty, are also trading in the red.

  • Mazagon Dock Shipbuilders touches its all-time high of Rs 1,079.3 per share as it signs a memorandum of understanding (MoU) with ThyssenKrupp Marine Systems for the construction of submarines. Under the MoU, ThyssenKrupp will provide engineering and design expertise, while Mazagon will undertake the construction and delivery of the submarines.

  • Hatsun Agro Products is rising as its board schedules a meeting on July 5 to discuss the sale of the company's windmill division. The proposed sale will involve the transfer of all assets and liabilities through a slump sale arrangement. It appears in a screener of stocks with zero promoter pledges.

  • Nomura maintains its ‘Buy’ rating on Tata Motors with a target price of Rs 610. The brokerage believes the company can gain market share in the passenger vehicles (PV) segment on the back of new launches.

  • Realty stocks like DLF, Macrotech Developers, Brigade Enterprises and Oberoi Realty are falling in trade. The broader sectoral indices Nifty Realty and BSE Realty are also trading in the red.

  • Inox Wind rises as it receives a turnkey order for a 100 MW wind energy plant from ABEnergia Renewables. The order includes the supply and installation of 3.3 MW turbines and is scheduled to be completed by 2024 at the Dayapar site in Kutch, Gujarat.

  • Aether Industries is rising as it signs a Letter of Intent with a US-based oil field services company to establish a strategic supplier and contract manufacturing partnership. Aether will supply four key products to the US-based company's global energy and oil & gas locations, including a significant supply within India. It appears in a screener of stocks with no debt.

  • Motilal Oswal maintains its ‘Buy’ rating on Trent with a target price of Rs 1,835, implying an upside of 15.4%. The brokerage believes the company is poised for healthy growth given its aggressive store additions, strong productivity and Zudio’s strong brand value. It expects the firm’s revenue to grow at a CAGR of 28.9% over FY23-25.

  • The Organization for Economic Co-operation and Development (OECD) marginally raises its FY24 GDP growth forecast for India to 6% from the earlier estimate of 5.9%. OECD believes that moderating inflation and easing monetary policy in H2FY24 could lead to an improvement in discretionary household spending.

  • IT stocks like Persistent Systems, LTIMindtree and L&T Technology Services are falling in trade. All constituents of the broader Nifty IT index are also trading in the red.

  • Lakshmi Machine Works, Cera Sanitaryware, Tata Elxsi, One97 Communications and Aether Industries are trading above their third resistance or R3 levels.

  • Utilities stocks like KPI Green Energy, Torrent Power, NTPC, RattanIndia Power and Reliance Infrastructure are rising in trade. The broader sectoral index of S&P BSE Utilities is also trading in the green.

  • RBI projects India's GDP to grow at a rate of 6.5% in FY24. It also revises the CPI inflation estimate for FY24 to 5.1%, from the earlier 5.2%.

  • Promoters of MTAR Technologies, including D Anitha Reddy, Usha Reddy Chigarapalli, Kavitha Reddy Gangapatnam and K Vamshidhar Reddy, sell a total of 5.32% stake in the company on Monday.

  • Tata Elxsi rises as it partners with the Indian Space Research Organization (ISRO) for the Gaganyaan Mission. The company has designed and developed the crew module recovery models (CMRM) for space mission training. It appears in a screener for stocks with strong quarterly growth.

  • Ashish Kacholia sells a 0.55% stake in D-Link (India) for approx Rs 4.5 crore in a bulk deal on Wednesday.

  • The Reserve Bank of India (RBI) decides to keep the policy repo rate unchanged at 6.5% during the Monetary Policy Committee (MPC) meeting.

  • Zen Technologies rises as it receives an order worth Rs 202 crore from the Ministry of Defence. The company provides military training and anti-drone solutions.

  • Gati rises more than 6% as its volume for surface and air express improves marginally by 1% YoY to 98 kt (thousand tonnes) over the month. The company experiences robust growth in the west zone, driven by the recent opening of a superhub in Bhiwandi.

  • Tech Mahindra is rising as Life Insurance of Indiaincreases its stake in the company by 2% from November 2022 to May 2023, acquiring shares at Rs 1,050.7 per share. The insurance company now holds an 8.9% stake in the IT company.

Riding High:

Largecap and midcap gainers today include One97 Communications Ltd. (772.00, 6.19%), YES Bank Ltd. (16.75, 3.72%) and Dixon Technologies (India) Ltd. (4,067.40, 3.69%).

Downers:

Largecap and midcap losers today include Varun Beverages Ltd. (1,581.85, -3.99%), Vodafone Idea Ltd. (7.35, -3.92%) and Hindustan Petroleum Corporation Ltd. (265.90, -3.89%).

Volume Rockets

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

Top high volume gainers on BSE included Tata Teleservices (Maharashtra) Ltd. (78.40, 14.70%), One97 Communications Ltd. (772.00, 6.19%) and Alembic Pharmaceuticals Ltd. (590.95, 5.94%).

Top high volume losers on BSE were Indian Energy Exchange Ltd. (136.45, -8.24%), Torrent Power Ltd. (667.70, -2.92%) and Tata Communications Ltd. (1,414.25, -2.21%).

Hatsun Agro Products Ltd. (932.75, 5.44%) was trading at 25.0 times of weekly average. Alok Industries Ltd. (14.40, 5.11%) and Cera Sanitaryware Ltd. (7,977.50, 3.04%) were trading with volumes 7.8 and 6.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

41 stocks took off, crossing 52-week highs,

Stocks touching their year highs included - Ajanta Pharma Ltd. (1,470.00, 1.39%), Apollo Tyres Ltd. (396.20, 0.49%) and Aurobindo Pharma Ltd. (668.50, -0.52%).

18 stocks climbed above their 200 day SMA including Alembic Pharmaceuticals Ltd. (590.95, 5.94%) and Hatsun Agro Products Ltd. (932.75, 5.44%). 9 stocks slipped below their 200 SMA including Indian Energy Exchange Ltd. (136.45, -8.24%) and Nippon Life India Asset Management Ltd. (250.15, -2.49%).

 
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The Baseline
08 Jun 2023
Indian equities a bright spot for global investors | Stocks FIIs are buying and selling
By Shreesh Biradar

When the bulls arrive, it sometimes becomes a stampede. And this time India is at the center. The Nifty 50 benchmark index closed on Wednesday above the 18,700 mark, less than 1% away from its all-time high of 18,887.6. Morgan Stanley predicts that the Sensex will hit 68,500 by December, 10% higher than where it is now.

So 2023 is turning out to be an interesting year for the India story. The country is building closer ties with the US and Europe, and PM Modi is meeting Joe Biden in Washington on June 21 to finalize a defense partnership. The writer Fareed Zakaria put it well when he said last week, "India is becoming a master of its own destiny for the first time in a very long while."

How has this happened? India is coming to the forefront as the global economy battles a slowdown. India is the only large Asian economy that is growing at a fast pace, and analysts give it a 'zero chance' of recession.

In FY23, India achieved a GDP growth rate of7.2%, surpassing China's 3% in 2022. India’s CPI inflation dropped to 4.7% in April, one of the lowest among emerging markets, trailing behind only Brazil (4.18%) and China (0.1%).

For many years, China has been the brightest star in Asia's sky, outshining the rest. But its slowing economy and abrupt policy changes under Xi Jinping have hurt investor sentiment. South Korea, Japan and India are emerging as new investment hotspots. India in particular, has become a promising alternative to China, and the world is counting on it to drive global growth.

In this week’s Analyticks:

  • India: A bright spot in global equity markets?
  • Screener: Big changes up or down in FII holding

Let’s get into it.

Taming inflation is key to economic growth

The flow of money into and out of equity markets is typically decided by inflation and interest rates. These two numbers have not been very pretty for the EU and the US.

The Eurozone CPI for April was at 7%, while the US recorded 5%. India's inflation, on the other hand, stood at 4.7% during the same month, and has been falling at a faster pace.

Developed economies have also increased interest rates by more than 4% over the past 12 months, while the Reserve Bank of India (RBI) raised rates only by 2.5%.

Not so cool anymore: the declining appeal of China

According to the IMF, India and China have accounted for half of global growth in 2023. However, China’s growth rate isprojected to slow to 5.2% over the year, and 4.5% in 2024, marking a significant deceleration compared to its impressive 9% CAGR growth from 1989 to 2022.New changes to China’s counter-espionage law, granting extra powers to state agencies to investigate foreign businesses, have also raised concerns among foreign investors. 

China’s worsening relationship with developed nations is putting pressure on its growth story. The US has stepped up restrictions on a long list of Chinese companies, including gaming and entertainment apps, server makers, and chip manufacturers.  Europe is reviewing products from Chinese giants like Huawei and ZTE. As a result, investments into China have slowed down, with a 40% decline inFDI from the USbetween 2020 and 2022. In the same period, FDI inflows from Europe to China dipped by 19.7%. 

India's equity markets stand out in an uncertain global economy

India has shown remarkable resilience in the face of global uncertainties by shielding its economy from inflation, banking crises and crude oil shocks (through Russian oil imports). The IMF predicts a GDP growth rate of 5.9% for India in FY24, while the RBI puts it at 6.4%. 

In May, India's manufacturing PMI reached a 31-month high of 58.7, while China, the largest manufacturing hub, recorded 50.9. 

Note: A value above 50 indicates growth

India’s strong economic indicators have pushed its stock market to new highs, reclaiming its position as the fifth largest stock market with a market cap of $3.3 trillion. The Nifty PSU Bank index touched a decadal high after gaining 56% in the past year. Midcaps, which offer a blend of value and growth, have seen significant gains in market cap. The Nifty Midcap 100 saw gains of 22% in the past year, against Nifty Smallcap 100’s 14%.

Among sectoral indices, Nifty PSU Bank (59%) led the way, followed by Nifty FMCG (36%) and Nifty Auto (27%). 

The FMCG segment saw growth on account of rising rural penetration. In Q4FY23, the FMCG market grew 14.1%, with rural markets growing at 16.8% vs urban at 7.9%. The auto segment, which contributes to 49% of India’s manufacturing GDP, was driven by growth in passenger vehicles (26.7% YoY).

As of May 2023, foreign portfolio investors (FPIs) have investments to the tune of Rs 48,79,628 crore in Indian markets. Major sectors holding FPI investments are Financial Services (Rs 16,46,306 crore), Oil, Gas & Consumables (Rs 4,76,503 crore) and Information Technology (Rs 4,87,869 crore)

Japan, South Korea and India are drawing foreign investors 

Asia, excluding China and Japan, has seen a significant influx of foreign investment totaling $23 billion in 2023. Japan’s Nikkei index has gained 25.28%, while South Korea’s Kospi index rose 17.51% since the start of 2023. India has experienced more modest growth with a 2.33% gain. These three nations have outperformed China by huge margins in 2023.

Japan's economy has got a boost from positive changes in corporate governance and the Bank of Japan's move towards tighter monetary policies. Foreign inflows into Japan reached nearly $30 billion in CY23, propelling the Nikkei index to a 33-year high.

In South Korea, FII inflows have amounted to $9 billion. The boom in artificial intelligence has driven up Korea's chip manufacturing stocks, while restrictions on Chinese chip manufacturers have improved prospects for South Korean players. Korean automotive stocks have also contributed to its economic resilience through robust export performance.

Between 1990 and 2019, the annual income for an average Chinese person jumped 32 times, from $318 to $10,276. That's a tough act to follow, but as Zakaria pointed out, it is India's game to win or lose.

Screener: Big changes up or down in FII holding


As foreign institutional investors turn net buyers of equities in the Indian market, we take a look at stocks which have seen the highest change in FII holdings over the past quarter. This screener highlights stocks with big shifts (> 2% or -2%) in FII shareholdings on a QoQ basis in the most recent quarter.

It features stocks from the automobile & auto components, banking & finance and software & services sectors. Major stocks that appear in the screener are Equitas Small Finance Bank, Sona BLW Precision Forgings, Go Fashion (India), Jindal Stainless, PVR Inox, Dixon Technologies, HDFC Asset Management and RBL Bank.

Equitas Small Finance Bank witnessed its FII holding increase by 18.6 percentage points over the past quarter to 22.7%. Ellipsis Partners was the largest buyer, acquiring a 2.7% stake in the company, followed by Massachusetts Institute of Technologyand Rimco India as they bought a 2.5% and 2.1% stake, respectively, over the same period. 

Sona BLW Precision Forgings’ FII holding grew by 13.4 percentage points to 24.7% over the past quarter. This rise was aided by the Government of Singapore buying a 4.1% stake in the company. Fidelity Funds and BNP Paribas Arbitragealso bought a 1.3% stake each in the company.

On the other hand, PVR Inox witnessed the steepest fall of 10.8 percentage points in FII holdings over the past quarter. Its FII holding currently stands at 31.2%. The biggest contributors to this decline were SBI Magnum Children's Benefit Fund and Nippon Life India Trustee, as they sold a 1.2% and 1.3% stake, respectively, in the company.

You can find more popular screenershere.

 
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The Baseline
07 Jun 2023
Five analyst picks with high upside post Q4 results
By Abhiraj Panchal

This week we take a look at analyst picks with high upside, that have performed positively in Q4FY23.

  1. Mahindra & Mahindra: BOB Capital Markets maintains its ‘Buy’ rating on this cars & utility vehicles manufacturer and raises the target price to Rs 1,665 from Rs 1,496. This implies an upside of 18.4%. In Q4FY23, the company’s net profit rose 17.9% YoY to Rs 2,636.7 crore, and revenue increased by 24.8% YoY. 

Analysts Milind Raginwar and Yash Thakur attribute the healthy Q4 performance to volume growth, price hikes, a better product mix and higher realisations. They add that falling raw material prices helped increase gross margins and profitability. Overall volume growth was driven by rising passenger vehicle sales, but its farm equipment segment’s volumes were subdued. 

Raginwar and Thakur remain optimistic about the firm’s prospects on the back of increasing production capacity and new launches. They say, “New capacity and high-end launches are likely to boost M&M’s revenue even as moderating cost, a good product mix and improving realisations support margin gains and mitigate supply chain issues.” The analysts expect the company’s net profit to grow at a CAGR of 21.9% over FY23-25. 

  1. Tata Consumer Products: KRChoksey maintains its ‘Buy’ rating on this packaged foods manufacturer with a target price of Rs 964. This implies an upside of 22.7%. In Q4FY23, the company’s net profit grew 23.5% YoY to Rs 268.6 crore, while its revenue rose 14% YoY.

Analyst Abhishek Agarwal believes that the company successfully offset volume pressures in  Q4 through stronger distribution, new product launches, and cost efficiencies. He adds that modern trade and e-commerce have also contributed to growth. The analyst sees the company’s focus on improving distribution as a key positive, as it will drive future growth. He says, “During FY23, the firm increased its direct distribution by 15%, allowing it to take its portfolio to a larger outlet universe with more impact.”

The company is also increasing its expenditure on research and development, with a focus on innovation and new products. The analyst expects the firm’s net profit to grow at a CAGR of 17.5% over FY23-25.  

  1. TCI Express: Sharekhan retains its ‘Buy’ call on this logistics services provider with a target price of Rs 2,070, indicating an upside of 27.2%. The company’s profit in Q4FY23  grew by 7% YoY to Rs 38.5 crore, while its revenue increased by 9.2% YoY.  Analysts at Sharekhan believe that profits have been better than expected, led by higher utilisation and demand from corporate and SME customers.

The analysts say, “TCI Express has been affected by a sluggish macro environment during H2FY23, although it performed well vis-à-vis industry peers.” They expect the company to continue its revenue growth and margin expansion over the next two years as the domestic economy revives. They believe that expansion in terms of new centres, automation of existing centres, addition of new branches and scale-up of new businesses will contribute to a net earnings growth of over 20% CAGR in FY24-25.

The analysts also remain positive on the back of TCI’s strong balance sheet, healthy cash flows and high return ratios. 

  1. KNR Constructions: HDFC Securities maintains its 'Buy' rating on this construction and engineering company with a target price of Rs 318, indicating an upside of 30.8%. In Q4FY23, the company's net profit increased by 5.8% YoY to Rs 147.3 crore, and revenue increased by 13% YoY. Analysts at HDFC Securities believe that the company’s growth exceeded expectations across all areas. 

The analysts expect the revenue/EBITDA for the previous fiscal to guide the company towards achieving revenue of Rs 40+ billion in FY24. KNR Constructions’ order book as of March 2023 stands at Rs 88.7 billion, which is 2.3 times its revenue. They believe that the company is effectively tackling tough competition by expanding into different segments such as state highways, metro, railways, and irrigation.

The analysts further emphasise that the company maintains a strong net cash position with zero gross debt. The management has partly offset the impact of higher input costs and raw material prices by reducing employee expenses and improving overhead utilisation.

  1. Praj Industries: Axis Direct maintains its ‘Buy’ call on this construction and engineering company with a target price of Rs 500. This indicates an upside of 29.2%. In Q4FY23, the company reported a 52.8% YoY rise in net profit to Rs 88.1 crore, while its revenue increased by 21.9% YoY. According to analyst Prathamesh Sawant, the company beat analyst estimates on all fronts. 

Sawant says, “Praj Industries is now marching its footprints globally.” Due to its focus on the engineering business, providing solutions across segments that cater to a growing industry, Sawant remains confident in the company’s growth prospects.

The analyst has increased its FY24-25 EBITDA estimates to factor in higher margins from new projects, increased exports, and a decrease in raw material prices. He also believes that the management's focus on growth and an increase in service segment revenues will support better margins.

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

(You can find all analyst picks here)

 
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Trendlyne Marketwatch
07 Jun 2023
Market closes higher, IKIO Lighting’s IPO gets bids for 6.83X of the available shares on offer

Trendlyne Analysis

Nifty 50 closed at 18,726.40 (127.4, 0.7%), BSE Sensex closed at 63,142.96 (350.1, 0.6%) while the broader Nifty 500 closed at 16,006.70 (128.3, 0.8%). Of the 1,983 stocks traded today, 1,263 were in the positive territory and 667 were negative.

Indian indices extended their gains in the final hour of the trading session and closed in the green. The benchmark Nifty 50 index closed above the 18,700 mark and is under 1% away from touching its all-time high of 18,887.6 points. 

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, taking cues from the benchmark index. Nifty Metal and Nifty FMCG closed higher than Tuesday’s close. According to Trendlyne’s sector dashboard, Telecommunications Equipment was the top-performing sector of the day.

Most Major Asian indices closed flat or higher amid mixed global cues. European stocks traded flat or lower, in line with the US indices futures. Investors look ahead to the US Federal Reserve's policy meeting, scheduled next week. Analysts expect the US Fed to pause interest rates at its June meeting.

  • Money flow index (MFI) indicates that stocks like Birla Corp, IDFC First Bank, IDFC and Mazagon Dock Shipbuilders are in the overbought zone

  • HAL touches a 52-week high today following reports of an upcoming agreement with General Electric to jointly manufacture jet engines in India. It appears in a screener of stocks with no debt.

  • Can Fin Homes, Fine Organic Industries, Apar Industries, Craftsman Automation and Mahanagar Gas outperform their industries in terms of annual growth and capital returns.

  • Varun Beverages is falling as reports suggest that 10.5 lakh shares (0.23% equity) of the company, amounting to Rs 172.6 crore, change hands in a large trade.

  • IKIO Lighting’s Rs 607 crore IPO gets bids for 6.83X the available 1.5 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 5.92X of the available 76.9 lakh shares on offer.

  • Telecommunications equipment companies like ITI, HFCL, Sterlite Technologies and GTL Infrastructure are rising in trade. The broader sector of telecommunications equipment is also trading in the green.

  • Gravita India remains flat as one of its promoters Rajat Agarwal sells a 1.9% equity stake (13,00,000 shares) in the company. The deal has been done through an open market transaction at an average price of Rs 586.04. Meanwhile, Jupiter India Fund has purchased a 1.4% stake (10,00,000 shares) at an average price of Rs 585.

  • Sugar stocks like Shree Renuka Sugars, EID Parry (India), Balrampur Chini Mills and Dalmia Bharat Sugar & Industries are rising in trade. The broader sugar industry is also trading in the green.

  • Deepak Goyal, Director (Operations) and Group CFO at APL Apollo Tubes, expects the company's volumes to grow by 30% and the EBITDA per tonne to improve by 11-12% in FY24. He also highlights that the company has a strong order book under the Jal Jeevan Mission.

  • ICICI Direct maintains its 'Buy' rating on Graphite India with an upgraded target price of Rs 440 per share. This indicates a potential upside of 17%. The brokerage believes that adopting the electric arc furnace (EAF) process will help the company drive demand in the long term. It expects the company's net profit to grow at a CAGR of 93% over FY23-25.

  • Page Industries, Nestle India, Lakshmi Machine Works and Atul are trading above their second resistance or R2 levels.

  • Aster DM Healthcare rises more than 6% and ranks high on Trendlyne's checklist with a score of 63.6%. The stock has 7 buy ratings out of 9 from brokerage firms. It appears in a screener of stocks hitting a new 52-week high today.

  • ICICI Securities maintains its ‘Buy’ rating on Angel One and increases the target price to Rs 1,590 from Rs 1,575. This implies an upside of 11.2%. The brokerage remains optimistic about the company’s prospects due to its aggressive market share expansion, high retail volume share and increasing customer lifecycle value. It expects the firm’s revenue to grow at a CAGR of 15.8% over FY23-25.

  • Lakshmanan R, Senior Research Analyst at CreditSights, highlights the improved credit metrics in FY23 for several Adani companies. Adani Enterprises, Adani Power, and Adani Ports are reported to have moderate leverage levels.

  • Societe Generale buys a 0.74% stake in IFB Industries in a bulk deal for approx Rs 24 crore on Tuesday.

  • Utility stocks like RattanIndia Power, Reliance Power, Torrent Power and SJVN are rising in trade. The broader sectoral index BSE Utility is also trading in the green.

  • KPI Green Energy rises near its 52-week high as it receives a Letter of Intent from Anupam Rasayan India. The order involves the execution of a solar-wind hybrid project of 40 MW capacity (21.5 MW wind and 18.5 MW solar).

  • G R Infraprojects’ arm, GR Hasapur Badadal Highway, executes its concession agreement with the National Highways Authority of India. The agreement involves the construction of a six-lane highway worth Rs 872.2 crore in Maharashtra. The stock shows up in a screener for companies with high TTM EPS growth.

  • Jefferies maintains its 'Buy' rating on Can Fin Homes with a target price of Rs 850. The brokerage expects the company's loan growth to be around 18-20% in FY24, and EPS to grow at 18% CAGR over FY23-26.
  • Varun Beverages fixes June 15 as the record date to determine the eligible shareholders entitled to the stock split in the ratio of 1:2. The company has received approval for the split in a postal ballot on June 2, 2023.

  • Bank of Maharashtra rises in trade today as it approves the QIP issue at an issue price of Rs 28.5 per share. An aggregate of Rs 1,000 crore will be allotted to eligible institutional buyers. It appears on a screener for stocks with strong annual EPS growth.

  • The World Bank projects India's GDP to grow at 6.3% in FY24, making it the fastest-growing economy among emerging markets and developing economies.

  • Media stocks like Hathway Cable & Datacom, TV18 Broadcast, Navneet Education, Network 18 Media & Investments and Zee Entertainment Enterprises are rising in trade. All constituents of the broader sectoral index, Nifty Media, are also trading in the green.

  • R Systems International's board of directors approves the acquisition of a 100% equity stake in Pune-based IT firm Velotio Technologies for Rs 278.8 crore in cash consideration. This will strengthen the company's engineering capabilities and expertise, and expand its delivery presence in Pune, a major talent hub for product engineering in India.

  • Va Tech Wabag secures a Rs 420 crore order from CIDCO in Raigad. The order includes the design, construction and operation of a water treatment plant with a capacity of 270 million litres per day. The project aims to address the future water requirements of Navi Mumbai and is expected to be completed in 42 months.

  • Torrent Power signs an MoU with the Government of Maharashtra to develop three pumped storage hydro projects with a total capacity of 5,700 megawatts. The projects require an investment of approximately Rs 27,000 crore and will be implemented over five years. The company shows up in a screener for affordable stocks with a high RoE and momentum score.

Riding High:

Largecap and midcap gainers today include Torrent Power Ltd. (687.75, 12.34%), Vodafone Idea Ltd. (7.65, 8.51%) and Max Healthcare Institute Ltd. (559.85, 6.86%).

Downers:

Largecap and midcap losers today include Varun Beverages Ltd. (1,647.65, -2.33%), Polycab India Ltd. (3,538.05, -1.60%) and 3M India Ltd. (27,000.00, -1.54%).

Volume Shockers

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

Top high volume gainers on BSE included Suzlon Energy Ltd. (14.45, 18.44%), Torrent Power Ltd. (687.75, 12.34%) and Vodafone Idea Ltd. (7.65, 8.51%).

Top high volume losers on BSE were Wockhardt Ltd. (170.15, -3.32%), KEC International Ltd. (526.75, -1.16%) and Jamna Auto Industries Ltd. (99.90, -0.65%).

ITI Ltd. (113.55, 4.65%) was trading at 14.9 times of weekly average. Sundaram Clayton Ltd. (4,429.60, 2.46%) and Aster DM Healthcare Ltd. (284.80, 5.62%) were trading with volumes 14.1 and 9.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

57 stocks made 52-week highs,

Stocks touching their year highs included - 3M India Ltd. (27,000.00, -1.54%), AIA Engineering Ltd. (3,142.55, 0.95%) and Ajanta Pharma Ltd. (1,449.90, 2.76%).

21 stocks climbed above their 200 day SMA including Jubilant Pharmova Ltd. (352.80, 3.73%) and Manappuram Finance Ltd. (113.00, 2.82%). 5 stocks slipped below their 200 SMA including Ambuja Cements Ltd. (455.75, -0.74%) and UTI Asset Management Company Ltd. (728.50, -0.36%).

 
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Trendlyne Marketwatch
06 Jun 2023
Market closes flat, IKIO Lighting’s IPO gets bids for 155% of the available shares on offer

Trendlyne Analysis

Nifty 50 closed at 18,599.00 (5.2, 0.0%), BSE Sensex closed at 62,792.88 (5.4, 0.0%) while the broader Nifty 500 closed at 15,878.40 (18.9, 0.1%). Of the 1,977 stocks traded today, 1,062 were gainers and 845 were losers.

Indian indices recover from a day low and close flat, with the Nifty 50 hovering above the key 18,600 mark. The volatility index, Nifty VIX, rises above 11 at the close. A report by Google, Temasek and Bain stated that India’s internet economy is expected to grow six times and touch USD 1 trillion by 2030. 

Nifty Smallcap 100 closed in the green, while Nifty Midcap 100 closes flat following the benchmark index. Nifty Realty and Nifty Auto closed sharply higher than Monday’s closing levels. According to Trendlyne’s sector dashboard, hardware technology & equipment emerged as the top-performing sector of the day with a rise of over 6.31%. 

Most European indices trade sharply lower except for Switzerland’s SMI trading in the green. US indices futures trade lower indicating a negative start. The ISM non-manufacturing PMI of the US fell to 50.3 in May against estimates of 52.2. The April non-manufacturing PMI stood at 51.9.

  • JSW Steel beats Tata Steel in QoQ revenue and profit growth, one-year price change and FII holdings. But it lags in PE ratio, one-year dividend yield, MF holdings and broker average rating.

  • Dalmia Bharat and Craftsman Automation touch their 52-week highs of Rs 2,170 and Rs 3,969 respectively. Dalmia has risen 7.3% in the past month, while the other increased by 19.8%.

  • According to reports, Jefferies maintains a ‘Buy’ rating on Axis Bank with a target price of Rs 1,150, indicating an upside of 19%. The brokerage is optimistic about the progress of Axis Bank's integration with Citibank India's retail platform, expecting it to generate cost synergies. It also expects the bank’s loan book to grow and asset quality to improve in the coming quarters.

  • La Opala RG rises as Nippon India Mutual Fund purchases 1.7% of equity stake (18,82,205 shares) in the company at an average price of Rs 399.05 per share.

  • IKIO Lighting’s Rs 607 crore IPO gets bids for 1.55X the available 1.5 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 1.64X of the available 76.9 lakh shares on offer.

  • Morgan Stanley expects the BSE Sensex to reach the 68,500 level by December. The brokerage highlights that Indian stocks remain attractive despite rich valuations.

  • Coforge falls by over 3.5% in trade and ranks low on Trendlyne's checklist with a score of 43.5%. The stock is in the 'Strong Sell' zone and appears in a screener of stocks with a negative breakdown at the third resistance level.

  • Sharda Cropchem rises over 10% in trade and ranks high on Trendlyne's checklist with a score of 68.2%. The stock is in the 'Buy' zone, and appears in a screener for affordable stocks with high ROE and momentum.

  • NTPC successfully commercializes the remaining 10 MW of the 20 MW Gandhar Solar PV project at Gandhar, Gujarat. The first 10 MW was commissioned on August 23, 2022.

  • Bajaj Finance, Asian Paints, JSW Steeland Nestle India's TTM price-to-earnings ratios trade above that of their respective industries.

  • Hardware technology & equipment, media and realtysectors rise more than 4% in the past week.

  • Thermax is falling as an arbitration panel rules against the company regarding the malfunctioning of two gas turbo generators at a customer site. The panel has directed Thermax to repair the generators and pay Rs 250 crore to the customer to cover additional power expenses and arbitration cost.

  • BoB Capital Markets maintains its ‘Buy’ rating on Hindustan Unilever with a target price of Rs 3,069. This implies an upside of 14.1%. the brokerage remains positive about the firm’s prospects due to its market share gains, investments into brand building and innovation. It expects the company’s revenue to grow at a CAGR of 10.5% over FY23-25.

  • Emami rises as it buys back a total of 23.68 lakh equity shares, amounting to Rs 94 crore, at Rs 397 per share on June 5. It appears on a screener of stocks with low debt.

  • Jefferies lowers the target price on Sunteck Realty to Rs 415 from the earlier Rs 621 due to the company’s weak Q4 earnings. However, the brokerage maintains its ‘Buy’ rating, expecting a 20-25% pre-sales growth over FY22-25.

  • Man Infraconstruction rises as its subsidiary, MICL Creators LLP, plans to undertake the development of a residential project in Ghatkopar, Mumbai. The project will have a saleable carpet area of 4 lakh sqft and the potential to generate Rs 12,000 crore over four years.

  • IT stocks like Persistent Systems, MphasiS and Tech Mahindra fall more than 2% in trade today. All constituents of the broader Nifty IT index are also trading in the red.

  • Larsen & Toubro's buildings and factories arm wins orders worth Rs 1,000-2,500 crore to construct commercial towers at two locations in Mumbai.

  • Leelavathi Reddy, P Kalpana Reddy and Mitta Madhavi, promoters of MTAR Technologies, sell stakes of 1.13%, 0.33% and 0.33% in the company respectively on Thursday.

  • CLSA expects a moderate improvement in the operating margins of FMCG companies in FY24. The brokerage favours Hindustan Unilever, ITC, and Dabur in the space, while maintaining a 'Sell' rating on Britannia Industries and Nestle.

  • President of India, promoter of Coal India, sells a 3% stake in the company for Rs 4,185 crore. The government now holds a 63.13% stake after the sale.

  • Adani Enterprises is rising as it completes the prepayment of share-backed loans worth $2.1 billion, according to reports. The promoters have also prepaid a $700 million debt taken for the acquisition of Ambuja Cements.

  • IKIO Lighting raises Rs 181.95 crore from anchor investors ahead of its IPO by allotting 63.84 lakh shares at Rs 285 each. Investors include HDFC Mutual Fund, ICICI Prudential, Goldman Sachs, Quant Mutual Fund, Malabar India Fund and Citigroup Global Markets Mauritius.

  • Reports suggest that 19.4 lakh shares (0.14% equity) of Larsen & Toubro, amounting to Rs 441.3 crore, change hands in a large trade.

  • JK Cement is rising as it agrees to acquire a 100% stake in Toshali Cements for a cash consideration of Rs 157 crore. The management expects this acquisition to support the company's expansion in Eastern India. The stock shows up in a screener for companies with book value per share improving over the past two years.

  • Indoco Remedies' board of directors approves the acquisition of an 85% equity stake in Florida Pharmaceutical Products (FPP) Holding Company for $4 million. This acquisition will provide Indoco with synergies and access to marketing and distribution channels in the USA.

  • Indian Energy Exchange’s total monthly trade volume in May rises 8% YoY to 8,251 million units (MU) due to increased power demand. The average spot power price falls 30% YoY on the back of improved supply, higher liquidity, and cooler weather conditions. The stock shows up in a screenerfor companies with improving cash flows from operations over the past two years.

Riding High:

Largecap and midcap gainers today include JSW Energy Ltd. (263.35, 5.51%), Ambuja Cements Ltd. (459.15, 4.58%) and PB Fintech Ltd. (624.05, 4.03%).

Downers:

Largecap and midcap losers today include Persistent Systems Ltd. (4,981.05, -4.38%), Coforge Ltd. (4,415.50, -3.85%) and MphasiS Ltd. (1,914.40, -3.67%).

Volume Shockers

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

Top high volume gainers on BSE included Aegis Logistics Ltd. (346.70, 8.99%), Sterling and Wilson Renewable Energy Ltd. (318.60, 8.22%) and Mahindra CIE Automotive Ltd. (492.20, 7.28%).

Top high volume losers on BSE were Indian Energy Exchange Ltd. (147.20, -3.92%) and Rallis India Ltd. (188.90, -1.54%).

IFB Industries Ltd. (803.15, 0.40%) was trading at 17.0 times of weekly average. Shyam Metalics and Energy Ltd. (311.20, 5.89%) and Prism Johnson Ltd. (127.85, 4.32%) were trading with volumes 15.9 and 11.9 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

42 stocks made 52-week highs,

Stocks touching their year highs included - 3M India Ltd. (27,415.00, 2.28%), AIA Engineering Ltd. (3,112.90, 0.40%) and Ajanta Pharma Ltd. (1,414.35, 2.54%).

20 stocks climbed above their 200 day SMA including Aegis Logistics Ltd. (346.70, 8.99%) and Sterling and Wilson Renewable Energy Ltd. (318.60, 8.22%). 10 stocks slipped below their 200 SMA including MphasiS Ltd. (1,914.40, -3.67%) and Trident Ltd. (33.35, -1.91%).

 
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Trendlyne Marketwatch
05 Jun 2023
Market closes higher, Tata Power’s arm commissions a 110 MW solar power project

Trendlyne Analysis

Nifty 50 closed at 18,593.85 (59.8, 0.3%), BSE Sensex closed at 62,787.47 (240.4, 0.4%) while the broader Nifty 500 closed at 15,859.50 (48.3, 0.3%). Of the 2,008 stocks traded today, 1,161 were gainers and 778 were losers.

Indian indices maintained their gains and closed in the green, with the Nifty 50 closing just below the 18,600 mark. Investors are looking ahead to RBI's three-day monetary policy committee (MPC) meeting, scheduled to start on Tuesday. Analysts expect the MPC to keep the benchmark policy repo rate unchanged at 6.50%.

Nifty Smallcap 100 closed in the green, following the benchmark index. However, Nifty Midcap 100 pared its early gains and closed flat. Nifty Auto and Nifty Energy closed higher than Friday’s close. According to Trendlyne’s sector dashboard, Telecommunications Equipment was the top-performing sector of the day.

Major Asian indices closed in the green, except for Taiwan’s TSEC 50 and China’s Shanghai SE Composite, which closed flat. European indices continued to trade mixed, in line with US indices futures, which also traded mixed. Investors awaited for cues from purchasing managers index or PMI data of Germany, France and Italy, scheduled to be released later today.

  • Relative strength index (RSI) indicates that stocks like Birla Corp, Dixon Technologies, IDFC First Bank and Can Fin Homes are in the overbought zone.

  • Suresh Iyer, MD & CEO of Can Fin Homes, says that demand is improving and expects the company's AUM (assets under management) to grow around 18-20%.

  • eClerx Services, Raymond, Narayana Hrudayalaya, Tata Communications and Bata India outperform their industries in terms of annual growth and capital returns.

  • Wonderla Holidays is rising as the Tamil Nadu government grants a 10% waiver on the local body tax (LBT) for a period of 10 years from the date of commencement of operations. The waiver for its Chennai project is subject to the condition that commercial operations must commence within two years from June 2, 2023.

  • Britannia Industries' annual return on equity (RoE) stands at 65.7% in FY23, rises 39.2 percentage points over the past five years.

  • Electronic components, shipping and other non-ferrous metals industries rise more than 10% over the past week.

  • Suzlon Energy surges in trade today as it becomes the first Indian wind energy company to reach 20GW of worldwide wind energy installations. It appears on a screener for stocks with strong annual EPS growth.

  • Tata Power’s arm, Tata Power Renewable Energy, commissions a 110 MW solar power project in Rajasthan, which will supply green power to the Kerala State Electricity Board. The stock shows up in a screener for companies with high TTM EPS growth.

  • Indian rupee depreciates 14 paise to 82.53 against the US dollar in early trade today due to a strong dollar and rising crude oil prices.

  • Telecommunications equipment manufacturers like ITI, HFCL, Sterlite Technologies and Optiemus Infracom are rising in trade. The broader sector of telecommunications equipment is also trading in the green.

  • ICICI Securities maintains its ‘Sell’ rating on Mazagon Dock Shipbuilders with a target price of Rs 600. This implies a downside of 35.1% from the current market price. The brokerage remains pessimistic about the company’s long-term prospects due to the absence of order visibility and uncertainty regarding repeat orders. It expects the firm’s net profit to grow at a CAGR of 2.5% over FY23-25.

  • JP Morgan downgrades Vedanta's rating to 'Neutral' from 'Overweight' and lowers the target price to Rs 280. It maintains its 'Underweight' call on Hindustan Zinc and reduces the target price to Rs 205. The brokerage explains that the sharp decline in LME zinc prices will result in EPS cuts by 23% for FY24/25.

  • Lupin touches its 52-week high of Rs 831.3 per share after launching Darunavir tablets in the US. These tablets are a generic version of Janssen Products' Prezista tablets and are used for HIV treatment. IQVIA reports estimate sales of $308 million for the drug in FY23.

  • Patel Engineering rises as it wins an order worth Rs 519.5 crore for the design and construction of a water tunnel and allied works in Raigad district from CIDCO.

  • Nava is surging as its Zambian subsidiary, Maamba Collieries, repays loans worth $277 million (approximately Rs 2,296 crore). The subsidiary's outstanding debt currently stands at $206 million (approximately Rs 1,707 crore).

  • NTPC rises marginally as its subsidiary, NTPC Green Energy, enters into a joint venture (JV) with Indian Oil Corporation (IOCL). The JV aims to develop renewable energy power projects to supply 650 MW for IOCL. The JV will be equally owned by NTPC Green Energy and IOCL.

  • India’s Services PMI falls to 61.2 in May, compared to 62 in April. However, the PMI reading has remained above the 50-mark for 22 consecutive months.

  • RateGain Travel Technologies rises as Aditya Birla Sun Life AMC increases its stake by 3.2% (25,34,000 shares). Following this transaction, ABSL's stake in RateGain stands at 5.2%.

  • Tata Chemicals surges in trade as it reportedly signs an MoU with the Gujarat government to establish a 20 GW capacity lithium-ion cell manufacturing factory, investing Rs 13,000 crore. The company plans to rationalize its US operations by reorganizing the number of intermediate entities. It appears in a screener for stocks with low debt.

  • Wipro sets June 16, 2023, as the record date for the Rs 12,000 crore buyback plan of up to 26.9 crore equity shares (representing 4.91%), with a face value Rs 2 each from the shareholders.

  • Retail sales for the automotive industry rise by 10.1% YoY to 20.2 lakh units in May, shows data from the Federation of Automotive Dealers' Association. Two-wheeler retail sales are up 9.3% YoY, while cars increase by 4.3% YoY.

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

  • Angel One rises as the average daily turnover (ADTO) for May increases by 146.4% YoY to Rs 22,03,700 crore. The surge of 148.3% YoY in futures and options ADTO contributes the most to the overall increase.

  • Paytm (One97 Communications) is rising as its loan disbursements grow by 168% YoY to Rs 9,618 crore in May 2023, with a distribution growth of 54% YoY to 85 lakh loans. It appears in a screener of stocks with brokers upgrading recommendations.

  • Minda Corp’s board of directors approves a proposal to raise Rs 600 crore through further issuance of securities through public or private offerings, including preferential issue, qualified institutions placement, or further public offer. The stock shows up in a screener for companies with low debt.

Riding High:

Largecap and midcap gainers today include Torrent Power Ltd. (588.55, 4.39%), Adani Transmission Ltd. (828.00, 4.20%) and Mahindra & Mahindra Ltd. (1,395.40, 4.03%).

Downers:

Largecap and midcap losers today include Gujarat Fluorochemicals Ltd. (3,192.20, -3.30%), Info Edge (India) Ltd. (4,136.90, -3.03%) and Au Small Finance Bank Ltd. (750.95, -2.91%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Mazagon Dock Shipbuilders Ltd. (986.10, 17.62%), Cochin Shipyard Ltd. (558.90, 11.49%) and NLC India Ltd. (98.25, 6.16%).

Top high volume losers on BSE were Brightcom Group Ltd. (19.55, -4.87%), Endurance Technologies Ltd. (1,485.30, -1.15%) and L&T Finance Holdings Ltd. (105.05, -0.47%).

Rossari Biotech Ltd. (805.25, 5.85%) was trading at 11.7 times of weekly average. Tata Chemicals Ltd. (995.55, 2.66%) and Galaxy Surfactants Ltd. (2,551.00, 3.57%) were trading with volumes 10.0 and 9.7 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

43 stocks hit their 52-week highs,

Stocks touching their year highs included - 3M India Ltd. (26,660.00, 1.55%), AIA Engineering Ltd. (3,109.65, 1.68%) and Apollo Hospitals Enterprise Ltd. (4,950.20, -0.34%).

20 stocks climbed above their 200 day SMA including Rossari Biotech Ltd. (805.25, 5.85%) and Trident Ltd. (34.00, 5.26%). 9 stocks slipped below their 200 SMA including Aegis Logistics Ltd. (318.10, -4.67%) and Swan Energy Ltd. (244.90, -2.91%).

 
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The Baseline
05 Jun 2023
By Abdullah Shah

Investors usually prefer companies with a high return on capital employed (ROCE) of over 20%, as they are able to efficiently use their capital to generate revenue. In this edition of Chart of the Week, we examine companies that have outperformed their sectors in terms of ROCE in FY23. These companies are from sectors with high ROCE that outperformed the Nifty 50. 

The software and services sector outperformed the Nifty 50’s ROCE by the highest margin in FY23 - by 20.7 percentage points. Companies with the highest ROCE in this sector are Tata Consultancy Services (TCS), Tata Elxsi and Easy Trip Planners, standing at 57.6%, 41.7% and 49.9% respectively. 

TCS’ high ROCE partly came from the sharp rise in its current liabilities, which rose at a three-year CAGR of 17.2%. This rise in current liabilities reduces the capital employed (total assets minus current liabilities), and in turn, boosts returns on capital. According to reports, 27% of TCS' business is currently funded by suppliers/short-term creditors.

Tata Elxsi’s ROCE increased due to robust growth in revenue (27.3% YoY) from software development & services and system integration & support services for FY23. These helped operating profit rise by 25.5% in FY23.

The FMCG sector has outperformed the Nifty 50’s ROCE by 13 percentage points in FY23. Companies with the highest annual ROCE in the sector are Nestle, Procter & Gamble Hygiene & Healthcare and Colgate-Palmolive, achieving 57.8%, 97.3% and 79.3% respectively in FY23. 

To sustain and improve its already high ROCE, Nestle plans to spend a major portion of its Rs. 1,200 crore capex to reduce pressure on over-utilized plants and increase food and chocolates production over 2023. Colgate-Palmolive’s annual ROCE surpassed the sector by 47.5 percentage points in FY23. Despite outperforming the sector, the company's ROCE has been falling for the past two years. 

The Food, Beverage & Tobacco sector has also outperformed Nifty 50’s ROCE by 11.3 percentage points on the back of strong ROCE posted by ITC, VST Industries and Bombay Super Hybrid Seeds. Their annual ROCE stands at 35.8%, 35.7% and 35.6% respectively. 

The Textile, Apparel, and Accessories sector has showcased an impressive performance, surpassing the Nifty 50 by 10.2 percentage points in terms of ROCE. It  was driven by strong ROCE from Page Industries, PDS and Titan, reaching 53.3%, 35.4% and 34.5% respectively in FY23. Despite a high ROCE, Page Industries posted a muted quarter in Q4FY23 due to increased inventory levels during the inflationary period. Its Q4 net profit fell by 58.9% YoY and revenue fell by 12.8%. 

Jhunjhunwala’s top bet, Titan, outperformed its sector by 5.6 percentage points in Annual ROCE. For FY 24-25, the company plans to set up 40+ new stores in the jewelry division and increase its international presence to 25 stores by 2024. It has observed a 157% rise in capital employed (Total Assets - Current Liabilities) over the past five years. For FY23, growth in sales of jewelry and watches helped increase the EBIT margin and ultimately ROCE.

The diversified consumer service sector outperformed the Nifty 50’s ROCE by 6.8 percentage points in FY23. IRCTC, a miniratna PSU, surpassed its sector by 24.3 percentage points. Its EBIT increased in FY23 on the back of robust growth in the catering, rail neer and state teertha segments. By the end of FY23, IRCTC plans to set up rail neer plants in Bhubaneshwar, Vijayawada and Kota, which will increase the production capacity by 3 lakh litres, reaching a total capacity of 19.8 lakh litres.

Despite being capital-intensive industries, metals & mining and chemicals & petrochemicals have managed to outperform the Nifty 50 by 6.4 percentage points and three percentage points, respectively. In the metals & mining sector, Hindustan Zinc was the highest outperformer, while Fine Organic Industries excelled in terms of ROCE in the chemicals & petrochemicals sector.

Finally, CG Power & Industrial Solutions stands out as the top-performing company in the General Industries sector, boasting the highest ROCE among its peers. The company has planned to further increase the production capacity of motors at its Ahmednagar and Goa plants with an investment of Rs 230 crore, and transformers at its Bhopal and Malanpur plants with an investment of Rs 126 crore in FY24.  

 
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The Baseline
02 Jun 2023
Five Interesting Stocks Today
  1. AU Small Finance Bank: Thisbanking stock has outperformed the Nifty Private Bank index by 14.3% in the past month, and rose 16.4%, according to Trendlyne’sTechnicals. Currently, the stock is trading at an all-time high. In Q4FY23, the bank’s deposits grew by 32% YoY to Rs 69,365 crore. Advances also improved by 26% YoY to Rs 59,158 crore, led by the commercial banking division.

    The Net Interest Margin (NIM) of the bank is one of the highest among its peers at 6.1%. However, the margins are expected to decrease due to rising cost of funds and limited scope to raise interest rates. Its bottom line was also aided by lower provisioning.

    The gross NPA remains steady at 0.7%, backed by high-rated customers. The bank is also investing in newer product lines like credit cards and video banking. The company shows up in ascreener for consistently high-return stocks in the Nifty 500 for five years.

In its future outlook, AU Small Finance Bank’s management said that it plans o focus on building the asset book and maintaining asset quality. The bank’s CEO, Sanjay Agarwal, expects the asset book to grow 29-30% in FY24, aided by branch expansion and market share gains. Margin compression and elevated cost ratios are expected to put pressure on the return on assets number. 

ICICI Securities suggests that the bank’s high ROA and investments toward franchise build-up will help grow the asset base.Its higher provision coverage ratio of 75% has resulted in lower provisioning, and a focus on retail customers will help in maintaining asset quality.

  1. Craftsman Automation: Thisauto part and equipment manufacturer has seen its stock price rise by 12.6% in the past week, while the broader benchmarkNifty Auto increased by 2.6%. The stock is currently trading at a 52-week high, according toTrendlyne’s Technicals. The firm’s revenue grew by 20% and net profit by 37% YoY in Q4FY23. The revenue growth was driven by auto powertrain and AI products. During the quarter, the company maintained a stable EBITDA margin of 21.3%. The profit growth was in part due to lower taxes from the recent tax regime change.

    The firm is also in the final stages of validation to supply critical parts for a domestic SUV, starting in July 2023. The firm plans a capex of Rs 320 crore in FY24, against 309 crore in FY23. The capex would be spent on the refurbishment of outdated equipment and semi-automation in material handling. The firm also aims to reduce its debt by Rs 200 crore in FY24, bringing the net debt below Rs 1,100 crore. The stock shows up in ascreener for companies with high TTM EPS growth.

Craftsman Automation’s management has guided a revenue growth of 20% for FY24, aided by higher volumes from new customers and a ramp-up in powertrain orders from Stellantis, an automotive manufacturer based in the Netherlands. However, the projected growth for powertrains in FY24 is lower at 14%, whereas Aluminium and industrial products are expected to grow by 20% or more. Exports are expected to slow down owing to recessionary fears in European markets. In terms of domestic growth, the commercial and passenger vehicle segment is expected to drive the first half of FY24,  while the construction and farm machinery division will fuel growth in the second half.

According toMotilal Oswal, the firm’s track record of market leadership in the auto component industry is uncommon. The firm has managed to create niche products and demonstrated superior capital efficiency, resulting in higher growth numbers than the industry. The brokerage has maintained a ‘Buy’ rating on the company.

  1. Kalpataru Power Transmission: This electric utility company’s promoters sold 96.3 lakh shares (nearly 6% stake) worth Rs 467.8 crore in a bulk deal on May 30. Parag Mofatraj Munot (promoter) and two promoter group entities, Kalpataru Constructions and Kalpataru Viniyog, sold their shares at around Rs 485 per share, which was lower than the stock’s opening of Rs 503.9 on Tuesday. ICICI Prudential Mutual Fund picked up nearly 15 lakh shares worth Rs 72.5 crore on the same day. 

Since the promoter sale, the stock has risen 5.8% till Friday. It shows up in a screener for stocks with strong momentum. This uptrend seems to be driven by the firm’s robust order book and healthy business outlook. As of the end of FY23, its order book stood at Rs 45,918 crore, and its order inflow for FY23 grew by 39% YoY to Rs 25,241 crore. Leveraging its presence across diverse geographies and segments, the company is pursuing growth in verticals such as water, metro and airports in both domestic and international markets. The management points out that the merger with its subsidiary, JMC Projects, has enhanced Kalpataru Power’s abilities to bid on larger and more complex projects, leading to cost synergies. The company is focused on divesting its non-core investments to free up capital and reduce debt over the coming quarters. 

ICICI Securities believes that the company is well-placed to benefit from the government’s increased focus on infrastructure, given its strong order pipeline, geographical expansion, and strengthening balance sheet. According to Trendlyne’s Forecaster, the consensus recommendation on the company from 13 analysts is ‘Buy’, with 10 rating it ‘Strong Buy’, two ‘Buy’ and one ‘Hold’. 

  1. Torrent Pharmaceuticals: This pharma company rose over 7% and touched an all-time high of Rs 1,884.9 on Wednesday after reporting strong Q4 results. The company posted a net profit of Rs 287 crore during the quarter, led by lower raw material expenses, compared to a net loss of Rs 118 crore in Q4FY22. The loss incurred in the previous year’s quarter was on account of a one-time impairment provision and costs from the discontinuation of its liquid business in the US. 

Despite posting a profit, it missed Trendlyne’s Forecaster estimates by 12%. Torrent’s India revenue, which contributes 59% to total revenue, has increased by 22% YoY, led by growth in chronic therapies and new launches. For FY23, its revenue rose by 13% to Rs 9,620 crore, marking the seventh consecutive quarter of YoY revenue growth. 

Meanwhile, the company’s EBITDA margins have also improved by 286 bps to 29.2%, led by a favourable product mix and lower R&D expenses in the US. The management has guided for margins to improve by 60-100 bps every year due to price increases across markets. It is also targeting 2% volume growth in its base business.  

Following the release of the company’s results, ICICI Securities maintains its ‘Hold’ rating but revises the target price to Rs 1,645 from Rs 1,630. According to the brokerage, Torrent is expected to take a few more quarters to fully realise synergies from the Curatio portfolio. Torrent acquired Curatio Health Care for Rs 2,000 crore in September 2022 to enhance its presence in dermatology.  The analysts also expect higher interest costs and depreciation to affect Torrent’s profitability in the near term. 

  1. Page Industries: This other apparels & accessories stock plunged almost 9% and touched its 52-week low of Rs 34,952.6 on May 26 as its Q4FY23 net profit declined by 58.9% YoY to Rs 78.3 crore. Its revenue has also fallen by 12.8% YoY to Rs 969.1 crore, affected by low demand. This caused the company to feature in a screener of stocks with low Piotroski scores, which indicates weak financial performance. 

Revenue and net profit missed Trendlyne’s Forecaster estimates by 15.2% and 42.9% respectively. It has also underperformed its industry in terms of net profit and revenue. Its EBITDA margin witnessed a drop of 10.1 percentage points on the back of increasing raw material, inventory, employee benefit and finance costs. 

According to VS Ganesh, Managing Director of the company, Page Industries saw a reduction in profitability due to higher inventory levels acquired during an inflationary period and lower than optimal capacity utilisation. However, the company has implemented a new inventory management system (auto replenishment strategy or ARS) to better manage its inventory.

Axis Securities maintains its ‘Hold’ rating on the stock with a downgraded target price of Rs 40,000 per share. This indicates a potential downside of 3%. The brokerage believes that the implementation of ARS will affect volume growth and margin expansion in the next two quarters. It expects the company’s profitability to improve only in H2FY24.  

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