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The Baseline
17 Mar 2023
Chart of the week: Inflation in India eases a bit, but remains above 6%
By Abdullah Shah

After briefly falling below the Reserve Bank of India’s upper tolerance limit of 6% in November and December 2022, India’s consumer price index (CPI) inflation has pulled above the limit  for two straight months. Even though it fell marginally by 12 bps in February, it still hit 6.44%. 

Over the past two months, CPI has risen due to a jump in food and fuel prices. In February, CPI inflation was  propelled over 6% from rising costs in the food and beverages segment. The rise in F&B was caused by high cereal and protein prices (up 16.1% YoY). Fuel and light inflation also remained high, rising close to 10% YoY.

Fuel is a major contributor to CPI, so inflation follows the overall trend in price change of India’s crude oil basket. The Indian crude oil basket consists of sour grade (Oman & Dubai average) and sweet grade (Brent Dated) of crude oil processed in Indian refineries in a ratio of approximately 75 to 25. Though inflation in the fuel and power segment has declined by 90 bps MoM to 9.9%, the crude oil basket price price is higher than December 2022 levels. 

The marginal MoM fall in CPI in February can be attributed to the fall in vegetable prices, mainly onion, tomato and potato. However, the foods and beverages segment, which has the highest weightage (39.1%), is still facing inflation, due to a sharp jump in cereal prices. 

Other major contributors to CPI are the housing, and clothing & footwear segments. The housing segment has witnessed a 20 bps MoM rise in inflation to 4.8%, while clothing & footwear inflation continues to decline for four consecutive months.

With inflation stubbornly above the 6% upper limit, economists believe that another rate hike by the RBI is imminent in April. According to Nikhil Gupta, Chief Economist of Motilal Oswal Financial Services, “The worst of inflation is likely behind us. Headline inflation could fall below 6% in March 2023 and towards 5% in the coming months. Also, a 25 bps hike in April by the RBI is almost certain." 

US consumer price index inflation also remained high in February at 6% YoY, but fell MoM, in line with economists’ expectations. After the collapse of Silicon Valley Bank and other major banks in the past week, analysts are not expecting the US Fed to hike rates in its next meeting. Investors are now waiting for March 22 to see if the US Fed will hike interest rate. Their decision could influence the outcome of RBI’s Monetary Policy Committee meeting in April.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
17 Mar 2023
Market closes higher, FIIs pull out Rs 2,211.3 crore from the market over the past week

Trendlyne Analysis

Nifty 50 closed at 17,100.05 (114.5, 0.7%), BSE Sensex closed at 57,989.90 (355.1, 0.6%) while the broader Nifty 500 closed at 14,420.85 (90.5, 0.6%). Of the 1,955 stocks traded today, 1,108 were on the uptrend, and 780 went down.

Indian indices closed in the green after switching between losses and gains throughout the day. Nifty 50 rose nearly 115 points and closed at the 17,100 mark. Gold, a safe haven asset, is set for its biggest weekly gain since November 2022 due to the banking crisis in the US and Europe.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty Metal and Nifty Realty closed sharply higher than Thursday’s closing levels. Nifty IT closed over 1.1% higher, taking cues from the tech-heavy Nasdaq 100 index, which closed 2.5% higher on Thursday.

European indices traded in the green amid positive global cues, led by banking stocks. US indices futures traded flat after posting strong gains on Thursday. Brent crude oil futures traded in the green but are set to post big weekly losses as investors assess the impact of banking crisis on the economy, which in turn affects crude oil demand.

  • National Aluminium sees a long buildup in its March 29 future series as its open interest rises 42.6% with a put-call ratio of 0.52.

  • Reports suggest that Malaysia-based company Petronas has offered to buy a 20% stake in NTPC's arm NTPC Green Energy for Rs 3,800 crore. NTPC is trading near its 52-week high.

  • Suzlon Energy, Tejas Networks and Lupin underperform their respective industries in terms of annual net profit growth YoY %.

  • GAIL (India) inks a memorandum of understanding with Shell Energy India to explore opportunities for infrastructure development for ethane sourcing.

  • FSN E-Commerce Ventures (Nykaa) rises over 3% in trade today. Reports suggest that 65.7 lakh shares (0.23% equity) of the company, amounting to Rs 93.2 crore, change hands in a block deal.

  • G R Infraprojects emerges as the lowest bidder for projects worth Rs 587.6 crore floated by the East Coast Railway. The projects involve the construction of tunnels and a new rail line. The stock shows up in a screener with improving book value per share over the past two years.

  • IT stocks like LTIMindtree, HCL Technologies and Persistent Systems are rising in trade. The broader Nifty IT index is also trading in the green.

  • Macquarie maintains an ‘Underperform’ rating on Jubilant Foodworks and cuts the target price to Rs 350 from Rs 380. The brokerage says the company’s margins will be affected by input cost pressures and poor demand in the coming quarters.

  • Foreign institutional investors pull out Rs 2,211.3 crore from the equity market over the past week, according to Trendlyne's FII dashboard. Meanwhile, index options witness the highest inflow of Rs 33,596.1 crore from foreign investors. Mutual Funds invest a total of Rs 648.1 crore in the Indian market.

  • Media stocks like Zee Entertainment Enterprises, Network 18 Media & Investments, TV18 Broadcast, PVR and New Delhi Television are falling in trade. The broader sectoral index Nifty Media is also trading in the red.

  • Sonal Varma, Managing Director and Chief Economist (India and Asia ex-Japan) at Nomura, says RBI will probably pause rate hikes. She expects an average inflation of 4.9% for FY24, compared to RBI’s projection of 5.3%.

  • Aster DM Healthcare's board appoints Nitish Shetty as the Chief Executive Officer of the company with effect from March 16, 2023.

  • Jubilant Pharmova surges more than 10% as its international subsidiary, Jubilant HollisterStier, receives approval from the Canadian government to avail a partially repayable loan of CAD 23.8 million. It will be used for the expansion of its Montreal facility.

  • Realty stocks like DLF, Phoenix Mills and Macrotech Developers are rising in trade. All stocks in the broader Nifty Realty index are also trading in the green.

  • Lemon Tree Hotelsis rising as it signs a license agreement for a 60-room property in Rajasthan. The property is expected to be operational by July 2026 and will be managed by Carnation Hotels, its wholly owned subsidiary.

  • B Ram Reddy, Managing Director of Balaji Amines, says the fall in raw material prices will benefit the specialty chemical industry. He adds that the company’s margins will improve to around 24% in the upcoming quarters.

  • Anand Rathi maintains its ‘Buy’ rating on Hero MotoCorp with a target price of Rs 2,855. This implies an upside of 21.1%. The brokerage believes the company is on track to regain market share on the back of multiple product launches. It expects the firm’s net profit to grow at a CAGR of 20%.

  • Promoter Sumitomo Wiring Systems sells a 3.4% stake (2.3 crore shares) in Samvardhana Motherson International for Rs 1,612.3 crore in a bulk deal. Societe Generale and Copthall Mauritius Investment pick up the shares.

  • Glenmark Pharmaceuticals’ arm Glenmark Specialty receives acceptance from the US FDA for its investigational new drug application GRC 54276. The company will be allowed to proceed with phase 1/2, the first-in-human clinical study of GRC 54276 for the treatment of patients with advanced solid tumours and lymphomas.

  • Rail Vikas Nigam is rising as it bags a contract worth Rs 111.8 crore to install, test and commission 11 KV lines and associated works in Sidhi, Chhatarpur and Jabalpur, among others. The stock is trading 119.4% higher than its 52-week low.

  • Probal Sen, Energy Analyst at ICICI Securities, says the fall in crude price is due to lower demand. He adds that this fall will benefit oil marketing firms. Crude oil prices have fallen sharply below $75 per barrel.

  • Va Tech Wabag wins an order worth Rs 800 crore to design, build and operate a sewage treatment plant at Pagla, in the City of Dhaka, Bangladesh. The project is funded by the World Bank and Asian Infrastructure Investment Bank.

  • Dr. Reddy’s Laboratories and its subsidiaries sell nine non-core dermatology brands to Eris Lifesciences for Rs 275 crore. According to IQVIA data, the divested portfolio has sales of Rs 60 crore. Dr. Reddy’s is trading near its 52-week high.

  • Tata Consultancy Services' CEO and MD Rajesh Gopinathan resigns, effective from September 15, 2023. The board appoints K Krithivasan as the CEO Designate, effective from March 16, 2023. He will take over as the CEO and MD in the next financial year, subject to shareholders' approval.

  • Zee Entertainment falls more than 3% in trade even after the NCLT cancelled the insolvency plea filed against the company by the Indian Performing Rights Society (IPRS). Reports suggest that Zee is ready to pay pending dues to IndusInd Bank to resolve the insolvency issue.

  • Voltas is rising as its wholly owned subsidiary Universal MEP Projects & Engineering Services (UMPESL) bags power distribution and solar projects worth Rs 1,770 crore. The project will benefit Uttar Pradesh, West Bengal and Odisha, among others.

  • Samvardhana Motherson International approves the acquisition of the remaining 50% stake in Fritzmeier Motherson Cabin Engineering (FMCEL) from its joint venture partner, F Holdings GmbH, for Rs 110.7 crore. Post acquisition, FMCEL will become a wholly owned subsidiary of Samvardhana Motherson.

Riding High:

Largecap and midcap gainers today include IDBI Bank Ltd. (46.70, 5.18%), Adani Green Energy Ltd. (816.25, 5.00%) and Adani Transmission Ltd. (1,022.35, 5.00%).

Downers:

Largecap and midcap losers today include Biocon Ltd. (202.30, -8.81%), Patanjali Foods Ltd. (898.40, -4.98%) and Tube Investments of India Ltd. (2,550.25, -4.40%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Jubilant Pharmova Ltd. (313.30, 12.76%), JK Paper Ltd. (384.70, 9.85%) and Kalyan Jewellers India Ltd. (119.50, 9.68%).

Top high volume losers on BSE were Biocon Ltd. (202.30, -8.81%), Jindal Stainless Ltd. (293.10, -7.58%) and Patanjali Foods Ltd. (898.40, -4.98%).

Gillette India Ltd. (4,186.20, -4.48%) was trading at 100.7 times of weekly average. Eris Lifesciences Ltd. (568.85, -2.89%) and Delhivery Ltd. (322.10, -2.79%) were trading with volumes 86.9 and 17.7 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

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

Stocks touching their year highs included - Godrej Consumer Products Ltd. (947.45, 1.62%), NCC Ltd. (103.50, 1.72%) and KPIT Technologies Ltd. (869.20, 6.56%).

Stocks making new 52 weeks lows included - Avanti Feeds Ltd. (342.95, -0.58%) and Bayer Cropscience Ltd. (3,988.10, -1.07%).

16 stocks climbed above their 200 day SMA including JK Paper Ltd. (384.70, 9.85%) and Medplus Health Services Ltd. (772.45, 7.46%). 11 stocks slipped below their 200 SMA including Swan Energy Ltd. (231.20, -6.32%) and Crisil Ltd. (2,997.75, -3.22%).

 
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The Baseline
16 Mar 2023
Screener of the week: DVM strategy for Nifty500 delivered 33%+ CAGR
By Abdullah Shah

In this week’s screener, we look at the "high return, high durability" investment strategy. The screener chooses a maximum of five stocks from the Nifty 500 index each quarter with strong financial durability, reasonable valuation and good momentum. 

The screener currently has stocks like HCL Technologies, Oil India, Hindustan Aeronautics, Zydus Lifesciences and Firstsource Solutions.

We performed two backtests on the screener to check its past performance. The backtests ran with a quarterly portfolio review frequency (change stocks every quarter) against the benchmark of Nifty 500 from March 2013 to March 2023. 

The difference between the two backtests was that for one test we considered only Nifty 500 stocks, and all stocks with a market cap of over Rs. 60 crore for the other.

The backtest with Nifty 500 stocks gave cumulative returns of 1,751.2% over 10 years, with a return CAGR of 33.84%. The average stock return was 14.4%, with a total of 82 winners and 62 losers. Ceat gave the highest returns of 428.8%. The maximum drawdown of the strategy was 30.5% in the September 2022 quarter. 

The backtest with all stocks beat the Nifty 500 strategy with higher cumulative returns and CAGR. However, this strategy comes with added risks, as its maximum drawdown is higher at 55.6%. It also has a higher number of losers (76) against 86 winners. Choosing all stocks may also include stocks with low delivery volumes. So the Nifty500 universe is more realistic. 

You can find some popular screenershere

 
Trendlyne Marketwatch
Trendlyne Marketwatch
16 Mar 2023
Market closes flat, Wipro and HDFC Life Insurance hit 52-week low

Trendlyne Analysis

Nifty 50 closed at 16,985.60 (13.5, 0.1%), BSE Sensex closed at 57,634.84 (78.9, 0.1%) while the broader Nifty 500 closed at 14,330.35 (10.1, 0.1%). Of the 1,960 stocks traded today, 657 were in the positive territory and 1,257 were negative.

Indian indices closed in the green after recouping losses made in the morning session. Global banks reel under pressure as US local banks face liquidity crunch due to high interest rates. Nifty 50 closed just below the 17,000 mark on a volatile day of trade. FIIs sold equities worth Rs 5,905 crore in the past three trading sessions, while DIIs bought for Rs 5,365 crore.

Nifty Midcap 100 closed in the green, tailing the benchmark index but Nifty Smallcap 100 closed lower than Wednesday’s level. Nifty Metal closed in the red, while Nifty Bank closed in the green after recovering from the day’s low. Nifty IT closed lower despite Nasdaq 100 closing 0.42% higher on Wednesday.

Major Asian indices closed lower. European Indices trade higher after dropping more than 3% on Wednesday. US indices futures are trading in the red, indicating a negative start for the day. US stocks have reacted negatively in the past three trading sessions post the failure of Silicon Valley Bank and Signature Bank in the US, followed by liquidity concerns at Credit Suisse Bank.

  • Relative strength index (RSI) indicates that stocks like Anupam Rasayan India, Jindal Stainless, Cummins India and Max Healthcare Institute are in the overbought zone.

  • Fears over a banking crisis increase as Credit Suisse says it will borrow around 50 billion Swiss francs from the Swiss National Bank to strengthen its finances.

  • Eris Lifesciences acquires nine dermatology brands from Dr Reddy's Laboratories for a cash consideration of Rs 275 crore. The company shows up in a screener of stocks with strong cash generating ability from core business.

  • According to reports, Patanjali Foods’ management plans to launch a follow-on public offer (FPO) in April to increase its public shareholding to 25%. It says the freeze on promoter-held shares will not impact the company’s operational and financial performance.

  • Zee Entertainment Enterprises rises as reports suggest that the company has agreed to repay dues worth $10 million owed to IndusInd Bank.

  • Sonata Software completes the acquisition of Quant Systems and its subsidiaries. Sonata pays Rs 537.3 crore upfront and will pay Rs 785.3 crore more over the next two years. The stock touches a 52-week high in the past week.

  • Wipro hits a 52-week low of Rs 370 in trade today. Reports suggest that the company may log lower revenue growth in Q4FY23. Analysts from IDBI Capital believe that slow order wins coupled with recession and slowdown in European markets will impact near-term growth.

  • Zee Entertainment Enterprises, ICICI Prudential Life Insurance, Adani Green Energy and Hindustan Petroleum Corp are trading above their third resistance or R3 level.

  • IndusInd Bank falls over 2.5% in trade. Reports suggest that 7.35 lakh shares (0.13% equity) amounting to Rs 74.37 crore change hands.

  • Patel Engineering is rising as its bags two irrigation projects worth Rs 1,265 crore through a joint venture. The company’s share in these orders is Rs 485 crore. The stock shows up in a screener for companies with strong annual EPS growth.

  • Bharat Petroleum Corp and Hindustan Petroleum Corp are surging as Brent crude prices drop below $75 per barrel for the first time since 2021.

  • Wipro and HDFC Life Insurance reach their 52-week lows of Rs 370 and Rs 457.8 per share respectively. Wipro has fallen 8.8% over the past month, while HDFC Life declined 10.4%.

  • Sameer Khetarpal, CEO and Managing Director of Jubilant FoodWorks, says the company plans to add 50 Popeyes stores in a year and 250 stores in the medium term. He expects the QSR industry to expand by 9-10%.

  • Man Industries (India) rises as it receives an export order worth approximately Rs 1,300 crore. The stock shows up in a screener for companies with low debt.

  • Commercial services & supplies, hardware technology & equipment and media sectors fall more than 20% over the past 90 days.

  • Brent crude oil price falls the most since 2021 to below the $75 dollar per barrel mark amid recessionary fears. The decline is also due to an increase in OECD inventory, which stands at its 18-month high.

  • ICICI Prudential Life Insurance rises as its board approves the appointment of Anup Bagchi as Managing Director and Chief Executive Officer of the company, effective from June 19, 2023, or the date of regulatory approval.

  • DLF is rising as it witnesses record pre-launch sales of Rs 8,000 crore for its high-rise residences, The Arbour, located in Sector 63, Gurugram.

  • ICICI Securities maintains its ‘Buy’ rating on LTIMindtree with a target price of Rs 5,651, indicating an upside of 24.7%. The company's strong cross-sell opportunities, cost synergies and ability to participate in larger deals post-merger make it the brokerage’s top pick in the IT sector. It expects the firm’s profit to grow at a CAGR of 16.6% over FY22-25.

  • CLSA maintains its ‘Buy’ rating on Ashok Leyland with a target price of Rs 189. The brokerage says price hikes could impact volumes slightly but it will improve margins. It adds that the company could maintain its market share gains in heavy trucks.

  • Hikal rises in early trade after 6.14 lakh shares (0.5% equity) amounting to Rs 18.3 crore change hands.

  • Metal stocks like Hindalco Industries, Jindal Steel & Power, Tata Steel, Welspun Corp and Hindustan Copper are falling in trade. The broader sectoral index Nifty Metal is also trading in the red.

  • Samvardhana Motherson International is falling as reports suggest that its promoter company Sumitomo Wiring Systems is set to sell a 3.4% stake (23 crore shares) worth Rs 1,607 crore in the company. The floor price for the deal is fixed at Rs 69.9 per share, a 9% discount from yesterday’s closing price.

  • BSE and NSE freeze 29.2 crore shares held by promoters and promoter groups of Patanjali Foods as it has failed to raise public shareholding to 25% within the stipulated time. Patanjali Foods has a low valuation score, indicating ‘Expensive Valuation’, according to Trendlyne DVM scores.

Riding High:

Largecap and midcap gainers today include Zee Entertainment Enterprises Ltd. (206.70, 9.34%), ICICI Prudential Life Insurance Company Ltd. (409.65, 6.67%) and Bharat Petroleum Corporation Ltd. (350.90, 6.24%).

Downers:

Largecap and midcap losers today include Samvardhana Motherson International Ltd. (68.50, -10.81%), Hindalco Industries Ltd. (384.95, -5.22%) and Jindal Steel & Power Ltd. (553.70, -4.56%).

Volume Shockers

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

Top high volume gainers on BSE included Medplus Health Services Ltd. (718.80, 10.81%), Zee Entertainment Enterprises Ltd. (206.70, 9.34%) and Hikal Ltd. (311.25, 8.81%).

Top high volume losers on BSE were Samvardhana Motherson International Ltd. (68.50, -10.81%), Jubilant Pharmova Ltd. (277.85, -4.89%) and Avanti Feeds Ltd. (344.95, -3.21%).

Network 18 Media & Investments Ltd. (54.70, 7.36%) was trading at 8.9 times of weekly average. Bharat Petroleum Corporation Ltd. (350.90, 6.24%) and ICICI Prudential Life Insurance Company Ltd. (409.65, 6.67%) were trading with volumes 8.0 and 7.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

3 stocks hit their 52-week highs, while 50 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Zydus Lifesciences Ltd. (479.65, 1.32%), NCC Ltd. (101.75, 1.45%) and Petronet LNG Ltd. (237.85, 0.49%).

Stocks making new 52 weeks lows included - Atul Ltd. (6,945.45, 1.83%) and Avanti Feeds Ltd. (344.95, -3.21%).

9 stocks climbed above their 200 day SMA including Medplus Health Services Ltd. (718.80, 10.81%) and Hindustan Petroleum Corporation Ltd. (244.50, 6.14%). 24 stocks slipped below their 200 SMA including Samvardhana Motherson International Ltd. (68.50, -10.81%) and Gujarat Fluorochemicals Ltd. (3,060.50, -3.91%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
15 Mar 2023
Market closes lower, Voltas announces price hikes in April

Trendlyne Analysis

Nifty 50 closed at 16,972.15 (-71.2, -0.4%), BSE Sensex closed at 57,555.90 (-344.3, -0.6%) while the broader Nifty 500 closed at 14,320.30 (-38.3, -0.3%). Of the 1,947 stocks traded today, 834 were on the uptick, and 1,050 were down.

Indian indices gyrated between losses and gains throughout the day and settled in the red for a fifth straight trading session. Nifty 50 fell nearly 240 points from its day’s high and closed below the key 17,000 mark on a volatile day of trade.

Nifty Smallcap 100 closed in the green, outperforming the benchmark index. Nifty Bank and Nifty PSU bank closed in the red for a fourth straight session. However, Nifty Metal closed 1.8% higher. Nifty IT closed in the red, despite the tech-heavy Nasdaq 100 index closing over 2.3% higher on Tuesday.

Barring Indian indices, all other major Asian indices closed in the green. However European stocks traded lower, dragged by banking stocks, which pared early gains as investors assessed developments in the US financial sector. Brent crude oil futures traded higher after falling nearly 4% on Tuesday as traders gauged the crude oil demand outlook.

  • Shriram FinancebeatsBajaj Finance in YoY revenue and profit growth, PE ratio and Price to Book Value. But it lags in Piotroski score, MF holdings and average broker target price upside.

  • KEC International is rising as it bags orders worth Rs 1,028 crore across various business verticals like transmission and cables. It shows up in a screener for stocks with book value per share increasing over the past two years.

  • Ramkrishna Forgings and Titagarh Wagons are rising as they bag a project from the Ministry of Railways under the Aatma-Nirbhar Bharat scheme to manufacture and supply 15.4 lakh forged wheels over 20 years.

  • Ameera Shah, Managing Director of Metropolis Healthcare, says consumer attitude is changing. She adds that there is price pressure in the wellness and semi-specialised segments.

  • Voltas is rising as it announces price hikes in April. Nomura sees a 25% upside in the stock with a ‘Buy’ rating. It expects the AC industry to grow as it is relatively under-penetrated. The stock shows up in a screener with improving book value for the past two years.

  • KPIT Technologies gains over 7% in trade today. The stock ranks high on Trendlyne’s checklist with a score of 78.26% and shows up in a screener for companies with high annual EPS growth.

  • Nifty Media, Nifty Private Bank and Nifty IT indices fall more than 5% in the past month.

  • ICICI Direct upgrades its rating on Data Patterns to ‘Buy’ from ‘Hold’ with a target price of Rs 1,555. This implies an upside of 17.7%. The brokerage believes the company will benefit from Centre's indigenisation push given its robust order book, product development and expertise in defence electronics. It expects the firm’s profit to grow at a CAGR of 28.5% over FY22-25.

  • PS Patel, Chairman and Managing Director of PSP Projects, says the company’s overall orderbook of Rs 6,400 crore will be executed in 2-2.5 years. He adds that the margin of a few projects has been impacted by high raw material prices.

  • Citi sees an 82% upside in the stock price of One97 Communications (Paytm), according to reports. In its February operational update, Paytm’s loan disbursals have increased 286% YoY to Rs 8,086 crore. The stock ranks medium on the Trendlyne checklist score.

  • Metal stocks like Hindustan Zinc, Jindal Steel & Power, Tata Steel, National Aluminium Co and Steel Authority of India are rising in trade. All constituents of the broader sectoral index BSE Metal are also trading in the green.

  • Suzuki Motor Corp, promoter of Maruti Suzuki India, buys a 0.11% stake aggregating to 3.45 lakh shares in the company.

  • Hindustan Construction Co continues to rise after bagging an order from the National High-Speed Rail Corp to build a bullet train station yesterday. The cost of the project is Rs 3,681 crore. However, it shows up in a screener for stocks with declining net cash flows.

  • Jefferies initiates coverage on Sona BLW Precision Forgings with a ‘Buy’ rating and a target price of Rs 575. The brokerage believes the company can grow its differential business with a focus on R&D and Indian cost advantage. It likes Sona's strategy to expand component portfolio.

  • Cipla inks an agreement with Africa Capitalworks to divest a 51.2% stake in Cipla Quality Chemical Industries (CQCI) for $25-30 million. Subsequently, CQCI will cease to be a subsidiary of Cipla.

  • Citi maintains its ‘Buy’ rating on Maruti Suzuki with a target price of Rs 12,500. The brokerage says the company remains its top pick in the Indian auto segment. It believes Maruti’s market share will improve with new utility vehicle models.

  • GMR Airports Infrastructure, Aster DM Healthcare and HDFC outperform the Nifty 50 index over the month post their Q3FY23 results.

  • NBCC (India) receives a work order worth Rs 500 crore from the government of Puducherry to construct a government medical college and hospital in Karaikal, Puducherry. The stock shows up in a screener for companies with book value per share improving over the past two years.

  • Railtel Corp of India is rising as it wins an order from the Centre for Development of Advanced Computing for the supply, installation, testing and commissioning of IT infrastructure in green field data centres in New Delhi and Bengaluru. The project cost is around Rs 287.5 crore.

  • PNC Infratech emerges as the lowest bidder for an NHAI project worth Rs 1,260 crore to build a six-lane greenfield highway in Bihar on hybrid annuity mode. The stock shows up in a screener for companies with high TTM EPS growth.

Riding High:

Largecap and midcap gainers today include Adani Enterprises Ltd. (1,839.00, 5.80%), Adani Green Energy Ltd. (740.40, 4.86%) and Oil India Ltd. (259.30, 3.87%).

Downers:

Largecap and midcap losers today include Astral Ltd. (1,349.80, -2.91%), Adani Total Gas Ltd. (919.85, -2.89%) and Samvardhana Motherson International Ltd. (76.80, -2.54%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included KPIT Technologies Ltd. (847.30, 8.84%), Varroc Engineering Ltd. (272.45, 6.36%) and Alok Industries Ltd. (12.75, 5.37%).

Top high volume losers on BSE were Swan Energy Ltd. (245.60, -12.07%), Sun Pharma Advanced Research Company Ltd. (169.35, -5.47%) and Adani Total Gas Ltd. (919.85, -2.89%).

Hikal Ltd. (286.05, 0.69%) was trading at 16.7 times of weekly average. Procter & Gamble Hygiene & Healthcare Ltd. (1,3429.95, -1.25%) and GMR Airports Infrastructure Ltd. (41.35, 4.82%) were trading with volumes 5.1 and 5.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

5 stocks took off, crossing 52-week highs, while 33 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Cummins India Ltd. (1,697.60, 0.88%), Gujarat Pipavav Port Ltd. (110.35, 1.89%) and Petronet LNG Ltd. (236.70, 3.32%).

Stocks making new 52 weeks lows included - Caplin Point Laboratories Ltd. (629.70, -1.15%) and Gillette India Ltd. (4,436.30, -0.56%).

17 stocks climbed above their 200 day SMA including Indian Energy Exchange Ltd. (151.45, 4.23%) and 360 One Wam Ltd. (434.60, 2.58%). 11 stocks slipped below their 200 SMA including Swan Energy Ltd. (245.60, -12.07%) and Samvardhana Motherson International Ltd. (76.80, -2.54%).

 
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The Baseline
14 Mar 2023
Five analyst picks this week
By Suhas Reddy
  1. Mahindra & Mahindra: Motilal Oswal maintains its ‘Buy’ rating on this cars & utility vehicles manufacturer with a target price of Rs 1,525. This implies an upside of 30.1%. Analysts Jinesh Gandhi, Amber Shukla and Aniket Desai are positive about the company’s prospects as demand for its automobiles and tractors remains healthy despite macroeconomic challenges and supply chain disruptions. 

However, they added, “with multiple industry-wide challenges emerging in the foreseeable future”, the analysts expect lower volume growth for both the divisions, compared to earlier expectations. They project lower growth for the company’s sports utility vehicle (SUV) business in FY25 due to increasing competitive launches. 

Gandhi, Shukla and Desai anticipate margins to improve from its Q3FY23 levels on the back of price hikes, cost-cutting measures and easing supply of semiconductors. According to them, the company also plans to grow its nascent farm equipment business by 10X in FY27. They expect the firm’s net profit to grow at a CAGR of 20% over FY23-25.  

  1. Astral: ICICI Securities maintains its ‘Buy’ rating on this adhesive manufacturing company with a target price of Rs 2,373. This implies an upside of 71.4%. The target price was set for the pre-split share price. Analysts Arun Baid and Sohil Kaura “continue to like Astral for its strong brand, comprehensive product portfolio, wide distribution reach and robust balance sheet”. They see the healthy demand trend in the pipe market as a key positive and say it will lead to robust volume growth in the near term. The analysts also expect the firm’s margins to improve on the back of falling raw material prices and stable PVC resin prices. 

Baid and Kaura are upbeat about the company’s ramp-up in the bathware segment. As of February 2023, the company has opened 320 showrooms and plans to open around 500 more by Q1FY24. The analysts expect the company’s revenue to grow at a CAGR of 17.1% over FY23-25.  

  1. Greenply Industries: IDBI Capital initiates a ‘Buy’ coverage on this plywood manufacturer with a target price of Rs 171. This indicates an upside of 22.9%. Analysts Bhavesh Chauhan and Kuber Chauhan say, “Greenply is a proxy play on rising real estate sales in India as it is the second largest plywood company in India and is on the verge of commissioning a 2,40,000 cubic board metre medium-density fibreboard plant in Vadodara, Gujarat.” They expect the plant to ramp up production during FY24  and anticipate 65% utilisation in FY25, leading to strong growth in overall sales.

Post expansion, Chauhan & Chauhan expect net profit to grow at a CAGR of 35% over FY23-25 and estimate the plant’s revenue potential at Rs 600-650 crore at its peak. They also predict free cash flows will remain strong and net debt will fall sharply during FY24-25, as the company has no major capex plans. According to the analysts, Greenply is a dominant player and its stock is trading at a significant discount, compared to Century Plyboards.

  1. Tata Chemicals: Geojit BNP Paribas reiterates its ‘Buy’ call on this chemicals company with a target price of Rs 1,197, indicating an upside of 23%. In Q3FY23, the company’s profit rose 26% YoY to Rs 391 crore and revenue increased 31.6% YoY. Analysts from Geojit say, “The company posted decent earnings on account of stable demand, better realisations and cost management.” Tata Chemicals’  management expects soda ash demand to rise and supply to tighten in the coming quarters, which the analysts believe will lead to better realisations.

According to the analysts, “Despite recessionary pressure in multiple geographies, the company’s orders are fully booked and they expect a strong market for its products, aided by the Chinese market slowly opening up.” They are also optimistic about the  focus on capacity expansions, maximising plant utilisation and improving cost efficiency. 

  1. Bharti Airtel: Anand Rathi maintains its ‘Buy’ rating on this Telecom Services provider with a target price of Rs 890, indicating an upside of 15.6%. Analysts at Anand Rathi believe that the firm’s revenue will continue to grow over the coming quarters, led by rising customer additions and improving margins. They are upbeat about the firm’s expansion plans as well. “It plans to expand to 40,000 rural areas in India and enhance its combined services (mobile, broadband, DTH, B2B) in existing top 150 cities through 5G rollout,” they add.

The analysts expect the firm’s average revenue per user (ARPU) to continue to grow and are bullish about the management’s plan to gradually increase it to Rs 300 in the medium term from Rs 193 in Q3FY23. They anticipate Bharti Airtel’s revenue to grow at a CAGR of 16.1% over FY22-25.  

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

(You can find all analyst picks here)

 
Trendlyne Marketwatch
Trendlyne Marketwatch
14 Mar 2023
Market closes lower, IT Dept investigates Cipla on alleged tax violations

Trendlyne Analysis

Nifty 50 closed at 17,043.30 (-111, -0.7%) , BSE Sensex closed at 57,900.19 (-337.7, -0.6%) while the broader Nifty 500 closed at 14,358.55 (-95.9, -0.7%). Of the 1,965 stocks traded today, 519 were in the positive territory and 1,397 were negative.

Indian indices close in the red, as markets globally turn volatile and the crisis around US regional banks continues. Nifty 50 closed below the 17,100 mark on a volatile day of trade. The Indian volatility index, India VIX, rose above 16. The data released by Ministry of Commerce & Industry indicated wholesale price index (WPI) for February fell to two year low of 3.85%, in line with economists expectation of 3.90%.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, tailing the benchmark index. Nifty Pharma and Nifty Media closed flat. All other major sectoral indices closed in the red. The Nifty PSU Bank index closed 1.7% lower than Monday’s level, tailing Dow Jones US Banks Index, which closed 7.32% lower on Monday.

Major Asian indices closed lower, tailing US indices, which closed lower on Monday. European Indices trade lower amid weak global cues. US indices futures are trading in the red indicating a negative start for the day. US stocks have reacted negatively in past two trading sessions post the failures of Silicon Valley Bank and Signature Bank in the US

  • Coforge sees a short buildup in its March 29 future series as its open interest rises 12.8% with a put-call ratio of 0.42.

  • Cipla hits a 52-week low as reports suggest that the Income Tax Department is investigating the company for alleged tax violations and avoidance. Initial investigation suggests wrongful tax claims worth Rs 400 crore. The stock is down 15% in the past month.

  • Emami and Lakshmi Organic Industries hit their 52-week lows of Rs 369.2 and Rs 245.6 respectively. Emami has fallen 23.7% in the past year, while Lakshmi Organic went down 41.3%.

  • HCL Technologies trades lower in a volatile market. The stock ranks high on the Trendlyne checklist score and shows up in a screener with improving revenue for the past four quarters.

  • Reports suggest that 1.89 lakh shares (0.26% equity) of Persistent Systems, amounting to Rs 85.5 crore, change hands in a large trade.

  • Tata Consultancy Services, HDFC and Bajaj Finance perform better than their sectors with annual RoA of 27%, 2.3% and 3.3% respectively.

  • Tube Investments of India is rising as it forays into the contract development and manufacturing operations (CDMO) business. It enters into an agreement with N Govindarajan to incorporate a subsidiary to start this CDMO business, subject to shareholders' approval. Tube Investment will invest close to Rs 285 crore in the form of equity and convertible shares.

  • Axis Direct maintains its ‘Buy’ rating on Bharti Airtel with a target price of Rs 855, indicating an upside of 11.5%. The brokerage is positive about the company’s prospects due to its high market penetration, strong digital portfolio and growing average revenue per user. It expects the firm’s net profit to grow at a CAGR of 53.1% over FY22-24.

  • India’s WPI inflation declines from 4.73% in January to 3.85% in February due to a fall in the prices of crude petroleum & natural gas, non–food articles, food products and minerals, among others.

  • IT stocks like Coforge, Mphasis, LTIMindtree and Tech Mahindra are falling in trade. The broader sectoral index Nifty IT is also trading in the red.

  • Bajaj Finance falls for five sessions. The stock ranks high on Trendlyne’s durability score but low on momentum and valuation scores. However, 18 analysts recommend a ‘Buy’, while seven call for ‘Sell’.

  • Macquarie maintains an ‘Outperform’ on Hindustan Unilever with a target price of Rs 3,050. The brokerage says that channel checks indicate a stable demand trend. It expects the company’s EBITDA to grow 12% in Q4.

  • PSU banks like Indian Bank, Bank of India, Union Bank of India and Punjab & Sind Bank are falling in trade. The broader sectoral index Nifty PSU Bank is also trading in the red.

  • Food, beverages & tobacco and metals & mining sectors gain more than 8% in the past six months.

  • Rekha Jhunjhunwala, Rakesh Jhunjhunwala's wife, buys a 5.22% stake in Raghav Productivity Enhancers on Friday.

  • India’s CPI inflation eases slightly to 6.44% in February from 6.52% in January but remains above RBI’s tolerance limit of 6%. Food inflation stands at 5.95%.

  • Surya Roshni is rising as it receives orders worth Rs 96.4 crore from Hindustan Petroleum Corp for the supply of coated steel pipes in Rajasthan, Bihar, Jharkhand and West Bengal. The company shows up in a screener for stocks with consistently high returns over the past five years.

  • Divgi Torq Transfer Systems’ shares list at a premium of 5.1% to the issue price of Rs 590 on its debut on the bourses. The Rs 412 crore IPO has been subscribed for 5.4X the total shares on offer.

  • CreditAccess Grameen Bank continues to fall despite reporting an increase in assets under management from Rs 17,786 crore in Q3FY23 to Rs 20,000 crore till date. So far, the bank has disbursed loans worth Rs 5,000 crore in Q4FY23. It shows up in a screener of stocks with decreasing provisions in recent results.

  • Blackstone sells its 20.5% stake (11.9 crore shares) worth Rs 4,917.4 crore in Sona BLW Precision Forgings in a bulk deal. The shares have been picked up by the Government of Singapore, Societe Generale and HDFC Mutual Fund, among others. In another deal, First Sentier Investment sells a 1.74% stake (12.5 lakh shares) worth Rs 45.7 crore in Mahindra Logistics.

  • Promoter Mahindra and Mahindra sells a 6.1% stake (2.3 crore shares) worth Rs 821.3 crore in Mahindra CIE Automotive in a bulk deal. Mahindra’s holding falls to 3.2% from 9.3% with this sale. Societe Generale picks up shares worth Rs 230.4 crore in Mahindra CIE in another bulk deal.

Riding High:

Largecap and midcap gainers today include Sona BLW Precision Forgings Ltd. (431.40, 6.20%), Gland Pharma Ltd. (1,186.15, 2.75%) and Zee Entertainment Enterprises Ltd. (192.45, 2.20%).

Downers:

Largecap and midcap losers today include Adani Enterprises Ltd. (1,738.20, -7.27%), Bank of India (70.85, -5.85%) and Bandhan Bank Ltd. (206.05, -5.44%).

Volume Shockers

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

Top high volume gainers on BSE included Sona BLW Precision Forgings Ltd. (431.40, 6.20%), Gland Pharma Ltd. (1,186.15, 2.75%) and Bajaj Holdings & Investment Ltd. (6,128.65, 2.00%).

Top high volume losers on BSE were Indian Bank (258.50, -8.46%), Intellect Design Arena Ltd. (403.45, -4.64%) and Coforge Ltd. (3,921.65, -3.99%).

Adani Green Energy Ltd. (706.10, -1.49%) was trading at 9.2 times of weekly average. V-Mart Retail Ltd. (2,379.85, -0.66%) and Century Plyboards (India) Ltd. (497.80, -1.56%) were trading with volumes 8.5 and 7.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock overperformed with 52 week highs, while 49 stocks hit their 52 week lows.

Stock touching their year highs included - Sonata Software Ltd. (834.60, 4.40%).

Stocks making new 52 weeks lows included - Avanti Feeds Ltd. (356.10, -0.57%) and Bayer Cropscience Ltd. (4,056.15, -1.26%).

8 stocks climbed above their 200 day SMA including EIH Ltd. (168.40, 3.92%) and Lemon Tree Hotels Ltd. (77.90, 3.32%). 34 stocks slipped below their 200 SMA including Hitachi Energy India Ltd. (3,261.20, -6.36%) and Eureka Forbes Ltd. (451.00, -3.01%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
13 Mar 2023
Market closes lower, private banks are falling in trade

Trendlyne Analysis

Nifty 50 closed at 17,154.30 (-258.6, -1.5%), BSE Sensex closed at 58,237.85 (-897.3, -1.5%) while the broader Nifty 500 closed at 14,454.45 (-225.4, -1.5%). Of the 1,982 stocks traded today, 211 were on the uptick, and 1,737 were down.

Nifty 50 fell over 370 points from its day’s high and closed in the red on a volatile day of trade. Gold, a safe-haven asset, extended its gains for the third straight day and traded higher as Silicon Valley Bank (SVB) collapse in the US spooked investors. 

Nifty Smallcap 100 and Nifty Midcap 100 closed sharply lower, following the benchmark index. All major sectoral indices closed in the red. Nifty Bank fell over 900 points and closed 2.3% lower as investors assessed the impact of the SVB collapse on the Indian banking system. 

European indices traded sharply lower, dragged lower by banking sector stocks on concerns of potential contagion from the collapse of SVB. Following the SVB collapse, US regulators shut down Signature Bank on Sunday, making it the third-largest failure in US banking history. Due to the stress on the US banking system, Goldman Sachs expects the US Fed not to deliver rate hikes at its next meeting on March 22.

  • Bosch beats Schaeffler India in YoY profit growth, PE ratio and Price to Book Value. But it lags in YoY revenue growth, MF & FII holdings and one-year price change.

  • Lumax Auto Technologies' arm Lumax Integrated Ventures acquires a majority shareholding in IAC International Automotive India for approx Rs 587 crore, suggest reports.

  • IndusInd Bank, Kalyan Jewellers India, Brightcom Group and NOCIL are trading below their third support or S3 level.

  • Kalpataru Power Transmission and Hindustan Aeronautics touch their all-time highs of Rs 597 and Rs 2,914 per share respectively in a weak market. Kalpataru Power has risen 18.2% in the past 30 days, while Hindustan Aeronautics grew 17.1%.

  • Reports suggest that 27 lakh shares (0.3% equity) of Tech Mahindra, amounting to Rs 310 crore, change hands in early trade today.

  • Shilpa Medicare is falling after US FDA's good manufacturing practice inspection at the company's analytical services division in Hyderabad. Observations of the inspection are related to improvements in existing procedures and are addressable.

  • Private banks like IndusInd Bank, RBL Bank, City Union Bank, Federal Bank and Bandhan Bank are falling in trade. All constituents of the broader sectoral index Nifty Private Bank are also trading in the red.

  • Tata Power’s arm Tata Power Renewable Energy signs a distribution agreement with Tata Power Delhi Distribution for a 510 MW hybrid project. It has a capacity bifurcation of 170 MW from solar and 340 MW from wind power. It will be commissioned within 24 months from the execution date.

  • Macquarie maintains its ‘Neutral’ rating on Axis Bank and ‘Outperform’ on ICICI Bank and IndusInd Bank. The brokerage also raises the target price for most banks. It says low credit costs will lead to multi-year high RoA for the banks.

  • Motilal Oswal maintains its ‘Buy’ rating on Varun Beverages and raises its target price to Rs 1,620 from Rs 1,550. This implies an upside of 21.9%. The brokerage expects the firm’s growth to be driven by the early onset of summer, increased penetration in new markets and higher acceptance of newly launched products.

  • One97 Communications (Paytm) is rising as the number and value of loans disbursed have grown 94% YoY to 79 lakh and 286% YoY to Rs 9,958 crore respectively in January-February. The stock shows up in a screener for companies with revenue increasing sequentially for the past four quarters.

  • Reports suggest that 2.45 crore shares (6.5% equity) of Mahindra CIE Automotive, amounting to Rs 892.6 crore, change hands in a large trade.

  • Media stocks like New Delhi Television, Dish TV India, Network 18 Media & Investments and Zee Entertainment Enterprises are falling in trade. The broader sectoral index Nifty Media is also trading in the red.

  • Tech Mahindra surges as the company appoints Mohit Joshi as its Managing Director and Chief Executive Officer, effective from December 20, 2023. Mohit Joshi is currently the President at Infosys and his tenure ends on June 9, 2023.

  • Indian rupee appreciates to 81.76 from the previous close of 82.04 against the US dollar in early trade today.

  • Hindustan Aeronautics wins an order worth Rs 677 crore from the Ministry of Defence for the supply of six Domier-228 aircraft for the Indian Air Force.

  • Sona BLW Precision Forgings is falling as reports suggest its promoter Blackstone will sell its whole 20.5% stake through a block transaction at a floor price of Rs 400 per share.

  • Mahindra & Mahindra’s total production in February rises 14% YoY to 56,997 units and sales increase 9.5% driven by healthy growth in passenger vehicle sales. However, exports drop 20% YoY. The stock shows up in a screener for companies with improving net cash flows over the past two years.

Riding High:

Largecap and midcap gainers today include Tech Mahindra Ltd. (1,133.80, 6.84%), Adani Transmission Ltd. (949.65, 5.00%) and Adani Total Gas Ltd. (997.05, 5.00%).

Downers:

Largecap and midcap losers today include IndusInd Bank Ltd. (1,060.10, -7.40%), Sona BLW Precision Forgings Ltd. (406.20, -6.90%) and YES Bank Ltd. (15.65, -5.15%).

Volume Shockers

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

Top high volume gainers on BSE included Tech Mahindra Ltd. (1,133.80, 6.84%), Shipping Corporation of India Ltd. (127.45, 5.16%) and Elgi Equipments Ltd. (477.95, 1.91%).

Top high volume losers on BSE were Mahindra CIE Automotive Ltd. (360.20, -8.42%), Kalyan Jewellers India Ltd. (107.70, -7.47%) and Sona BLW Precision Forgings Ltd. (406.20, -6.90%).

Mahindra Logistics Ltd. (362.10, -2.58%) was trading at 9.3 times of weekly average. Sundram Fasteners Ltd. (977.90, -0.32%) and Hindustan Zinc Ltd. (300.45, -1.30%) were trading with volumes 6.5 and 6.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

6 stocks made 52-week highs, while 30 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Cummins India Ltd. (1,668.10, -0.76%), NCC Ltd. (97.50, -1.86%) and Kalpataru Power Transmissions Ltd. (579.40, -0.23%).

Stocks making new 52 weeks lows included - Atul Ltd. (6,844.05, -2.14%) and Avanti Feeds Ltd. (358.15, -1.76%).

6 stocks climbed above their 200 day SMA including Shipping Corporation of India Ltd. (127.45, 5.16%) and Route Mobile Ltd. (1,347.30, -0.07%). 35 stocks slipped below their 200 SMA including IndusInd Bank Ltd. (1,060.10, -7.40%) and YES Bank Ltd. (15.65, -5.15%).

 
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The Baseline
13 Mar 2023
Chart of the week: New internet companies struggle to deliver returns on capital
By Abdullah Shah

Return on capital employed (RoCE) is a financial ratio that determines a company’s ability to use capital to earn profits. Unlike return on equity (ROE), RoCE gives us a more holistic view of the company’s ability to use all of its capital and in order to generate profits.

This week's chart looks at the RoCE of internet software & services companies, from the old to the new. 

The results suggest that older internet companies are more efficient in generating returns from the available capital. Older companies like Tanla Platforms, Affle (India), IndiaMART InterMESH and Info Edge have higher and positive RoCE values, compared to their newer competitors like FSN E-Commerce Ventures (Nykaa), Zomato, PB Fintech and One97 Communications (Paytm). 

One reason for this could be that companies like Affle and Tanla Platforms, which are heavily focused on B2B rather than B2C businesses, had already figured out the optimal business model by the time of their IPO. . Meanwhile, the newer clutch of internet companies are still finding a path to profitability - such as Zomato, which has recently decided to target home services.   

As a result, the new internet companies (except for Nykaa) are loss-making, using up cash for expenses like marketing, user acquisition and to drive growth.

Tanla Platforms’ annual RoCE for FY22 has jumped 200 bps to 48%, which is higher than the average industry RoCE of 25.5. This helped the company’s three-year average RoCE to grow to 23%. 

Affle (India)’s three-year average RoCE is at 25%, compared to its five-year average of 30%. After plunging 9.1 percentage points to 18% in FY22, its current RoCE level is below the industry average.

Most newer internet companies have negative returns on capital employed. Zomato has the lowest five-year average of -41%, However, its three-year average returns have improved to -39%, despite its RoCE declining by 310 bps to -9% in FY22. 

One97 Communications (Paytm) also has a negative five-year average RoCE of -27%. However, its three-year average returns improved by 400 bps, owing to a 6.6 percentage boost in FY22.  

 
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The Baseline
10 Mar 2023
Five Interesting Stocks Today
  1. Hindustan Aeronautics: This defence stock rose over 5% in trade on Wednesday and touched its 52-week high after bagging a contract from the Ministry of Defence. The contract worth Rs 6,800 crore is for the supply of 70 HTT-40 trainer aircraft to the Indian Air Force.

The new aircraft are meant to boost the training program for air force pilots. This aircraft has been on the list of weapons and systems that India imposed an import ban on for the past 30 months. Hindustan Aeronautics will supply these planes to the IAF over a period of six years.

HAL has risen around 15% in the past month and over 112% in the past year. As a result, the company makes it to a screener of stocks with strong momentum. Defence stocks in general, have been on the rise for the past two years due to the Centre’s focus on reducing import of defence equipment and promoting domestic manufacture. The defence industry has risen close to 78% in the past year.

Post this order win, ICICI Direct initiated coverage on the stock with a ‘Buy’ rating and a target price of Rs 3,240, implying an upside of 14%. The brokerage says that HAL has a healthy order book of Rs 84,000 crore on the back of large-scale orders in the manufacturing segment and engines. It expects HAL to achieve revenue and EBITDA CAGR of 10.3% and 14.8% respectively over FY22-25E. While the company has a huge order book, timely order execution will be key going forward.

  1. JSW Energy: This electric utilities stock has had a difficult six months as it fell 23.3% over the period. But it showed a resurgence in the past month and rose 20.45%. The growth came after the company’s Joint Managing Director and Chief Executive Officer (CEO) Prashant Jain spoke about a rise in demand in February and revealed its plans to expand energy generation capacity. This helped the company show up in a screener of stocks which gained more than 20% in the past month.

The stock has been on a rally since Jain said that the company expects energy demand to improve in the summer owing to the El Nino effect, and an impending heat-wave in India from March to May. It rose 12.7% on February 28 and 11.2% over the past week.

According to Prashant Jain, the company witnessed a 7.5%-8%  increase in power demand in February, owing to growth in economic activities like industrial production and manufacturing. He also mentioned the company’s plans to expand its total energy generation capacity to 10 GW by 2025 and 20 GW by 2030, while also planning to generate 80% of the energy capacity through renewable sources by 2030.

  1. G R Infraprojects: After declining more than 17% from February 14 till March 6 and touching its 52-week low on February 28, this roads & highways construction company shows signs of regaining lost ground. The stock has risen 6.5% since March 6, trading at high volumes on Thursday. This upward price momentum came after the firm announced that it received a completion certificate for the construction of an eight-lane expressway for Rs 1,047 crore in Madhya Pradesh. The company also bagged a contract worth Rs 1,248.4 crore for the construction of a six-lane highway in Bihar. It shows up in a screener for stocks in the PE and P/BV buy zone.

The company’s order book as of Q3FY23 stands at Rs 14,073 crore, of which 87% is hybrid annuity mode (HAM) projects and 6% is engineering, procurement & construction projects. The company is also trying to expand into the transmission and railway segments, which currently account for 2% and 4% of the order book respectively.

The management maintains its order inflow guidance at Rs 15,000 crore for FY23 on the back of a strong order pipeline in the roads segment and opportunities in the railways, transmission and ropeways sectors.

  1. Mahanagar Gas (MGL): This city distribution gas stock rose 8.7% in trade on Monday after it announced plans to acquire a 100% stake in Unison Enviro for Rs 531 crore. Ashoka Buildcon and North Haven are the existing shareholders of Unison Enviro and will transfer their shares to MGL once the Petroleum and Natural Gas Regulatory Board waves a green flag. The stock has risen 10% in the past week, touching a new 52-week high on Thursday. Over the past year, the stock went up 31%.

The acquisition will expand MGL’s distribution network in Ratnagiri, Latur and Osmanabad areas of Maharashtra. It will also help expand its presence in Chitradurga and Davanagere in Karnataka. Reports suggest that volumes may increase to 1 mmscmd (million metric standard cubic meters per day) from current volume of 0.1 mmscmd, by FY28, with an investment of Rs 700-800 crore in Unison Enviro. Another benefit for MGL is Raigad’s (a coastal district in Maharashtra) proximity to Ratnagiri, where it has distribution rights. This would give the company an opportunity to expand beyond the Mumbai Metropolitan area.

MGL has posted robust Q3FY23 results with net profit growth of 3X YoY to Rs 172.1 crore. It beat Trendlyne’s Forecaster estimates by 4.4%. With this acquisition, ICICI Securities reiterates its ‘Buy’ rating on the stock but with a revised target price of Rs 1,125, which is 7% over the previous target price of Rs 1,050. It expects EBITDA to grow to Rs 2,100 crore by FY28E.

According to the brokerage, the acquisition looks meaningful in the medium- and long- term. However, its inability to pass on high gas costs and delayed execution of expansion plans are risks to watch out for. 

  1. Bharat Forge Ltd: Thisindustrial products firm has opened an e-bike manufacturing facility with a production capacity of 60,000 units per annum. The facility will handle the assembling of e-bikes for Tork Motors. The promoter group firm, Kalyani Powertrain, owns a 64.3% stake in Tork Motors. Tork Motors is FAME-II approved and has orders for electric commercial vehicle components. The stock remainedflat post the inauguration of the new facility.

Kalyani Strategic Systems Ltd (KSSL), a wholly owned subsidiary of Bharat Forge, won an order worth Rs 600 crore in Q3. The order book for defence exports stands at Rs 2,000 crore. Bharat Forge is also expecting orders for Advanced Towed Artillery Guns (ATAG) in the coming quarters. This gives execution visibility of 2-3 years for KSSL. The industrial segment of Bharat Forge has also won orders for Rs 265 crore, taking the total order book size to Rs 1,500 crore

The company sees increased demand in aerospace component manufacturing. Currently, aerospace contributes less than 10% of revenue. Bharat Forge is the only firm with prerequisite capabilities to build aerospace components in India.

Bharat Forge has completed the acquisition of JS Autocast for Rs 490 crore, adding roughly Rs 450 crore to its revenue. It has also completed the Sanghvi Systems takeover. The two new acquisitions will grow at a CAGR of 35% for the next two years. The stock shows up in a screener with improving cash flows and good durability.

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