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Trendlyne Marketwatch
28 Sep 2022
Market closes lower, Vodafone Idea falls after Indus Towers asks to clear dues

Trendlyne Analysis

Nifty 50 lost over 145 points and closed in the red, with the volatility index, India VIX, rising over 22%. Indian indices closed lower for a sixth straight session. European stocks followed the global trend and traded lower than Tuesday’s close. Major Asian indices closed in the red, following the US indices which mostly closed lower on Tuesday. US stocks gave up their gains towards the end of the trading session and closed in the red on a volatile day of trade. The Dow Jones fell 0.43% while the S&P 500 closed 0.2% lower. However, the tech-heavy NASDAQ 100 managed to close 0.2% higher. Brent crude oil futures traded higher after rising over 2% on Tuesday as supply concerns emerged due to OPEC production cuts and a hurricane in the Gulf of Mexico.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, following the benchmark index. Nifty Bank and Nifty Energy closed lower than Tuesday’s levels. Nifty IT closed flat, despite the NASDAQ 100 closing higher on Tuesday.

Nifty 50closed at 16,826.15 (-181.3, -1.1%), BSE Sensexclosed at 56,598.28 (-509.2, -0.9%) while the broader Nifty 500closed at 14,594.15 (-133.2, -0.9%)

Market breadth is in the red. Of the 1,922 stocks traded today, 640 were in the positive territory and 1,240 were negative.

  • Medplus Health Services and Can Fin Homes are trading in the oversoldzone, according to the Money Flow Index or MFI.

  • Asian Paints is rising as analysts say a drop in raw material prices and better product mix will drive EBITDA margin growth, according to reports. The stock also features in a screener that has negative to positive growth in sales and profit with strong price momentum.

  • Coromandel International, Chambal Fertilisers, and Indian Potash sign a memorandum of understanding with Canpotex, Canada. According to the MoU, Canpotex will supply up to 15 lakh metric tonne of potash annually, for the next three years to the fertilizer companies.

  • Punjab National Bank, Mangalore Refinery and Petrochemicals, and CG Power and Industrial Solutions trade below their second supportor S2 level as markets trade lower.

  • Vodafone Idea falls in trade after Indus Towers asks the company to clear its dues, failing which access to the tower network would be disrupted, according to reports. Vodafone Idea’s dues to Indus Towers stand at Rs 7,000 crore.

  • Sona BLW Precision Forgings and Indian Energy Exchange hit their 52-week lows of Rs 458.1 and Rs 65.5, respectively. Indian Energy Exchange falls for two sessions, while Sona BLW Precision Forgings trades lower for four sessions.

  • Metal stocks like JSW Steel, Hindalco Industries, National Aluminium, and Coal Indiaare falling in trade. The broader sectoral index BSE Metalis also trading in red.

  • ICICI Securities maintains its ‘Add’ rating on AIA Engineering with a target price of Rs 2,720, implying an upside of 6.7%. The brokerage believes the company is well-placed to benefit from the mining sector’s capacity expansion due to the upswing in the commodity cycle. It believes the company’s ability to pass on increases in input costs and improve product basket to improve profitability. It expects the company’s revenue to grow at a CAGR of 14.7% over FY22-24.

  • City gas distributor stocks like Adani Total Gas, Indraprastha Gas, and Mahanagar Gas rise in a weak market. This is after the Centre takes more time to submit a report on the pricing strategy of gas to meet the expectations of both consumers and producers.

  • Motherson Sumi’s board of directors will meet on Friday to take up a proposal to issue bonus shares.

  • Supriya Lifescience is falling as its CEO and key managerial personnel (KMP) resigns from his post citing personal reasons. The company’s board approves the appointment of Rajeev Kumar Jain as the new CEO and KMP, effective from October 3.

  • Oil & Gas, Coal, and Fertilizers sectors fall more than 6.5% in trade over the past month.

  • Larsen & Toubro receives an engineering, procurement and construction order worth Rs 1,000-2,500 crore from the state government of Assam to construct a medical college and hospital at Golaghat.

  • FMCG stocks like Hindustan Unilever,Nestle India, Britannia Industries, Godrej Consumer Products and Marico are rising in trade, as palm oil price falls 5%.

  • Brent crude is trading below its $100-mark and global cues suggest that the prices are likely to go up on the possibility of a shortage in the supply of oil, according to oilprice.com. This is because of a fall in OPEC’s production of oil to 3.5% of global demand (3.58 million barrels per day) and news that Russia’s exports may fall by 2.4 million barrels per day. Also, with US’ strategic petroleum reserve going below commercial storage will have a direct effect on Europe’s supply of energy. With China's economy re-opening the demand is likely to increase causing a supply shock in the global market.

  • Sharekhan remains optimistic about Vinati Organics’ future growth prospects as it keeps its ‘Buy’ rating on the company with a target price of Rs 2,500. This implies an upside of 22.2%. The brokerage believes the firm’s dominant market share in niche chemical segments, robust balance sheet, and capacity expansion plans will drive profit growth in the coming years. It expects the company’s profit to grow at a CAGR of 31.9% over FY22-24.

  • Power Grid’s board approves an investment of Rs 327.71 crore for a transmission project. The project is to connect Reliance Industries’ Jamnagar Oil Refinery with Jamkhambaliya ISTS PS.

  • Indian rupee touches another record low of 81.9 against the US dollar, in early trade today.

  • Bharti Airtel's promoter Bharti Telecom acquires an additional 19 crore shares (3.2% stake) of the telecom company from the affiliates of Singtel. The promoter now holds a 38.62% stake in the company.

  • V-Sciences Investments sells 0.47% stake (9 lakh shares) in Godrej Agrovet for Rs 45 crore in a bulk deal. The shares were picked up by Unifi Capital via block deals.

  • Torrent Pharma will buy a 100% stake in Curatio Healthcare for Rs 2,000 crore, which includes an upfront payment of Rs 115 crore on the date of signing. This acquisition will help the company expand its presence in the cosmetic dermatology segment in the Indian market.

Riding High:

Largecap and midcap gainers today include Muthoot Finance Ltd. (1,048.65, 3.62%), The New India Assurance Company Ltd. (85.50, 3.20%) and Asian Paints Ltd. (3,570.65, 2.88%).

Downers:

Largecap and midcap losers today include Punjab National Bank (34.85, -5.04%), Adani Green Energy Ltd. (2,051.05, -4.44%) and Au Small Finance Bank Ltd. (582.25, -4.01%).

Volume Shockers

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

Top high volume gainers on BSE included ITI Ltd. (112.15, 8.41%) and Eris Lifesciences Ltd. (698.60, 1.36%).

Top high volume losers on BSE were Torrent Pharmaceuticals Ltd. (1,494.30, -2.58%), CCL Products India Ltd. (500.45, -2.13%) and Star Health and Allied Insurance Company Ltd. (712.05, -0.91%).

Symphony Ltd. (835.90, -0.77%) was trading at 8.5 times of weekly average. Hitachi Energy India Ltd. (3,467.50, -0.47%) was trading with volume 4.8 times weekly average on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

2 stocks overperformed with 52-week highs, while 17 stocks tanked below their 52-week lows.

Stocks touching their year highs included - Cipla Ltd. (1,097.15, -0.14%) and Gujarat Fluorochemicals Ltd. (3,878.70, 6.69%).

Stocks making new 52 weeks lows included - Dhanuka Agritech Ltd. (637.25, -2.46%) and Johnson Controls-Hitachi Air Conditioning India Ltd. (1,385.55, -1.43%).

13 stocks climbed above their 200 day SMA including ITI Ltd. (112.15, 8.41%) and Nesco Ltd. (574.15, 1.88%). 17 stocks slipped below their 200 SMA including Punjab National Bank (34.85, -5.04%) and NOCIL Ltd. (240.05, -3.48%).

 
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The Baseline
27 Sep 2022
Five analyst stock picks this week
By Abhiraj Panchal

Analysts are making some of their final picks ahead of Q2 results, which will start being released early October. Footwear, banking and health stocks are among the favorites.

  1. Campus Activewear: Motilal Oswal initiates a ‘Buy’ coverage on this footwear retailer with a target price of Rs 640. This indicates an upside of 10.1%. Aliasgar Shakir, Harsh Gokalgandhi, and Tanmay Gupta say that the Indian footwear market is witnessing an increase in demand due to younger people aspiring for more fashionable footwear. 

The analysts think that with a vertically integrated manufacturing ecosystem and superior product quality footwear, the company has created an edge over the Indian sportswear market. They believe its effective cost management, quick time to market, and premiumization push are benefiting it in the shift towards sportswear. Shakir, Gokalgandhi, and Gupta add, “Campus’ tenable earnings growth, strong returns profile and self-sustainable growth model warrants rich valuation.” The analysts expect revenue and profit CAGR of 29% and 42% over FY22-25, respectively. 

  1. City Union Bank: IDBI Capital initiates a ‘Buy’ call on this banking company with a target price of Rs 230, indicating an upside of 32.5%. “City Union Bank’s asset quality got impacted due to Covid-19 with GNPA at 5.6% in Q1FY22 as against 3% in FY19 (pre-Covid-19). GNPA declined to 4.7% by the end of FY22 backed by higher recoveries/upgrades (including write-offs) against fresh slippages,” write Bunty Chawla and Debesh Agarwala. 

The analysts note that the bank reported the most consistent performance in terms of return ratios and expect the return on assets ratio to improve to pre-covid levels of 1.5% backed by 15% CAGR in FY23-24 and a decline in credit cost to 1.2% in FY23 against 2.2% FY21. They initiate coverage on City Union Bank on the back of improving asset quality, credit growth being in the high teens, and the restructured assets’ trajectory.

  1. Eicher Motors: Axis Direct upgrades this automobile company to a ‘Buy’ call from a ‘Hold’ with a target price of Rs 4,125. This indicates an upside of 14.4%. According to Aditya Welekar and Shridhar Kallani, Royal Enfield (RE) domestic sales contracted over FY19-22 due to Covid-19, higher vehicle prices, weak consumer sentiments, and supply-chain constraints. However, the analysts say, “both demand and supply constraints are easing now, and lowering commodity prices coupled with vehicle prices that are expected to remain stable should drive an uptick in sales moving forward.” 

RE’s total wholesales stood at 70,112 in August, up 53% YoY. “After channel checks on the pan-India level, most dealers are projecting higher demand this festive season with a few even suggesting overall volumes will cross pre-Covid levels,” say the analysts. Welekar and Kallani expect the volume growth to drive higher operating leverage, which along with the correction in commodity prices, should lead to EBITDA margin expansion over FY22-25.

  1. Krishna Institute of Medical Sciences: ICICI Securities initiates coverage of this healthcare facilities company with a ‘Buy’ rating and a target price of Rs 1,565. This implies an upside of 17.7%. Analysts Vinay Bafna and Rohan John are positive on the company’s long-term growth prospects given its strong brand recall in Andhra Pradesh and Telangana, expansion into newer markets, and healthy margins. Another key advantage of this healthcare services provider is that “it follows an affordable pricing strategy whereby its services are priced lower vs key competitors”, add the analysts. 

Bafna and John believe the firm’s plans to expand into Maharashtra, Bangalore, Chennai, and central India will drive its next phase of growth in the coming years. According to the analysts, it intends to enter these new markets through a series of strategic partnerships and acquisitions to increase its scale of operations. The analysts expect the company’s revenue to grow at a CAGR of 26.7% over FY22-24.

  1. Kennametal India: Edelweiss assigns a ‘Buy’ rating on this metal products manufacturer with a target price of Rs 3,384, indicating an upside of 27.3%. Analyst Tushar Chaudhari expects the company to benefit from the rising manufacturing activity in India, especially the rising capacity utilisation across the automobile sector. He adds that “the company is one of the major beneficiaries of the impending revival in the automobile sector as it is one of the biggest consumers of its hard metal products”. He believes the firm can capitalize on this recovery given its strong balance sheet.

Chaudhari also expects Kennametal’s margins to expand as raw material prices are softening. The main raw materials used by this company are Tungsten Carbide and Cobalt, whose prices have significantly fallen since March 2022. The analyst also says that the focus on indigenization and import reduction will bode well for the business in the long term. He expects the company’s net profit to grow at a CAGR of 22.8% over FY22-25.

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
27 Sep 2022
Market closes flat, HFCL wins purchase orders worth Rs 202.6 crore

Trendlyne Analysis

Indian indices closed flat after gyrating between losses and gains throughout the day, with the volatility index, India VIX, at around 21.5%. European stocks traded higher, taking cues from Asian indices. Most major Asian indices closed in the green, recovering some of their losses, despite the US indices closing in the red on Monday. The Dow Jones and S&P 500 lost over 1% and closed at their lowest levels in 2022. Dow Jones, which comprises 30 large-cap companies, has now lost over 20% from its peak in January, meeting common criteria for the definition of a bear market. Investors continue to assess the impact of aggressive interest rate hikes by central banks on already slowing economic growth. Brent crude oil futures traded higher after falling around 3.3% on Monday due to demand concerns amid slowing global economy.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the green, despite the benchmark index closing flat. Nifty FMCG and Nifty Media closed higher than Monday’s close. Nifty IT closed in the green, despite the tech-heavy NASDAQ 100 index closing lower on Monday.

Nifty 50closed at 17,043.45 (27.2, 0.2%), BSE Sensexclosed at 57,107.52 (-37.7, -0.1%) while the broader Nifty 500closed at 14,755.00 (29.3, 0.2%)

Market breadth is in the green. Of the 1,920 stocks traded today, 1,024 were gainers and 831 were losers.

  • JM Financial is trading in the overbought zone, according to the relative strength index or RSI.

  • Medplus Health Services falls to a new all-time low of Rs 608.15 per share. The stock is falling for the last 11 consecutive sessions.

  • Indian Rupee hits another record low of near 81.66 against the US dollar in trade today.

  • HFCL receives purchase orders worth Rs 202.6 crore consisting of Rs 167.6 crore from Reliance Retail, and Reliance Projects and Property Management Services for the supply of optical fibre cables and of Rs 35 crore from an overseas customer for the supply of various types of cables and related accessories.

  • Amara Raja Batteriesannounces a backward integration plan. The company proposes to buy plastic components for battery business from Mangal Industries in a share swap deal.

  • UNO Minda, Gujarat Gas, and Indraprastha Gas trades above its second resistance or R2 as markets trade higher

  • Advertising & Media, Integrated Oil & Gas, and Special Consumer Services industries rise more than 15% over the past month.

  • Gautam Adani says that Adani Group will invest $100 billion over the next 10 years. 70% of the amount will be invested in the energy transition segment.

  • Nazara Technologies falls after the Tamil Nadu government banned online gaming in the state on Monday, according to reports. The stock shows up on a screener of companies with promoters decreasing their shareholding in the last four quarters.

  • Power Grid Corp of Indiarises as the government turns down REC’s proposal to sell Power Finance Corp's (PFC) stake in REC to the company, according to reports. As the stake sale will not be going through REC will continue to operate as PFC’s subsidiary. PFC acquired REC for Rs 14,500 crore in 2019 and the merger is still in the process of completion.

  • Paint stockslike Asian Paints, Berger Paints, and Kansai Nerolac Paints trade in green as crude oil prices trade at a 9-month low.

  • Axis Direct retains its ‘Buy’ rating on AU Small Finance Bank with a target price of Rs 705, implying an upside of 10%. The brokerage believes the bank is well-placed to drive growth in an increasing interest rate environment given its healthy asset quality, robust disbursement growth, and strong deposit franchise. It expects the company’s net profit to grow at a CAGR of 26.2% over FY22-25.

  • Fitch Ratings maintains its rating on Bharat Petroleum Corp (BPCL) at ‘BBB’, with a stable outlook. The rating agency expects BPCL to incur gross marketing losses in FY23, as oil marketing companies are impacted by changing crude oil prices.

  • Metro Brands touches an all-time high of Rs 948.5 in trade today before giving up its gains and falling nearly 6%. The stock is also outperforming the Sensex by 18.4% in the past month on a better outlook of business in terms of sales, across all its formats. The company expects gross margins to go back to 55-56% in the coming quarters.

  • Sterlite Technologies’ arm Sterlite Global Venture agrees to sell its entire stake in Impact Data Solutions (IDS) to Hexatronic Group. The initial consideration will be worth 9.6 million pounds and the additional earnout consideration will be capped at 7.2 million pounds, which will be based on the EBITDA performance of IDS.

  • Dish TV is falling as its shareholders reject four out of six resolutions at its annual general meeting. The shareholders did not approve the reappointment of Rakesh Mohan as an independent director. Also, the shareholders did not approve the appointment of new statutory auditors S N Dhawan & Co. The board strength is now down to two.

  • Private Equity firm Blackstone Group to sell 7.7 crore units in Embassy REIT worth Rs 2,650 crore via block deals today, according to reports.

  • Hornbill Orchid India sells a 1.4% stake (4.2 lakh shares) in Mastek for Rs 75.5 crore in a bulk deal. In another deal Smallcap World Fund buys a 1.8% stake (5.4 lakh shares) in Mastek for Rs 96.7 crore.

  • Jubilant Foodworks acquires a 29.42% stake in Roadcast Tech Solutions on a fully diluted basis. Roadcast Tech Solutions is a delivery automation SaaS platform helping with last-mile delivery operations. It will buy an additional 10.58% stake by October 26.

  • Mahindra Logistics announces the acquisition of Rivigo Services’ B2B express delivery business, on a slump sale basis. Mahindra will acquire the customers, team, technology and assets of the B2B express delivery segment. The deal is valued at around Rs 225 crore.

Riding High:

Largecap and midcap gainers today include Indraprastha Gas Ltd. (422.95, 6.86%), Gujarat Gas Ltd. (516.65, 6.04%) and Muthoot Finance Ltd. (1,012.05, 5.84%).

Downers:

Largecap and midcap losers today include Varun Beverages Ltd. (1,038.55, -4.45%), Emami Ltd. (499.95, -4.20%) and Tube Investments of India Ltd. (2,577.70, -3.53%).

Volume Rockets

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

Top high volume gainers on BSE included Aster DM Healthcare Ltd. (250.65, 8.69%), Great Eastern Shipping Company Ltd. (524.35, 6.91%) and Indraprastha Gas Ltd. (422.95, 6.86%).

Top high volume losers on BSE were DCM Shriram Ltd. (997.90, -2.18%), Crisil Ltd. (3,100.05, -2.08%) and Phoenix Mills Ltd. (1,337.00, -0.35%).

Akzo Nobel India Ltd. (2,175.60, 1.01%) was trading at 3.9 times of weekly average. Zydus Wellness Ltd. (1,580.05, -0.28%) and Allcargo Logistics Ltd. (389.50, 6.17%) were trading with volumes 3.5 and 3.5 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

2 stocks overperformed with 52-week highs, while 16 stocks hit their 52-week lows.

Stocks touching their year highs included - Cipla Ltd. (1,098.70, 3.10%) and Metro Brands Ltd. (867.80, -2.88%).

Stocks making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (600.15, 0.76%) and Aurobindo Pharma Ltd. (502.90, 0.15%).

13 stocks climbed above their 200 day SMA including Mahanagar Gas Ltd. (851.35, 6.67%) and Dr. Lal Pathlabs Ltd. (2,649.15, 3.19%). 47 stocks slipped below their 200 SMA including Suzlon Energy Ltd. (8.35, -2.34%) and DCM Shriram Ltd. (997.90, -2.18%).

 
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Trendlyne Marketwatch
26 Sep 2022
Market closes in red, PVR plans to invest Rs 350 crore in FY23

Trendlyne Analysis

Nifty 50 lost over 300 points and closed in the red on a volatile day of trade. The benchmark index managed to close just above the 17,000 mark with the Indian volatility index, India VIX, rising above 21.5%. European indices traded mixed with the Italian index trading in the green as right-wing leader Giorgia Meloni secured a majority in Italy's parliamentary elections.

Most Asian indices closed in the red, tracking the US indices which closed lower on Friday. The Dow Jones lost 4% last week and closed at its lowest level since November 2020. The tech-heavy index, NASDAQ 100, also extended its losses by falling over 4.6% last week. Investors continue to be wary of the slowing economic growth amid central banks raising interest rates to combat record-high inflation levels. Brent crude oil futures traded lower and hovered around $85 per bbl, its lowest level since January.

Nifty Smallcap 100 and Nifty Midcap 100 lost over 3% and closed deep in the red, following the benchmark index. Nifty Metal and Nifty Realty fell over 4% and closed sharply lower than Friday’s close. Nifty IT bucked the market trend and closed in the green, despite the NASDAQ 100 closing lower on Friday.

Nifty 50closed at 17,016.30 (-311.1, -1.8%), BSE Sensexclosed at 57,145.22 (-953.7, -1.6%) while the broader Nifty 500closed at 14,725.70 (-332.0, -2.2%)

Market breadth is highly negative. Of the 1,957 stocks traded today, 164 were on the uptrend, and 1,772 went down.

  • PI Industriessees a short build-up in its September 29 future series as its open interest rises 32.2% with put to call ratio of 0.28.

  • Gland Pharmaand Aurobindo Pharmahit their 52-week lows of Rs 2,055.5 and Rs 497.8, respectively. Gland Pharma falls for two sessions, while Aurobindo Pharma trades lower for four sessions.

  • Revenue Secretary Tarun Bajaj says the Centre will reassess global crude oil prices around October 1 and will eliminate windfall tax on crude and petroleum exports, if required. The decision regarding windfall tax will be taken after reviewing incoming data for global crude oil prices.

  • Special Consumer Services, Other Non-Ferrous Metals, and Copperindustries fall more than 5% in trade today.

  • Hindustan Aeronautics sets up an integrated cryogenic engine manufacturing facility in Bengaluru worth Rs 208 crore. This facility will be used to manufacture and supply rocket engines to the Indian Space Research Organisation.

  • PVR plans to invest Rs 350 crore in FY23 to open 100 new screens, says CEO Gautam Dutta. The investment will be funded by cash balances from internal accruals and debt, according to reports. The company also expects its merger with Inox Leisure to be completed by February 2023.

  • Reliance Industries, ITC, and Life Insurance Corp of India trade below their second support or S2 level as markets trade lower.

  • Tata stocks likeTata Chemicals, Tata Motors, Tata Teleservices among others are falling as Tata Sons plans to reduce the number of listed companies to 15 from 29, according to reports. The report comes after Tata Steel's board approved the merger of seven subsidiaries with itself on Friday.

  • Metal stocks likeHindustan Copper, Hindalco Industries, Jindal Steel & Power, National Aluminium Co, and Vedanta are falling in trade. The broader sectoral index Nifty Metal is also trading in the red.

  • Jefferies maintains its ‘Hold’ rating on Tata Steel, with a target price of Rs 95. The brokerage feels that steel prices are sticky. It also says there is a risk in pricing due to Indian steel prices being 6-11% above import parity.

  • ICICI Securities continues to be positive about Gujarat Fluorochemicals’ growth prospects as it retains its ‘Buy’ rating on the company and increases its target price to Rs 4,270 from Rs 3,865. This implies an upside of 15.5%. The brokerage believes the company’s plans of expanding its production capacity and foray into battery chemicals manufacturing will drive revenue growth in the coming years. It expects the company’s revenue to grow at a CAGR of 27.7% over FY22-24.

  • Promoter Mayank Singhal sells a 1.3% stake (20 lakh shares) in PI Industries for Rs 630 crore in a bulk deal on Friday. The shares were picked up by Morgan Stanley Asia Singapore, Mirae Asset Mutual, BNP Paribas, and ICICI Prudential Life Insurance, among others.

  • Realty stocks like Brigade Enterprises, Oberoi Realty, Godrej Properties among others are falling in trade. All constituents of the broaderNifty Realty index are trading in the red.

  • Coal India will sign a memorandum of understanding with Bharat Heavy Electricals, Indian Oil Corp, and GAIL (India) to set up four surface coal gasification projects, according to reports.

  • Suzlon Energy’s board approves the raising of Rs 1,200 crore through a rights issue on Sunday. The company will issue 240 crore equity shares at Rs 5 per share price. The company shows up on a screener with improving book value for the last two years.

  • Britannia Industries' board appoints Rajneet Kohli as Executive Director and Chief Executive Officer. The board elevates Varun Berry to Executive Vice-Chairman, he will also continue to be Managing Director at the company.

  • Indian rupee hits a record low of 81.5 in early trade today, against the US dollar.

  • Harsha Engineers’ shares list at a 36% premium to the issue price of Rs 330, on its debut on the bourses. The Rs 755-crore IPO was subscribed for 74.7 times of the total shares on offer.

  • Nestle S.A's CEO Mark Schneider says the company plans to invest Rs 5,000 crore in India over the next three and a half years, according to reports. The investment will involve setting up new plants, acquisitions and expanding the existing product portfolio.

  • Unichem Laboratories sells a 19.97% stake in Optimus Drugs to Sekhmet Pharmaventures for Rs 270.9 crore. This is the first part of the payment received by Unichem Labs for sale. The company shows up on a screener of stocks with consistent returns over the past five years.

Riding High:

Largecap and midcap gainers today include Emami Ltd. (521.85, 5.29%), Dr. Lal Pathlabs Ltd. (2,567.20, 2.08%) and Ipca Laboratories Ltd. (891.85, 2.05%).

Downers:

Largecap and midcap losers today include JSW Energy Ltd. (296.15, -7.19%), Jindal Steel & Power Ltd. (397.30, -6.69%) and Au Small Finance Bank Ltd. (597.15, -6.38%).

Volume Shockers

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

Top high volume gainers on BSE included J B Chemicals & Pharmaceuticals Ltd. (1,916.20, 3.49%), Westlife Development Ltd. (694.40, 2.76%) and Ipca Laboratories Ltd. (891.85, 2.05%).

Top high volume losers on BSE were Thermax Ltd. (2,205.85, -7.98%), Great Eastern Shipping Company Ltd. (490.45, -6.37%) and Bandhan Bank Ltd. (261.55, -5.97%).

Mahindra CIE Automotive Ltd. (261.80, -1.00%) was trading at 7.8 times of weekly average. Power Grid Corporation of India Ltd. (200.85, -0.84%) and EPL Ltd. (165.35, 1.10%) were trading with volumes 5.2 and 5.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock hit its 52-week highs, while 30 stocks hit their 52-week lows.

Stock touching their year highs included - Westlife Development Ltd. (694.40, 2.76%).

Stocks making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (595.60, -2.26%) and Aurobindo Pharma Ltd. (502.15, -2.88%).

1 stock climbed above their 200 day SMA including Alkem Laboratories Ltd. (3,290.60, 1.01%). 76 stocks slipped below their 200 SMA including RBL Bank Ltd. (112.55, -8.50%) and Varroc Engineering Ltd. (350.55, -7.62%).

 
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The Baseline
23 Sep 2022
FabIndia plans IPO as industry recovers | outperformer stocks with MFs buying shares
By Tejas MD

Another bumper interest rate hike came from the US Federal Reserve on Wednesday - a 75 bps increase which took the US interest rate to 3.25%, the highest it's been since 2008. It's surprising how quickly interest rates have moved up - the rate stood at 0.25% in January 2022. 

However, Indian markets have stayed resilient with the Nifty 50 among the best performing indices globally, and flirting with all-time highs over the past few months. There’s been continued momentum in IPOs as well, and we take a closer look at a familiar name that is getting ready to list - FabIndia.

In this week’s Analyticks,

  • Dressed for success?: FabIndia hopes to take advantage of the apparel industry's recovery
  • Screener: Stocks outperforming Nifty 50 with increasing mutual fund holding, and also in the PE Buy Zone

Apparel industry bounces back post-pandemic, clearing path for IPOs 

During Covid, no one was dressing up: it was all trackpants and old t-shirts. Work calls on Zoom got taken with the video off. Events and weddings were being cancelled or postponed. This hit the apparel industry hard, including FabIndia. 

Now however, apparel companies are staging a comeback. With the exception of TCNS Clothing, top listed companies like Page Industries, Trent, and Aditya Birla Fashion and Retail (ABFRL) have outperformed the Nifty 50 by a huge margin in the past year.

Companies like Vedant Fashions and Go Fashion, which were listed less than a year ago, have also managed to beat the benchmark index comfortably in the past six months. 

FabIndia - which is known for its use of traditional materials and contemporary ethnic wear - wants to time its IPO with the apparel industry’s dramatic recovery. The company filed its draft red herring prospectus (DRHP) with market regulators for its IPO, and received the Securities Exchange Board of India’s (SEBI) nod in January 2022. According to reports, the proposed IPO is sizeable at Rs 4,000 crore. Out of this, the company plans a fresh issue worth Rs 500 crore, on a valuation of Rs 20,000 crore. 

FabIndia's fresh issue is for the voluntary redemption of non-convertible debentures or NCDs issued by the company, and prepayment of a portion of its outstanding borrowings. This means that the IPO will not change the way the company does business. 

FabIndia's "inclusive capitalism" focus 

FabIndia is planning to share the wealth from the IPO with its broader network. Promoters Bimla Nanda Bissell and Madhukar Khera are transferring 4,00,000 equity shares and 3,75,080 equity shares respectively to the artisans and farmers engaged with the company or its subsidiaries. According to FabIndia’s DRHP, the company works with 50,000 artisans and 10,300 farmers as of March 31, 2021.

FabIndia's founders have long talked about "inclusive capitalism", and the business works with a network of "community owned companies" (COCs) owned by artisans and farmers. It remains to be seen how this ownership model will evolve post IPO.

Among the investors selling shares, PI Opportunities fund and Prazim Trading and Investment Company will sell up to 40% and 100% of the equity shares held by them respectively. 

Apparel companies’ topline and bottomline jump YoY in Q1FY23 as demand recovers post-Covid

Q1FY23 was the first quarter in two years without a single Covid-19 lockdown. This helped apparel companies post strong topline and bottomline growth YoY. Revenues and net profits of these companies doubled at minimum, with Go Fashion’s revenue jumping by over 5X YoY in Q1FY23 on a low base. 

This indicates a strong comeback for apparel companies including FabIndia in FY23. According to FabIndia's DRHP, the company had posted losses in FY21 and H1FY22 due to lockdowns. 

However, recent quarterly results from its competitors point to strong revenue and net profit growth in apparels post H1FY22. Barring the two years of the pandemic, FabIndia has been profitable. 

The pandemic changes FabIndia’s revenue mix, organic food segment gains

One factor that helped the company contain its losses during the pandemic was the increased demand for healthy food, with a growing preference for organic and immunity booster items. As a result, the revenue contribution from this segment rose from 18.9% in FY20 to 31.1% in FY21.

Low demand for ethnic wear during the pandemic meant revenue contribution from the apparel segment decreased by 12 percentage points in H1FY22 to 46.5% when compared to FY19. However, with demand for clothing bouncing back, the revenue contribution from this segment is expected to recover. 

Warning sign: FabIndia’s store count is below pre-pandemic levels

The pandemic was a blow to FabIndia, and in some ways the business may not have fully recovered. Even with the strong rebound in apparel, FabIndia’s store count is not yet back to FY20 levels. As of H1FY22, its total store count stood at 309 against the pre-Covid number of 328. 

In comparison, FabIndia's listed peers saw their store count surpass pre-Covid levels in FY22. But revenue generation is not entirely dependent on the number of stores,  especially when we consider rising sales from online channels in FY21.

FabIndia’s online retail revenue contribution rose to 18% in H1FY22 from 4% in FY19. Revenue from FabIndia's online channels rose 40-50% during FY20 and FY21, similar to growth for close competitors like Vedant Fashions and TNCS. 

But retail outlets still play a major role in capturing market share, and the slow recovery here cannot be ignored.

Can FabIndia capitalize on opportunities amid competition?

The long-term growth plan for FabIndia is on track when it comes to market size, both in apparels and ethnic wear. The apparel industry’s market size bounced back in FY22, and it looks likely that demand will sustain in the coming quarters.

The ethnic wear segment’s market size is expected to grow at a CAGR of 6% over FY20-25E. In addition, the organic foods industry is also on the rise and is expected to grow at a CAGR of 24% during 2021-2026E. 

There is no dearth of opportunities for FabIndia to drive its top line and bottom line. But what investors will look for is whether the company is able to capitalize on opportunities, amid competition from its peers. FabIndia is sandwiched between two competitive segments: it directly competes with private label, large-format stores, and also with companies that offer affordable products and sell through online channels. It will have to distinguish itself in an increasingly crowded space.

Screener: Stocks outperforming Nifty 50 with increasing mutual fund holding (PE Buy Zone)

As we see the return of institutional buying in the Indian market,this screener identifies stocks that have outperformed the Nifty 50 index over the past month, and also saw increasing mutual fund holding in the last 30 days. With concerns around market valuations, we only consider stocks in the PE buy zone with a high Trendlyne Durability Score.

The screener shows 27 stocks from the Nifty 500 index. It is not dominated by any one industry but includes stocks from coal, breweries & distilleries, housing finance, and restaurants. Major stocks featured in the screener are Westlife Development, Sapphire Foods, United Spirits and Coal India.

Sapphire Foods has the highest increase in mutual fund holding of 0.9% in August. 10 mutual funds bought into the stock, of which Invesco India Contra Fund is the largest buyer (2.3 lakh shares or 0.36% stake). The stock has outperformed the Nifty 50 index by almost 15 percentage points and is in the PE buy zone with just 14.5% of total trading days spent below the current PE.

United Spirits has one of the highest increases in mutual fund holding with a 0.4% rise in holdings in August. Out of the 66 mutual funds that bought the stock, Nippon India Large Cap Fund - Growth bought the most (14.9 lakh shares or 0.2% stake). The stock has outperformed the Nifty 50 index by 9.6 percentage points and is in the PE buy zone with 16.2% of total trading days spent below the current PE.

You can find more screeners here.

 
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The Baseline
23 Sep 2022
Five Interesting Stocks Today
  1. Metro Brands: This footwear manufacturer’s stock rose 8.5% on Tuesday, continuing its rally from Monday. The company is rising amid expectations of robust growth as demand for footwear picks up on the back of the economy recovering. The improving economic environment aided the company’s bottom line in Q1FY23. It was back in black on a YoY basis as it posted a net profit of Rs 104.8 crore, beating Trendlyne’s Forecaster profit estimates by 26.3%. Metro Brands’ stock rose more than 35% since announcing its Q1 results. This uptrend in the stock has enabled it to make it into this screener which lists companies in the overbought zone according to the money flow index.

The stock’s PE ratio is 73.7 and is currently trading at a PE neutral zone meaning it has traded 72.9% of the days below its current PE. However, its PE ratio is lower than Campus Activewear and Relaxo Footwear’s PE ratio of 121.5 and 111.3, respectively.  Both these stocks are currently trading in the PE sell zone.

Metro Brands CEO Nissan Joseph says the company’s profit has been improving over the last few quarters because of healthy traction on both offline and online channels, according to reports. The firm launched its presence on e-commerce back in 2010 which has enabled it to expand its presence online. Its online business has grown at a 79% CAGR over the past three years. Going forward, the management plans to add another 260 stores by FY25, a 40% rise from its base of 624 stores at the end of FY22. In FY23, the company plans to open 80-85 stores. According to Motilal Oswal, the company’s high store productively along with its robust cash flow generation will allow it to expand further in the coming quarters. 

  1. Ambuja Cements: This cement stock is in the news for several reasons. Firstly, it hit a market cap of Rs 1 lakh crore last Thursday. The stock rose 2.7% in reaction to this. Then the Adani Group completed their acquisition of Holcim’s stake (63.15%) in the company and also announced a capex infusion of Rs 20,000 crore. The company plans to raise this amount by the issue of warrants to Harmonia Trade and Investment Ltd, a promoter group entity. It is yet to receive the board’s approval for this. The stock rose 9% in trade on Monday in reaction to this news. It also shows up on the screener of companies outperforming their industry, with Ambuja Cements outperforming the cement & cement products industry by 21% over the past three months.

However, after all the uproar, news broke on Wednesday of the company’s promoter entities Endeavour Trade and Xcent Trade and Investments pledging their entire stake to fund the acquisition of Holcim’s stake. The pledged shares will be used to raise debt from Deutsche Bank to fund the acquisition. The stock fell 5.7% in the trade as high debt levels are a cause of concern.

Despite this, Jefferies maintains a ‘Buy’ rating on the stock as it expects new leadership and capex plans to drive future growth. Axis Direct maintains a ‘Hold’ rating on the stock despite being positive on the robust capex plans announced by the company. Trendlyne’s consensus recommendation shows mixed reactions among analysts with 16 maintaining a ‘Buy’ and 12 maintaining a ‘Hold’ recommendation on the stock.

  1. Persistent Systems: This IT services company held an investor meet on Tuesday and Wednesday where it reiterated double-digit revenue growth in FY23 and FY24 on the back of robust deal wins. However, this failed to enthuse investors and the company’s stock price continued to hover near its 52-week low. This could be because investors remain wary of a high inflationary environment amid slowing global economic growth that could lead to cost optimization by its clients. To add to this, the company derives over 85% of its total revenues from North America and Europe, where the inflation level remains at record levels amid a growth slowdown.

However, in the Q1FY23 earnings call, Persistent Systems’ management said that the demand environment continues to be robust, and is confident of strong growth in the coming quarters. According to Trendlyne’s Forecaster, revenue is expected to rise 6.9% QoQ in Q2. Notably, the company’s revenue has grown consistently over the past eight quarters.

Axis Direct, in its brokerage report released on Monday, kept its ‘Buy’ rating on Persistent Systems with an upside of 22%. The brokerage remains optimistic about the company’s future growth prospects given its robust order book, higher offshoring, presence across diversified geographies, and lower attrition. This company also shows up in the screener that lists companies with a high analyst rating with at least 20% upside. However, the stock is currently trading in the PE sell zone as the stock has traded 80% of the time below its current PE. 

  1. Shree Renuka Sugars: This sugar company outperformed the Nifty 50 index by 23.5% over the past week. The surge comes after the firm announced its plans to double its ethanol production capacity after market hours last Friday. This positive price movement pushed the company into this screener which lists stocks with strong momentum with prices above short, medium, and long-term moving averages.

The firm is looking to expand its ethanol manufacturing capacity from 720-kilo litres per day (KLPD) to 1,250 KLPD by December 2022. The management expects to incur around Rs 700 crore on this capacity expansion, according to reports. The company is optimistic about the future prospects of ethanol as the Centre has set a target of blending 20% of petrol with ethanol by 2025, from the earlier target of 2030. The Centre wants to increase ethanol blending in petrol to reduce the country’s oil imports. With the current blending rate at 10%, SRS believes the new target provides vast opportunities to expand its footprint in the segment. According to reports, the ethanol segment is expected to receive investments worth Rs 10,000 crore in the coming years.

Chairman Atul Chaturvedi, believes another key positive of increasing ethanol production is that it allows the firm to hedge against volatility in sugar prices, according to reports. If the sugar prices rise the company will have the option of diverting cane juice into sugar and if ethanol demand is higher than usual, it can be diverted accordingly. 

  1. Triveni Engineering & Industries: This sugar maker sold off its entire stake of 21.85% in its listed subsidiary Triveni Turbine for a consideration of Rs 1,609 crore in a bulk deal on Wednesday. The company also outperformed the Nifty 500 index by over 10 percentage points in the past week.

Rati Sawhney, who is the wife of the Chairman Dhruv Sawhney, picked up 10% of the stake sold by Triveni Engineering through an inter-se transfer. The remaining stake was bought by foreign institutional investors like Nomura, Plutus Wealth, Abu Dhabi Investment Authority as well as domestic mutual funds like SBI Mutual Fund and Aditya Birla Mutual Fund. According to the management, the aim behind this stake sale was to kick-start long-term succession planning, have a focused management process for its subsidiary, and exit its non-core business of electrical equipment. 

Notably, Triveni Engineering is managed by the elder son of Dhruv Sawhney, Tarun Sawhney while Triveni Turbine is managed by the younger son Nikhil Sawhney. Now, post this stake sale, there is no cross holding of Triveni Engineering in Triveni Turbine. Basically, the remaining promoter stake of 55.9% in Triveni Turbine is now entirely held by the Sawhney family individually and through an unlisted public company.

In accordance with Tarun Sawhney’s statement, it is highly likely that Triveni Engineering declares a special dividend for the shareholders in order to distribute a part of the sale proceeds. The company may also use a portion of this cash inflow in their upcoming distillery expansion project which involves an outlay of Rs 460 crore. Both these factors have cheered investors and led to the stock’s outperformance.

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

 
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Trendlyne Marketwatch
23 Sep 2022
Market closes lower, NBFC stocks are falling in trade

Trendlyne Analysis

Nifty 50lost over 300 points and closed in the red, on a volatile day of trade. The Indian volatility index, India VIX, rose above 20.5%. European stocks traded lower as investors digest a series of interest rate hikes by central banks. Bank of England followed the US Federal Reserve and raised its key interest rate by 50 bps to 2.25% to combat elevated inflation levels. Major Asian indices closed lower, tracking the US indices, which closed in the red for a third straight session on Thursday. The tech-heavy NASDAQ 100 fell 1.2% while the Dow Jones closed 0.4% lower. Crude oil traded lower and is set to post losses for a fourth straight week amid demand concerns due to slow global economic growth.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Media closed lower than Thursday’s close. Nifty IT closed lower, taking cues from the NASDAQ 100, which closed in the red on Thursday.

Nifty 50closed at 17,332.25 (-297.6, -1.7%), BSE Sensexclosed at 58,098.92 (-1,020.8, -1.7%) while the broader Nifty 500closed at 15,056.45 (-278.9, -1.8%)

Market breadth is sharply down. Of the 1,921 stocks traded today, 289 were on the uptrend, and 1,594 went down.

  • Stocks like Tata Steel Long Products, Cochin Shipyard, Solar Industries India, and RHI Magnesita Indiaare in the overboughtzone, according to the Money Flow Index or MFI.

  • BSE Realty Index, BSE Power, and S&P BSE Utilities fall more than 6.5% in the past week.

  • Reliance Industries' arm Reliance New Energy inks an agreement to invest $12 million in Caelux Corp, a perovskite-based solar technology developer, for a 20% stake in the company.

  • Divi’s Laboratoriesand Vijaya Diagnostic Centretrade above their third resistance or R3 level despite markets trading lower.

  • Shriram Properties Managing Director Murali Malayappan says the company will launch two projects in Q2FY23 and six projects in Q3FY23. The company intends to hike prices by 5-6% in the coming months.

  • Exide Industries is planning to invest Rs 6,000 crore, according to reports. The investment will take place for the next 8-10 years to set up a 12 GWh lithium-ion cell manufacturing plant in Karnataka.

  • Media stocks like Dish TV India, Zee Entertainment Enterprises, Sun TV Network, Saregama India, and TV18 Broadcast are falling in trade. The broader sectoral index Nifty Media is also trading in the red.

  • Patanjali Foods expects Indian palm oil imports to increase 23% in FY23 to 9.5 million tonnes because of rising consumption and prices, according to reports. This will cause refiners to increase their purchase of palm oil, says CEO Sanjeev Asthana. He also implies that prices are under pressure because of stocks.

  • Sharekhan continues to have a positive outlook on State Bank of India as it keeps its ‘Buy’ rating on the PSU bank with a target price of Rs 680. This indicates an upside of 19.3%. The brokerage believes the bank’s healthy loan growth, lower credit cost, and adequate capital levels will drive profitability in the coming quarters. It expects the company’s net profit to grow at a CAGR of 22.9% over FY22-24.

  • Citi downgrades its rating on Mphasis to ‘Sell’ with a target price of Rs 1,900, a downside of 7%. The brokerage says that the company may be impacted by changing macro conditions. It also expects the slowness of the digital risk business to continue.

  • NBFC stocks like Bajaj Finance, SBI Cards & Payments, Cholamandalam Investment & Finance, and Shriram Transport Finance fall in trade. The industry is trading down by more than 2% today.

  • Sterling and Wilson Renewable Energy is rising as its US subsidiary signs a memorandum of understanding (MoU) with the government of Federal Republic of Nigeria. The MoU is to deliver the development, design, construction and commissioning of solar power plants. The plants will be installed at five locations in Nigeria with a total capacity of 961 MW along with battery energy storage systems with a capacity of 455 MWh.

  • Century Textiles and Industries rises as its wholly-owned subsidiary Birla Estates acquires a 10-acre land parcel in South Bengaluru. The project has a development potential of 10 lakh square feet and a revenue potential of Rs 900 crore.

  • Mahindra & Mahindra Financial Services falls over 10% in trade today, after the RBI orders the company to stop recovery or repossession activity through outsourcing arrangements, until further orders.

  • Fidelity Investment sells a 1.42% stake (14.5 lakh shares) in Vijaya Diagnostic Centre for Rs 58 crore through a bulk deal.

  • Bank stocks like HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank, Axis Bank, are falling in trade. All constituents of the broader Nifty Bank are also trading in the red.

  • Tata Metaliks is falling as Managing Director Sandeep Kumar steps down from the position to take up an opportunity within the Tata Steel Group. His resignation is effective from October 31, 2022.

  • Hero MotoCorp increases ex-showroom prices of its motorcycles and scooters up to Rs 1,000 with effect from Thursday. The company is revising its prices to partially offset the impact of inflation.

  • The Indian rupee touches a new record low of 81.2, against the US dollar in early trade today.

  • Promoter Sundaram Clayton buys TVS Motor's 50.05% stake in step-down arm Sundaram Holding USA for Rs 317 crore from Sundaram Auto Components (TVS Motor's wholly-owned subsidiary).

  • Tata Steel’s board of directors approve the merger of seven of its subsidiaries with the company. The seven companies are Tata Steel Long Products, Tinplate Co of India, Tata Metaliks, TRF, Indian Steel & Wire Products, Tata Steel Mining, and S&T Mining Co. The company shows up on a screener which lists stocks with improving cash flow from core business operations over the past two years.

Riding High:

Largecap and midcap gainers today include Dr. Lal Pathlabs Ltd. (2,514.90, 2.83%), Divi's Laboratories Ltd. (3,642.60, 1.75%) and Endurance Technologies Ltd. (1,453.85, 1.56%).

Downers:

Largecap and midcap losers today include Mahindra & Mahindra Financial Services Ltd. (194.40, -13.10%), Power Grid Corporation of India Ltd. (202.55, -7.97%) and Cholamandalam Investment & Finance Company Ltd. (738.50, -5.82%).

BSE 500: highs, lows and moving averages

6 stocks hit their 52-week highs, while 11 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Escorts Kubota Ltd. (2,076.65, -2.36%), ITC Ltd. (346.40, 0.39%) and Lakshmi Machine Works Ltd. (12,771.85, -3.31%).

Stocks making new 52 weeks lows included - Biocon Ltd. (283.80, -1.97%) and Johnson Controls-Hitachi Air Conditioning India Ltd. (1,443.90, -0.97%).

6 stocks climbed above their 200 day SMA including Godfrey Phillips India Ltd. (1,179.75, 3.51%) and Sterling and Wilson Renewable Energy Ltd. (337.10, 2.42%). 27 stocks slipped below their 200 SMA including Power Grid Corporation of India Ltd. (202.55, -7.97%) and Advanced Enzyme Technologies Ltd. (290.90, -5.72%).

 
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The Baseline created a screener Stocks in PE Buy …
22 Sep 2022
Stocks in their buy zone in their PE (Price to Earnings) relative to historical PE
 
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The Baseline created a screener Stocks in P/BV Buy …
22 Sep 2022
Stocks in their buy zone in their P/BV (Price to Book Value) relative to historical P/BV
 
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The Baseline created a screener Stocks in P/BV Sell …
22 Sep 2022
Stocks in their sell zone in their P/BV (Price to Book Value) relative to historical P/BV