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The Baseline
13 Aug 2022
The Big Fight: Contest between ICICI Bank and HDFC Bank | 11 profitable stocks outperforming the Nifty500
By Deeksha Janiani

India turns 75 on Monday. Our generation has been especially lucky, living in a free country and post 1991 liberalization. This week in Analyticks, we do a special face-off between India's top two private banks, who have been pivotal in fuelling the nation's financial growth since 1991. 

  • ICICI Bank has gained on HDFC Bank since FY20. Can the leader get back its momentum?
  • Screener:  11 profitable stocks that are outperforming the Nifty 500 index

Let’s get into it.

ICICI Bank has outperformed HDFC Bank in the last two years

The pandemic caused a tectonic shift in the banking space, especially with customer behavior. A typical savings account holder downloaded the banking app, rather than risk a visit to a crowded bank. For many customers, this was the first time they were doing this.

In the process, they discovered convenience: no searching for their passbook, or waiting in queues, or trying to talk through bulletproof glass to a bank teller. Best of all, their applications got processed much faster.  

Banking customers now increasingly prefer a digital app to meet their regular banking needs, rather than making a branch visit. With this big shift, the growth trajectory of the top two private banks changed. 

ICICI Bank lagged HDFC Bank in terms of topline and bottomline growth between FY16 and FY20. This was owing to the turbulent years of 2016-2018, when the former was caught in a cobweb of rising non-performing loans and misgovernance. Meanwhile, HDFC Bank was like the Rahul Dravid of this space, thanks to its growth consistency during the period.

Cut to the present, and ICICI Bank has found its inner Tendulkar. It has overtaken HDFC Bank in terms of growth pace in the last 8-9 quarters. 

ICICI Bank jumps post-Covid

ICICI Bank’s net interest income (NII) grew at a compounded quarterly growth rate of 4.5% between Q1FY21 and Q1FY23. This was driven by the growth in retail advances as well as SME and business banking loans. 

While the bank’s advances in these segments witnessed 20%+ growth CAGR in this period, other segments were also not far behind. Basically, ICICI Bank’s strategy of ‘One Bank, One ROE’ which focuses on tapping growth opportunities across products worked well in these two years. 

HDFC Bank’s NII growth lagged that of ICICI Bank between Q1FY21 and Q1FY23. This was owing to the slow rise in its retail advances. Sluggishness in auto and credit cards loans hurt growth in retail.

RBI had also barred HDFC Bank from fresh issues of credit cards and new digital initiatives between December 2020 and March 2022. This hit customer acquisition for the bank - and the news headlines covering the RBI ban didn’t help. It was a virtual advertisement to banking customers to go to the competition.

If we compare the NII growth of the top five private banks, ICICI Bank and Axis Bank stand out in terms of sequential and YoY growth in Q1FY23. HDFC Bank’s NII grew the slowest among other private banks. 

A higher share of retail loans, especially mortgages also led to a steady improvement in ICICI Bank’s net interest margins in the past nine quarters. 

If we look at ICICI Bank's loan portfolio, mortgages as well as the SME and business banking segments stand out. The bank’s cross-selling initiatives and its digital offering InstaBIZ aided the growth in SME and business banking loans. Infact, the InstaBIZ application saw an over 55% YoY rise in the value of transactions processed through it in Q1FY23 as the bank made this platform interoperable. 

HDFC Bank sees weaker growth, but has the lowest NPAs

For HDFC Bank, the rural banking and commercial segment grew in prominence between Q1FY21 and Q1FY23. Meanwhile, the corporate segment share reduced in its portfolio, as India Inc made its balance sheet leaner during this period. According to the management, HDFC Bank also lost Rs 40,000 - 50,000 crore worth of corporate business in Q1FY23 by deciding not to lend at lower interest rates.

HDFC bank continues to be the clear winner in terms of its asset quality. The bank had the lowest net non-performing asset ratio both in Q1FY21 and in Q1FY23, among others. A lower proportion of riskier retail loans definitely helped the bank here. 

Game on: HDFC Bank is investing in digital, ICICI Bank to benefit from rate hikes

HDFC Bank now has some serious catching up to do. Its first point of action is to increase the share of high-margin retail advances to 55% from its current 40%. When it does merge with HDFC, mortgage loans will automatically occupy a higher portion in the loans pie, helping the bank achieve its target loan mix. 

A lot is happening in Q2FY23 under the bank's new CEO Sashi Jagdishan. HDFC Bank is launching ‘PayZapp 2.0’, an advanced version of its payment app, which will enable the bank to tap the retail customer base. It launched the ‘Xpress Car Loans’ app in April 2022 to improve the digital experience for customers seeking auto finance. Jagdishan hopes to transform it into a Neo bank or a virtual bank backed by such products. 

HDFC Bank is also deepening its rural footprint and expanding its network coverage to two lakh villages, from one lakh currently. It sees potential in this region as banking penetration remains low at 20-25%. On an overall level, the bank is looking to double its network by adding 1,500-2,000 branches every year from FY23 till FY28.

ICICI Bank, which is already riding high on growth, will see a positive change in its NIMs with RBI hiking repo rates by 140 bps from May 2022. Nearly 70% of its loans are linked to external benchmarks and its credit costs remain benign. ICICI Bank is also seeing good credit demand in the retail segment, but sounded some caution for quarters ahead given the interest rate rise. 

All in all, the dynamics within the sector may change again in next 3-5 years as HDFC Bank works to reclaim its top spot in terms of growth. It has an ambitious target of doubling its balance sheet size on a merged basis in this period. The Rahul Dravid of the banking space is firmly set on the pitch after some yorkers, and is now hoping for a successful innings.  

Screener:Stocks with positive profit growth, outperforming the Nifty 500 index

As most of the results for Q1FY23 are out, we take a look at companies whose net profits consistently grew in the past four quarters, have low debt and outperformed theNifty 500 index in the past month.

This screener reflects 11 Nifty 500 stocks that qualify. Notable ones among these are Hindalco Industries, Tata Elxsi, Schaeffler India, L&T Technology Services and IDFC First Bank.

IDFC First Bank clocked a net profit of Rs 485 crore in Q1FY23 as against a loss in Q1FY22 on lower provisions and higher NII. This banking stock outperformed the index by over 24 percentage points in past month. 

Hindalco Industries comes in next with a 2X rise in its net profits in Q1FY23, led by healthy sales realizations. It recorded consistent net profit growth in the past four quarters and outperformed the Nifty 500 by over 14 percentage points. 

Meanwhile, Tata Elxsi’s net profit grew by over 60% YoY in Q1FY23 on robust demand from foreign automotive OEMs. Despite its pricey valuations, the stock has outperformed the index by 10 percentage points in past month. 

You can find some popular screeners here.

Signing off this week,

The Trendlyne Team

 
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The Baseline
12 Aug 2022
Five Interesting Stocks Today
  1. IRB Infrastructure Developers: This road construction company’s stock rose 6.6% on Monday after announcing its Q1FY23 results. Its net profit jumped more than 5X YoY to Rs 363.2 crore and revenue rose 18.4% YoY. Higher traffic volume and a tariff hike of 10% led to robust growth in toll collections, which aided profit growth. However, the company’s profit was mainly boosted by an arbitration award of Rs 419 crore it received from the National Highways Authority of India. It received 75% (Rs 308 crore) of the compensation but recognised the entire amount as revenue in Q1FY23. This helped the company beat Trendlyne Forecaster’s revenue and profit estimates by 22% and 107.7%, respectively. According to the management, the arbitration award had a net impact of Rs 270 crore on the net profit. The boost in revenue by the arbitration award, and the resultant surge in profit, also helped the company to make it into this screener that lists companies with sequentially rising profits for the past three quarters.

The board of directors approved the transfer of the Vadodara Kim expressway project to the IRB InvIT Fund (trust) for a consideration of Rs 342 crore. This transaction will reduce IRB Infra’s debt by Rs 955 crore. Even though there was no new order wins the management sees healthy revenue visibility for the next three financial years.

  1. Hindustan Aeronautics (HAL): This aerospace company’s stock rose 8.1% and touched its 52-week high on Monday. This comes on the back of a strong business outlook given recent deal wins, according to reports. The stock is up 29.7% over the past month. The stock reacted positively to reports suggesting that the company is working on the development of AI-driven advanced multi-role drones for use in high-altitude areas. The company plans to conduct flying tests in the middle of next year and produce 60 drones in the first phase of the project. In July, the company also signed a contract worth $100 million with Honeywell for the supply and manufacture of 88 engines for the Hindustan Trainer Aircraft. The company shows up on a screener with improving cash flows and a good durability score.

According to the company’s annual report, its order book stood at Rs 82,000 crore at the end of FY22. The management expects a rise in orders as the Centre’s defence budget increased by 9.8% YoY for FY23. The company also plans to foray into civil aviation for both manufacturing and maintenance, repair, and overhaul, or (MRO) opportunities going forward.

  1. Zensar Technologies: This IT services company’s stock fell 7.3% on Monday and hit a 52-week low post its Q1FY23 results. This is despite Zensar Technologies’ revenue rising sequentially for the past five quarters till Q1FY23. Investors were left disappointed due to the 300 bps QoQ fall in its EBITDA margin to 11.2%, in addition to the 43% QoQ fall in net profit fall in Q1. An increase in the cost of delivery, and lower utilisation hurt the company’s EBITDA margin even without wage hikes in Q1. Add to this the 28% attrition (up 20 bps QoQ), and its clearer why investors might be fretting.

With all these factors at play, the management’s original guidance to reach an EBITDA margin in the mid-teens in FY23 was pushed forward to Q2FY24. This probably led to the sharp sell-off on Monday. This stock features in a screener that lists stocks that are near the oversold zone according to the relative strength index, or RSI.

However, brokerages like HDFC Securities and ICICI Securities maintain a positive outlook on the company on the back of strong revenue growth across all verticals. While HDFC Securities’ target price indicates a 36% upside, ICICI Securities’ indicates an upside of about 20%. However, the macroeconomic slowdown in the US (71% of total revenue) may lead to slow top-line growth.

  1. Delhivery: This logistics company’s stock was trading up from June 27 - July 24 until it started falling and slumped 6.6% on Wednesday after it reported a widening in its net loss to Rs 399 crore in Q1FY23 compared to Rs 129.5 crore in Q1FY22. The stock has seen choppy waters since it listed on May 24, falling 2% on listing day. But this coincided with weakness in the broader market as foreign investors were selling Indian shares, which brought the Nifty 50 to 16,000 levels.

After that, the stock rose in June and July, till the company announced its Q1FY23 results. The management attributed the widening loss to integration issues with Spoton (which it acquired in August 2021). The third phase of integration took longer than expected. Going forward, the management says the company is well-capitalized to carry out its expansion plans. But analysts aren’t enthused as ICICI Securities downgraded the stock to a ‘Sell’ from ‘Hold’. It believes that Delhivery will not be able to 'deliver' in the cross-border freight and parcel industry anytime soon, given the competition from Chinese players.

  1. JSW Energy: This power company’s stock rose 3% on Wednesday after it announced that its renewable energy arm, JSW Neo Energy, will buy Mytrah Energy’s 1.75 GW renewable portfolio. JSW Neo will pay Rs 10,531 crore to buy these solar and wind power assets. This sent JSW Energy’s stock higher by 3% on Wednesday, but the stock gave up some of these gains on Thursday.

This acquisition will help JSW Neo Energy to achieve its goal to have a power generation capacity of 10 GW by 2025, up from 4.8 GW currently. Moreover, once the company completes its under-construction project of 2.5 GW by June 2023, 65% of its generation capacity will be renewable power.

Mytrah Energy was on the lookout for buyers for its renewable assets since 2021 due to working capital concerns. In fact, around 205 MW of its capacity is not in operation due to pending dues from power distribution companies in Telangana and Andhra Pradesh. JSW Energy will also take over a considerable portion of debt of this company i.e., Rs 9,132 crore. Its net debt rose 11% QoQ to Rs 7,720 crore in Q1FY23. Moreover, management is most likely to fund a large part of the deal value through debt, according to reports. Hence, its net debt-to-EBITDA ratio is set to rise to 4X from 1.75X currently, after the acquisition is completed. Understandably, the market is on a wait and watch mode on this highly leveraged deal.

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
12 Aug 2022
Market closes higher, Edelweiss keeps ‘Buy’ rating on Max Healthcare Institute

Trendlyne Analysis

Nifty 50 closed higher, with the Indian volatility index, India VIX, falling below 18%. European stocks traded higher than Thursday’s levels. UK’s GDP contracts 0.1% in Q2CY22 against a 0.8% expansion in Q1CY22. However, the 0.1% fall in Q2 is less than the estimated 0.3% contraction. Major Asian indices closed mixed, tracking the US indices, which closed mixed on Thursday. US stocks lost their gains and closed mixed as investors remain uncertain of the pace of federal funds rate hike by the US Federal Reserve. Investors look ahead to the domestic consumer price index or CPI print to be released later today. Brent crude oil futures traded marginally lower after rising over 2% on Thursday.

Nifty Smallcap 100 and Nifty Midcap 100 closed higher, following the benchmark index. Nifty Realty and Nifty Energy closed higher than Thursday’s levels. Nifty IT closed in the red, taking cues from the tech-heavy index, NASDAQ 100, which closed 0.7% lower on Thursday.

Nifty 50closed at 17,698.15 (39.2, 0.2%), BSE Sensexclosed at 59,462.78 (130.2, 0.2%) while the broader Nifty 500closed at 15,140.55 (45.4, 0.3%)

Market breadth is even. Of the 1,895 stocks traded today, 928 were on the uptick, and 905 were down.

  • Pfizer, EPL, GlaxoSmithKline Pharmaceuticals, and PNB Housing Financeare trading with higher volumes as compared to Thursday.

  • Indraprastha Gas sees a long build-up in its August 25 future series as its open interest rises 13% with a put-call ratio of 0.95.

  • Grasim Industries is rising as its net profit increases 16% YoY to Rs 1,933.4 crore despite elevated raw material costs, and power & fuel expenses. Revenue growth of 40.8% YoY led by the cement and textile businesses. The company shows up on the screener which lists companies with zero promoter pledges.

  • Stocks like Adani Enterprises, Tata Chemicals, IDFC First Bank, and Bajaj Finservare in the overbought zone, according to the technical indicator relative strength index or RSI.

  • KR Choksey reiterates its 'Buy' rating on Reliance Industries with a target price of Rs 2,985, indicating an upside of 15.2%. The brokerage believes that retail and Reliance Jio will continue to see higher margins due to improved revenue mix, operating leverage and increased customer engagement. It estimates the company's revenue and EBITDA to grow at a CAGR of 13.4% and 15.6%, respectively, over FY22-24.

  • Metal stocks like JSW Steel, Tata Steel, Hindustan Zinc, Hindalco Industries, and Vedanta are rising in trade. The broader sectoral index Nifty Metal is also trading in the green.

  • Syrma SGS Technology’s Rs 840 crore IPO gets bids for 37% of the available 2.9 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 69% of the available 1.4 crore shares on offer.

  • Sunteck Realty is trading flat despite its Q1FY23 net profit growing 8.2X to Rs 24.9 crore. Revenue growth of 54.7% YoY is driven by the mid-income segment. Even though profit rises, the stock shows up in the screener which reflects companies with inefficient use of capital to generate profits as its return on capital employed falls for two consecutive years.

  • Tata Chemicals and Trent hit their all-time highs of Rs 1,160 and Rs 1,388.9, respectively. Both stocks are rising for five consecutive sessions.

  • Edelweiss maintains its ‘Buy’ rating on Max Healthcare Institute with a target price of Rs 470. This indicates an upside of 26%. The brokerage remains positive on the company’s prospects given its robust balance sheet, asset-light expansion plans, and sector-leading average revenue per occupied bed. It expects the company’s net profit to grow at a CAGR of 23.6% over FY22-24.

  • Phoenix Millsis trading with more than seven times its weekly average trading volume. Ipca Laboratories, Mangalore Refinery And Petrochemicals, PNB Housing Finance, and Bharat Forgeare trading at more than five times their weekly average trading volumes.

  • The Society of Indian Automobile Manufacturers’ (SIAM) data reveals that in July two-wheeler sales rise 9.5% YoY to 13.8 lakh units. Passenger car sales were up 10.3% YoY to 1.43 lakh units.

  • Other Leisure Facilities, Oil Equipment & Services, and Other Non-Ferrous Metals industries rise by more than 3% in trade today.

  • Oil and gas stocks like Indraprastha Gas, Gujarat Gas, Oil And Natural Gas Corp, and Hindustan Petroleum Corp, among others, are rising in trade. The broader sectoral index BSE Oil&Gasis also trading in green.

  • Adani Enterprises is rising as it will invest Rs 57,575 crore to set up two projects in the metal sectors of Odisha. The projects include a four million metric tonnes per annum integrated alumina refinery and a thirty million metric tonnes per annum iron ore (value addition) project.

  • Aditya Birla Capital and its arm Aditya Birla Health Insurance approve a proposal from a subsidiary of the Abu Dhabi Investment Authority for a capital infusion of Rs 665 crore in Aditya Birla Health Insurance for a 9.99% stake.

  • One97 Communications (Paytm) is falling as the management anticipates a slight moderation in growth in the coming quarters. It expects the new RBI norms to add operational complexity to the digital lending business. The company’s loan disbursals in July rises 3X YoY to 29 lakhs and the value of loans disbursed jumps 6X YoY.

  • Phoenix Mills is rising as it posts a profit of Rs 718.7 crore in Q1FY23 compared to a loss of Rs 24.3 crore in Q1FY22. Revenue surges 188.2% YoY to Rs 574.4 crore on the back of the hospitality and property segments. The stock has a high Trendlyne checklist score of 82.6%.

  • Aurobindo Pharma’s Q1FY23 net profit declines 32.4% YoY as raw material costs and other expenses increase. Revenue grows 9.4% YoY driven by the US formulations segment. The company shows up on a screener which lists companies where promoters have increased their pledged shares.

  • Syrma SGS Technology raises Rs 252 crore from investors by selling 1.14 crore equity shares for Rs 220 per share. Investors include Nomura, Eastspring investments, Volrado Ventures, Abakkus Emerging Opportunities, Franklin India, IIFL Special Opportunities Fund, and BNP Paribas Arbitrage, among others.

  • Apollo Hospital’s Q1FY23 net profit fell 35% YoY to Rs 317.1 crore because of a deferred tax reversal of Rs 154 crore. Revenue grew marginally by 0.9% YoY with an increase in revenue from healthcare services. However, revenue from clinics and the pharmacy distribution segments fell in Q1. It shows up in the screener of stocks that are showing a consistent share price growth with a 5-year price change of more than 200%.

Riding High:

Largecap and midcap gainers today include Tata Elxsi Ltd. (10,238.05, 7.78%), Bharat Forge Ltd. (790.20, 7.38%) and Zomato Ltd. (61.75, 6.65%).

Downers:

Largecap and midcap losers today include Ipca Laboratories Ltd. (928.05, -8.68%), Divi's Laboratories Ltd. (3,726.20, -5.62%) and One97 Communications Ltd. (787.30, -4.66%).

Volume Shockers

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

Top high volume gainers on BSE included KSB Ltd. (1,712.35, 8.13%), Tata Elxsi Ltd. (10,238.05, 7.78%) and TCNS Clothing Co. Ltd. (644.05, 7.53%).

Top high volume losers on BSE were Ipca Laboratories Ltd. (928.05, -8.68%), Divi's Laboratories Ltd. (3,726.20, -5.62%) and Shriram City Union Finance Ltd. (1,889.40, -5.07%).

Phoenix Mills Ltd. (1,312.35, 3.12%) was trading at 10.1 times of weekly average. Mangalore Refinery And Petrochemicals Ltd. (75.15, 4.59%) and India Cements Ltd. (193.05, 0.63%) were trading with volumes 9.7 and 8.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

17 stocks made 52-week highs, while 1 stock was an underachiever and hit its 52-week lows.

Stocks touching their year highs included - Adani Transmission Ltd. (3,535.60, 1.19%), Cummins India Ltd. (1,249.75, 0.98%) and ICICI Bank Ltd. (874.40, 1.71%).

Stock making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (652.50, 0.38%).

25 stocks climbed above their 200 day SMA including Indraprastha Gas Ltd. (430.35, 5.45%) and Greaves Cotton Ltd. (171.65, 3.87%). 14 stocks slipped below their 200 SMA including Ipca Laboratories Ltd. (928.05, -8.68%) and Max Healthcare Institute Ltd. (361.90, -2.70%).

 
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The Baseline
11 Aug 2022
Which stocks did superstar investors sell in Q1FY23?
By Suhas Reddy

The buys and sells of Superstar investors are closely watched by the market, providing us insights into which industries and sectors they are bearish or bullish on.

Earlier, we took a look at which stocks superstars bought in Q1FY23.

Now we dig deeper into the stocks ace investors (or Superstars) like Rakesh Jhunjhunwala, Ashish Kacholia, Sunil Singhania, and Dolly Khanna sold in Q1FY23.

Rakesh Jhunjhunwala takes his stake below 1% in five companies

Rakesh Jhunjhunwala sold most of his shares in Delta Corp, with his stake falling below 1% at the end of Q1FY23 (vs at the end of Q4FY22.) Investors were left wondering why this happened considering the company's net profit grew nearly 4X YoY to Rs 57.1 crore in Q1FY23. The company’s stock price plummeted nearly 42% from April 1 till August 8.

Jhunjhunwala also cut his stake below 1% in Indiabulls Real Estate, National Aluminium Co, and TV18 Broadcast from 1.1%, 1.4%, and 1.2%, respectively.

The big bull sold a 0.2% stake in NCC, bringing his stake in the company down to 12.6%. He also reduced his stake in Tata Motors, Nazara Technologies, DB Realty, Autoline Industries, and Indiabulls Housing Finance by 0.1% to 1.1%, 10%, 1.9%, 4.5% and 1.2%, respectively. He sold minor stakes in Federal Bank, and Geojit Financial Services.

Sunil Singhania cuts stake in  Saregama

Sunil Singhania’s Abakkus Fund sold a 0.3% stake in Saregama India in Q1FY23, bringing the fund’s holding in the stock down to 1.1%. He has been selling small stakes in the company in each quarter since Q1FY22. The investor also sold 0.1% of Abakkus’ stake in ADF Foods during Q1 and now holds 1.5%  in the company.

Ashish Kacholia sells part of his stake in Igarashi Motors

Ashish Kacholia cut his stake in auto part maker Igarashi Motors India, and now holds below 1% stake in the company. He held a 1.3% stake in Igarashi at the end of Q4FY22. The stock fell by 22.4% to Rs 278.2 during the quarter.

His largest stake sale in Q1FY23 was Mold-Tek Packaging where he pared his stake by 1.2% QoQ to 1.9%. He also sold a 0.8% stake in Vishnu Chemicals and now holds a 3.4% stake in the company. 

Kacholia also sold a 0.2% stake in Mastek, a 0.1% stake in ADF Foods, and a 0.1% stake in Kwality Pharmaceuticals during the quarter. He now holds a 1.8% stake in Mastek, a 1.0% stake in ADF Foods, and a 1.9% stake in Kwality Pharmaceuticals. He also reduced part of his stake in Acrysil during the quarter.

Dolly Khanna reduces her stakes in cyclical stocks

Dolly Khanna went on a selling spree in Q1FY23 as she reduced her stake in all the fertiliser, agrochemical, and cement companies in her portfolio. Among six newly bought stocks in Q4FY22, she reduced her stake in five of them in Q1FY23. Among these five companies, she reduced her stake in Goa Carbons by 0.3% to 1.1% and inSharda Cropchem by 0.2% to 1.2%.

Khanna’s stakes in Nahar Spinning Mills, Sandur Manganese & Iron Ores, Butterfly Gandhimathi Appliances, Rain Industries, Indo Tech Transformers, and Khaitan Chemicals & Fertilizers are now below 1%.

The ace investor sold her stakes in fertiliser makers Rama Phosphates (sold a 0.3% stake) and Mangalore Chemical & Fertilizers (sold a 0.2% stake). Khanna also reduced her stake in agrochemical firm Aries Agro (sold a 0.1% stake) and textile companies Nitin Spinners and RSWM (sold 0.2% stake in each.)

She sold minor stakes in Polyplex Corp, New Delhi Television, Simran Farms, KCP, NCL Industries, Deepak Spinners, Control Print and Talbros Automotive Components.

Vijay Kedia cuts in Tejas Networks and Ramco Systems

Vijay Kedia sold a 0.8% stake in Tejas Networks during Q1FY23 and now holds a 2.6% stake in the company. The company is a broadband and data networking service provider to telecom and internet service providers. Tejas Network hit an all-time high of Rs 570.9 on April 8, after which it fell to Rs 385.1 on May 12. But since then the stock is on a rising trend.

Kedia also sold a 0.4% stake in Ramco Systems and now holds 2% in the company.

Porinju V Veliyath sells stakes in small-cap companies

Porinju V Veliyath pared his stake in Swelect Energy Systems in Q1FY23 and now holds below 1% compared to 1.1% at the end of Q4FY22. This heavy electrical equipment manufacturer’s stock fell in the recent period, declining 7.7% from April 1 till August 8. Veliyath also sold a minor stake in Orient Bell, a ceramic tiles manufacturer.

 
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Trendlyne Marketwatch
11 Aug 2022
Market closes higher, Axis Sec keeps ‘Buy’ rating on Bharti Airtel

Trendlyne Analysis

Indian indices pared their early gains but closed in the green, with the volatility index, India VIX, falling significantly. The Nifty 50 rose close to 125 points and closed above the 17,650 mark. Investors look ahead to the domestic consumer price index or CPI print, to be released on Friday. European indices followed the global trend and traded higher than Wednesday’s levels. Major Asian indices closed higher, tacking the US indices, which closed sharply higher on Wednesday. US stocks rose as US July CPI rose 8.5%, 200 bps below analysts’ expectations. The tech-heavy index, NASDAQ 100, rose 2.9% while the Dow Jones closed 1.6% higher. Brent crude oil futures traded higher after closing in the green on a volatile day of trade on Wednesday.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty Bank and Nifty Realty closed higher than Wednesday’s levels. Nifty IT closed sharply higher, taking cues from the NASDAQ 100, which closed in the green on Wednesday.

Nifty 50closed at 17,659.00 (124.3, 0.7%), BSE Sensexclosed at 59,332.60 (515.3, 0.9%) while the broader Nifty 500closed at 15,095.15 (109.4, 0.7%)

Market breadth is balanced. Of the 1,897 stocks traded today, 936 showed gains, and 901 showed losses.

  • CSB Bank, Ajanta Pharma, Aditya Birla Sun Life AMC, and GlaxoSmithKline Pharmaceuticals are trading with higher volumesas compared to Wednesday.

  • Mahanagar Gas sees a long build-up in its August 25 future series as its open interest rises 16.7% with a put-call ratio of 0.69.

  • Jefferies India says the consensus Nifty EPS estimates are down by 2.5% for FY23 after the Q1FY23 results season.

  • Stocks like Fine Organic Industries, Adani Enterprises, Tata Chemicals, IDFC First Bank, and ZF Commercial Vehicle Control Systems India are in the overbought zone, according to the technical indicator relative strength index or RSI.

  • IDBI Capital downgrades Indian Hotels to 'Hold' rating from 'Buy' with a target price of Rs 302, indicating an upside of 12%. The brokerage believes that the company's focus on revenue growth, cost optimization, and increasing demand in the business travel segment will help in growth. It expects Indian Hotels' revenue to rise 76% YoY in FY23.

  • Trent rises to touch a new 52-week high as it posts a profit of Rs 130.5 crore in Q1FY23 compared to a loss of Rs 126.6 crore in Q1FY22. Revenue rises 3.6X YoY which helps boost profit despite a significant rise in input costs. It shows up on a screener with stocks that are overbought according to the technical indicator money flow index.

  • JMC Projects receives new orders worth Rs 1,524 crore. The orders include engineering, procurement and construction project for integrated airport development, water projects, and buildings and factories projects in India.

  • Sapphire Foods is back in black as it reports a net profit of Rs 38.2 crore in Q1FY23 compared to a loss of Rs 26 crore in Q1FY22. Revenue increased because of an increase in restaurant sales by 80% YoY. The stock shows up in the screener where mutual funds increased their holding in the last quarter.

  • Medplus Health Services hits an all-time low of Rs 690.4, as its Q1FY23 net profit falls 92.1% YoY to Rs 3.7 crore.

  • ICICI Securities maintains its 'Buy' rating on Eicher Motors and increases target price to Rs 3,640, indicating an upside of 15.4%. The brokerage believes that stability in input prices and improvement in scale would help increase profitability of the two-wheeler portfolio in FY23. The increase in target price is driven by 7% rise in FY24E earnings and valuation rollover by a quarter.

  • Godrej Agrovet's promoter Godrej Industries acquires 54,793 shares in the company for Rs 2.7 crore through open market.

  • Aerospace, Integrated oil & gas and IT Training Services industries rise more than 3% in trade today.

  • Mazagon Dock Shipbuilders is trading with more than 16 times its weekly average trading volume. Home First Finance Company India, Uflex, Endurance Technologies, and Medplus Health Services are trading at more than four times their weekly average trading volumes.

  • Consumer durables stocks like Titan, Voltas, Aditya Birla Fashion and Retail, Crompton Greaves Consumer Electricals and Whirlpool of India are rising in trade. The broader sectoral index BSE Consumer Durables is also trading in the green.

  • Axis Securities maintains its ‘Buy’ rating on Bharti Airtel with a target price of Rs 900, indicating an upside of 28%. The brokerage remains positive on the company’s prospects given its healthy margins, robust subscriber growth, and high 4G conversions. It estimates the company’s net profit to grow at a CAGR of 103.2% over FY22-24.

  • Indian Railway Catering & Tourism Corp is falling even though its Q1FY23 net profit surges nearly 3X YoY and revenue jumps 3.5X YoY on a low base in Q1FY22. This significant rise in revenue is mostly driven by the catering, internet ticketing, and tourism segments. However, the operating margin falls by 8.2 percentage points YoY as the catering services and tourism expenses increase manifold.

  • Oil India is rising as its Q1FY23 net profit jumps 2.6X YoY to Rs 2,805.2 crore despite an increase in raw material cost by 2.9X and an increase in excise duties. However, high oil prices result in an increase in revenue by 85% YoY. Revenue from all segments, like, crude oil, natural gas, refinery products, and LPG see a substantial increase in Q1.

  • Tata Consumer Products is falling despite its net profit rising 38% YoY to Rs 255.5 crore. Profit rises on the back of rising revenue from the India business. Revenue growth is driven by the salt and tea segments. The salt business gains market share amid high input costs, as its premium salt products portfolio improves penetration. Falling raw material costs in the tea business offset inflationary pressure in the salt business and high advertisement costs, aiding margin expansion. EBITDA margin rises 40 bps YoY to 13.8%.

  • Steel Authority of India (SAIL) falls as its Q1FY23 net profit drops 79.3% YoY to Rs 804.5 crore. Rise in cost of raw materials and employee benefits expenses results in EBITDA margin taking a large fall of 22.2 percentage points to 9.6%. Rise in revenue from the Bhilai and Rourkela steel plants aids total revenue growth.

  • Airline stocks like InterGlobe Aviation (IndiGo) and Spicejet are rising after the Centre’s Ministry of Civil Aviation removes restrictions on ticket prices that were imposed two years ago amid the coronavirus pandemic.

  • Eicher Motors’ touches a 52-week high of Rs 3,256 as its Q1FY23 net profit surges 2.5X YoY to Rs 611 crore. This is despite a rise in expenses because of input cost inflation and semi-conductor shortage. Current tax expenses also shot up 104%. Managing Director Siddharth Lal says international revenues increased due to rise in demand for Royal Enfield bikes. Royal Enfield's wholesales in Q1 rose 52% YoY.

  • Coal India’s Q1FY23 net profit surges 2.7X YoY to Rs 8,832 crore. This is because of a 91.6% YoY jump in sales from the e-auction segment. Total sales are up as demand for power is high across India. Coal production also increased 28.9% YoY.

Riding High:

Largecap and midcap gainers today include Indraprastha Gas Ltd. (408.10, 7.45%), Cummins India Ltd. (1,237.60, 6.03%) and Aditya Birla Fashion and Retail Ltd. (291.30, 5.09%).

Downers:

Largecap and midcap losers today include Abbott India Ltd. (18,917.55, -3.50%), Tube Investments of India Ltd. (2,241.65, -3.32%) and Tata Consumer Products Ltd. (773.45, -2.16%).

Volume Shockers

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

Top high volume gainers on BSE included BEML Ltd. (1,783.20, 16.14%), Affle (India) Ltd. (1,185.55, 7.64%) and Asahi India Glass Ltd. (564.45, 7.58%).

Top high volume losers on BSE were Capri Global Capital Ltd. (687.95, -3.77%), Metropolis Healthcare Ltd. (1,493.45, -1.72%) and Endurance Technologies Ltd. (1,415.40, -1.25%).

Mazagon Dock Shipbuilders Ltd. (297.45, 5.03%) was trading at 24.2 times of weekly average. Greaves Cotton Ltd. (165.25, 1.63%) and Uflex Ltd. (670.40, 7.04%) were trading with volumes 9.0 and 8.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

21 stocks hit their 52-week highs, while 2 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - AIA Engineering Ltd. (2,640.65, 2.27%), Bank of Baroda (123.20, 3.83%) and Bharat Electronics Ltd. (287.45, 0.02%).

Stocks making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (650.05, -0.43%) and Medplus Health Services Ltd. (723.30, 0.72%).

27 stocks climbed above their 200 day SMA including BEML Ltd. (1,783.20, 16.14%) and Affle (India) Ltd. (1,185.55, 7.64%). 15 stocks slipped below their 200 SMA including Cholamandalam Financial Holdings Ltd. (651.30, -2.36%) and Apollo Hospitals Enterprise Ltd. (4,429.65, -1.94%).

 
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Trendlyne Marketwatch
10 Aug 2022
Market closes flat, Tata Chemicals’ Q1 profit surges 2X YoY to Rs 589 crore

Trendlyne Analysis

Indian indices closed flat after gyrating between losses and gains on a volatile day of trade. European indices followed the global trend and traded lower than Tuesday’s levels. Major Asian indices closed in the red, tracking the US indices which closed lower on Tuesday. US stocks fell as investors look ahead to the US inflation print release scheduled later today. The tech-heavy index, NASDAQ 100 fell 1.2% while the S&P 500 closed 0.4% lower. Brent crude oil futures traded lower after a volatile day of trade on Tuesday. Tight crude oil supply due to the geopolitical crisis, and fears of slow economic growth remain the key factors affecting the crude oil price.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, despite the benchmark index closing flat. Nifty Metal and Nifty Auto closed higher than Monday’s levels. Nifty IT closed lower, taking cues from the NASDAQ 100, which fell 1.2% on Tuesday.

Nifty 50closed at 17,534.75 (9.7, 0.1%), BSE Sensexclosed at 58,817.29 (-35.8, -0.1%) while the broader Nifty 500closed at 14,985.80 (-7.6, -0.1%)

Market breadth is in the red. Of the 1,897 stocks traded today, 772 showed gains, and 1,080 showed losses.

  • Crisil, Thermax, SIS, and Carborundum Universal are trading with higher volumesas compared to Monday.

  • Tata Chemicalssees a long build-up in its August 25 future series as its open interest rises 49.9% with a put-call ratio of 0.88.

  • Tata Power is rising in trade as the company will set up EV charging points across JP Infra’s residential projects in order to promote sustainable mobility in Mumbai.

  • Stocks like ZF Commercial Vehicle Control Systems India, Pidilite Industries, Bajaj Finance, IDFC First Bank, and Adani Enterprises are in the overbought zone, according to the technical indicator relative strength index or RSI.

  • Apollo Hospitals Enterprise is rising as it acquires a hospital facility in Gurugram, Haryana. It acquires the asset from Nayati Healthcare for a total consideration of Rs 450 crore. This hospital facility is situated in the hospital zoned land, with a potential of 650 beds spread across 7 lakh square feet. The integrated healthcare complex is set to be commissioned in a span of 24 months.

  • Public sector banks like State Bank of India, Punjab National Bank, Indian Overseas Bank, Union Bank of India and Bank of India are falling in trade. The broader sectoral index Nifty PSU Bank is also trading in the red.

  • Hindalco is rising as its Q1FY23 net profit rises 47.8% YoY to Rs 4,119 crore as revenue from Novelis (subsidiary of Hindalco), aluminium (both upstream and downstream) and copper segments rise. Novelis’ revenue grew 38% YoY because of better product pricing and a favourable product mix. The company’s net debt falls 23% YoY in Q1.

  • ICICI Securities maintains its ‘Buy’ rating on Indraprastha Gas with a target price of Rs 540. This indicates an upside of 50.4%. The brokerage expects a growing addressable market, cost pass-through mechanisms and rising demand will support strong sales volume growth in the coming quarters. It estimates the company’s revenue to grow at a CAGR of 12% over FY22-24.

  • Tata Chemicals is trading with more than ten times its weekly average trading volume.City Union Bank, Galaxy Surfactants, G R Infraprojects, and Fine Organic Industries are trading at more than seven times their weekly average trading volumes.

  • NBCC (India) is rising in trade after it bags three work orders worth Rs 258 crore. This includes a Memorandum of Understanding (MOU) with the Centre’s Ministry of External Affairs for redevelopment of an old housing complex in New Delhi.

  • Tata Chemicals is rising as its net profit surges 2X YoY to Rs 589 crore on the back of higher realisations across all its business verticals. Profit rises as strong demand and higher realisations offset elevated raw material, logistics, and energy costs. Revenue rises 34.2% YoY to Rs 3,995 crore on the back of robust demand for soda ash across geographies. EBITDA margin rises 500 bps YoY to 25%.

  • AIA Engineering hits a 52-week high of Rs 2,650 as its Q1FY23 net profit rises 27.6% YoY to Rs 190.4 crore. Revenues surge 45% YoY because of improved supply-chain and customer demand. However, its freight outward expenses are on a higher side as it rose 72% YoY, but the management expects the prices to cool off in the coming quarters. The company expects capex of Rs 300 crore in FY23 which includes projects like Mill Lining and hybrid and solar power project.

  • EKI Energy is falling after India's Minister for New and Renewable Energy RK Singh says India will not allow export of carbon credits till its commitment of cutting carbon emission intensity of its GDP by 45% is met.

  • Indian Hotels is rising as its net profit jumps 2.3X QoQ to Rs 170.1 crore. Profit rises as a surge in demand leads to occupancy rates and average room rates exceeding pre-Covid levels. Revenue grows 45.2% QoQ to Rs 1,266.1 crore driven by a rise in revenue from room and food & beverage services. EBITDA margin in Q1FY23 rises by 11.4 percentage points to 31.3% over the pre-pandemic levels of Q1FY20.

  • JSW Energy's arm JSW Neo Energy agrees to acquire a portfolio of 1,753 MW of renewable energy generation capacity from Mytrah Energy for Rs 10,531 crore

  • One97 Communications (Paytm) partners with Piramal Capital & Housing Finance (Piramal Finance) to offer loans to merchants and small businesses. This partnership will enable Paytm to expand its loan distribution to small cities and towns of India. Paytm plans to disburse loans worth Rs 10 lakh with a repayment period of 6-24 months.

  • All IT stocks are trading in the red. Stocks like Infosys, HCL Technologies, Wipro, Tech Mahindra and Larsen & Toubro Infotech are down by more than 1.5%. The broader sectoral index Nifty IT is also falling in trade.

  • Delhivery is falling as its Q1FY23 net loss widens to Rs 399 crore compared to Rs 129.5 crore in Q1FY22. The management attributes this to one-time events like spends on increase in capacity, rise in fuel prices, rent and wages. The company’s freight handling and servicing costs are up 67% and depreciation expenses surge 2.2X YoY. However, revenue increases 32.5% to Rs 1,745 crore as the number of express parcel shipments goes up. Revenue from services increases with cross-border services revenue increasing 53% YoY.

  • Power Grid Corp of India is falling as its net profit declines 36.6% to Rs 3,801.2 crore. Profit falls due to rising employee benefit expenses and other expenses. Revenue grows 6.7% YoY led by the transmission segment’s revenue rising 5.9% YoY to Rs 10,703 crore. The company’s revenue from the consultancy and telecom segments increases by 50.6% and 60.2%, respectively. Its operating margin falls 327 bps YoY to 84.8%.

  • Adani Ports and SEZ's Q1FY23 net profit is down 16% YoY to Rs 1,072.4 crore due to a 3.1X surge in forex losses (Rs 1,201.1 crore). Revenue rose marginally by 0.7% YoY. The management is positive about future growth as it plans to commission two more terminals for cargo handling. Its Q1FY23 cargo volumes were up 8% YoY.

Riding High:

Largecap and midcap gainers today include Indraprastha Gas Ltd. (379.80, 5.87%), Hindalco Industries Ltd. (440.10, 4.44%) and Adani Power Ltd. (339.75, 3.39%).

Downers:

Largecap and midcap losers today include Oil India Ltd. (186.90, -5.58%), MRF Ltd. (83,466.60, -4.85%) and 3M India Ltd. (22,750.30, -4.11%).

Volume Rockets

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

Top high volume gainers on BSE included Fine Organic Industries Ltd. (6,737.85, 15.63%), Tata Chemicals Ltd. (1,074.15, 12.24%) and JK Paper Ltd. (422.60, 8.67%).

Top high volume losers on BSE were Natco Pharma Ltd. (672.85, -10.35%), Suven Pharmaceuticals Ltd. (439.00, -8.64%) and 3M India Ltd. (22,750.30, -4.11%).

City Union Bank Ltd. (176.70, 8.54%) was trading at 12.9 times of weekly average. G R Infraprojects Ltd. (1,405.85, 6.23%) and Galaxy Surfactants Ltd. (3,228.45, 2.43%) were trading with volumes 9.9 and 9.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

24 stocks made 52-week highs, while 2 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Aegis Logistics Ltd. (283.45, -1.60%), AIA Engineering Ltd. (2,582.00, 7.80%) and Bharat Electronics Ltd. (287.40, 1.97%).

Stocks making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (652.85, -1.64%) and Zensar Technologies Ltd. (234.55, 2.27%).

15 stocks climbed above their 200 day SMA including NCC Ltd. (66.30, 4.16%) and Narayana Hrudayalaya Ltd. (681.10, 3.25%). 24 stocks slipped below their 200 SMA including Avanti Feeds Ltd. (463.95, -9.51%) and eClerx Services Ltd. (2,144.00, -6.97%).

 
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The Baseline
10 Aug 2022
Chart of the week: Maruti Suzuki’s limited SUV lineup causes market share loss
By Abdullah Shah

Consumer tastes can change quickly in the auto industry. And the gain in popularity of SUVs  over the last two years has left India’s market leader Maruti Suzuki flat-footed, and on the defensive. 

The July retail sales data, released by the Federation of Automobile Dealers Associations (FADA) shows Maruti Suzuki’s stranglehold on the Indian car market waning as a result of this shift.

Maruti Suzuki’s retail market share fell 11 percentage points to 39.2% over the past two years (till end July 2022). Its retail sales fell below 1 lakh units in July 2022 for the first time in ten months. 

The two companies that have gained at Maruti Suzuki’s expense are South Korean carmaker Hyundai Motor India, and Tata Motors. Both these companies are vying for the second spot in the Indian car market., Tata Motors and Hyundai were neck-to-neck at second place in retail market share in June this year, but the South Korean carmaker pulled ahead of Tata Motors in July to take the second position.

The preference towards sports utility vehicles is helping Tata Motors, Hyundai, Mahindra & Mahindra and Kia Motors grab market share from Maruti Suzuki.

Maruti is still India’s largest car maker, but it’s playing catch-up in the SUV market. Its new launches in the SUV space however, are making waves with record bookings. Investors will be watching to see if its new products help it claw back the customers it lost over the past two years.

COTW-10082022

 
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The Baseline
08 Aug 2022
Which stocks did superstar investors buy in Q1FY23?
By Abhiraj Panchal

Investors take a keen interest in the stocks that superstar investors like Big Bull Rakesh Jhunjhunwala, Sunil Singhania, Ashish Kacholia, Dolly Khanna and others are buying. We take a look at which stocks some of these Superstars bought during Q1FY23.

As the market took a bearish turn in Q1FY23, Rakesh Jhunjhunwala, Sunil Singhania, Ashish Kacholia, and Porinju Veliyath’s net worth also fell as a result. They still made new bets and doubled down on some older ones. However, Radhakishan Damani did not make any new additions to his portfolio during the quarter. 

Rakesh Jhunjhunwala buys Escorts Kubota in Q1FY23, after cutting his stake in Q4FY22

Rakesh Jhunjhunwala’s net worth in Q1FY23 fell 24.7% QoQ to Rs 25,425.9 crore. He did a U-turn on Escorts Kubota – he  bought a 1.4% stake in the company in Q1FY23, after he had cut his stake to below 1% in Q4FY22.  Before that cut, he had a 5.2% stake in the auto company in Q3FY22. 

While the auto sector is in recovery, Escorts Kubota is still struggling with costs - the company’s net profit declined 26.3% QoQ in Q1FY23 due to a steep rise in commodity prices. During Q3FY22 the stock rose by 22.9% but fell 11.1% in Q4FY22. It looks like the big bull bought the stock when it was trading at lower levels in Q1FY23. From April 1 till August 8 the stock has fallen 3%.  

Sunil Singhania’s Abakkus Fund adds five new stocks in Q1FY23

Sunil Singhania’s Abakkus Fund saw its consolidated net worth fall 28.5% QoQ in Q1FY23 to Rs 1,613.3 crore. During the quarter, the Abakkus Fund purchased new stakes in multiple companies - a 2.7% stake in J Kumar Infraprojects, a 1.9% stake in Stylam Industries, a 1.3% stake in Paras Defence and Space Technologies, a 1.1% stake in CMS Info Systems, and a 1.3% stake in Ethos. 

The fund also added stakes in small-cap companies like HIL, Ion Exchange (India), Technocraft Industries (India), Sarda Energy & Minerals, Siyaram Silk Mills, IIFL Securities, and HG Infra Engineering during the quarter.

The Abakkus Fund also bought additional stakes in existing holdings, like a 1.2% stake in Hindware Home Innovation (now holds 4.8%) and a 0.9% stake in Rupa & Company (now holds 4.1%).  

Ashish Kacholia was the most active Superstar buying stocks in Q1FY23

Ashish Kacholia’s net worth fell 21.6% QoQ to Rs 1,536.3 crore in Q1FY23. Kacholia bought a fresh 4.2% stake in micro-cap company Inflame Appliances. The company makes kitchen appliances like gas stoves, cooker hoods, and cooking ranges. Kacholia also bought a new 3.6% stake in another micro-cap firm – Repro India. He added the restaurant chain Barbeque-Nation Hospitality to his portfolio with a 1.1% stake during Q1. He increased his stake in another houseware company La Opala RG by 0.4%, bringing his stake to 1.4%. 

The marquee investor also added a 0.5% stake in Gravita India and a 0.4% stake in Faze Three, and he now holds total stakes of 1.8% and 5% in these companies respectively. In Xpro India, Kacholia increased his stake for four consecutive quarters since Q2FY22 and now holds a 3.9% stake. The other companies where he increased stakes are United Drilling Tools, Fineotex Chemical, Yasho Industries and Genesys International Corporation.

A Vijay Kedia pick more than doubles since the start of Q1FY23

Vijay Kedia’s net worth rose 13.8% QoQ to Rs 493.9 crore. He added a 0.7% stake in industrial machinery producer Elecon Engineering Company. He now holds a 1.9% stake in the company. The stock rose by nearly 125.7% since April 1, 2022. Kedia also added a 0.1% stake in Vaibhav Global, an online retailer that manufactures fashion jewellery and lifestyle accessories. 

Dolly Khanna adds six small-cap companies to her portfolio in Q1

Dolly Khanna’s net worth rose 30% to Rs 511.8 crore in Q1FY23. She bought a fresh 3.3% stake in Chennai Petroleum Corp, which has gained 103% since the beginning of Q1FY23 till August 8. She purchased a 1.8% stake in Monte Carlo Fashions, a branded apparel company. Her stake in Monte Carlo fell below 1% in Q4FY22. 

Khanna also bought a 1.2% stake in Zuari Industries and Suryoday Small Finance Bank and a 1.1% stake in both National Oxygen and Manali Petrochemicals. She increased her stake in Pondy Oxides & Chemicals by 0.3% to 3.9% during Q1FY23. She also bought minor stakes in Tinna Rubber & Infrastructure, Ajanta Soya, and Prakash Pipes.

Porinju V Veliyath adds two micro-cap companies to his portfolio in Q1FY23

Porinju V Veliyath bought a 1.3% stake in the agrochemical maker TCM. The company’s stock rose 43.5% from the beginning of Q1FY23 till August 8. The other purchase he made in Q1 was a 0.6% stake in micro cap real estate technology company Aurum Proptech. He now holds a 1.7% stake in the company.

Mohnish Pabrai ups his stake in a petrochemical maker

Mohnish Pabrai’s net worth fell 7.4% QoQ to Rs 1,185.6 crore in Q1FY23. He raised his stake in Rain Industries by 0.5% to 8.4%. Otherwise, there were no major changes to his portfolio in Q1FY23. Rain Industries’ stock is down 4.7% since the beginning of Q1FY23 till August 8.

 
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Trendlyne Marketwatch
08 Aug 2022
Market closes higher, Zensar Technologies' Q1 net profit falls 42% QoQ to Rs 75 crore

Trendlyne Analysis

Indian indices closed in the green, with the Indian volatility index, India VIX, rising over 19%. The Nifty 50 rose over 125 points and closed above the 17,500 mark. European shares bounced back from their fall on Friday and traded higher. Asian indices closed mixed, tracking the US indices, which closed mixed on Friday. US stocks closed mixed as stronger than expected US jobs report raised concerns about the US Federal Reserve maintaining its aggressive monetary policy to tackle inflation. The tech-heavy index, NASDAQ 100 fell 0.8% while the Dow Jones closed 0.2% higher. Brent crude oil futures traded flat after falling about 9% last week amid demand concerns.

Nifty Smallcap 100 and Nifty Midcap 1000 closed in the green, following the benchmark index. Nifty Metal and Nifty Auto closed higher than Friday’s levels. Nifty IT closed flat, despite the NASDAQ 100 closing in the red on Friday.

Nifty 50 closed at 17,525.10 (127.6, 0.7%) , BSE Sensex closed at 58,853.07 (465.1, 0.8%) while the broader Nifty 500 closed at 14,993.35 (93.0, 0.6%)

Market breadth is in the green. Of the 1,917 stocks traded today, 1,017 were in the positive territory and 851 were negative.

  • Crisil, Thermax, SIS, and Carborundum Universal are trading with higher volumes as compared to Friday.

  • Hindustan Aeronautics sees a long build-up in its August 25 future series as its open interest rises 10.6% with a put-call ratio of 0.72.

  • Spicejetfalls in trade after IDFC, YES Bank, Indian Bank categorize the loans in the airlines' name under the high-risk category, according to reports.

  • Stocks like Asian Paints, Pidilite Industries, Bajaj Finance, MRF, and Adani Total Gasare in the overbought zone, according to the technical indicator relative strength index or RSI.

  • Marico is rising as its Q1FY23 net profit grows 4.2% YoY to Rs 371 crore. Headwinds in sales of Saffola Oils results in a muted rise in revenues of 1.3% YoY to Rs 2,558 crore. Drop in cost of raw materials aids the EBITDA margin to grow 300 bps YoY to 31.2%.

  • Zensar Technologies touches a 52-week low of Rs 226.2 as its Q1FY23 net profit falls 42% QoQ to Rs 75 crore. However, revenue rises 4% QoQ with revenue from digital and application services increasing 4.9%. Revenue from the US and Europe regions grow more than 2% QoQ in constant currency in Q1.

  • Aditya Saraogi, Chief Financial Officer at Birla Corp, says that Q2FY23 would be a seasonally weaker quarter for the cement industry. He expects the company's EBITDA per tonne for FY23 to be around Rs 750 per tonne and volumes to grow at 15%.

  • Capital goods stocks like Hindustan Aeronautics, Siemens, Suzlon Energy, Grindwell Norton, and KNR Constructions are rising in trade. The broader sectoral index BSE Cap Goods is also trading in the green.

  • Promoter & Director Vishad D Mafatlal sells 1.5 lakh shares (0.3% stake) worth Rs 64.3 crore in Navin Flourine International in an insider trade on Friday. Mafatlal says this trade was done for charity and personal reasons.

  • Affle (India) trades flat despite its Q1FY23 net profit rising 52.6% YoY to Rs 54.4 crore. Revenue from cost per converted user (CPCU) services rises 144% YoY across India and international markets. This helped total revenue to rise 127.9% YoY to Rs 347.5 crore.

  • Sudarshan Chemical Industries is trading with more than six times its weekly average trading volume. Mahanagar Gas, ZF Commercial Vehicle Control Systems India, Hitachi Energy India, and BASF India are trading at more than three times their weekly average trading volumes.

  • Edelweiss maintains its ‘Buy’ rating on Aditya Birla Fashion & Retail with a target price of Rs 398. This indicates an upside of 43%. The brokerage remains positive on the company’s prospects as its margins expanded during Q1FY23 despite inflationary pressure. It believes the company’s growth momentum will continue in the coming quarters due to price hikes, an improving product mix, and a recovery in the Pantaloons segment. The brokerage expects the company’s revenue to grow at a CAGR of 25.8% over FY22-24.

  • Metal stocks like JSW Steel, Tata Steel, Vedanta, Hindalco Industries, Jindal Steel & Power and NMDC are rising in trade. The broader sectoral index BSE Metal is also trading in the green.

  • Mahanagar Gas is rising despite its Q1FY23 net profit falling 9.2% YoY to Rs 185.2 crore. Profit falls as the cost of natural gas jumps more than 5X YoY. Its revenue grows 2.4X YoY on total gas sales rising 44% YoY driven by soaring compressed natural gas sales. However, the rise in sales is offset by elevated prices of natural gas, leading to its operating margin dropping by 27.7 percentage points YoY.

  • Tata Motors' arm Tata Passenger Electric Mobility inks an agreement to acquire Ford India's manufacturing plant situated at Sanand, Gujarat for Rs 725.7 crore

  • Bharat Petroleum Corp is falling as it incurs a loss of Rs 6,147.9 crore in Q1FY23 compared to a profit of Rs 2,872.8 crore in Q1FY22. The loss is due to the company not raising fuel prices despite a significant increase in input costs. However, its revenue rises 70.7% YoY to Rs 1.21 lakh crore on a 22.1% YoY increase in market sales and higher turnout at its fuel stations. The company's gross refining margin surges more than 6X YoY as the refining business benefits from the elevated prices of petroleum products.

  • FSN E-commerce Ventures (Nykaa) is rising as its Q1FY23 net profit grows 33.2% YoY to Rs 4.5 crore. Rise in gross merchandising value of the fashion and beauty and personal care segments aids the revenue to increase by 40.5% to Rs 1,148.4 crore.

  • Blue Star is rising in trade after it bags three rural water supply project orders worth Rs 375 crore from the Department of Rural Water Supply and Sanitation (RWSS), Government of Odisha.

  • Crompton Greaves Consumer Electricals' promoter Temasek Holdings' arm MacRitchie Investments sells 2.02 crore shares (3.2% stake) in the company through a bulk deal on Friday. Temasek now holds a 2.74% stake in the company.

  • One97 Communications (Paytm) is rising despite its net loss widening to Rs 645 crore in Q1FY23 compared to Rs 382 crore loss in Q1FY22. Employee benefits expense and marketing costs surge 160% and 131% YoY respectively. However, revenue also increases 88.5% YoY. Gross merchandise value increases 101% YoY as average monthly transacting users rise 49% YoY to 7.4 crore users. The value of loans disbursed from its platform rises more than 7X YoY across segments like postpaid loans, personal loans and merchant loans.

  • State Bank of India’s Q1FY23 net profit falls 6.7% YoY to Rs 6,068 crore because of a mark-to market (MTM) loss on the investment book, as bond yields fall. Non-interest income also falls 80% YoY. Net interest income rises 12.8% YoY with net interest margins rising marginally by 8 bps to 3.2%. The asset quality of the bank improves as gross NPA rises 141 bps to 3.9% in Q1.

Riding High:

Largecap and midcap gainers today include Hindustan Aeronautics Ltd. (2,146.40, 7.47%), JSW Energy Ltd. (306.25, 7.16%) and One97 Communications Ltd. (829.60, 5.78%).

Downers:

Largecap and midcap losers today include Alkem Laboratories Ltd. (2,970.95, -4.56%), Hindustan Petroleum Corporation Ltd. (239.75, -4.37%) and Bharat Petroleum Corporation Ltd. (324.65, -3.49%).

Riding High:

Largecap and midcap gainers today include JSW Energy Ltd. (311.65, 9.04%), Hindustan Aeronautics Ltd. (2,154.00, 7.85%) and One97 Communications Ltd. (834.95, 6.46%).

Downers:

Largecap and midcap losers today include Hindustan Petroleum Corporation Ltd. (239.05, -4.65%), YES Bank Ltd. (16.00, -3.90%) and Alkem Laboratories Ltd. (2,995.00, -3.78%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included HFCL Ltd. (74.50, 9.48%), Aegis Logistics Ltd. (288.05, 8.68%) and Mahindra Holidays & Resorts India Ltd. (255.05, 8.00%).

Top high volume losers on BSE were Sudarshan Chemical Industries Ltd. (456.00, -6.31%), Hindustan Petroleum Corporation Ltd. (239.05, -4.65%) and KEC International Ltd. (404.60, -4.58%).

Heidelberg Cement India Ltd. (192.80, 2.83%) was trading at 7.5 times of weekly average. Mahanagar Gas Ltd. (818.00, 4.18%) and AstraZeneca Pharma India Ltd. (3,155.50, 2.48%) were trading with volumes 6.0 and 5.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

16 stocks overperformed with 52 week highs, while 2 stocks were underachievers and hit their 52 week lows.

Stocks touching their year highs included - Aegis Logistics Ltd. (288.05, 8.68%), Great Eastern Shipping Company Ltd. (519.80, 2.49%) and Grindwell Norton Ltd. (1,987.30, 1.25%).

Stocks making new 52 weeks lows included - Alembic Pharmaceuticals Ltd. (663.75, -1.32%) and Zensar Technologies Ltd. (229.90, -7.09%).

22 stocks climbed above their 200 day SMA including HFCL Ltd. (74.50, 9.48%) and JSW Energy Ltd. (311.65, 9.04%). 15 stocks slipped below their 200 SMA including KEC International Ltd. (404.60, -4.58%) and SJVN Ltd. (28.15, -2.26%).

 
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The Baseline
05 Aug 2022
Five Interesting Stocks Today
  1. Dr. Lal Pathlabs: This diagnostic company’s stock rose close to 11% in the past week till Thursday despite its weak Q1FY23 results. Both revenue and net profit fell YoY in Q1FY23 mainly due to a high base in Q1FY22 as the company benefited from Covid testing revenues. As a result, it features in this screener which lists companies that posted a YoY fall in quarterly revenue and net profit.

Revenue fell 17.1% YoY to Rs 502.7 crore in the June quarter while the net profit declined by 56%. However, what cheered investors could be the 25% YoY growth in non-Covid revenue and the bounce back of preventive tests, which contributed to 21% of the total sales. Managing Director Om Manchanda said that the bundling of tests, especially in the preventive segment, led to a higher number of tests per patient (2.6 tests per patient). He further added that bundling may lead to lower revenue per test, but the realization per patient rises with the increase in number of tests per patient.

The diagnostic labs space has intense competition with companies across different industries entering the segment. Due to this, a rise in marketing and IT costs led to a 7.8 percentage point YoY fall in EBITDA margin to 23.4% in Q1FY23. Although the management expects the EBITDA margin to go lower in the short term, it expects it to revert back to its pre-Covid level of 25% in FY23.           

  1. Escorts Kubota: This tractor maker’s stock fell nearly 6% on Monday due to its disappointing Q1FY23 results and July wholesales. Its Q1 net profit fell over 20% YoY despite its revenue rising.

Escorts Kubota’s Q1FY23 profit fell due to a four percentage point contraction in its EBITDA margin to 10%. Its market share in the tractors space also declined by over 2% sequentially led by its mainstay markets like Uttar Pradesh and Bihar. In its recent earnings call, the company’s management said the loss of market share was mainly among price sensitive buyers. Escorts hiked prices by 12-13% in the last 18 months and it looks like this led to customers switching to lower end brands. This is probably visible in Escorts Kubota’s July tractor wholesales number falling to 18%. Then there is the uneven distribution of India’s monsoon that may play spoilsport for tractor makers. Although Escorts' management believes that the southwest monsoon will soon catch up, it expects the tractor industry’s growth at just 3-5% YoY in FY23, down from its earlier forecast of 6-8%.

  1. IDBI Bank: This bank’s stock was one of the top gainers on Wednesday as it surged 13% and was trading 3.5X its weekly average trading volumes. It also outperformed the Nifty 500 by 24.4% over the past. The bank’s net profit rose 25% YoY to Rs 756.4 crore because of a fall in provisions while its net interest income fell marginally during the quarter.

The bank’s gross and net NPA ratios in Q1FY23 were 19.9% and 1.2%, respectively, compared to a gross NPA of 22.7% and a net NPA of 1.6% in Q1FY22. The management is positive about the asset quality of the bank and expects NPAs to further decrease. It expects recoveries from insolvency and bankruptcy processes to be close to Rs 4,000 crore in FY23.

There is also the impending stake sale by the Centre in the bank. This has been on the table for a while, and the Centre hopes to conclude the stake sale by FY23. Both Life Insurance Corporation of India and the Centre will sell their stakes as part of the planned strategic stake sale . But any new majority owner in the bank will have to contend with the Reserve Bank of India’s rule that a bank’s promoter must bring down their stake to 26% over a period of time.

  1. Godrej Properties: This real estate developer’s stock had a topsy-turvy week. After the company announced land acquisition in Mumbai on Monday the stock started trading higher. And then came its stellar Q1FY23 results on Tuesday. But the market wasn’t enthused and the company’s stock fell 7% over the next three days.

The company performed well, with a surge in net profit by 2.5X YoY to Rs 140.5 crore, but investors were more focused on another event. The Managing Director and CEO Mohit Malhotra resigned and will leave the company on December 31. The management assured investors that the change in leadership will not hamper business development and that there will be a smooth transition. The management also increased the sales guidance for FY23 to Rs 10,000 crore and declared that the company’s sales may grow 20%. But the stock’s reaction shows investors are still concerned about the change of guard at the top.

  1. Lemon Tree Hotels: This hotel company is in the black after nine consecutive quarters of losses, yet it fell by 3.5% after its Q1FY23 results were announced on Wednesday. The company’s revenue grew more than 4.5X YoY to Rs 192 crore, driven by robust demand from corporate travellers. It posted a net profit of Rs 13.9 crore compared to a loss of Rs 40.1 crore in Q1FY22, despite increasing input costs. It beat Trendlyne Forecaster’s revenue and profit estimates by 14.8% and 51.1%, respectively.

The rise in demand for travel led to the company’s average room rate (ARR) rising to Rs 4,822 in Q1FY23 which was higher than its ARR in the pre-Covid quarter of Q1FY20.  Its EBITDA margin rose by 16 percentage points to 48% compared to 32% in Q1FY20 (pre-Covid). The management said that cost optimization measures led to its margins beating pre-Covid margins. However, the company’s occupancy rate of 65.1% in Q1FY23 was lower than its peers like EIH and Chalet Hotels which had occupancy rates of 72% and 78%, respectively.

As social restrictions began to ease around Q3FY22, demand for travel started to pick up. Since then, the promoters’ pledged shares are down by half since Q3FY22 to 14.7% at the end of Q1FY23. This coincided with Lemon Tree’s stock rising 42.2% over the past seven months.

The management expects the leisure travel and corporate travel segments to continue to gain traction in FY23. They believe customer preference is shifting toward branded hotels, which should bode well for the company.

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