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The Baseline
23 May 2022
Five analyst stock picks this week

  1. State Bank of India: LKP Securities maintains a ‘Buy’ rating on this public sector bank’s stock with a target price of Rs 565, indicating an upside of 22.7%. Analyst Ajit Kumar Kabi believes the bank delivered stable results led by a rise in operational revenue and improved asset quality. Kabi believes that profit growth in Q4FY22 was led by a 15.3% YoY growth in NII (net interest income), along with steady operating expenses. Kabi says “the bank witnessed better than expected advance growth (11.6% YoY & 6% QoQ) led by wholesale credit growth, and stable deposit growth (10% YoY & 5.3% QoQ) sequentially.”

The bank’s asset quality will continue to improve in the coming quarters on the back of higher upgrades and recoveries, Kabi said Furthermore, he expects the bank’s profitability to improve in the coming quarters on the back of credit growth, normalisation of credit costs, and improving operational performance.

  1. Kajaria Ceramics: HDFC Securities maintains a ‘Buy’ call on this tile maker’s stock but reduced its target price by Rs 30 to Rs 1,420, indicating an upside of 35.6%. “We continue to like Kajaria Ceramics for its market share gain and superior margin in the tiles segment (function of its robust distribution and cost controls) and its fast expansion in the bath ware and ply businesses,” say analysts Rajesh Ravi and Keshav Lahoti. In Q4FY22, the company’s consolidated revenue grew 15.7% YoY to Rs 1,101.8 crore but profit and EBITDA fell by 24.7% YoY and 13% YoY to Rs 95.8 crore and Rs 165.9 crore, respectively. The analysts believe that the fall in EBITDA was due to higher gas prices.

According to the analysts, the company expects volume and revenue to increase by 15-20% and 20-25% YoY respectively for FY23. The analysts also expect India’s tiles export to increase by 35% YoY as sharp spikes in gas and electricity prices in European countries have increased the competitiveness of Indian tile makers. The company “has expanded its tiles capacity by 17% in April-May 2022, bolstering its volume growth and market share gain,” the analysts said.

  1. Vinati Organics: Edelweiss reaffirmed its ‘Buy’ rating on this specialty chemical maker’s stock and increased its target price to Rs 2,300 from Rs 2,250. This indicates an upside of 11.6%. “Vinati Organics’ Q4FY22 earnings beat our expectation, with strong growth in top line primarily on account of increased volume in key products aided by market share gains for some products,” says analyst Anshul Verdia. In Q4FY22, the company’s profit grew 43% YoY to Rs 101 crore and revenue grew 74% YoY to Rs 486 crore. 

Verdia believes that “a strong capex pipeline over the next two years indicates significant revenue generation opportunity for Vinati Organics, underpinning its aim to achieve Rs 3,000 crore in top line over the next two to three years.” He expects the company to achieve a 26% CAGR in revenue over FY22–24 on the back of increased penetration of the butyl-phenol market, robust volume growth in Acrylamide tertiary-butyl sulfonic acid and the Isobutyl Benzene business, and strong demand.

  1. Abbott India: Axis Securities maintains a ‘Buy’ call on this pharmaceutical company’s stock with a target price of Rs 20,000. This indicates an upside of 12.6%. “Abbott India reported revenue growth of 14.9% (YoY) in Q4FY22, outpacing the IPM (Indian pharma market) growth of 3.9%,” says analyst Ankush Mahajan. He adds that the revenue growth, “was majorly driven by sales improvement in key therapies such as gastrointestinal (+18.3% YoY) and hormones(+5.0% YoY).” 

The company reported a profit of Rs 212 crore, up 38.7% YoY, and EBITDA margins improved by 465 bps YoY to 23.4%. Mahajan expects stable sales of the Duphaston brand and an increase in volume in the Thyronorm brand to help deliver revenue and profit CAGR of 11.1% and 1.3% over FY21-24. The analyst believes that revenue growth in the branded business will improve overall profitability.

  1. Century Plyboards (India): BOB Capital Markets upgrades its rating on this plywood manufacturer’s stock to ‘Buy’ from ‘Hold’ with a target price of Rs 735, indicating an upside of 37.8%. Analyst Ruchitaa Maheshwari says the company’s “long-term growth story remains intact given its strong fundamentals, impressive return ratios and healthy balance sheet”. She upgraded her rating to an attractive valuation after a 30% correction.

The company’s growth momentum will sustain over the near-to-medium term, supported by the plywood and laminates segments, Maheshwari said she expects these segments to grow due to a pick-up in the housing sector alongside a gradual demand shift from unorganised to organised players. Maheshwari also expects better margins in the medium-density fibreboard (MDF) segment amid buoyant demand for ready-made furniture and exports. Overall, she believes the company’s EBITDA margin will expand backed by a higher MDF contribution, superior product mix, operating leverage and cost rationalisation. 

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

 
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The Baseline created a screener Stocks Underperforming their Industry …
23 May 2022
Stocks that have underperformed their industry in Quarter Share Price Change
 
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The Baseline created a screener Stocks Outperforming their Industry …
23 May 2022
Stocks that have outperformed their Industry in Quarter Share Price Change
 
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The Baseline created a screener Industry Underperformers Relative to …
23 May 2022
Industries that Underperformed the Nifty50
 
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The Baseline created a screener Industry Outperformers Relative to …
23 May 2022
Industries that Outperformed the Nifty50
 
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The Baseline
20 May 2022
Five Interesting Stocks Today
  1. Chennai Petroleum Corporation:This refinery companyoutperformed the Nifty 50 index by a whopping 88% in the past month, and by 22% in the past week. Moreover, last month, Superstar investor Dolly Khanna bought 10 lakh shares or 0.7% stake in this company worth Rs 26.3 crore. Even FIIs steadily increased their holdings in the company to 3.37% in Q4FY22 from 1.33% in Q2FY22. So, what exactly fueled the recent rally for this oil refining company?

Chennai Petroleum Corp saw a 4.3X jump in its Q4 net profits at Rs 994.4 crore driven by an 88% YoY rise in its revenues at Rs 16,427 crore. This company is a pure-play crude oil refining company and is not involved in marketing of downstream petroleum products. While its refining throughput rose by 10% YoY to 2.91 million metric tonne in Q4FY22, a 2.2X jump in gross refining margins (GRMs) played the real magic. Average GRMs rose to $14.18/bbl from $6.4/bbl in Q4FY21. Notably, Singapore GRMs were trading at $7.8/bbl levels in Q4FY22. In fact, it rose to $17/bbl levels in April backed by robust demand for refined petroleum products and supply constraints. According to Moody’s, global sanctions on Russia led to higher offtake of Asian fuels as European countries sought other alternatives. Additionally, supply fell owing to lower exports from China and due to significant refinery closures. According to the International Energy Agency, crude oil throughput in April 2022 fell by 1.4 metric barrels/day to 78 metric barrels/day, lowest since May 2021.

Interestingly, every dollar of GRM expansion can potentially add Rs 700-800 crore to the topline of an oil refining company. Hence, amid a tight supply situation, GRMs will stay buoyant and lead to oil refineries earning windfall gains at least in Q1FY23.

  1. Lupin: This pharmaceutical company’s stock fell over 7% on Thursday after it announced its Q4FY22 results. Lupin posted a loss of Rs 518 crore in Q4FY22 against a profit of Rs 460 crore in the same quarter previous year. However, revenues increased 2.8% YoY to Rs 3,864.5 crore in Q4FY22.

As the company is not consistent in posting profits, it shows up in the screener that lists stocks that are seeing big swings between profit and loss in quarterly results.

The drug-maker posted losses in Q4FY22 as its EBITDA margin fell by 13.1 percentage points YoY to 7.3% mainly due to an increase in raw material costs and manufacturing expenses. Raw material costs rose 23.9% YoY to Rs 1,317.6 crore and manufacturing expenses increased by 18.2% to Rs 1,117.8 crore. Also, an impairment expense on its acquisition of Gavis IP of Rs 130 crore and a rise in deferred taxes contributed to losses in Q4FY22.

High raw material and manufacturing costs come at a time when the US markets are already under pricing pressure amid intense competition. This is putting further pressure on margins. Lupin was affected more by this as it derives a majority (over 37%) of its revenues from the US markets. The company’s revenue from US markets fell 5.3% YoY to Rs 14,162. However, its revenue from India increased 5% YoY to Rs 13,511. But this seems lower when compared to its peers. Cipla’s and Dr Reddy’s revenue from the Indian market grew 25% and 15% YoY respectively in Q4FY22. In fact, Cipla outperforms Lupin in YoY and QoQ profit growth, price to earnings ratio, and foreign institutional investors or FII holding.

  1. Kotak Mahindra Bank: This bank’s stock outperformed the Nifty 500 index this week after it announced its Q4FY22 results. According to reports, Kotak Mahindra Bank recently made it to the top 10 most valuable companies, replacing Adani Green Energy at the tenth position. It is the fourth bank to enter the elite club after HDFC Bank, ICICI Bank, and State Bank of India. However, thanks to the bearish market, the stock fell more than 3% on the bourses on Thursday. The bank posted robust growth in net profit and maintained stable asset quality.

Net profit was up 64.5% YoY to Rs 2,767 crore with net interest income rising by 17.7% YoY to Rs 4,521 crore. Total advances for the bank also grew 21% YoY to Rs 2.7 lakh crore as businesses picked up pace after the third wave of Covid. Among the loan segments, the corporate loan demand is expected to increase. The management also plans to increase capex in this segment to meet rising demand. Also, the management thinks that an increase in repo rates by the Reserve Bank of India will not hamper credit growth.

Operating expenses increased 26.1% YoY to Rs 3,007.8 crore keeping the operating profit growth flat at 1.2% YoY to Rs 3,340 crore. The increase in expenses is because of the rise in spending on digital and promotional expenses. The management plans to  continue its growth plans even if costs run high in the near term.

  1. Aditya Birla Capital: This Aditya Birla Group’s holding company’s stock tanked 5% on Monday because of reports of a whistleblower accusing the former CEO of the Aditya Birla Group Ajay Srinivasan of insider trading. This shook investors confidence as it is similar to allegations made for fund managers who were sacked at Axis Mutual Fund. The company, however, denied the allegations against Srinivasan of insider trading and frontrunning in stocks at Aditya Birla Sun Life AMC (mutual fund arm of Aditya Birla). The management asked Srinivasan to step down as the CEO, according to the BSE filing dated April 23, 2022, as the company says that it is looking to settle him into a new role. The management explicitly maintains its stance that this is in no way related to the allegations made against him, according to reports. Vishakha Muley will replace him as the CEO of Aditya Birla Capital starting from June 1, 2022.

According to reports, the Securities and Exchange Board of India (SEBI) is investigating both Aditya Birla Capital and Aditya Birla Sun Life AMC for the alleged wrongdoings.

  1. Indraprastha Gas: This city gas distributor’s stock plunged 6% in trade on Thursday, despite its Q4FY22 net profit rising 14.9% YoY to Rs 430.9 crore to beat Trendlyne’s Forecaster estimates by 8.4%. The company also showed up on this screener which lists companies that saw their net profit rising QoQ and YoY in Q4FY22. However, it looks like the company’s robust performance led by rise in sales volume and price hikes were not enough to escape the bearish sentiment in the market.

In the last 6 months the price of CNG for automobiles has been hiked 40.6% to Rs 73.61 per kg in the Delhi-NCR region, with the latest price hike coming in on Monday. The Managing Director of Indraprastha Gas expects gas prices to remain high for the coming quarters due to geopolitical tensions and supply constraints.

Furthermore, the government’s amendment to its gas allocation policy to city gas distributors (CGD), which makes GAIL (Gas Authority of India) responsible for providing gas to CGDs and gas prices will be uniform for all CGDs. With the amendment in place, domestic gas supply to CGDs will increase every quarter instead of every six months. The management expects this amendment to improve domestic gas supply and decrease raw material costs for the company. It will also lead to a reduction in sourcing of gas from the international spot market. This amendment took effect from May 16, 2022.

The management expects the volumes of CNG to rise 20%, driven by robust demand for CNG vehicles in FY23. It also expects to keep its margins stable through price hikes in the coming quarters.

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

 
Trendlyne Marketwatch
Trendlyne Marketwatch
20 May 2022
Market closes higher, Ethos’ IPO gets bids for 104% of the total shares on offer

Trendlyne Analysis

Nifty 50 recovered all of its losses from Thursday and closed 2.9% higher with the Indian volatility index, India VIX falling by 5.9. Asian shares closed higher as China cut a key lending benchmark – five-year loan prime rate by a steeper than expected 15 basis points to 4.45% in order to support a slowing economy. Covid-19 lockdowns in China continue to impact economic growth by disrupting the global supply chain. Investors remain cautious of macroeconomic factors like high inflation rates, and the effects of impending rate hikes by the central banks. Sell-off continued in the US markets on Thursday as the indices closed in the red for the second consecutive session. European indices open higher than Thursday’s level, tracking the Asian markets amid positive cues from China. Crude oil prices remained steady this week as weaker demand due to slow economic growth concerns offset the planned European ban on Russian oil. In the last week, foreign investors have sold over Rs 6,078.1 crore worth shares of Indian companies.

Nifty Next 50 and Nifty Smallcap 100 closed in the green, following the benchmark index. Nifty Metal and Nifty Media trade higher than Thursday’s levels. Nifty IT, which fell over 5% on Thursday closed in the green.

Nifty 50closed at 16,266.15 (456.8, 2.9%), BSE Sensexclosed at 54,326.39 (1,534.2, 2.9%) while the broader Nifty 500closed at 13,895.05 (344.2, 2.5%)

Market breadth is surging up. Of the 1,878 stocks traded today, 1,536 were on the uptrend, and 310 went down.

  • Go Fashion (India), Carborundum Universal,J B Chemicals & Pharmaceuticals, and Kajaria Ceramics are trading with higher volumes as compared to Thursday.

  • Godrej Consumer Products sees a short build-up in its May 26 futures series after it announces Q4FY22 results. Its open interest rises 12.4% with put to call ratio at 0.44

  • Ethos’ Rs 472-crore IPO gets bids for 104% of the available 39.8 lakh shares on offer on the final day of bidding. The retail investor quota gets bids for 84% of the available 19.6 lakh shares on offer

  • Zydus Lifesciences' Q4FY22 profit rises 12.1% YoY to Rs 525 crore and revenue rises 5.3% YoY to Rs 3,863.8 crore. For FY22, the profit rises 11.7% to Rs 2,298.8 crore.

  • Auto stocks like Ashok Leyland, Tata Motors, Bosch, and Sona BLW Precision Forgings among others are rising in trade. The broader sectoral index Nifty Auto is also trading in green.

  • eMudhra’s Rs 412.8-crore IPO gets bids for 48% of the available 1.1 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 94% of the available 57.6 lakh shares on offer. The public offer comprises of a fresh issue of Rs 161 crore as well as an offer for sale of Rs 251.8 crore.

  • Reserve Bank of India’s report on scheduled banks shows that bank credit grew 10.8% YoY to Rs 120.5 lakh crore and deposits by 9.7% to Rs 166.9 lakh crore in the fortnight ended May 6, 2022. In FY22 bank credit rises 8.59% YoY and deposits rise by 8.94%.

  • Krishna Institute of Medical Sciencesis trading with more than 12 times its weekly average trading volume. Welspun Corp, JK Lakshmi Cement, TeamLease Servicesand, Poly Medicureare trading at more than three times their weekly average trading volumes.

  • Edelweiss maintains a ‘Buy’ rating on DLF with a target price of Rs 481, indicating an upside of 46%. The brokerage is positive about the company’s prospects on the back of robust pre-sales growth, sales margin growth, new launches, and increase in occupancy levels. The brokerage expects revenue to grow at a 60% CAGR over FY22-24.

  • Axis Securities maintains a ‘Buy’ rating on Bharti Airtel with a target price of Rs 900, indicating an upside of 29%. The brokerage is positive about the company on the back of strong mobile subscriber growth in Q4FY22 and high active subscriber ratio. The brokerage expects the telecom company’s revenue to grow at a 6.5% CAGR over FY22-FY24.

  • Godrej Consumer Products is falling as its Q4FY22 net profit falls marginally by 0.7% YoY to Rs 363.2 crore due to cost of materials consumed rising 19.5% YoY to Rs 1,428.9 crore. However, the revenue rises 7% YoY to Rs 2,939.6 crore on the back of revenue growth came from the personal care segment at 18% YoY. In FY22, net profit rises 15% YoY to Rs 1,720.8 crore and revenue rises 10.7% YoY to Rs 11,095.7 crore.

  • YES Bank rises as it picks JC Flowers Asset Reconstruction Company as its joint venture partner to offload nearly Rs 51,000 crore of distressed loans. This could lead to the re-rating of this stock and attract new equity investments.

  • Bank stocks like IDFC First Bank, Bank of Baroda, State Bank of India, and IndusInd Bank among others are rising in trade. The broader sectoral index Nifty Bank is also trading in green.

  • Prince Pipes & Fittings' Q4FY22 profit falls 9.2% YoY to Rs 88.2 crore despite a 17.7% rise in revenue to Rs 901.3 crore due to an increase in the cost of raw materials. In FY22, the company's profit rises 12.4% YoY to Rs 249.4 crore.

  • Ashok Leyland is rising despite its Q4FY22 net profit falling 60.2% YoY to Rs 140.2 crore due to an impairment in the value of net assets of subsidiaries and loss on fair valuation of investment. However, net profit on a standalone basis rises 3.7X times to Rs 901.4 crore. Revenue rises 21.7% YoY to Rs 9,958 crore on the back robust demand for commercial vehicles from end user industries.

  • Nifty 50 sees a short covering in its May 26 futures series as its open interest falls 7.2% with put to call ratio at 0.89.

  • Glenmark Pharma is rising as it receives United States Food & Drug Administration (U.S. FDA) approval for its Abiraterone Acetate tablets in the strength of 500 mg. This drug, which is used to treat prostate cancer, is a generic version of Zytiga 1 tablets of Janssen Biotech. Abiraterone Acetate has a market size of $ 260.2 million.

  • Prudent Corporate Advisory Services' shares list at a 3.2% premium to the issue price of Rs 630 on its debut on the bourses after getting bids for 1.2X of the total shares on offer.

  • Biocon is rising as the Competition Commission of India (CCI) approves the merger by absorption of Covidshield Technologies into Biocon, according to reports. This is in consideration for approximately 15 per cent equity shareholding of Biocon Biologics by Serum Institute Life Sciences.

  • One97 Communications (Paytm) rises more than 2% to Rs 568 ahead of its Q4FY22 earnings scheduled for today

  • Gland Pharma is falling despite its Q4FY22 net profit rising by 7.8% YoY to Rs 285.9 crore. Total revenue rises 25% YoY to Rs 1,168.2 crore. However, EBITDA margin falls 5.0 percentage points to 35% on the back of high raw material costs and employee benefit expenses. Net profit rises 21.5% YoY in FY22 to Rs 1,211.6 crore and revenues increase by 28.5% to Rs 4,624.6 crore.

  • Hindustan Petroleum Corporation’s Q4FY22 net profit falls 34% YoY to Rs 2,018.4 crore on account of higher costs. Cost of materials surges 71.7% to Rs 26,312.2 crore. However, the sale of products for the company rises 23.5% YoY to Rs 1.1 lakh crore with revenue from downstream petroleum increasing 23.5% YoY to Rs 1.05 lakh crore. Domestic sales for the company is up 4% YoY to 10.26 million tonnes. The company recommends a dividend of Rs 14 per share for FY22.

Riding High:

Largecap and midcap gainers today include JSW Energy Ltd. (293.35, 9.87%), Macrotech Developers Ltd. (988.90, 9.68%) and Sun TV Network Ltd. (438.35, 8.40%).

Downers:

Largecap and midcap losers today include Container Corporation of India Ltd. (573.40, -5.49%), Godrej Consumer Products Ltd. (758.40, -4.68%) and Adani Green Energy Ltd. (2,273.65, -1.89%).

Movers and Shakers

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

Top high volume gainers on BSE included Welspun Corp Ltd. (244.90, 17.23%), JK Lakshmi Cement Ltd. (493.75, 17.13%) and Welspun India Ltd. (73.45, 13.61%).

Top high volume losers on BSE were Container Corporation of India Ltd. (573.40, -5.49%), Advanced Enzyme Technologies Ltd. (277.85, -2.65%) and Supreme Industries Ltd. (1,802.50, -1.34%).

Krishna Institute of Medical Sciences Ltd. (1,261.70, 0.52%) was trading at 14.0 times of weekly average. KIOCL Ltd. (217.75, 7.74%) and Indigo Paints Ltd. (1,620.05, 3.51%) were trading with volumes 11.2 and 9.1 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

6 stocks hit their 52-week highs, while 5 stocks tanked below their 52-week lows.

Stocks touching their year highs included - Adani Power Ltd. (312.25, 4.99%), ITC Ltd. (280.00, 1.58%) and Welspun Corp Ltd. (244.90, 17.23%).

Stocks making new 52 weeks lows included - Container Corporation of India Ltd. (573.40, -5.49%) and Firstsource Solutions Ltd. (108.85, 0.51%).

21 stocks climbedabove their 200 day SMA including Aegis Logistics Ltd. (225.75, 12.68%) and IRB Infrastructure Developers Ltd. (234.25, 9.92%). 6 stocks slipped below their 200 SMA including Equitas Small Finance Bank Ltd. (52.55, -11.61%) and Caplin Point Laboratories Ltd. (776.65, -2.98%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
19 May 2022
Market closes lower, IT stocks close deep in the red

Trendlyne Analysis

Nifty 50 falls over 430 points to close over 2.65% lower with the Indian volatility index, India VIX rising by 10%. Asian indices closed sharply lower following the US indices which closed in the red on Wednesday. S&P 500 fell over 4% and registered its biggest daily drop in over two years. The tech-heavy index NASDAQ 100 also plunged over 5% loss amid high inflation concerns and hawkish commentary from the US Federal Reserve chairman Jerome Powell. Investors continue to monitor the prevailing high inflation levels all over the world. UK’s consumer price index or CPI rose 9% in April hitting a 40-year high while Canadian CPI rose 6.8% in April. European indices follow the global trend and trade lower than Wednesday’s levels.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Energy closed lower than Wednesday’s levels. Nifty IT falls over 5.5%, following the NASDAQ 100, which fell over 5% on Wednesday.

Nifty 50closed at 15,805.05 (-435.3, -2.7%), BSE Sensexclosed at 52,792.23 (-1,416.3, -2.6%) while the broader Nifty 500closed at 13,547.80 (-370.4, -2.7%)

Market breadth is moving down. Of the 1,855 stocks traded today, 291 were in the positive territory and 1,542 were negative.

  • Dhani Services, Nuvoco Vistas Corporation, Westlife Development, and City Union Bankare trading with higher volumesas compared to Wednesday.

  • Nifty 50 sees a short build-up in its May 26 futures series as its open interest rises 15.2% with put to call ratio at 0.73.

  • Realty stocks like Godrej Properties, Oberoi Realty, Phoenix Mills, and Sunteck Realty, among others are falling in trade. The broader sectoral index Nifty Realtyis also trading in the red.

  • Bosch is falling as its Q4FY22 net profit falls 27.3% YoY to Rs 350.9 crore and revenue marginally rises 2.1% YoY to Rs 3,403.6 crore on rising inventory and employee costs. Revenue growth is led by the power tools segment, rising 34.5% YoY to Rs 480.9 crore.

  • Dr Reddy’s is rising despite its Q4FY22 net profit falling by 83.5% YoY to Rs 97 crore. The fall in net profit is mainly due to impairment losses of Rs 930 crore. Revenue rises 15.4% YoY to Rs 5,596.8 crore on the back strong demand in its global generic products. Net profit rises 11.8% YoY to Rs 2,182.5 crore and revenues rise by 13.9% to Rs 22,029.6 crore.

  • Ethos’ Rs 472- crore IPO gets bids for 44% of the available 39.8 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 68% of the available 19.6 lakh shares on offer.

  • Paradeep Phosphates’ Rs 1,501.7-crore IPO gets bids for 1.7X of the available 26.8 crore shares on offer on the final day of bidding. The retail investor quota gets bids for 1.4X of the available 13.1 crore shares on offer.

  • Edelweiss maintains a ‘Buy’ rating on Vinati Organics with a target price of Rs 2300, indicating an upside of 13%. The brokerage anticipates the company’s profitability to improve in FY23 on the back of robust demand, new product launches, and capacity expansion. The brokerage expects the company’s net profit to grow at a 24.1% CAGR over FY23-25

  • Finolex Industries is rising as its Q4FY22 net profit rises 65.7% YoY to Rs 495.1 crore and revenue rises 28.2% YoY to Rs 1,619.3 crore. Maximum revenue growth comes from the PVC pipes and fittings segment, rising 41.6% YoY to Rs 1,276.9 crore. However, EBITDA margin falls by 16 percentage points YoY to 17% on the cost of materials consumed rising 14.9% YoY to Rs 913.5 crore.

  • Axis Securities maintains a ‘Buy’ rating on Abbot India with a target price of Rs 20,000, indicating an upside of 14%. The brokerage is positive about the company on the back of its strong growth in gasteroinsteinal and hormone segments. The brokerage expects the company’s revenue to grow at a CAGR of 10.9% over FY22-FY24.

  • JK Lakshmi Cementis trading with more than 21 times its weekly average trading volume. Lupin, Manappuram Finance, Dhani Services, and Westlife Developmentare trading at more than three times their weekly average trading volumes.

  • JPMorgan sees revenue growth for IT companies to slow down and EBIT margins taking a hit because of rising inflation globally. The brokerage downgrades its stance on IT sector to ‘Underweight’ and target multiples by 10-15%. It downgrades Tata Consultancy Services, HCL Technologies, Wipro, and L&T Technology Services to ‘Underweight’ from ‘Neutral’.

  • Mahindra & Mahindra and Volkswagen ink a pact to collaborate on MEB electric components like electric motors, battery system components and battery cells. The main objective of the companies is to electrify the Indian automotive market and decarbonize the mobility sector. Mahindra & Mahindra stands to gain from Volkswagen’s technology, innovation, and vertical integration of supply chains for their next project called “Born Electric Platform”. The binding supply contract will conclude by end of 2022.

  • Media Stocks like Network 18 Media & Investments, TV18 Broadcast, Sun TV Network, Saregama India and Zee Entertainment Enterprises, among others are falling in trade. The broader sectoral index Nifty Media is also trading in red.

  • Nestle India touches a 52-week low of Rs 16,006. Stock falls for two consecutive sessions. However, ITC touches a 52-week high of Rs 279.3. Stock rises for three consecutive sessions.

  • Manappuram Finance slumps as its Q4FY22 net profit falls 44.3% YoY to Rs 261 crore as the company shifts its sales from high-yielding gold loans to low-yielding gold loans. Revenue from gold loans falls 17.5% YoY to Rs 1,109.2 crore. The NBFC's net interest income fell 10.2% to Rs 986.5 crore. The board approves the payment of an interim dividend of Rs 0.75 per share.

  • Pidilite Industries falls in trade as its Q4FY22 net profit falls 16.9% YoY to Rs 254.3 crore, despite its revenue rising 11.8% YoY to Rs 2,518.2 crore. Profit falls due to the cost of materials consumed rising 30.1% YoY to Rs 1,413.9 crore on high input costs. In FY22, net profit rises 6.7% YoY to Rs 1,207.6 crore and revenue rises 35.1% YoY to Rs 9,957.3 crore.

  • Lupin is falling as it posts a loss of Rs 518 crore in Q4FY22 against a profit of Rs 460 crore in the same quarter previous year. However, revenues increase by 2.8% YoY in Q4FY22 to Rs 3,864.5 crore. The company posted losses mainly due to deferred tax expenses and one-time expenses of Rs 193.2 crore regarding its Metformin and Oseltamivir drugs.

  • Arvind's Q4FY22 profit rises 58.2% YoY to Rs 84.2 crore and revenue rises 32% YoY to Rs 2,213.3 crore. In FY22, the company makes profit of Rs 238.2 crore as against a loss of Rs 16.5 crore in FY21.

  • Route Mobile is falling as its Q4FY22 profit falls 1.8% QoQ to Rs 45.7 crore. However, revenues increase by 11.8% QoQ to Rs 634.5 crore. Net profit falls as employee benefits expense rises 51.1% QoQ to Rs 39.9 crore in Q4FY22. Net profit rises 24.6% YoY in FY22 to Rs 166.2 crore and revenues increase by 42.2% to Rs 2,022.1 crore.

  • ITC’s Q4FY22 net profit rises 11.6% YoY to Rs 4,259.6 crore as gross revenue from the sale of goods and services increases 14.9% to Rs 17,569.7 crore. The maximum revenue growth came from the hotels segment with a 34.8% YoY rise to Rs 407.4 crore. Agri business grows 29.3% YoY to Rs 4,375.4 crore and FMCG-Cigarettes grew 10.3% to Rs 7,177 crore as GST on cigarettes remains the same, driving cigarette sales. The board recommends a final dividend of Rs 6.25 per share for FY22.

Riding High:

Largecap and midcap gainers today include ITC Ltd. (276.00, 3.45%), Abbott India Ltd. (18,129.90, 1.42%) and Adani Power Ltd. (298.75, 1.37%).

Downers:

Largecap and midcap losers today include Coforge Ltd. (3,665.00, -7.22%), Lupin Ltd. (634.95, -7.08%) and MphasiS Ltd. (2,462.45, -6.84%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included JK Lakshmi Cement Ltd. (430.45, 9.52%), Caplin Point Laboratories Ltd. (809.65, 9.06%) and ITC Ltd. (276.00, 3.45%).

Top high volume losers on BSE were Manappuram Finance Ltd. (94.40, -9.71%), Lupin Ltd. (634.95, -7.08%) and Route Mobile Ltd. (1,208.65, -6.18%).

Akzo Nobel India Ltd. (1,779.65, -0.08%) was trading at 11.0 times of weekly average. Dr. Reddy's Laboratories Ltd. (3,939.05, 0.85%) and Punjab & Sind Bank (15.65, 2.62%) were trading with volumes 5.7 and 5.4 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 28 stocks hit their 52-week lows.

Stocks touching their year highs included - ITC Ltd. (276.00, 3.45%) and Mangalore Refinery And Petrochemicals Ltd. (90.75, 1.57%).

Stocks making new 52 weeks lows included - Astral Ltd. (1,679.65, -3.95%) and Aurobindo Pharma Ltd. (524.00, -6.36%).

4 stocks climbed above their 200 day SMA including Caplin Point Laboratories Ltd. (809.65, 9.06%) and Timken India Ltd. (1,951.30, 0.58%). 18 stocks slipped below their 200 SMA including Trent Ltd. (1,024.50, -5.58%) and VIP Industries Ltd. (557.75, -4.80%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
18 May 2022
Market closes flat, Teamlease Services Q4 profit rises 61% YoY

Trendlyne Analysis

Indian indices closed flat after posting their highest daily gains in three months on Tuesday. Most Asian indices closed higher on Wednesday tracking the US indices, which closed sharply higher on Tuesday. The tech-heavy NASDAQ 100 rose 2.6% despite US Federal Reserve Chairman Jerome Powell’s hawkish remarks on Tuesday. Chairman Powell said the US central bank will keep raising interest rates until there is “clear and convincing” evidence that inflation is in retreat. Investors continue to monitor the prevailing high inflation levels, tightening monetary policies, and geopolitical crisis in Europe. In the last week, foreign investors have sold over Rs 11,328.5 crore worth shares of Indian companies. UK’s consumer price index or CPI rises 9% in April hitting a 40-year high.

Nifty Smallcap 100 and Nifty Midcap 100 closed lower despite the benchmark index closing flat. Nifty FMCG and Nifty Pharma closed higher than Tuesday’s levels. Nifty Metal, which rose over 6.8% on Tuesday, closed in the red. Nifty IT gave up its gains and closed lower, despite the NASDAQ 100 closing in the green on Tuesday.

Nifty 50closed at 16,240.30 (-19, -0.1%), BSE Sensexclosed at 54,208.53 (-109.9, -0.2%) while the broader Nifty 500closed at 13,918.20 (-7.9, -0.1%)

Market breadth is in the green. Of the 1,876 stocks traded today, 1,013 showed gains, and 829 showed losses.

  • Dhani Services, Glenmark Life Sciences, Phoenix Mills, and Finolex Cables are trading with higher volumesas compared to Tuesday.

  • Dr. Lal Pathlabs sees a short build-up in its May 26 futures series after it announces Q4FY22 results. Its open interest rises 10.4% with put to call ratio at 0.51

  • Garments & apparel company Gokaldas Exports surges and hits an all-time high of Rs 519.9 on robust quarterly performance, growing order book and its ability to deal with supply-chain disruptions. The company’s net profit is up 2.8X to Rs 61 crore while revenues jump 58% YoY to Rs 588 crore for Q4FY22.

  • Teamlease Services Q4FY22 profit rises 61% YoY to Rs 31.6 crore and revenue rises 35% YoY to Rs 1,822 crore. In FY22, profit falls 49.7% to Rs 39.5 crore as employee benefits and other expenses increase.

  • Ruchi Soya surges as it announces acquisition of food retail business of Patanjali Ayurved for Rs 690 crore. It will also acquire manufacturing plants of Patanjali at Padartha, Haridwar, and Newasa. The acquisition is likely to be complete by July 15. The company also plans to change its name from Ruchi Soya Industries Limited to Patanjali Foods Limited, subject to approval from regulatory authorities.

  • Sugar stocks like Uttam Sugar Mills, Rajshree Sugars & Chemicals, Triveni Engineering & Industries, and Piccadily Agro Industriesamong others are rising in trade as cabinet advances 20% ethanol blending target In petrol to 2025-26 from 2030

  • Ethos’ Rs 472.3- crore IPO gets bids for 22% of the available 39.8 lakh shares on offer on the first day of bidding. The retail investor quota gets bids for 43% of the available 19.6 lakh shares on offer. The public offer comprises of a fresh issue up to Rs 375 crore as well as an offer for sale of up to Rs 97.3 crore.

  • Paradeep Phosphates’ Rs 1,501.7-crore IPO gets bids for 42% of the available 26.8 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 81% of the available 13.1 crore shares on offer.

  • Edelweiss maintains a ‘Buy’ rating on Brigade Enterprises with a target price of Rs 605, indicating an upside of 40%. The brokerage has a positive outlook on the company on the back of strong demand in residential segment and a rise in occupancy rate in the commercial space. The brokerage expects the company’s revenue to grow at a CAGR of 9.2% over FY22-FY24.

  • Tube Investments of India is trading with more than 14 times its weekly average trading volume. Sudarshan Chemical Industries, Wockhardt, NOCIL, and Galaxy Surfactants are trading at more than five times their weekly average trading volumes.

  • Avenue Supermarts, Bandhan Bank, PI Industries, and Coforge, among others, are rising over the past week after announcing their Q4FY22 results

  • DLF's Q4FY22 profit falls 15.7% YoY to Rs 405.3 crore and revenue falls 13.35% YoY to Rs 1,652.1 crore. In FY22, net profit rises 37.24% to Rs 1,500.9 crore on the back of increasing demand across segments and geographies. The Board recommends interim dividend of Rs 3 per share.

  • Metropolis Healthcare and Hindustan Petroleum Corporation touch 52-week low of Rs 1,766.1 and Rs.283.3 respectively. Both stocks are falling for three consecutive sessions.

  • S&P Global Ratings cuts India’s growth projection for FY23 to 7.3% from 7.8% on rising inflation and the extension of the ongoing geopolitical conflict. High inflation for a long duration may require central banks to raise rates affecting output and employment.

  • Acrysil is falling despite its Q4FY22 net profit rising 24.1% YoY to Rs 16.5 crore and revenues increasing by 33.9% YoY to Rs 141.1 crore. Raw material costs rise 71.2% YoY in Q4FY22 to Rs 52,2 crores and total expenses increase by 38% to Rs 119 crore. Net profit rises 65.5% YoY in FY22 to Rs 65.3 crore and revenues increase by 55.4% to Rs 494 crore.

  • NOCIL is rising as Q4FY22 profit rises 84.6% YoY to Rs 68.92 crore and revenue rises 43.7% YoY to Rs 462.74 crore. In FY22, profit rises 99.2% to Rs 176.11 crore.

  • Indian Oil Corporation falls as its Q4FY22 net profit is down 26.3% YoY to Rs 6,645.7 crore because of a jump in deferred tax expense by 1.4X YoY to Rs 160.4 crore. Revenue increases 25.9% YoY to Rs 2.1 lakh crore. Revenue from petroleum products rises 25.9% YoY to Rs 1.9 lakh crore in Q4FY22. The company’s FY22 revenue rises 41.5% YoY to Rs 7.28 lakh crore (without GST), the highest standalone revenue given out by an Indian Company.

  • Dr. Lal Pathlabs is falling as its Q4FY22 net profit declines 26.5% YoY to Rs 61.3 crore. However, revenue rises 11.9% YoY to Rs 495.5 crore as its non-Covid revenue increases by 12.2% YoY to Rs 419.7 crore. Operating profit margin decreases 280 bps YoY in Q4FY22 to 25.2% on the back of high employee benefit expenses and finance costs.

  • Premium watch retailer Ethos raises Rs 141.6 crore from investors by selling 16.1 lakh equity shares at Rs 878 per share to nine anchor investors. Investors include ICICI Prudential Flexi Cap Fund, Jupiter India Fund, Saint Capital Fund, UPS Group Trust, Nomura Singapore, among others.

  • Minda Corp is rising as its Q4FY22 profit jumps 5.9 times YoY to Rs 75.9 crore and revenues rise by 18.9% YoY to Rs 952.3 crore. Net profit jumps mainly due to a tax credit of Rs 22 crore related to earlier years. Net profit jumps 3.6 times YoY in FY22 to Rs 191.9 crore and revenues rise by 24.9% to Rs 3,000.1 crore.

  • Bharti Airtel’s Q4FY22 net profit jumps 1.4X QoQ to Rs 2,008 crore. Revenue increases 5.4% QoQ to Rs 31,500 crore because of a 20% tariff hike taken in November 2021. Revenue from home services rises 10% QoQ to Rs 876.2 crore and mobile services (India) increases 9.5% to Rs 17,616.8 crore. The operating margin is up 3.1 bps QoQ to 23.7%. The company recommends a dividend of Rs 3 per fully paid-up equity share and Rs 0.75 per partly paid-up equity share for FY22.

Riding High:

Largecap and midcap gainers today include Ruchi Soya Industries Ltd. (1,187.85, 9.60%), Adani Power Ltd. (294.70, 4.99%) and Petronet LNG Ltd. (223.50, 4.88%).

Downers:

Largecap and midcap losers today include Dr. Lal Pathlabs Ltd. (2,051.95, -6.07%), Indian Oil Corporation Ltd. (118.05, -5.10%) and Hindustan Petroleum Corporation Ltd. (243.65, -4.77%).

Movers and Shakers

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

Top high volume gainers on BSE included Sudarshan Chemical Industries Ltd. (509.70, 19.34%), Wockhardt Ltd. (283.25, 15.78%) and Great Eastern Shipping Company Ltd. (440.90, 10.85%).

Top high volume losers on BSE were Route Mobile Ltd. (1,288.30, -14.66%), Metropolis Healthcare Ltd. (1,753.45, -9.28%) and Dr. Lal Pathlabs Ltd. (2,051.95, -6.07%).

Tube Investments of India Ltd. (1,669.30, -1.39%) was trading at 18.1 times of weekly average. Galaxy Surfactants Ltd. (2,687.80, 3.34%) and NOCIL Ltd. (254.35, 4.54%) were trading with volumes 7.2 and 7.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

5 stocks made 52-week highs, while 9 stocks hit their 52-week lows.

Stocks touching their year highs included - Coromandel International Ltd. (929.50, -1.41%), Great Eastern Shipping Company Ltd. (440.90, 10.85%) and Mangalore Refinery And Petrochemicals Ltd. (89.35, 9.97%).

Stocks making new 52 weeks lows included - Bharat Petroleum Corporation Ltd. (331.90, -3.08%) and Hindustan Petroleum Corporation Ltd. (243.65, -4.77%).

28 stocks climbed above their 200 day SMA including Praj Industries Ltd. (369.80, 7.03%) and Petronet LNG Ltd. (223.50, 4.88%). 5 stocks slipped below their 200 SMA including Indian Oil Corporation Ltd. (118.05, -5.10%) and Prestige Estates Projects Ltd. (426.55, -4.69%).

 
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The Baseline
18 May 2022
Warning in key indicator as India's equity market cap soars past GDP

In Shakespeare's Romeo and Juliet, a character warns the hero, "These violent delights have violent ends." Go slow, he tells Romeo.

Like Romeo, the stock market may have moved too fast, especially when we compare it to India's real GDP growth. For the first time, India's total stock market capitalization (BSE) is at a record 165% of India's estimated real GDP for FY22. Pre-Covid, it was 108% of real GDP.

This value (total market cap to GDP) is commonly known as the Buffett indicator - Warren Buffett once said that it is “probably the best single measure of where valuations stand at any given moment.” This helps us compare stock market sentiment against actual economic output - telling us when there is a mismatch in investor expectation and reality. 

The high level of this indicator right now is a signal to investors to be very cautious about adding more money to equities, especially in the riskier smallcap and midcap stocks, and overvalued stocks. Especially with CEOs across industries talking about rising costs impacting their margins in earnings calls. Achal Bakeri of Symphony puts this well:

"We cannot keep on repeating price increases over and over again. We have not been able to keep passing this. Even in the month of April, there were cost increases - commodity cost increases or basic raw material increases. You cannot just keep on changing your prices frequently in business like ours which is a consumer business. So we have absorbed quite a bit of cost increases."

As the RBI raises interest rates and liquidity shrinks, companies will have to battle both costs as well as the rising price of debt. This is likely to impact valuations further. 

Plenty of Nifty500 stocks in the PE Sell Zone

Investors can check which stocks are in the PE Sell Zone (stocks that usually trade below their current PE most of the time). Even after the recent correction, 115 stocks in the Nifty500 are still in the PE Sell Zone, including Infosys, Adani Enterprises, Asian Paints and Bandhan Bank. 

Results show some sectors turning wobbly

The Results Dashboard tracks results as they come in, and the Q4 results are illuminating. Some sectors beaten down by the pandemic are finally delivering strong results - Hotels are seeing profit margins jump by double digits, Specialty Retail including PVR and Inox are seeing net profit recovery.

Agrochemicals has so far also delivered a good quarter, although rising costs have put margins under pressure - this sector has limited capability of passing on costs to farmers, especially in India's price-sensitive rural market. 

But over 50% of results declared so far have shown negative profit growth. 

Sectors that have been weak include auto as well as the tyre industry, which are reeling under both demand and cost pressures. 

Interesting reads

HDFC Life, despite the challenges of FY22 has closed the year on a high, showing rising premiums and improving metrics.

UPL delivered a strong set of results. But price hikes played a big part in this, as the company deals with rising costs.   

FMCG bellweather HUL managed a difficult quarter well. But like others it has been hit by cost pressures. Does this threaten margins?