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Trendlyne Marketwatch
20 Jun 2022
Market close higher, Axis Bank hits 52-week low

Trendlyne Analysis

Indian indices snapped their six-day losing streak and closed in the green. European stocks trade higher than Friday’s levels amid mixed global cues. Major Asian indices closed mixed, tracking the US indices, which also closed mixed on Friday. The Dow Jones closed marginally lower while the tech-heavy NASDAQ 100 rose 1.2%. The S&P 500 lost 5.8% last week, its biggest weekly loss in two years. Investors continue to monitor elevated inflation levels globally and the effect of aggressive interest rate hikes by the central banks on economic growth. Crude oil falls sharply amid demand concerns on the back of slow economic growth induced by interest rate hikes.

Nifty Midcap 100 and Nifty Smallcap 100 closed deep in the red, despite the benchmark index closing in the green. Nifty Bank and Nifty Realty, which opened higher than Friday’s levels, closed in the red. Nifty IT closed in the green, following the tech-focused NASDAQ 100, which closed higher on Friday.

Nifty 50 closed at 15,350.15 (56.7, 0.4%) , BSE Sensex closed at 51,597.84 (237.4, 0.5%) while the broader Nifty 500 closed at 12,950.75 (-44, -0.3%)

Market breadth is highly negative. Of the 1,906 stocks traded today, 234 were in the positive territory and 1,648 were negative.

  • Brightcom Group, Gland Pharma, Relaxo Footwears, and Orient Electric are trading with higher volumes as compared to Friday.

  • Vedanta sees a short build-up in its Jun 30 future series as its open interest rises 11% with put to call ratio at 0.49.

  • Stocks like Persistent Systems, Pidilite Industries, Rashtriya Chemicals & Fertilizers, Angel One, and Varroc Engineering are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Axis Bank falls to a new 52-week low of Rs 624.45 per share. The stock is falling for last two consecutive sessions.

  • National Aluminium Co is falling as ICICI Securities downgrades its rating on the stock to ‘Sell’ from ‘Reduce’ with a target price of Rs 52. The brokerage cites possible demand-supply surplus in FY23-24, price and delay in the current projects leading to cost overrun for downgrading its rating on the stock. It also cut its FY23 profit estimates for the company by 37% to Rs 1,658.6 crore.

  • Delta Corp falls the most in four weeks after Rakesh Jhunjhunwala sells 57 lakh equity shares for Rs 96 crore in the open market, according to reports. Jhunjhunwala previously sold 60 lakh and 15 lakh shares between June 1-14, bringing his holding down to 3.36% from 6.17%. After the current reported transaction, his holding will come down to 1.2%.

  • Alkem Laboratories is rising despite its St. Louis manufacturing facility receiving three observations after the conclusion of the US FDA’s facility inspection. The inspection was conducted from June 6 -17.

  • Paint companies' stocks like Asian Paints, Berger Paints, and Kansai Nerolac rise in trade today as crude oil falls to a three-week low. Nearly 50% of raw material of paint makers comes from crude oil derivatives.

  • IndusInd Bank and Amara Raja Batteries touch their 52-week lows of Rs 780.1 and Rs 446 respectively. Both stocks trade lower for eight consecutive sessions.

  • ITI is trading with more than 15 times its weekly average trading volume. The Fertilisers and Chemicals Travancore, Gujarat Pipavav Port, Orient Electric, and Vedanta are trading at more than three times their weekly average trading volumes.

  • Greenlam Industries is rising after its board of directors approve a preferential issue of Rs 195 crore for a 4.97% stake in the company to Asian Paints' promoter entity Smiti Holding and Trading.

  • FMCG stocks like Hindustan Unilever, ITC, Nestle India, Dabur India, Godrej Consumer Products, United Breweries, among others, are rising in trade. The broader sectoral index Nifty FMCG is also trading in the green.

  • JP Morgan initiates coverage on Life Insurance Corp of India with an ‘Overweight’ rating and a target price of Rs 840, indicating an upside of 29%. The brokerage finds the company’s current valuation attractive and believes that the markets are mispricing the stock.

  • Adani Wilmar hits the lower circuit during trade as it cuts edible oil prices by Rs 10, after the Centre reduces import duties on the commodity on Saturday.

  • Energy stocks like Reliance Industries, Bharat Petroleum Corp, Power Grid Corporation of India, Tata Power Co, NTPC, Oil and Natural Gas Corp, among others, are falling in trade after oil prices fell 5% to a three-week low on Friday. The broader sectoral index Nifty Energy is also trading in the red.

  • Axis Securities maintains a ‘Buy’ rating on Dalmia Bharat with a target price of Rs 1,635, indicating an upside of 30%. The brokerage expects the company’s market share to grow going forward on the back of production capacity expansion, cost optimization, and robust demand. It expects the company’s revenue to grow at a 14.1% CAGR over FY22-24.

  • Shares of Sun Pharmaceutical Industries rise as Jefferies upgrades the stock to 'Buy' rating from 'underperform', according to reports. It set a price target of Rs 910, an upside of 12%. The brokerage believes that the next two years' growth will be driven by Ilumya, Cequa and Winlevi while the dependance on US generics is among the lowest in the pharmaceutical sector.

  • All metals stocks are trading in the red. Stocks like Hindustan Zinc, Tata Steel, Vedanta, Hindalco Industries, NMDC, National Aluminium Co or NALCO,among others, are down by more than 3%. The broader sectoral index Nifty Metal is also falling in trade.

  • Vodafone Idea's board to consider raising Rs 500 crore by issuance of equity shares and/or convertible warrants on a preferential basis to one or more entities of Vodafone Group. The meeting is scheduled for Wednesday.

  • Indian rupee surges 9 paise to Rs 77.96 against the US dollar in early trade. IT stocks like Tata Consultancy Services, Infosys, HCL Technologies, and Wipro also rise in trade today.

  • Vedanta invites bids for its Tuticorin-based smelter--Sterlite Copper--which is shut since mid-2018. The smelter accounted for 40% of India’s copper output before it was shut over alleged violations of environmental norms. The last date for submission of an expression of interest is July 4. Plant units, along with oxygen-generating facilities as well as residential homes, are a part of the sale offer.

Riding High:

Largecap and midcap gainers today include Pidilite Industries Ltd. (2,106.65, 5.36%), Godrej Consumer Products Ltd. (759.00, 4.65%) and Hindustan Unilever Ltd. (2,195.90, 4.05%).

Downers:

Largecap and midcap losers today include Vedanta Ltd. (230.45, -12.69%), Bandhan Bank Ltd. (274.05, -11.71%) and Oil India Ltd. (227.00, -10.86%).

Movers and Shakers

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

Top high volume gainers on BSE included ITI Ltd. (93.00, 12.52%) and DCB Bank Ltd. (75.10, 5.33%).

Top high volume losers on BSE were Vedanta Ltd. (230.45, -12.69%), Rain Industries Ltd. (135.65, -10.08%) and Hindustan Copper Ltd. (84.35, -9.40%).

Gujarat Pipavav Port Ltd. (74.90, -2.60%) was trading at 5.4 times of weekly average. Orient Electric Ltd. (247.75, -3.09%) and Tasty Bite Eatables Ltd. (8,184.00, -6.91%) were trading with volumes 5.1 and 4.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

125 stocks tanked below their 52 week lows.

Stocks making new 52 weeks lows included - Amara Raja Batteries Ltd. (445.30, -3.49%) and Astral Ltd. (1,607.65, -1.52%).

5 stocks climbed above their 200 day SMA including Adani Green Energy Ltd. (1,743.65, 1.89%) and Adani Transmission Ltd. (2,060.25, 1.36%). 24 stocks slipped below their 200 SMA including Bandhan Bank Ltd. (274.05, -11.71%) and Oil India Ltd. (227.00, -10.86%).

 
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The Baseline
17 Jun 2022, 05:47PM
Five Interesting Stocks Today
  1. Medplus Health Services: This healthcare supplies company, which listed on the exchanges in December 2021, hit a lifetime low of Rs 708 in share price in the last week. The stock lost close to 16% in the previous eight trading sessions and is currently trading below its IPO issue price of Rs 796. A combination of the competitive landscape in the pharmacy segment and weakQ4FY22 results led to the price fall.

However, brokerages still have a positive outlook on the company. As a result, it shows up in this screener which lists stocks with high analyst ratings and have an upside of at least 20% from their current price.

The pharmacy segment (both offline and e-commerce) is under intense competition from companies from different industries. While peers like PharmEasy are expanding aggressively in this segment, hospital companies like Apollo Hospital Enterprises and Aster DM Healthcare are also after market share in the pharmacy space. Apollo Hospital Enterprises’ arm, Apollo Healthco boasts of a larger network compared to Medplus, With a total store count of 4,529 against Medplus’ 2,748 as of March 2022. However, Medplus is expanding its network at a faster clip, adding 667 stores in FY22 (on a net basis). Apollo Healthco added 411 net new stores in FY22. Both companies’ margins fell in Q4FY22 as a result of increased discounts to gain market share from the unorganized sector. Medplus’ EBITDA margin fell 120 bps YoY to 6.8% in Q4FY22. With 27% of the total stores being less than 12 months old, improvement in margins from these new additions could help ease the margin pressure for Medplus.

  1. JSW Steel: This steel maker’s output in May rose 22% YoY to 16.67 lakh tonnes. However, with the mayhem in markets over the past few trading sessions, the stock rose only marginally by 0.2%, despite strong volume growth. In fact, this stock is down over 30% from its lifetime high seen in April and is currently trading less than 5% away from its 52-week low. But, mutual funds are optimistic, increasing their holdings in JSW Steel in the past month.

The steep fall in the company’s share price over the past many trading sessions is not entirely due to the choppy market. There is also the weak outlook and muted Q4FY22 results. On May 23, the Centre imposed export duties on iron ore and some steel intermediaries to curb rising prices in the domestic market. Exports contributed to 28% of total volumes in FY22. This export duty imposition comes at a time when the company’s margins are already under pressure. Operating profit margin fell 11.8 percentage points YoY in Q4FY22 to 19.6% on the back of high input costs. Going forward, a fall in coking coal prices can help the company sustain its margins. Trendlyne’s Forecaster estimates a 10% revenue growth in FY23. This is a muted forecast, considering that JSW’s revenue grew 87% YoY to Rs 1,47,902 crore in FY22.

Brokerages downgraded this company’s stock on the back of falling margins in Q4FY22 and new export duty imposition by the Centre. While Motilal Oswal downgraded its rating from ‘Buy’ to ‘Neutral’, Prabhudas Lilladher has a ‘Reduce’ rating. 

  1. G R Infraprojects: This roads & highway builder’s stock was doing well on Monday morning when it was trading almost 28X its weekly average trading volumes. However, the stock plunged 18% in the next three consecutive sessions, after news broke of raids conducted by the Central Bureau of Investigation (CBI) at various company locations. It was alleged that there were anomalies found in an Assam highway project.

On June 14, 2022, its wholly owned-subsidiary GR Bandikui Jaipur Expressway executed the concession agreement with the National Highways Authority of India worth Rs 1,368 crore. The stock touched a 52-week low on the same day. The stock fell further on Wednesday when the company’s exchange filing revealed that the CBI filed an FIR against the company and some of its officials under the Prevention of Corruption Act. Despite these developments, the stock closed 2% above on Thursday, even though the Nifty fell below the 15,400 mark on Thursday.

  1. Tata Communications: This telecommunication service provider’s stock fell 7% in intra-day trade to touch a 52-week low of Rs 856 on Wednesday. The stock fell after its investor day 2022 event held on Tuesday, as the company’s management did not give guidance or any outlook on its revenue growth for FY23. This did not enthuse investors and brokerages. The company’s revenue conversion cycle has slowed down due to deal closure delays caused by the shortage of chips and component supplies.

The company stock also made it to this screener which shows broker downgrades in price or recommendations in the past month. Its target price was downgraded by ICICI Securities after its Investor Day 2022 event. The brokerage still has a ‘Buy’ rating on the stock.

  1. Varun Beverages: This soft drink bottler’s stock rose over 5% in intra-day trade and touched an all-time high of Rs 805.6 on Wednesday. The stock surged by around 25% over the past three months, in an otherwise weak market. It shows up on a screener with companies whose shares rose by more than 10% in over three months, with rising net profit growth. The stock has been rising on expectations of robust profitability in Q1FY23.

Hem Securities expects the company to benefit from the strong recovery in consumer demand led by the opening up of offices and colleges, increasing travel demand, rising out-of-home consumption, and traction in new products. 

The company has been trading at higher levels since it posted its Q4FY22 results, with its profit rising 96.6% YoY to Rs 254.2 crore and revenue by 26.2% YoY to Rs 2,827.5 crore helped by a scorching summer. The management believes it can deliver healthy profit growth in the coming quarters as the economy recovers. In FY23, the management expects high raw material and commodity prices to increase margin pressure. To counter this, Varun Beverages undertook advanced stocking for the summer season. The management expects to achieve 1.5X sales volume in Q1FY23 compared to Q4FY22.

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
17 Jun 2022, 03:50PM
Market closes lower, Pharma stocks trade in the red

Trendlyne Analysis

Nifty 50 closed in the red and extended its losing streak to six days on a volatile day of trade. European stocks trade higher, following the US indices futures, which are trading in the green. Major Asian indices closed lower, tracking the US indices, which closed deep in the red on Thursday. The tech-heavy index, NASDAQ 100 fell 4% and S&P 500 closed 3.3% lower. Investors remain fearful of the impact of aggressive rate hikes by central banks on the global economy. Brent crude oil falls marginally amid demand concerns due to the possibility of slow economic growth induced by rate hikes globally. In the last week, foreign investors have sold over Rs 14,418.7 crore worth of shares of Indian companies.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty Pharma and Nifty FMCG closed lower than Thursday’s levels. Nifty IT closed in the red, tracking the tech-focused NASDAQ 100, which fell sharply lower on Thursday.

Nifty 50closed at 15,293.50 (-67.1, -0.4%), BSE Sensexclosed at 51,360.42 (-135.4, -0.3%) while the broader Nifty 500closed at 12,994.75 (-94.5, -0.7%)

Market breadth is overwhelmingly negative. Of the 1,865 stocks traded today, 501 were on the uptrend, and 1,334 went down.

Riding High:

Largecap and midcap gainers today include Sun TV Network Ltd. (433.05, 5.78%), Hindustan Aeronautics Ltd. (1,898.70, 5.65%) and Bajaj Finance Ltd. (5,419.55, 2.57%).

Downers:

Largecap and midcap losers today include Adani Total Gas Ltd. (2,149.05, -9.57%), Bajaj Holdings & Investment Ltd. (4,471.70, -6.36%) and Titan Company Ltd. (1,936.45, -6.04%).

Volume Rockets

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

Top high volume gainers on BSE included Delta Corp Ltd. (184.20, 12.39%), KIOCL Ltd. (190.10, 12.02%) and Sun TV Network Ltd. (433.05, 5.78%).

Top high volume losers on BSE were Adani Total Gas Ltd. (2,149.05, -9.57%), Titan Company Ltd. (1,936.45, -6.04%) and Avenue Supermarts Ltd. (3,460.55, -6.03%).

Indus Towers Ltd. (208.00, 0.73%) was trading at 6.9 times of weekly average. Hindustan Aeronautics Ltd. (1,898.70, 5.65%) and Honeywell Automation India Ltd. (32,856.90, -0.23%) were trading with volumes 6.4 and 6.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock hit their 52-week highs, while 133 stocks were underachievers and hit their 52-week lows.

Stock touching their year highs included - Hindustan Aeronautics Ltd. (1,898.70, 5.65%).

Stocks making new 52 weeks lows included - Akzo Nobel India Ltd. (1,701.60, -2.49%) and Amara Raja Batteries Ltd. (461.40, -0.33%).

7 stocks climbed above their 200 day SMA including Asahi India Glass Ltd. (464.20, 8.51%) and Jyothy Labs Ltd. (153.60, 3.99%). 19 stocks slipped below their 200 SMA including Linde India Ltd. (2,843.35, -5.18%) and Vinati Organics Ltd. (1,851.90, -4.47%).

 
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Trendlyne Marketwatch
16 Jun 2022, 03:50PM
Market closes lower, Nifty 50 hits 52-week low

Trendlyne Analysis

Nifty 50 fell over 500 points from the day’s high and hit a 52-week low with the volatility index, India VIX rising above 22.5%. Indian indices closed deep in the red and extended their losing streak to five days. European Indices trade in the red, tracking the US indices futures, which is trading sharply lower. Major Asian indices, which opened higher, closed in the red amid weak global cues.

US indices rose on Wednesday after the US Federal Reserve increased its federal funds rate by 75 bps, its biggest hike in 28 years. However, Chairman Jerome Powell doesn’t expect moves of this size to be common going forward but clarified that in its next meeting rates could rise by 50 bps or 75 bps. Brent crude oil edges higher after falling on Wednesday. Tight crude oil supply due to the geopolitical crisis, fears of slow economic growth, and lockdowns in China remain the key levers affecting the crude oil price.

Nifty Next 50 and Nifty Smallcap 100 closed deep in the red, following the benchmark index. Nifty Media and Nifty Pharma, which opened higher, closed sharply lower than Wednesday’s levels. Nifty IT also closed in the red, tracking the tech-heavy NASDAQ 100 futures, which is trading sharply lower.

Nifty 50closed at 15,360.60 (-331.6, -2.1%), BSE Sensexclosed at 51,495.79 (-1,045.6, -2.0%) while the broader Nifty 500closed at 13,089.20 (-291.7, -2.2%)

Market breadth is sharply down. Of the 1,878 stocks traded today, 185 were on the uptrend, and 1,676 went down.

  • ZF Commercial Vehicle Control Systems India, PNC Infratech, Nuvoco Vistas Corporation, and Kansai Nerolac Paints are trading with higher volumes as compared to Wednesday.

  • Maruti Suzuki India sees a short build-up in its Jun 30 futures series as its open interest rises 3.1% with put to call ratio at 0.62.

  • Stocks like MMTC, LIC Housing Finance, Laxmi Organic Industries, Gland Pharma, and Tata Communications are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Infosys falls to a new 52-week low of Rs 1,401.87 per share. The stock is falling for the last five sessions.

  • Metal stocks like Vedanta, Jindal Steel & Power,Tata Steel, APL Apollo Tubes, and Hindalco Industries among others, are falling in trade. The broader sectoral index BSE Metal is also trading in red.

  • Zomato and Jio-bp (a joint venture between Reliance Industries and bp) sign an agreement for electric vehicle (EV) services, according to reports. Jio-bp will provide EV services to Zomato and access to ‘Jio-bp pulse’ the battery swapping stations for last-mile delivery.

  • All realty stocks are trading in the red. Stocks like, DLF, Godrej Properties, Oberoi Realty, Phoenix Mills, Prestige Estates Projects, Sunteck Realty and Indiabulls Real Estate are down by more than 2%. The broader sectoral index Nifty Realty is also falling in trade.

  • Hem Securities maintains a ‘Buy’ rating on PNC Infratech with a target price of Rs 294, indicating an upside of 22.5%. The brokerage company expects the company to remain profitable for the coming quarters on the back of a robust order book, a strong balance sheet, and its tendering activities. It expects the company's profit to grow at a 14.1% CAGR over FY22-24.

  • Nifty 50 falls over 400 points from the day's high and hits a 52-week low of 15,369.8 with all sectoral indices trading in the red. Nifty Bank falls over 20% from its record high and falls into the bear market territory.

  • The Reserve Bank of India approves Equitas Small Finance Bank’s request of reappointing MD and CEO Vasudevan for a period of one year. The re-appointment comes in effect from July 23, 2022.

  • Sudarshan Chemical Industries is trading with more than 31 times its weekly average trading volume. Galaxy Surfactants, Brigade Enterprises, Vakrangee, and Chemplast Sanmarare trading at more than three times their weekly average trading volumes.

  • Media stocks are falling in trade, with stocks like Nazara Technologies, Zee Entertainment Enterprises, Network 18 Media & Investments, TV18 Broadcast, and Dish TV India falling below 2%. The broader sectoral index Nifty Media is also trading in the red.

  • Dredging Corp of India is rising as it secures a Rs 250 crore yearly maintenance contract from Jawaharlal Nehru Port at Navi Mumbai. The contract includes the maintenance of the Mumbai and Jawaharlal Nehru Port navigational channels.

  • Indian Overseas Bank’s board approves the raising of Rs 1,000 crore equity capital through the issuance of shares for FY23. The company will seek shareholders' approval for raising the capital soon.

  • Stocks of airline companies like Interglobe Aviation (Indigo), SpiceJet, and Jet Airways fall amid hike in ATF prices by oil marketing companies. According to reports, Chairman and SpiceJet's Managing Director Ajay Singh say that a minimum of 10-15% increase in air fares is required due to the hike in ATF prices and depreciation of the rupee. India still has a cap on air fares to prevent soaring ticket fares.

  • UPL receives approval for its resolution plan submitted to National Company Law Tribunal for the revival of Kudos Chemie. UPL's arm UPL Speciality Chemicals acquires a 100% stake in Kudos Chemie for Rs 40 crore and has to invest Rs 237 crore in Kudos over a period of two years.

  • Diagnostic companies' stocks like Dr Lal Pathlabs, Metropolis Healthcare, Thyrocare Technologies and Krsnaa Diagnostics trade higher due to the gradual increase in Covid-19 cases and increased testing. Diagnostic lab stocks are in a downtrend after the third Covid-19 wave receded in January 2022.

  • Shares of Reliance Industries rise after JP Morgan upgrades the stock to 'overweight', according to reports. The brokerage believes that the company's outperformance to Nifty50 will continue and increases its target price to Rs 3,170 per share from Rs 2,575, which is an upside of 22.10%.

  • Securities and Exchange Board of India (SEBI) initiates recovery action on BSE and National Stock Exchange for non-payment of a fine and interest relating to regulatory actions on the two exchanges. These relate to the fine imposed by the regulator for the exchanges not detecting misuse of clients' securities by Karvy Stock Broking.

  • Motilal Oswal upgrades its rating on ITC to ‘Buy’ from ‘Neutral’ with a target price of Rs 335, indicating an upside of 27%. The brokerage turns positive on the company’s prospects due to better-than-expected demand recovery in cigarettes, healthy sales traction in the FMCG segment, and lower drag from the hotels segment. It expects the company’s profit to grow at a 13.7% CAGR over FY22-24.

  • The Reserve Bank of India approves the merger of Shriram Capital and Shriram City Union Finance into Shriram Transport Finance. The merger was approved by the companies in December 2021 as part of a restructuring of the Shriram Group's lending businesses.

Riding High:

Largecap and midcap gainers today include Adani Transmission Ltd. (2,124.65, 3.27%), General Insurance Corporation of India (115.85, 3.25%) and Bayer Cropscience Ltd. (5,103.20, 1.92%).

Downers:

Largecap and midcap losers today include Vedanta Ltd. (267.45, -8.20%), Jindal Steel & Power Ltd. (326.65, -6.28%) and Tata Steel Ltd. (901.70, -6.03%).

Volume Rockets

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

Top high volume gainers on BSE included Vakrangee Ltd. (27.10, 9.05%), Gujarat Alkalies & Chemicals Ltd. (731.95, 1.67%) and Cera Sanitaryware Ltd. (4,082.70, 1.01%).

Top high volume losers on BSE were eClerx Services Ltd. (1,917.05, -7.63%), Spicejet Ltd. (41.05, -6.70%) and InterGlobe Aviation Ltd. (1,649.20, -4.97%).

Sudarshan Chemical Industries Ltd. (419.85, -3.36%) was trading at 41.8 times of weekly average. Heidelberg Cement India Ltd. (173.50, -2.53%) and Galaxy Surfactants Ltd. (2,906.70, -0.95%) were trading with volumes 23.7 and 7.5 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

80 stocks hit their 52-week lows.

Stocks making new 52 weeks lows included - Amara Raja Batteries Ltd. (462.95, -3.41%) and Bajaj Consumer Care Ltd. (130.80, -0.23%).

8 stocks climbed above their 200 day SMA including Gujarat Alkalies & Chemicals Ltd. (731.95, 1.67%) and Au Small Finance Bank Ltd. (624.65, -0.44%). 22 stocks slipped below their 200 SMA including Aegis Logistics Ltd. (213.55, -6.69%) and Tata Teleservices (Maharashtra) Ltd. (119.75, -5.89%).

 
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The Baseline
15 Jun 2022
As risks pile up, it's not yet safe to buy the dip

"In the next three months, we will find out if we are entering a global recession or not," Morgan Stanley Asia Chief Jonathan Garner said last week. He added, "We believe Indian markets are going to go lower".

This is a dangerous time for Indian investors - the recent fall in the market makes stocks look more tempting. But with both the US Fed and RBI raising rates, there is more downside to come.

Bear markets tend to outstay their welcome. After the subprime crash of 2008 for example, it took two years for the Nifty to reach its January 2008 levels (chart above).  

US indices hit bear market territory on Monday, losing more than 20% from its January peak. Hot inflation in the US means the Federal Reserve may become aggressive with upcoming hikes - analysts from Citigroup to Jefferies and Goldman Sachs say a 0.75% hike in interest rates is possible on Wednesday.  

And India, despite all we say about decoupling, correlates with US market movement and is battling a host of challenges.  

Looking at the positive and negative factors driving the Indian market, the negatives right now outweigh the positives, and some of the greens below can turn red quickly. For example while corporate earnings are strong, rising costs and low demand in the coming months can hit bottomlines across industries. 

Dollar earners have an advantage

Generating alpha in a weak market is a different ball game.  The safer companies are likely to be those that earn significant export revenue, benefiting from a strong dollar. So IT companies with significant US market share, fertilizer companies and export refiners like RIL become more attractive to investors - once their valuations turn more reasonable. The companies most in danger are those highly sensitive to rising costs like consumer staples and discretionary.  

Interesting reads (and videos)

How have superstar portfolios been doing? Tejas MD takes a look at Jhunjhunwala, Singhania, Kacholia's portfolio performance.

A jump in refining margins puts Reliance Industries in a sweet spot.

 
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Trendlyne Marketwatch
15 Jun 2022
Market closes lower, Rakesh Jhunjhunwala cuts stake in Delta Corp to 3.3%

Trendlyne Analysis

Nifty 50 closed in the red with the Indian volatility index, India VIX, rising above 22%. European indices trade in the green after the European Central Bank called for an unscheduled meeting to discuss the recent sell-off in government bond markets. Asian indices trade mixed as investors remain cautious ahead of a key US Federal Reserve decision to be announced later today.

US indices closed mostly lower on Tuesday. The S&P 500 and Dow Jones closed in the red but the tech-heavy NASDAQ 100 closed marginally higher. Analysts expect the US Federal Reserve to raise interest rates by 75 bps following a surprise rise in the US consumer price index or CPI to 8.6% in May. A 75 bps rate hike will be the biggest hike by the US Fed since 1994. US treasury yields rose expecting an aggressive monetary policy due to high inflation levels. Brent Crude oil falls marginally on fears of weaker demand due to slow global economic growth.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green despite the benchmark index closing lower. Nifty Media, which opened higher than Tuesday’s level, closed in the red. Nifty IT closed lower despite the tech-focused NASDAQ 100 closing in the green on Tuesday.

Nifty 50closed at 15,692.15 (-40.0, -0.3%), BSE Sensexclosed at 52,541.39 (-152.2, -0.3%) while the broader Nifty 500closed at 13,380.85 (-7.5, -0.1%)

Market breadth is in the green. Of the 1,875 stocks traded today, 999 were in the positive territory and 815 were negative.

Riding High:

Largecap and midcap gainers today include Bajaj Finserv Ltd. (11,809.70, 4.17%), Au Small Finance Bank Ltd. (627.40, 4.06%) and Indraprastha Gas Ltd. (355.35, 4.01%).

Downers:

Largecap and midcap losers today include Tata Communications Ltd. (875.35, -4.95%), Canara Bank (188.30, -4.49%) and Macrotech Developers Ltd. (1,056.25, -3.72%).

Volume Rockets

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

Top high volume gainers on BSE included DCM Shriram Ltd. (988.15, 5.53%), Vardhman Textiles Ltd. (266.00, 3.89%) and Jamna Auto Industries Ltd. (106.90, 3.64%).

Top high volume losers on BSE were Mastek Ltd. (2,145.65, -7.06%), PTC India Ltd. (74.00, -5.61%) and Tata Communications Ltd. (875.35, -4.95%).

Procter & Gamble Health Ltd. (4,154.75, 0.73%) was trading at 8.4 times of weekly average. PNC Infratech Ltd. (237.70, -0.86%) and Sun TV Network Ltd. (411.45, -1.98%) were trading with volumes 8.2 and 6.0 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock took off, crossing 52-week highs, while 27 stocks hit their 52-week lows.

Stock touching their year highs included - Varun Beverages Ltd. (786.85, 1.70%).

Stocks making new 52 weeks lows included - Bajaj Consumer Care Ltd. (131.10, -0.79%) and Bharat Petroleum Corporation Ltd. (314.00, -0.10%).

9 stocks climbed above their 200 day SMA including APL Apollo Tubes Ltd. (928.50, 6.06%) and Au Small Finance Bank Ltd. (627.40, 4.06%). 1 stock slipped below their 200 SMA including Oil And Natural Gas Corporation Ltd. (151.40, -2.92%).

 
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Trendlyne Marketwatch
14 Jun 2022
Market closes lower, Bajaj Finance touches a new 52-week low of Rs 5,284

Trendlyne Analysis

Indian indices closed in the red after gyrating between losses and gains on a volatile day of trade. India’s consumer price index or CPI eases to 7.04% in May but remains well above the central bank’s upper tolerance level of 6%. Most European indices trade higher amid mixed global cues. Major Asian indices closed lower, tracking the US indices, which closed deep in the red on Monday. The S&P 500 officially entered the bear market territory after falling more than 20% from its high. The tech-heavy NASDAQ 100 fell 4.7% and the Dow Jones declined by 2.8% on Monday. Crude oil edges higher despite recessionary fears and reduced demand from China due to new Covid curbs.

Nifty Next 50 closed in the green, despite the benchmark index closing flat. Nifty Metal and Nifty Realty closed higher than Monday’s levels. Nifty IT closed marginally higher, taking cues from the tech-focused NASDAQ futures, which is trading in the green.

Nifty 50 closed at 15,732.10 (-42.3, -0.3%), BSE Sensex closed at 52,693.57 (-153.1, -0.3%) while the broader Nifty 500 closed at 13,388.30 (-28.6, -0.2%)

Market breadth is in the red. Of the 1,873 stocks traded today, 771 were on the uptrend, and 1,034 went down.

  • ZF Commercial Vehicle Control Systems India, Relaxo Footwears, Ratnamani Metals & Tubes, and Jyothy Labsare trading with higher volumesas compared to Monday.

  • Adani Enterprisessees a long build-up in its Jun 30 futures series as its open interest rises 1.9% with put to call ratio at 0.81.

  • Shares of oil marketing companies like Hindustan Petroleum Corp and Bharat Petroleum Corp hit their new 52-week lows after reports of reduction in marketing margins.

  • Stocks like National Aluminium Co, ICICI Lombard General Insurance Co, V Mart Retail, Metropolis Healthcare, and Aditya Birla Sun Life AMC are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Shares of rice mills like Kohinoor Foods and KRBL rise after food secretary Sudanshu Pandey clarifies that there are no plans to restrict rice shipment as there are ample stockpiles of rice.

  • Chemplast Sanmar and Medplus Health Services hit their all-time lows of Rs 430 and Rs 714.5 respectively. While Medplus Health Services trades lower for eight consecutive days, Chemplast Sanmar falls for four days.

  • The Centre plans to restart NTPC plants with a capacity of more than 5 GW to supply power as the monsoon approaches, according to reports. This move comes in as the Centre plans to import gas to meet the rise in power demand. According to a report, the electricity produced from natural gas may cost up to Rs 22-23 per unit, up to 5X higher than the current tariffs.

  • LIC trades in the green for the first time in June 2022. This arrests the stock's 10-day losing streak after listing

  • ICICI Securities maintains a ‘Hold’ rating on Voltas, with a target price of Rs 1,033 indicating an upside of 4%. The brokerage sees limited upside in the stock’s price at current valuations as the company’s market share declines in FY22 and high raw material prices are expected to increase margin pressure in FY23.

  • Shilpa Medicare is trading with more than nine times its weekly average trading volume. SIS, G R Infraprojects, Bajaj Holdings & Investment, and TCNS Clothing Co.are trading at more than three times their weekly average trading volumes.

  • ICICI Direct maintains a ‘Buy’ rating on Trent, with a target price of Rs 1,470, indicating an upside of 34%. The brokerage remains positive on the company’s prospects due to its efficient supply chain, expansion plans, strong liquidity position, and rising online presence. The company’s revenue is expected to grow at a 32.1% CAGR over FY22-24, the brokerage said.

  • India's May wholesale price index comes in at 15.88% against 15.08% in April. This comes after the consumer price index slowed to 7.04% in May against 7.79% in April.

  • G R Infraprojects falls and touches a new 52-week low on reports that the Central Bureau of Investigation conducted searches at various locations. The raids are in connection to an alleged irregularity in the national road highway project in Assam.

  • Adani New Industries, an arm of Adani Enterprises, and TotalEnergies from France ink an agreement to create a green hydrogen ecosystem in India. TotalEnergies will acquire a 25% stake in Adani New Industries. Adani New Industries plans to invest $50 billion over the next 10 years in green hydrogen and associated ecosystem.

  • Shares of Bajaj Finance fall to a new 52-week low of Rs 5,284.2 apiece after falling nearly 5.5% on Monday.

  • WPIL rises in trade as it receives an order worth Rs 430.9 crore from the government of West Bengal to execute a turnkey project. The project involves the construction, design, and commissioning of a clear water reservoir. The project is expected to be completed over a period of 24 months.

  • India's retail inflation marginally slips to 7.04% in May, but stays well above the upper limit of the Reserve Bank of India's target range. Food inflation, which counts for nearly half of the retail inflation basket rises 7.97%, marginally lower than 8.31% in the previous month.

  • Asian Paints touches its 52-week low of Rs 2,585 on the BSE, due to growing margin concerns on account of rising inflation.

  • Dynamatic Technologies is rising as the company receives a contract from Selia Aeronautique Canada, a subsidiary of Airbus Atlantic SAS, to manufacture the escape hatch door for Airbus A220 aircraft.

  • Srei Equipment Finance, a wholly-owned subsidiary of Srei Infrastructure Finance, receives a report from the transaction auditor of fraudulent transactions worth Rs 3,250.7 crore in FY20-21. The application regarding the fraud transactions is filed with the NCLT (National Company Law Tribunal) against 14 respondents, by the auditor. The Srei group companies are currently undergoing an insolvency resolution process.

  • Metropolis Healthcare is falling as reports suggest that, chief executive Ameera Shah and her family have initiated a formal process to sell a part of the promoter stake in the company. However, in a media statement in reference to such reports, the company clarifies that the promoters have no intention of exiting the business and are focusing on strengthening the company’s brand.

  • Amara Raja Power Systems, an arm of Amara Raja Group, grabs a contract from NTPC to set up a green hydrogen fueling station in Leh, according to reports. The pilot project will produce 80 kg per day of 99.97% pure hydrogen which will be utilized for compression, storage, and distribution of the fuel. NTPC also plans to ply five hydrogen fuel buses in the region.

Riding High:

Largecap and midcap gainers today include Adani Enterprises Ltd. (2,196.45, 5.61%), Aurobindo Pharma Ltd. (535.75, 3.67%) and Varun Beverages Ltd. (773.70, 3.43%).

Downers:

Largecap and midcap losers today include Oil India Ltd. (268.15, -5.80%), Hindustan Petroleum Corporation Ltd. (214.00, -5.66%) and Bajaj Auto Ltd. (3,681.75, -5.14%).

Movers and Shakers

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

Top high volume gainers on BSE included TCNS Clothing Co. Ltd. (559.65, 8.35%), Shilpa Medicare Ltd. (449.65, 6.69%) and Swan Energy Ltd. (234.40, 6.47%).

Top high volume losers on BSE were Indiabulls Housing Finance Ltd. (101.75, -3.23%), Crompton Greaves Consumer Electricals Ltd. (317.45, -3.07%) and Tech Mahindra Ltd. (1,030.15, -2.07%).

SIS Ltd. (445.15, -0.84%) was trading at 11.4 times of weekly average. Bajaj Holdings & Investment Ltd. (4,912.40, -0.31%) and Page Industries Ltd. (39,999.75, -1.33%) were trading with volumes 6.4 and 4.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock hit its 52-week highs, while 53 stocks tanked below their 52-week lows.

Stock touching their year highs included - Varun Beverages Ltd. (773.70, 3.43%).

Stocks making new 52 weeks lows included - Asian Paints Ltd. (2,635.40, -0.95%) and Bajaj Consumer Care Ltd. (132.15, -2.22%).

4 stocks climbed above their 200 day SMA including Balrampur Chini Mills Ltd. (395.80, 2.69%) and Jyothy Labs Ltd. (149.90, 1.08%). 22 stocks slipped below their 200 SMA including Gujarat State Fertilizer & Chemicals Ltd. (134.30, -5.22%) and Grindwell Norton Ltd. (1,609.95, -3.81%).

 
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Trendlyne Marketwatch
13 Jun 2022
Market closes in the red, HDFC Securities maintains a ‘Reduce’ rating on Siemens

Trendlyne Analysis

Nifty 50 fell over 2.6% and closed deep in the red with the volatility index, India VIX, rising above 22%. European indices follow the global trend and trade sharply lower than Friday’s levels. Major Asian indices also closed lower, tracking the US indices which closed in the red on Friday. The US indices fell following a surprise rise in the US consumer price index or CPI to 8.6% in May, which may lead to an aggressive monetary policy from the US Federal Reserve. The tech-heavy NASDAQ 100 fell 3.6% while S&P 500 declined 2.9% on Friday. The shorter term five-year US treasury yields surged higher than the 30-year Treasury notes on fears of recession. Investors also continue to monitor the resumption of Covid-19 lockdowns in parts of China, which could slow down the global economy and disrupt supply chain. India’s index of industrial production or IIP rises to an eight-month high of 7.1% YoY in April led by higher electricity and mining output.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty Media and Nifty Auto closed lower than Friday’s levels. Nifty IT closed in the red, following the NASDAQ 100, which fell 3.6% on Friday.

Nifty 50closed at 15,774.40 (-427.4, -2.6%), BSE Sensexclosed at 52,846.70 (-1,456.7, -2.7%) while the broader Nifty 500closed at 13,416.90 (-364.9, -2.7%)

Market breadth is overwhelmingly negative. Of the 1,900 stocks traded today, 152 were in the positive territory and 1,726 were negative.

  • Orient Electric, Gujarat Fluorochemicals, TTK Prestige, and Macrotech Developers are trading with higher volumes as compared to Friday.

  • Pidilite Industries sees a long build-up in its Jun 30 futures series as its open interest rises 2.2% with put to call ratio at 0.64.

  • Cement stocks like UltraTech Cement, Grasim Industries, Ambuja Cements, Shree Cements, ACC, JK Cement, The Ramco Cements, among others, are falling in trade today. Brokerage Nirmal Bang expects earnings to fall for cement companies because of prolonged cost inflation. Also, falling demand, low pricing power, and rising crude oil prices may dent growth for this sector.

  • Stocks like Chambal Fertilisers & Chemicals, Birla Corporation, Vijaya Diagnostic Centre, Vardhman Textiles, and GMM Pfaudler are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Life Insurance Corp of India hits an all-time low of Rs 669.7, falls for 10 consecutive days. The company falls more than 23% since its listing.

  • Hindustan Zinc touches a 52-week low of Rs 276.25 as the government plans to sell its stake in the company in tranches, the Secretary of Department of Investment and Public Asset Management said on Friday. Last month, the cabinet approved the sale of the government’s stake of 29.5% in the company to raise Rs 38,000 crore.

  • Bajaj Finserv and NMDC touch their 52-week lows of Rs 11,482.5 and Rs 114.8 respectively. While Bajaj Finserv falls for three days, NMDC trades lower for four consecutive days.

  • Future Retail rises as National Company Law Appellate Tribunal (NCLAT) upholds the Competition Commission of India’s decision to suspend the deal between Amazon and Future Coupons, a subsidiary of Future Retail. NCLAT also orders Amazon to pay a Rs 200-crore fine within 45 days for suppressing information during its 2019 deal with Future Coupons.

  • The Nifty IT is falling and is on track for its worst day in over two weeks. All stocks part of the index are falling, with Mindtree and Coforge being losing the most during trade today.

  • G R Infraprojects is trading with more than 28 times its weekly average trading volume. Rajesh Exports, RBL Bank, Relaxo Footwears, and Minda Industriesare trading at more than four times their weekly average trading volumes.

  • HDFC Securities maintains a ‘Reduce’ rating on Siemens and reduces the target price to Rs 2,071 from Rs 2,120. The brokerage cut its target price and continues to remain bearish on the company’s prospects due to supply chain issues impacting its order execution.

  • Rajesh Exports is rising after a subsidiary of the company inked a pact with the Telangana government to set up a fabrication facility in the state with an investment of Rs 24,00 crore. The stock is at the highest level seen in three months.

  • Adani Group is in talks with foreign banks to raise $4.5 billion through a mix of overseas loan instruments, according to reports. The proposed loan structure includes stock-backed bridge loans and a senior debt facility for 18 months. The proceeds of this fundraising will be utilized n the acquisition of Holcim’s stakes in the listed companies Ambuja Cements and ACC.

  • Coal India floats two international competitive bidding e-tenders of three million tonnes each to import coal from abroad. The two medium-term tenders have an option of increasing the bid quantity by 100% to 12 million tonnes.

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

  • RBL Bank is falling in trade after the RBI appoints R Subramaniakumar as the company’s new Managing Director (MD) and CEO. The appointment comes after the former MD and CEO unexpectedly stepped down.

  • Foreign Portfolio Investors (FPI) pull out Rs 14,000 crore from equities this month because of economic slowdown, high inflation in the US, and supply constraints. Net outflow by FPIs reaches Rs 1.8 lakh crore in 2022.

  • Pharma stocks like Sun Pharmaceutical Industries, Divi’s Laboratories, Dr. Reddy’s Laboratories, Aurobindo Pharma, Abbott India, among others, are falling in trade as the pharma sector continues to underperform due to rising costs and prevailing pricing pressures in the US generic market.

  • Rupee falls to a new all-time low of Rs 78.14 since breaching the record low of Rs. 77.80 and touching new lows over the past few weeks.

  • Public sector banking stocks like State Bank of India, Canara Bank, Punjab National Bank, and Indian Overseas Bank, among others, are falling in trade today. The broader sectoral index Nifty PSU Bank is also trading in the red.

  • CDC Group PLC, a British investment firm, sells a 4.2% stake (1.6 crore shares) in IIFL Finance, worth Rs 526.9 crore, through bulk and block deals. Max Life Insurance and Nomura India Investment Fund pick up 1.8% stake through a bulk deal in IIFL Finance. Superstar Sunil Singhania’s Abakkus Growth Fund-2 also purchases 3.1 lakh shares (0.08% stake), Nomura Funds Ireland PLC buys 6.5 lakh shares (0.17% stake), Employee Provident Fund purchases 5 lakh shares (0.13% stake), L&T Mutual Fund purchases 4.8 lakh shares (0.13% stake), among others.

Riding High:

Largecap and midcap gainers today include Adani Green Energy Ltd. (1,798.70, 2.34%), Honeywell Automation India Ltd. (33,450.05, 2.30%) and Marico Ltd. (500.15, 1.54%).

Downers:

Largecap and midcap losers today include Gujarat Gas Ltd. (447.65, -7.40%), Bajaj Finserv Ltd. (11,386.05, -7.08%) and JSW Energy Ltd. (230.75, -6.86%).

Volume Rockets

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

Top high volume gainers on BSE included Rajesh Exports Ltd. (548.35, 4.91%), Minda Industries Ltd. (895.70, 3.47%) and Sheela Foam Ltd. (2,803.75, 0.10%).

Top high volume losers on BSE were RBL Bank Ltd. (87.85, -22.67%), Punjab & Sind Bank (14.30, -4.35%) and Zee Entertainment Enterprises Ltd. (226.70, -4.00%).

Gillette India Ltd. (4,948.25, -0.12%) was trading at 15.3 times of weekly average. Relaxo Footwears Ltd. (974.90, -1.01%) and Cholamandalam Financial Holdings Ltd. (615.95, -1.29%) were trading with volumes 5.0 and 4.5 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock overperformed with 52-week highs, while 63 stocks were underachievers and hit their 52-week lows.

Stock touching their year highs included - Mahindra Lifespace Developers Ltd. (403.15, -1.71%).

Stocks making new 52 weeks lows included - Astral Ltd. (1,635.90, -0.73%) and Bajaj Finance Ltd. (5,358.25, -5.46%).

27 stocks slipped below their 200 SMA including Sunteck Realty Ltd. (430.80, -7.97%) and Cholamandalam Investment & Finance Company Ltd. (609.00, -6.36%).

 
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The Baseline
13 Jun 2022
In a volatile market, five analyst picks outperforming the Nifty 50

The market opened in the red on Monday after inflation in the US came in hot at 8.6%, a 40 year high. In this volatile market with rising interest rates, analysts are moving towards relatively safer sectors like energy and financials in their picks, as well as sectors with beaten down valuations like hotels.  

Here are five analyst picks that outperformed the Nifty 50 over the month and have a buy call.

  1. Oil India: Prabhudas Lilladher retains its ‘Buy’ call on this oil explorer, with a target price of Rs 344. This indicates an upside of 19.1%. This stock outperformed the Nifty 50 index by 37.5% over the past month. 

“Oil India has aggressive growth plans as it expects a 30% increase in oil volumes to 4 million tonnes per annum by FY25, with the commencement of brownfield expansion projects in Assam,” says analyst Avishek Datta. The company doesn’t expect any cap on gas prices and remains hopeful of another price hike in October 2022. The Numaligarh Refinery (NRL) (Oil India has a 69% stake in the crude oil refiner) is a highly complex refinery and is a prized asset for Oil India, according to the analyst. In FY22, NRL posted an EBITDA of Rs 5,050 crore (up 16% YoY) and profit of Rs 3,560 crore (up 17% YoY).

Datta added that the company invested $990 million in Russian oil and gas fields in CY16. Till the end of FY22, the company received $660 million in dividends from its investment in these fields. The company spent Rs 4,280 croreon capex in FY22 and Datta expects a similar capex in FY22.

  1. City Union Bank: HDFC Securities maintains its ‘Buy’ call on this bank’s stock with a target price of Rs 218, indicating an upside of 62.6%. This stock outperformed the Nifty 50 index by 13.2% over the past month. 

“Despite a higher credit cost (1.8% annualized), City Union Bank’s Q4FY22 earnings were 8% ahead of our estimates on account of higher recoveries from written-off accounts and lower employee costs,” say analysts Krishnan ASV, Deepak Shinde and Neelam Bhatia. The bank’s net interest income grew 16.8% YoY to Rs 500 crore in Q4FY22. The analysts added that “on the back of healthy repayment trends and a highly-secured loan book (99% of loans), the management has guided for higher recoveries and lower credit costs.”

The bank’s gross non-performing assets and net non-performing assets improved QoQ in Q4FY22 to 4.7% and 2.9% (from 5.2% and 3.4%), respectively.  They conclude that  “with credit costs gradually reducing, a stable margin outlook, sustained market share gains will remain a key monitorable for the bank”.  

  1. HDFC Life Insurance: Geojit BNP Paribas reiterates its ‘Buy’ call on this life insurer with a target price of Rs 750, indicating an upside of 29.1%. The company outperformed the Nifty 50 index by 6.8% over the past month. 

In Q4FY22, the company’s gross premium income rose 11.7% YoY to Rs 1,442 crore, (vs. 11.1% industry growth). This, according to the brokerage, was driven mainly by growth in renewal premium (up 15.6% YoY to Rs 734 crore) and first-year premium (up 7.8% YoY to Rs 257 crore). 

The brokerage feels that the “macro drivers for the life insurance sector remain positive, and growth can be witnessed in the significantly under-penetrated prosperous middle class for life insurance in India. Favourable regulatory environment and rapid digitalization initiatives could boost the product mix in the protection business”

  1. Bharat Electronics (BEL): ICICI Direct maintains a ‘Buy’ rating on this defence electronics maker with a target price of Rs 290, indicating an upside of 21.8%. The company outperformed the Nifty 50 index by 9.8% over the past month.

Analysts Chirag Shah and Vijay Goel expect the company’s revenue growth to be driven by growth in orders, a robust balance sheet, and a strong order book. They added that the strategy to diversify into non-defence areas, and a focus on improving exports and services share in revenue would boost long-term revenue growth and reduce risk in its business. The company plans to increase the revenue contribution of the non-defence segment to 20% in 2-3 years from 12% at present, they noted.

BEL bagged orders worth Rs 19,200 crore in FY22, taking its total order backlog to Rs 57,750 crore as of March 2022  The company received export orders worth $179 million in FY22, and the analysts expect the company’s revenue to grow at a 16.8% CAGR over FY22-24.

  1. Lemon Tree Hotels: ICICI Securities maintains a ‘Buy’ rating on this hotel chain and increases its target price to Rs 84 from Rs 80, indicating an upside of 32.8%. The company outperformed the Nifty 50 index by 11.3% over the past month.

The analyst Adhidev Chattopadhyay increased his target price for the stock “owing to the better-than-expected average room rates (ARRs) and occupancies across assets.” According to the analyst, in Q4FY22 ARR grew 54% YoY to Rs 4,093 and in March 2022 occupancies rose to 60%. He added that a strong recovery in business travel and resumption of international flights led to the improvement in occupancy rates in Q4FY22.

Chattopadhyay noted, “based on the strong recovery in demand between March and May 2022, the company now expects FY23 consolidated revenue to grow 100% YoY to Rs 800 crore”. He expects the company’s occupancy rate and ARR to increase further during H1FY23 led by an uptick in business travel. He estimates the company’s revenue to grow at a 52.5% CAGR over FY22-24.

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

 
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The Baseline
10 Jun 2022
Five Interesting Stocks Today
  1. PB Fintech (Policybazaar): On June 6, 2022, the stock price of this insurance aggregator nosedived nearly 12% after its promoter announced plans to sell 37.7 lakh or 0.84% stake in the company. Notably, this stock has lost over 60% of its value from its life-high achieved in November 2021.

PB Fintech’s co-founder Yashish Dahiya held an 11.3% stake in the company back in June 2020 i.e., in the pre-IPO era. His holdings stood at 5.45% as of May 2022 and reduced further to 4.6% post the share sale executed on June 7. According to the official statement, Dahiya seeks to meet his tax obligation arising out of the exercise of employee stock options through this sale deal. Previously in February 2022, the other cofounder Alok Bansal cited a similar reason while selling a 0.6% stake in the company. However, this failed to placate the concerns of investors. Under employee stock option plans, shares of a particular company are granted to key personnel at a very low strike price, generally close to the face value of the share. So, while promoters made a big profit in these deals, retail investors have lost money in PB Fintech ever since its listing. The recent financial performance of the company is also nothing to cheer about.

PB Fintech’s net losses magnified 5.5X YoY to Rs 833 crore in FY22 with its operating cash flows sliding into negative territory. While its topline grew over 60% YoY in FY22, advertising and employee expenses as a % of sales grew sharply by 20%. Moreover, the company's overall contribution margins fell continuously over the last 5 quarters owing to the business initiatives. The new-age startups are clearly playing the greater fool theory quite well. (This theory basically means that investors buy overvalued securities believing that there will be a greater fool willing to pay an even higher price for the same).

  1. Bata India: This footwear retailer’s stock fell over 8% in the last seven trading sessions after its promoters sold a 2.8% stake on June 1, 2022. However, mutual funds increased their holdings in Bata India in the past month. As a result, it shows up in this screener that lists stocks where mutual funds have raised their stakes.

Promoters selling their stake in the company come at a time when it is facing challenging times in terms of revenue growth due to the Covid 19 pandemic. This is reflected in Bata India’s revenue CAGR over FY18-FY22, which stands at -6.6%. However, the company is on a recovery path in FY22. Its revenue rose 12.8% YoY to Rs 684 crore in Q4FY22 and profit jumped 2.1 times to Rs 65 crore. Despite strong YoY growth, both revenue and profit missed Trendlyne’s Forecaster estimates. Operating profit margin rose 5.4% YoY to 24.4% on the back of price hikes and operational efficiencies. Sneakers and casual segments led revenue recovery while the kid’s footwear segment still struggles to grow, according to the management.

The company plans to leverage the franchise model to grow in tier two and three cities, where the unorganized players’ market share is higher. In addition, Bata is also expanding its footprint through multi-brands footwear shops. Going forward, the execution of this aggressive expansion will be a key determining factor for growth, and the success of this strategy is currently unclear. As a result, brokerages have different takes on this stock. While HDFC Securities maintained its ‘Sell’ rating, Axis Securities has a ‘Buy’ rating.

  1. Mangalore Refinery And Petrochemicals (MRPL): This petrochemical stock rose 20% on Tuesday and was locked in the upper circuit for the third consecutive day. The stock surged 9% touching a 52-week high, on Wednesday. The share price doubled in less than six months delivering a 140% return on the stock. Its Q4FY22 results have also been off the charts as it records a net profit growth of 8.2X YoY to Rs 3,008.2 crore. It beat Trendlyne Forecaster’s net income estimate by 44.7%. The rise in profit was because of higher crude output and improving gross refining margin (GRM). Its capacity utilization increased to 116.9% in Q4FY22 as compared to 107.5% in Q4FY21. With a continuous increase in capacity utilization, refining output will remain strong and generate revenues for the company.

Because of the recovery in demand for crude oil, its revenue from operations increased 36% YoY to Rs 28,227.8 crore. This is also because MRPL took certain initiatives to improve revenue from marketing margins through domestic demand and exports. Analysts from ICICI Securities expect MRPL to report healthy earnings in the near term because of a favorable global refining scenario. The brokerage expects GRM to increase to US $12 per barrel in FY23.

The surge in Brent crude prices to above $124 per barrel and WTI crude prices above $122 per barrel also bodes well for this stock. Reports suggest that with the ongoing conflict in Europe, supply concerns remain a major problem but with increasing GRMs, MRPL stands to gain the most from the situation.

  1. Life Insurance Corporation of India (LIC): This life insurance stock is falling for the last seven consecutive sessions. It hit an all-time low, twice, on Thursday. The stock is now down 25% from its IPO issue price of Rs 949. The street is abuzz with talk of the stock falling continuously since its listing and eroding more than 25% of its market cap value. During the time of its listing, LIC’s market cap was around 6 lakh crore, which fell to 4.6 lakh crore within a month of its listing. The loss in value is equivalent to the market cap of companies like Tata Motors and JSW Steel.

It might not just be an overall bearish sentiment that is hitting the stock. In the last week of May, the company released its Q4FY22 results and the numbers were not very impressive, despite LIC being the market leader in the life insurance space. It reported a fall in net profit by 18% YoY to Rs 2,371.6 crore. Its new business margins were low and a lot of analysts do not see much growth potential. Emkay Global gives a ‘Hold’ rating for the stock as it believes that LIC has limited scope in product and channel distribution.

However, not everything is negative for LIC.  It has a competitive edge over other private players - the company has a large network of agents with a good distribution network and it can work on improving its new business premiums and margins to retain its elephant’s share in the market.

  1. Cyient: This technology solutions company’s stock rose by 5% on Monday after it announced the acquisition of Celfinet, a wireless engineering services company. The company will be acquiring Celfinet for a total cash consideration of 41 million euros (Rs 342.2 crore). This is the company’s third acquisition so far in FY23 and the total cost of these acquisitions is $181.8 million (Rs 1,413.1 crore).

These acquisitions were all-cash deals as the company has a healthy cash position of Rs 1,569 crore in FY22. The company’s net profit in Q4FY22 also rose by 17% QoQ to Rs 154.2 crore driven by the services business. It beat Trendlyne’s Forecaster estimates by 21.4%. The company shows up on a screener of companies with rising net profit QoQ for the past four quarters. 

So far the acquisitions in FY23 are in line with the company’s long-term strategy to diversify its segment revenue and geographical revenue mix. Cyient is looking at acquisitions that build scale in its existing business verticals where it does not have a geographical presence. According to reports, the company has focused on expanding in Europe and Japan.

Among the three companies acquired, two are from Europe, namely Citec and Celfinet. Citec is a plant and product engineering services company mostly catering to the energy sector in Europe. Cyient also acquired Singapore-based Grit Consulting, which provides consulting services to mining and energy companies. Currently, the communication and utilities segment makes 28% and 7% of the segment revenue mix of the company. Through these acquisitions, Cyient management expects to increase its revenue contribution from the two business segments by expanding its global presence.

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