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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.

 
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Trendlyne Marketwatch
10 Jun 2022
Market closes lower, Medplus Health Services trades below its issue price

Trendlyne Analysis

Nifty 50 fell over 250 points and closed in the red amid weak global cues. Major Asian indices closed lower, tracking the US indices which also closed in the red on Thursday. The US indices closed sharply lower led by the tech-focused NASDAQ 100, which fell over 2.7%. S&P 500 lost 2.4% while Dow Jones fell 1.9% as investors look ahead to the inflation print to be released later today. Brent crude oil edges lower but continues to trade at elevated levels as China imposes new Covid-19 lockdown measures in parts of Shanghai. On Thursday, the European Central Bank said it would raise the interest rate next month, its first hike since 2011. European indices follow the global trend and trade lower than Thursday’s levels.

Nifty Smallcap 100 and Nifty Next 50 closed in the red, following the benchmark index. Nifty Pharma and Nifty Metal closed lower than Thursday’s levels. Nifty IT closed in the red, tracking the NASDAQ 100, which fell over 2.7% on Thursday.

Nifty 50closed at 16,201.80 (-276.3, -1.7%), BSE Sensexclosed at 54,303.44 (-1,016.8, -1.8%) while the broader Nifty 500closed at 13,781.75 (-195.4, -1.4%)

Market breadth is sharply down. Of the 1,880 stocks traded today, 557 were in the positive territory and 1,274 were negative.

  • GMR Infrastructure, ZF Commercial Vehicle Control Systems India, Kansai Nerolac Paints, and Krishna Institute of Medical Sciencesare trading with higher volumesas compared to Thursday.

  • Grasim Industries sees a long build-up in its Jun 30 futures series as its open interest rises 1.1 % with put to call ratio at 0.46.

  • Strides Pharma Science's Singapore arm receives approval from the US FDA for Ibuprofin oral suspension drug. This is a non-steroidal and anti-inflammatory drug used as a pain killer for various conditions. Strides Pharma has a competitive generic therapy designation for the drug with 180 days of exclusivity.

  • Oil India rises 18.2% this week on account of rising crude oil prices. India's crude oil basket reached a decade high of $121 per barrel, as retail fuel prices continue to remain unchanged. The company’s three-year average annual ROE stands at 16.7%.

  • India's auto sector's May wholesales indicate that the worst might be over for the industry as car and bike sales surge.

  • Stocks like Birla Corporation, Jindal Stainless, Equitas Small Finance Bank, UltraTech Cement, andAmber Enterprises India India are in the oversold zoneaccording to the technical indicator relative strength index or RSI.

  • Morgan Stanley gives an ‘overweight’ rating to Tata Consumer Products with a target price of Rs 888, indicating an upside of 18%. It expects the company to expand its sales and distribution infrastructure to become the largest FMCG company. The management believes that reducing costs, building strategic partnerships, and improving cash flows will drive margin growth. However, the brokerage expects fluctuations in input costs, and weak profitability in the packaged food business to affect the earnings of the company.

  • Bank stocks like HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank and Bandhan Bank, among others, are falling in trade. The broader sectoral index Nifty Bank is also trading in the red.

  • Sugar companies like Shree Renuka Sugars, EID Parry India, The Andhra Sugars, among others, are rising. This is because state-owned fuel retailers--Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp--agree to provide relief to sugar mills, and other producers of ethanol (which is blended with motor fuel). The fuel retailers will compensate ethanol producers for higher energy costs by paying Rs 1,604 per kilolitre for ethanol produces from sugarcane juice, Rs1,439 for B-heavy molasses and Rs 1,179 for ethanol produced from C-heavy molasses. This relief is available between June 1 to November 30.

  • IIFL Finance is trading with more than 33 times its weekly average trading volume. Tata Teleservices (Maharashtra), TTK Prestige, V-Guard Industries, and Sheela Foam are trading at more than three times their weekly average trading volumes.

  • Axis Direct maintains a ‘Buy’ rating on Ambuja Cements with a target price of Rs 405, indicating an upside of 11%. The brokerage remains positive on the company’s prospects due to its focus on selling premium products, sharp cost optimization, new capacity expansion, and higher sales of blended cement. The company's net profit is expected to rise 25.1% in CY23 over CY22, the brokerage added.

  • Medplus Health Services hits a new 52-week low as the stock trades below its issue price of Rs 796. The stock is falling for the last six consecutive sessions.

  • IIFL Finance is trading with more than 33 times its weekly average trading volume. Tata Teleservices (Maharashtra), TTK Prestige, V-Guard Industries, and Sheela Foamare trading at more than three times their weekly average trading volumes.

  • Omaxe is rising after the company announces its partnership with Reliance Jio-BP. It plans to establish a battery charging ecosystem for electric vehicles. Jio-BP will set up electric vehicle charging and swapping infrastructure at various Omaxe properties gradually.

  • Shares of Deepak Nitrite rise as the company clarifies that it will restart its plant that caught fire only after complying with the Gujarat state government's order. The plant needs to undergo stability studies and other compliances before reopening.

  • Fitch Ratings revises the outlook on India’s long-term foreign-currency issuer default rating to ‘stable’ from ‘negative’. It expects India’s fast economic recovery and stabilization of the financial sector to bode well for its growth. The rating agency forecasts India’s GDP growth for FY23 at 7.8%

  • Metal stocks are trading in the red. Stocks like Tata Steel, Hindalco Industries, Jindal Steel & Power, NMDC, Steel Authority of India and National Aluminium Co or NALCO are falling below 2%. The broader sectoral index Nifty Metal is also falling in trade.

  • Alembic Pharmaceuticals receives tentative approval from the US FDA for its Abbreviated New Drug Application (ANDA) for dasatinib tablets. The drug will be used to treat 'Philadelphia Chromosome-positive Chronic Myeloid Leukaemia'. The dasatinib tablets have an estimated market size of $1.46 billion.

  • IT stocks like Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro, and Tech Mahindra are falling in trade today. The broader sectoral index Nifty IT is also trading in the red today. According to reports, IT stocks are falling as TCS warns of low growth and a high inflation environment going forward. IT stocks are falling despite the Indian rupee falling 4 paise to hit its all-time low of Rs 77.82 against the dollar in early trade today.

  • Shares of IIFL Finance rise the most in six weeks to nearly 9% as its subsidiary IIFL Home Finance enters into definitive agreements to raise Rs 2,200 crore of primary capital for a 20% stake from the Abu Dhabi Investment Authority.

  • Welspun Enterprises is rising as it plans to plans to sell its operating road projects at an aggregate enterprise value of Rs 6,000 crore to Actus. These projects comprise five completed hybrid annuity models and one tolled road.

  • HFCL is rising as it receives orders worth Rs 73.4 crore to supply unlicensed band radio (UBRs) and optical fibre cables. The order for the supply of UBRs is worth Rs 51.1 crore and the order for the supply of optical fibre cables is worth Rs 22.3 crore.

  • Dr Reddy’s Laboratories arm Aurigene Discovery inks a global licensing pact with Olema Pharmaceuticals to research, develop, and commercialise novel small molecule inhibitors for a cancer project. Olema will pay a license fee of $8 million to get access to Aurigene's existing cancer research project. Dr Reddy's arm can gain up to $430 million based on clinical development and milestones, and there will also be royalties on annual net sales.

Riding High:

Largecap and midcap gainers today include Deepak Nitrite Ltd. (1,853.40, 3.82%), Trent Ltd. (1,113.30, 2.68%) and Emami Ltd. (422.00, 2.30%).

Downers:

Largecap and midcap losers today include Godrej Properties Ltd. (1,313.40, -4.24%), Adani Total Gas Ltd. (2,398.30, -3.99%) and Kotak Mahindra Bank Ltd. (1,791.80, -3.94%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Tata Teleservices (Maharashtra) Ltd. (140.50, 9.98%), IIFL Finance Ltd. (353.70, 7.72%) and IOL Chemicals and Pharmaceuticals Ltd. (355.00, 7.28%).

Top high volume losers on BSE were PNB Housing Finance Ltd. (369.45, -7.04%), V-Guard Industries Ltd. (230.45, -2.39%) and TTK Prestige Ltd. (792.25, -2.38%).

Sheela Foam Ltd. (2,801.05, -0.62%) was trading at 5.1 times of weekly average. JSW Energy Ltd. (247.75, 1.75%) and Torrent Power Ltd. (466.00, 1.89%) were trading with volumes 4.3 and 3.7 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 14 stocks tanked below their 52-week lows.

Stocks touching their year highs included - GHCL Ltd. (663.40, -0.81%) and Oil India Ltd. (300.20, 0.98%).

Stocks making new 52 weeks lows included - Grasim Industries Ltd. (1,326.50, 1.33%) and Gujarat State Petronet Ltd. (237.30, -1.45%).

7 stocks climbed above their 200 day SMA including Tata Teleservices (Maharashtra) Ltd. (140.50, 9.98%) and Trent Ltd. (1,113.30, 2.68%). 15 stocks slipped below their 200 SMA including Suzlon Energy Ltd. (8.60, -3.37%) and Network 18 Media & Investments Ltd. (78.60, -2.90%).

 
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The Baseline
10 Jun 2022
One consumer sector rises despite inflation, screener for stocks valued cheaper than their peers

"We are facing new challenges everyday," RBI Governor Shaktikanta Das said after the interest rate hike this week. The RBI and central banks the world-over are fighting inflation, which is taking big bites out of everyone's wallets.

While this hurts most of the economy, one consumer facing industry is not that worried.

In this week’s Analyticks:

  • Fast food, growing fast: Quick service restaurants are growing, and making big expansion plans
  • Screener: Companies trading at cheaper valuations compared to peers

Let’s get into it.

Customers are queuing up at quick service restaurants

Analysts often say that “pizza is recession proof". When money is tight, fast food wins over restaurant meals, as more people become cost-conscious while eating out. 

Quick service restaurants (QSR) not only saw a swift revenue recovery in FY22 after the pandemic, they also sustained their margins. They were able to pass on price increases quite easily onto consumers. 

In April 2022, QSR chains hiked prices by 3-6% to manage their input price inflation. Despite menu prices increasing, demand was robust in April and May, helped by cricket season and the Indian Premier League, and the onset of summer vacations. 

And it's not just delivery. Restaurant Brands Asia (earlier Burger King India) also saw average daily dine-in sales recover to 96% of pre-Covid levels in May 2022, while average daily sales in delivery grew by 46% over May 2019 levels. Quick service restaurants have clearly evolved to become multi-channel fast-food businesses.

Leading QSR chains like Jubilant Foodworks and Devyani International plan to add 500 stores on an average in the next two years, to leverage these emerging trends. 

The pandemic disrupted same-store sales growth in Q4FY22

Although QSRs witnessed healthy double-digit YoY revenue growth in Q4FY22, their revenues fell sequentially as the third pandemic wave hit business for the first 4-6 weeks of the quarter. 

The third Covid wave also impacted same-store sales growth (SSSG) for QSR chains. The SSSG for all chains moderated sequentially, with KFC and Pizza Hut franchisees owned by Devyani International witnessing very low growth (2-3%) in Q4FY22.

Interestingly, the like-for-like (LFL) growth for Jubilant Foodworks slowed to 5.8% in Q4FY22 from 7.5% levels in Q3FY22. Both Jubilant and Devyani International saw YoY revenue growth of 20%+ on a company level, but lower sales growth for each existing store in Q4FY22. New store additions clearly drove Q4FY22 sales growth for both companies.

Restaurant Brands Asia’s net losses increased 3X QoQ to Rs 67 crore in Q4FY22 due to poor performance of the newly acquired unit i.e. Burger King Indonesia.

Chicken dishes a big bet as chains see non-vegetarian customers as majority

If there is one product area where QSRs are pinning their hopes on, it is chicken-based offerings. According to Devyani International’s management, nearly 70% Indians are non-vegetarian, while menus right now tilt more towards vegetarian items. In southern and eastern India, the proportion of non-vegetarians in the population is over 94%.

As a result, Westlife Development is planning to aggressively market its popular McSpicy Chicken burger, given the fact that this product added incremental sales of Rs 50 lakh per year per store for the company in FY22. It also introduced McSpicy Chicken in a few stores in western India to gauge the response. 

Jubilant Foodworks also saw a strong response for the four stores of its fried-chicken chain Popeyes’, which it launched in Bengaluru back in Q3FY22. Now, the company is planning to launch 250-300 stores of this franchisee in the next 4-5 years. Clearly, the competition will be hotter with KFC, McDonald’s and Popeyes all vying for a higher wallet share of its non-vegetarian customer.

Finding new (and old) customers in small towns

Two years of the pandemic caused lakhs of salaried professionals to head back to their hometowns, as work from home became a reality. Companies sensed their lack of intention to return to crowded metros. Hence, Indian IT services and engineering companies are planning to open more offices in tier-2 and 3 cities to retain their employees.  

This is one of the reasons that QSR chains plan to enter smaller cities through store expansions. In fact, some companies are seeing encouraging results already. Westlife Development saw stronger sales momentum in new stores launched in Vellore, Bhilai and Bilaspur, than at those in metro city stores. 

Another reason behind QSRs’ aggressive store expansions is reducing their distance to customers, to increase sales via the delivery channel. Devyani International is planning to expand its store count by over 50% to nearly 1,300 in the next two years to achieve this. The company guided for single digit SSSG for KFC (4-5%) and Pizza Hut (7-8%) in FY23 - clearly, the focus is to raise sales at the company level rather than store level.

Consensus estimates from Trendlyne’s Forecaster shows that revenues of the QSR players are expected to be higher by nearly 33% YoY in FY23 backed by robust consumer demand and store additions. 

Now all eyes are on the execution of these plans, and whether the tier-2 and 3 cities actually drive the next phase of growth for QSRs.

Screener: Companies that grew at a decent rate and are trading at affordable valuations vis-à-vis their peers

In this week’s edition, we bring you a list of companies that maintained a double-digit growth trajectory in FY22, but are available at a discounted price on the bourses. 

This screener throws up 76 companies in total and 18 companies within the Nifty 500 that are trading below the industry PE and P/BV (price to earnings and price to book). Power utility NTPC features in this list. Its top line grew at 15%+ in FY22 backed by higher power trading revenues.  It has plans within the renewable power space of setting up projects worth 60 GW.  

IT companies like Tech Mahindra and Zensar Technologies are also trading at a significant discount to their peers. Although these companies witnessed healthy QoQ revenue growth of 4-5% in Q4FY22, margin pressure has persisted. In the past month, foreign brokerages like JP Morgan and Nomura downgraded the Indian IT sector on the back of slowing revenue growth momentum, fear of recession in the US and pricey valuations.

Gas companies like GAIL and Indraprastha Gas also appear in this list. These companies maintained a robust growth momentum in FY22. However, a sharp spike in gas prices have cast a shadow on their profit margins in the near future. 

You can find some popular screeners here.

 
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Trendlyne Marketwatch
09 Jun 2022
Market closes higher, Dalmia Bharat commits to a capex of Rs 9,000 crore on rising demand for cement

Trendlyne Analysis

Nifty 50closed in the green with the volatility index, India VIX, falling by 3.5%. Indian indices fell on Wednesday after the Reserve Bank of India (RBI) increased the repo rate by 50 bps to 4.9% as it withdrew its ‘accommodative stance’ for economic growth. Most Asian indices closed lower, tracking the US indices, which closed in the red on Wednesday. US indices closed lower amid rising bond yields as investors await the global inflation print releases and monetary policy decisions by global central banks this week. Brent crude oil rises above $123 per barrel and hits a 13-week high as the commodity’s demand is expected to rise with easing lockdowns in China. European indices follow the global trend and trade lower than Wednesday’s levels.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty FMCG and Nifty Pharma, which opened lower, also closed in the green. Nifty IT closed higher despite the tech-heavy NASDAQ 100 falling by 0.8% on Wednesday.

Nifty 50closed at 16,478.10 (121.9, 0.7%), BSE Sensexclosed at 55,320.28 (427.8, 0.8%) while the broader Nifty 500closed at 13,977.10 (90.2, 0.7%)

Market breadth is neutral. Of the 1,867 stocks traded today, 922 were on the uptick, and 889 were down.

  • Supreme Industries, Krishna Institute of Medical Sciences, Grindwell Norton, and Indigo Paintsare trading with higher volumesas compared to Wednesday.

  • Reliance Industries sees a long build-up in its Jun 30 futures series as its open interest rises 3.4% with put to call ratio at 0.68.

  • Shares of UPL reverse a 1% loss and gain nearly 2% after the company announces launch of new insecticides in India with patented active ingredient Flupyrimin.

  • Stocks like Aditya Birla Sun Life AMC, Aptus Value Housing Finance India, Birla Corporation, Symphony, and Amber Enterprises India are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Dalmia Bharat expects cement demand to increase on the back of rising capital expenditure by the government and through PLI schemes. The company is committing to a capex of Rs 9,000 crore to expand manufacturing capacity over the next few years, to meet growing demand.

  • SBI Cards and Payment Services and One97 Communications (Paytm) fall in trade today after the Reserve Bank of India allows the linking of credit cards to UPI platforms. Analysts from Axis Securities expect this move to favor credit card issuers more as it would increase spending and boost credit-card usage in the long run.

  • Gujarat State Petronet and Nuvoco Vistas Corporation touch their 52-week lows of Rs 237.8 and Rs 282 respectively. While, Gujarat State Petronet trades lower for four days, Nuvoco Vistas Corporation falls for five consecutive days.

  • Tata Power's arm Tata Solar Power Systems commissions 450 megawatts dc capacity solar pant for Brookfield Renewable India. The project will produce over 800 gigawatt-hours of clean energy annually.

  • Strides Pharma Science is trading with more than four times its weekly average trading volume. Krishna Institute of Medical Sciences, Computer Age Management Services, United Breweries, and Amber EnterprisesIndia are trading at more than two times their weekly average trading volumes.

  • BOB Capital Markets maintains a ‘Buy’ rating on Polycab India with a target price of Rs 3,000, indicating an upside of 24%. The brokerage remains positive on the company’s prospects given its robust balance sheet, high growth in all its business segments, and expanding distribution network. The brokerage expects the company’s revenue to grow at a 15.1% CAGR over FY22-24.

  • Sugar exports increase 22.9% YoY to 8.6 million tonnes till May 2022 (the ongoing marketing year, ending September). Last month, the Centre capped sugar exports to 10 million tonnes to ensure domestic supply and keep a check on retail prices. Sugar stocks like Shree Renuka Sugars, EID Parry (India), Balrampur Chini Mills among others continue to fall in trade.

  • Deepak Nitrite touches a 52-week low after reports emerge of the Gujarat Government issuing a closure notice to the company. This is in connection to the fire incident at the Nandeswari plant.

  • Metals stocks like JSW Steel, Tata Steel, Vedanta, Hindalco Industries, and Jindal Steel & Power, among others are falling in trade. The broader sectoral index Nifty Metal is also trading in the red.

  • Coal India floats their maiden international competitive bidding e-tender, seeking bids for the import of 2.41 million tonnes of coal. The coal is being sourced on behalf of the state generating companies and independent power plants for the July-September period of the current fiscal year.

  • LIC drops to a new all-time low today after another decline of 0.95%.

  • Vedanta pledges a 5.77% stake in Hindustan Zinc for a term loan of Rs 8,000 crore. The company’s earlier pledge of a 14.82% stake in Hindustan Zinc to secure a term loan facility of Rs 10,000 crore has been released.

  • Shares of MRPL gained nearly 5%, on course to rise for the 5th consecutive day while ONGC gained more than 2% in a weak market. Oil India went up 7% whereas BPCL and HPCL declined. This rise comes amid increase in brent crude prices going above $124 per barrel and WTI crude prices above $122 per barrel.

  • Paints stocks like Asian Paints, Berger Paints, Kansai Nerolac, and Shalimar Paints, among others are falling in trade as crude prices increase.

  • Indian rupee falls by 4 paise to Rs 77.78 against the dollar in early trading today.

  • India’s coal production rises 34% YoY to 71.3 million tonnes in May 2022, according to the provisional data released by the Ministry of Coal. Coal India, and Singareni Collieries’ coal production increases 30% and 11% YoY, respectively. 23 out of 37 coal productive mines produced more than 100% coal.

Riding High:

Largecap and midcap gainers today include Oil India Ltd. (297.30, 6.16%), Container Corporation of India Ltd. (656.55, 5.53%) and Biocon Ltd. (337.15, 5.18%).

Downers:

Largecap and midcap losers today include Tata Steel Ltd. (1,044.85, -3.86%), Vedanta Ltd. (302.90, -3.30%) and Au Small Finance Bank Ltd. (613.35, -2.52%).

Volume Shockers

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

Top high volume gainers on BSE included PNB Housing Finance Ltd. (397.45, 15.14%), Tata Teleservices (Maharashtra) Ltd. (127.75, 9.99%) and IFB Industries Ltd. (926.55, 9.21%).

Top high volume losers on BSE were Swan Energy Ltd. (258.75, -6.05%), Strides Pharma Science Ltd. (314.70, -4.26%) and Garware Technical Fibres Ltd. (2,991.90, -3.37%).

Gulf Oil Lubricants India Ltd. (422.85, -0.72%) was trading at 9.9 times of weekly average. Mas Financial Services Ltd. (539.35, 6.19%) and Amber Enterprises India Ltd. (2,326.25, -0.01%) were trading with volumes 4.8 and 4.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

1 stock made 52-week highs, while 12 stocks were underachievers and hit their52-week lows.

Stock touching their year highs included - Oil India Ltd. (297.30, 6.16%).

Stocks making new 52 weeks lows included - Gujarat State Petronet Ltd. (240.80, -0.60%) and Shree Cements Ltd. (19,198.00, -1.97%).

13 stocks climbed above their 200 day SMA including Tata Teleservices (Maharashtra) Ltd. (127.75, 9.99%) and Suzlon Energy Ltd. (8.90, 9.20%). 9 stocks slipped below their 200 SMA including Au Small Finance Bank Ltd. (613.35, -2.52%) and Canara Bank (207.50, -1.61%).

 
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The Baseline
08 Jun 2022
Chart of the Week: India's forex reserves rise for two consecutive weeks

The RBI raised its policy rate (repo rate) today by 50 bps from 4.4% to 4.9%, signaling that it is going to aggressively battle inflation. At this juncture, the RBI’s Monetary Policy Committee voted to move away from the ‘accommodative stance’ it had previously held to boost economic growth. This had contributed to increasing inflation, which was already up due to the rise in crude prices.

With a lot of uncertainty on the economic front, foreign institutional investors (FII) pulled out money from the Indian market. According to a report, FIIs pulled out more money from January-May 2022 than they invested in the Indian market in the last 12 years. FII activity in the last 30 days alone shows a net sale in Indian shares of Rs 35,800.7 crore.

This exit hurt India’s foreign exchange reserves. The dip in India’s forex reserves began in March 2022, when they fell 1.5% in seven days to $622 billion. Then on May 13 forex reserves plunged again by 6% to USD 593.3 billion. This is the highest decline in India’s forex reserves since March 04, 2022.

Now, India’s forex reserves are back over the $600 billion mark. This was because of the appreciation of non-US currencies like the euro, pound sterling, and the yen held in foreign exchange reserves. India’s forex reserves are in various global currencies but are denoted in dollars for easy comparison. As the dollar index fell nearly 1.5% against major currencies like the euro and pound, the value of India’s forex reserves in those currencies increased. 

With crude oil rising every week and China’s economy opening up, India’s forex reserves will be closely watched. India imports over 80% of its crude oil - as fuel demand continues to rise, there will be a higher price to pay for imports.

 
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Trendlyne Marketwatch
08 Jun 2022
Market closes lower, RBI raises repo rate by 50 bps to 4.9%

Trendlyne Analysis

Nifty 50 closed in the red, with the Indian volatility index, India VIX, falling below 20%. The Reserve Bank of India (RBI) increased the repo rate by 50 bps to 4.9% as it withdrew its ‘accommodative stance’ for economic growth. RBI retained the FY23 real GDP growth estimate at 7.2%. The World Bank cut India’s economic growth forecast for the current fiscal to 7.5% from 8% due to rising inflation and supply chain disruptions. Most Asian indices closed higher, tracking the US indices, which closed in the green on Tuesday. US indices rose led by technology and energy stocks. S&P 500 rose close to 1% while Dow Jones increased by 0.8% on Tuesday. Brent crude oil edges higher and trades above $120 per barrel ahead of US oil inventories data release. European indices trade lower than Tuesday’s levels as investors assess the impact of aggressive monetary policy tightening on global economic growth.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the red, tracking the benchmark index. Nifty Media and Nifty Realty closed higher than Tuesday’s levels. Nifty ITclosed in the green, tracking the tech-heavy NASDAQ 100, which rose 0.9% on Tuesday.

Nifty 50 closed at 16,356.25 (-60.1, -0.4%), BSE Sensex closed at 54,892.49 (-214.9, -0.4%) while the broader Nifty 500 closed at 13,886.90 (-48.7, -0.4%)

Market breadth is in the red. Of the 1,877 stocks traded today, 755 showed gains, and 1,079 showed losses.

  • GlaxoSmithKline Pharmaceuticals, Tube Investments of India, Bajaj Holdings & Investment, and ZF Commercial Vehicle Control Systems Indiaare trading with higher volumesas compared to Tuesday.

  • Deepak Nitrite sees a short build-up in its Jun 30 futures series as its open interest rises 16.2% with put to call ratio at 0.52.

  • Stocks like Mangalore Refinery And Petrochemicals, Praj Industries, Elgi Equipments, TCNS Clothing Co., Engineers India, TV18 Broadcast and PNB Housing Financerise by more than 5% in trade today.

  • Stocks like Aditya Birla Sun Life AMC, Symphony, Birla Corporation, and JK Cement, among others, are in the oversold zone according to the technical indicator relative strength index or RSI.

  • ICICI Direct maintains a “Buy’ rating on MM Forgings with a target price of Rs 1,250, indicating an upside of 40%. The brokerage expects robust revenue growth for the company on healthy demand growth, new product launches, and an increasing share of machining in its product profile. The brokerage estimates the company’s profit to grow at a 39% CAGR over FY22-24.

  • One97 Communications (Paytm) rises as Reserve Bank of India (RBI) proposes the linking of credit cards to UPI platforms. RuPay credit cards will be the first to be linked to UPI platforms.

  • Central Banks of the major economies have begun to respond to inflation by tightening their monetary policies. After the RBA, RBI also raised its policy rate by 50 bps.

  • Sapphire Foods India and The New India Assurance Company touch their 52-week lows of Rs 932.5 and Rs 95.8 respectively. Both stocks are trading lower for the sixth consecutive day.

  • YES Bank gains as it initiates the process of setting up an alternate board in line with the YES Bank Reconstruction Scheme March 2020. The constitution of the alternate board will be recommended for approval to shareholders at the annual general meeting on July 15.

  • Biocon is trading lower and hit an over two-year low of Rs 312. In the past six weeks, shares of the pharmaceutical company is down 18% after it reported a 4% YoY fall in consolidated net profit to Rs 283.9 crore in Q4FY22.

  • Lupin is rising after it gets a tentative nod from the US FDA to market ivacaftor tablets. Ivacaftor is used to treat specific types of cystic fibrosis, a hereditary disease that causes problems with breathing, digestion, and reproduction in adults. The drug will be manufactured at its Nagpur facility. Ivacaftor tablets have an estimated annual sales of $109 million in the US, according to IQVIA.

  • PNB Housing Finance is trading with more than 14 times its weekly average trading volume. Engineers India, Sterlite Technologies, GlaxoSmithKline Pharmaceuticals, and Mangalore Refinery And Petrochemicalsare trading at more than three times their weekly average trading volumes.

  • ICICI Direct maintains a ‘Buy’ rating on TCI Express with a target price of Rs 2,000, indicating an upside of 21%. The brokerage remains positive on the company’s prospects due to its strong free cash generation, better margins from new businesses, and robust capital structure. The brokerage expects the company’s revenue to grow at a 20.8% CAGR over FY22-24

  • Reserve Bank of India increases repo rate by 50 bps to 4.9% as it withdraws its ‘accommodative stance’ for economic growth. Marginal Standing Facility (MSF) and bank rate stand at 5.15%.

  • Realty stocks like DLF, Macrotech Developers, Godrej Properties, Oberoi Realty, among others, are on the rise, after RBI doubles cooperative banks’ housing loan limits. The broader sectoral index Nifty Realty is also trading in the green.

  • Ramkrishna Forgings receives an export order worth Rs 115 crore from a European supplier for a new differential housing case business.

  • ITD Cementation is rising as it receives an order for a road construction project worth Rs 4,850 crore. The project involves the construction of a six-lane greenfield expressway in Uttar Pradesh on an EPC (Engineering, Procurement and Construction) basis.

  • Indian rupee appreciates 9 paise to Rs 77.69 against the US dollar in early trade today.

  • FMCG stocks like Hindustan Unilever, ITC, Nestle India, Britannia Industries, Tata Consumer Products, among others, are falling in trade due to rise in Covid cases. The broader sectoral index Nifty FMCG is also trading in the red.

  • Adani Power invests a total of over Rs 609 crore in Support Properties and Eternus Real Estate to acquire 100% stake in them. The companies will help Adani Power set up infrastrcuture facilities.

  • Zomato board will meet on June 17 to consider the acquisition of quick commerce company Blinkit, according to reports. The value of the final deal is yet to be finalized. Blinkit’s largest investor SoftBank Vision Fund will get a 4% stake in the company. The deal will involve a stock swap in the ratio of 1:10, where Zomato gets 10 shares of every one share of Blinkit.

Riding High:

Largecap and midcap gainers today include Macrotech Developers Ltd. (1,099.60, 5.07%), SBI Cards and Payment Services Ltd. (784.90, 2.65%) and Dalmia Bharat Ltd. (1,269.70, 2.58%).

Downers:

Largecap and midcap losers today include Gujarat Gas Ltd. (489.10, -7.03%), Deepak Nitrite Ltd. (1,798.45, -4.84%) and Polycab India Ltd. (2,314.10, -4.31%).

Volume Shockers

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

Top high volume gainers on BSE included TV18 Broadcast Ltd. (45.00, 10.84%), Mangalore Refinery And Petrochemicals Ltd. (118.00, 9.11%) and Dishman Carbogen Amcis Ltd. (129.40, 8.65%).

Top high volume losers on BSE were Gujarat Gas Ltd. (489.10, -7.03%), Mas Financial Services Ltd. (507.90, -5.84%) and Polycab India Ltd. (2,314.10, -4.31%).

PNB Housing Finance Ltd. (345.20, 4.59%) was trading at 18.1 times of weekly average. Engineers India Ltd. (62.90, 4.75%) and Hawkins Cookers Ltd. (5,211.00, 0.30%) were trading with volumes 11.9 and 8.9 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 13 stocks tanked below their 52-week lows.

Stock touching their year highs included - Mangalore Refinery And Petrochemicals Ltd. (118.00, 9.11%).

Stocks making new 52 weeks lows included - Biocon Ltd. (320.55, 1.20%) and Birla Corporation Ltd. (856.75, -0.43%).

11 stocks climbed above their 200 day SMA including Network 18 Media & Investments Ltd. (80.05, 5.47%) and Aster DM Healthcare Ltd. (193.55, 2.14%). 18 stocks slipped below their 200 SMA including Polycab India Ltd. (2,314.10, -4.31%) and Aegis Logistics Ltd. (216.90, -3.21%).

 
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The Baseline
08 Jun 2022
Up up and away: oil prices just keep rising

As China comes out of lockdowns, the competition to buy oil just got much more expensive. US oil reserves are also down, and Saudi Arabia is busy raising prices. Brent crude just hit $120 per barrel.

Does anyone remember April 2020, when oil prices briefly fell below zero because storing oil was more expensive than buying it? 

To combat rising prices, India has been making very large purchases of discounted Russian oil -  purchases from Russia jumped 500% to 840,000+ barrels per day this May, compared to May last year (when it was 136,774 bpd). With Reliance, IOC, BPCL and HPCL planning new six-month contracts for Russian crude, the purchases are not stopping anytime soon. 

Interactive chart - hover to see data

Despite these big buys, the price of India's oil basket is getting costlier and crossed above $116 per barrel in June (see chart above). The rise in oil prices will fuel inflation, an important issue as the RBI met this week to push through another rate hike, raising the repo rate by 50 basis points to 4.9%.

Stock markets: All eyes are on earnings now

US equities have fallen 15% from the peak they saw in the first week of January. India's Nifty50 on the other hand, has fallen just 3.1% over the past six months. Earnings Per Share (EPS) has risen steadily for Nifty50 companies over the same period (pink line in the chart):

 Nifty50's performance over the coming months will depend on how Indian companies' earnings are in the June quarter.

Management across sectors - from FMCG to specialty chemicals - have all said they have hiked prices. Rising prices may hit company earnings in the June quarter, as consumer spending slows. India's consumer spending growth fell to 1.8 percent in the Jan-March period from a year earlier. It had grown at 7.4 percent in the previous quarter.  

Lose lose situation for India's loss-making startups

As the RBI hikes rates amid high prices, investors should be careful about newly listed high-growth, loss-making companies. These businesses - like Zomato, Paytm, PB Fintech - rely on a steady inflow of investor money to keep growth going. But investor capital is likely to see a sharp slowdown in the coming weeks and months as interest rates go up and capital becomes more expensive. 

So are Indian startups losing their shine? See Deeksha Janiani's video analysis: 

Interesting reads

One of India's fastest growing specialty chemicals companies has aggressive growth plans, Ketan Sonalkar writes.

L&T has outlined its hopes and dreams in its Lakshya 2026 plan. Can it execute?

Mid-tier IT firms - Mindtree, Tech Mahindra, Coforge and others - are set to have a topsy-turvy FY23, Vivek Ananth says.

 
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Trendlyne Marketwatch
07 Jun 2022
Market closes lower, HG Infra Engineering bags contract worth Rs 4,971 crore

Trendlyne Analysis

Indian indices closed in the red, with the volatility index, India VIX, rising above 20%. Most Asian indices closed lower amid rising bond yields as investors await the global inflation print releases and monetary policy decisions by global central banks this week. However, Japan’s Nikkei index hit a two-month high boosted by auto stocks. US indices closed higher on Monday led by the tech-focused NASDAQ 100, which closed 0.4% higher. Crude oil edges higher and trades at elevated levels on expected demand revival in China after relaxing strict Covid lockdowns. European Indices trade in the red, tracking the Asian indices.

Nifty Next 50 and Nifty Smallcap 100 closed in the red, following the benchmark index. Nifty FMCG and Nifty Realty closed lower than Monday’s levels. Nifty IT closed in the red, taking cues from the NASDAQ 100 futures, which are trading in the red.

Nifty 50closed at 16,416.35 (-153.2, -0.9%), BSE Sensexclosed at 55,107.34 (-568.0, -1.0%) while the broader Nifty 500closed at 13,935.60 (-118.5, -0.8%)

Market breadth is in the red. Of the 1,874 stocks traded today, 609 were on the uptick, and 1,214 were down.

  • Shriram City Union Finance, Kalpataru Power Transmissions, Phoenix Mills, and CESC are trading with higher volumesas compared to Monday.

  • Oil and Natural Gas Corp (ONGC) sees a long build-up in its Jun 30 futures series as its open interest rises 30.9% with put to call ratio at 0.44.

  • Stocks like Symphony, Jindal Steel & Power, Rajesh Exports, Delta Corp, and JK Cement, among others, are in the oversold zone according to the technical indicator relative strength index or RSI.

  • Zydus Lifesciences receives final approval from United States Food & Drug Administration (USFDA) to market adapalene and benzoyl peroxide topical gel. The gel is used to decrease the number and severity of acne pimples. The product is estimated to have a market size of $195 million.

  • Aurobindo Pharma’s wholly-owned subsidiary, Eugia Pharma Specialties receives final approval from the United States Food & Drug Administration (USFDA) to manufacture and market Leuprolide Acetate Injection. The injection is used to treat the symptoms associated with advanced prostate cancer. The product is estimated to have a market size of $83 million and will be launched this month.

  • HG Infra Engineering receives a contract worth Rs 4,971 crore from Adani Road Transport to develop an access-controlled six-lane greenfield Ganga Uttar Pradesh expressway of 151.7 kilometers.

  • Chola Wealth Direct maintains a ‘Market Performer’ rating on Page Industries with a target price of Rs 44,530, indicating an upside of 4.5%. The brokerage believes the company’s revenue could see high growth on the back of a strong distribution reach, diverse product portfolio, and a loyal customer base. However, the brokerage sees rising raw material prices increasing margin pressure in the coming quarters. The brokerage expects the company’s revenue to grow at a 18.5% CAGR over FY22-24.

  • Mangalore Refinery and Petrochemicals (MRPL), Chennai Petroleum Corp (CPCL), Bharat Petroleum Corp, among other downstream oil and gas sector stocks are trading higher. Singapore benchmark's gross refinery margin touches a record high of $ 25.2 per barrel, boosting confidence among investors and traders towards downstream oil and gas stocks.

  • ICICI Lombard General Insurance Co. and Lux Industries touch 52-week low of Rs 1,151.6 and Rs 1,945. While ICICI Lombard General Insurance Co. is falling for five consecutive sessions, Lux Industries trades lower for three sessions.

  • Consumer durable stocks like Havells India, Voltas, Whirlpool of India, Crompton Greaves Consumer Electronics and Dixon Technologies are falling in trade. The broader sectoral index BSE Consumer Durables is also trading in the red.

  • Mangalore Refinery And Petrochemicalsis trading with more than six times its weekly average trading volume.PB Fintech, Bajaj Holdings & Investment, Kalpataru Power Transmissions, and Oil India are trading at more than three times their weekly average trading volumes.

  • Edelweiss maintains a ‘Buy’ rating on Zydus Wellness with a target price of Rs 2,271, indicating an upside of 46%. The brokerage remains positive on the company’s prospects due to its focus on distribution expansion, new launches, and rising sales volume. The brokerage expects the company’s net profit to grow at a 20.8% CAGR over FY22-24.

  • Hindustan Aeronautics surges to hit an all-time as the Ministry of Defence approves the procurement of indigenous equipment worth Rs 76,390 crore. The equipment includes next-generation corvettes, armoured fighting vehicles and engines for the Sukhoi-30 MKI fleet.

  • Realty stocks like Indiabulls Real Estate, DLF, Godrej Properties, Macrotech Developers, and Brigade Enterprises among others are falling in trade. The broader sectoral index Nifty Realty is also trading in red.

  • Dish TV is falling as promoter entities World Crest Advisors LLP and Direct Media Distribution Ventures sold their stakes in the company to STCI Finance on Thursday. World Crest Advisors LLP reduces its stake to 0.05% from 0.56% and Direct Media Distribution Ventures reduces its stake to 0.56% from 2.09%.

  • Oil India hits a five-year high of Rs 291 as the profit for Q4FY22 rises 93.3% YoY to Rs 1,630 crore. Brokerages like Prabhudas Lilladhar, HDFC Securities, and Motilal Oswal remain bullish on the stock and maintain a 'Buy' call. The stock is rising for seven consecutive days.

  • Apollo Hospitals Enterprise and Adani Group to consider bidding for a majority stake in Metropolis Healthcare, according to reports. The deal could be worth $1 billion.

  • As the Reserve Bank of India's Monetary Policy Committee starts its regular bi-monthly meeting, other global central banks are acting to curb broad-based inflation.

  • HLE Glascoat is rising as its board approves the sub-division of one equity share of the face value of Rs 10 each, into fully-paid up five equity shares of Rs 2 each. The company’s board also approves raising Rs 350 crore by issuing equity shares.

  • Adani Enterprises receives approval to set up a hyper-scale data centre park at Bengal Silicon Valley on 51.75 acres of land, according reports.

  • PB Fintech falls as the Chairman and CEO of the company, Yashish Dahiya intents to sell 37.7 lakh equity shares via bulk deals on the open market.

  • NMDC cuts prices of lump ore by Rs 1,100 to Rs 4,400 per tonne and fines by Rs 1,000 to Rs 3,300 per tonne, effective from June 5, 2022. The revised prices exclude royalty, district mineral fund, national mineral exploration trust, cess, forest permit fee, and other taxes. The company had last made a price revision on May 25, 2022.

Riding High:

Largecap and midcap gainers today include Oil And Natural Gas Corporation Ltd. (161.85, 5.13%), Honeywell Automation India Ltd. (32,627.00, 3.98%) and NHPC Ltd. (33.90, 2.42%).

Downers:

Largecap and midcap losers today include Zee Entertainment Enterprises Ltd. (237.80, -4.50%), Titan Company Ltd. (2,100.20, -4.47%) and Gujarat Gas Ltd. (527.80, -4.31%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Mangalore Refinery And Petrochemicals Ltd. (108.60, 20.00%) and Kalpataru Power Transmissions Ltd. (365.10, 0.16%).

Top high volume losers on BSE were Gujarat Gas Ltd. (527.80, -4.31%), BEML Ltd. (1,328.20, -1.37%) and Bajaj Holdings & Investment Ltd. (4,979.85, -0.79%).

Oil India Ltd. (277.95, -0.34%) was trading at 5.6 times of weekly average.

BSE 500: highs, lows and moving averages

3 stocks overperformed with 52-week highs, while 19 stocks hit their 52-week lows.

Stocks touching their year highs included - Mangalore Refinery And Petrochemicals Ltd. (108.60, 20.00%), Oil India Ltd. (277.95, -0.34%) and Hindustan Aeronautics Ltd. (1,895.50, 0.41%).

Stocks making new 52 weeks lows included - Aurobindo Pharma Ltd. (516.30, -1.19%) and Birla Corporation Ltd. (860.45, -2.47%).

2 stocks climbed above their 200 day SMA including Tata Motors Ltd. (436.65, 0.99%) and ZF Commercial Vehicle Control Systems India Ltd. (7,839.35, 0.00%). 26 stocks slipped below their 200 SMA including Greaves Cotton Ltd. (150.55, -4.81%) and MRF Ltd. (71,490.00, -4.31%).

 
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Trendlyne Marketwatch
06 Jun 2022
Market closes flat, Prabhudas Lilladher upgrades Aarti Industries rating to 'Accumulate'

Trendlyne Analysis

Nifty 50 recovered from the day’s low and closed flat on a volatile day of trade. However, most Asian indices closed in the green as China eased Covid-19 lockdowns offering hope for a global economic recovery. Major US indices closed in the red on Friday led by the tech-heavy NASDAQ 100, which fell over 2.7%. US stocks fell as a strong US job report released on Friday, allows the US Federal Reserve to maintain its aggressive stance on inflation. Saudi Arabia raises crude oil prices for its Asian customers starting July leading to a rise in crude oil prices globally. European indices trade higher than Friday’s levels ahead of key inflation print releases this week.

Nifty Smallcap 100 closed lower despite the benchmark index closing flat. Nifty Media closed lower while Nifty Metal closed higher than Friday’s levels. Nifty IT closed in the red, tracking the tech-focused NASDAQ 100, which fell 2.7% on Friday.

Nifty 50closed at 16,569.55 (-14.8, -0.1%), BSE Sensexclosed at 55,675.32 (-93.9, -0.2%) while the broader Nifty 500closed at 14,054.10 (-23.8, -0.2%)

Market breadth is in the red. Of the 1,904 stocks traded today, 700 were gainers and 1,145 were losers.

  • Galaxy Surfactants, J B Chemicals & Pharmaceuticals, Kansai Nerolac Paints, and Equitas Small Finance Bank are trading with higher volumes as compared to Friday.

  • Rain Industries sees a long build-up in its Jun 30 futures series as its open interest rises 11% with put to call ratio at 0.38.

  • Stocks like ICICI Bank, ITC, HCL Technologies, Hindustan Unilever, Larsen & Toubro, and Titan Company, among others, are outperforming their respective sectors in the past month.

  • Prabhudas Lilladher upgrades rating on Aarti Industries from ‘Hold’ to ‘Accumulate’ with a target price of Rs 880, indicating an upside of 22%. The brokerage expects the company’s revenue growth to be driven by increasing capacity utilization, rising domestic demand and import substitution. The brokerage expects the company’s revenue to grow at an 18% CAGR over FY22-24.

  • Stocks like Hemisphere Properties India, Thyrocare Technologies, Indoco Remedies and Oil India rise by more than 5% in trade today.

  • Tata Motors receives an order for the supply of 10,000 XPRES-EV (electric vehicle) units from BluSmart Electric Mobility, according to reports.

  • Kolte-Patil Developers partners with Tata Power to set up charging stations across its projects in Pune, Mumbai, and Bengaluru. Tata Power will provide seamless EV (electric vehicle) charging facilities to the residential customers of Kolte-Patil Developers.

  • Hem Securities initiates coverage on Agarwal Industrial Corp with a ‘Buy’ rating and a target price of Rs 705, indicating an upside of 32%. The brokerage believes the company is well-placed to benefit from the rise in infrastructure spending given its fully integrated business model and market leadership in bitumen transportation with a market share of 28%. The brokerage expects the company’s profit to grow at a 22.5% CAGR over FY22-24.

  • Vijaya Diagnostic Centre and Aptus Value Housing Finance India touch an all-time low of Rs 345.1 and Rs 270.3 respectively. Both stocks are falling for two consecutive sessions.

  • PVR and Inox Leisure fall as investors worry about a decrease in footfall as Covid-19 infections rise, according to reports. The Maharashtra government makes the wearing of masks compulsory in public places after the number of cases increase by 54% in the last 24 hours.

  • Glenmark Life Sciences is trading with more than 11 times its weekly average trading volume. Thyrocare Technologies, Aegis Logistics, Galaxy Surfactants, and Garware Technica Fibres are trading at more than 2 times their weekly average trading volumes.

  • Aditya Birla Group set to invest Rs 77,000 crore towards building new capacity and entering new sectors.

  • Oil India rises after Kotak Institutional Equities upgrades the stock to ‘Add’ from ‘Sell’ with a target price of Rs 285, indicating an upside of 10.7%. The upgrade is on the assumption of elevated oil and gas prices in FY23-24. It raises its operating profit estimates for Oil India by 71% for FY23 and 83% for FY24.

  • Cyient’s arm Cyient Europe acquires a 100% stake in Celfinet for a total cash consideration of euro 41 million (Rs 341.4 crore). Celfinet is a wireless engineering and network management services provider based out of Lisbon, Portugal. The company expects the acquisition to improve its wireless engineering services and expand its presence in Europe.

  • Larsen & Toubro wins an order worth Rs 2,500-5,000 crore from the Municipal Corporation of Greater Mumbai to set up the Bandra wastewater treatment. The project involves designing, building, operating and maintaining the 360 million litres per day sewage treatment plant, which will also have an inhouse power generator.

  • All media stocks are trading in the red. Stocks like Zee Entertainment Enterprises, Sun TV Network, PVR, Network 18 Media & Investments, Saregama India, TV 18 Broadcast and Inox Leisure are falling below 2%. The broader sectoral index Nifty Media is also trading in the red.

  • Adani Transmission enters into a share purchase agreement with Essar Power to acquire a 100% stake in Essar Power Transmission for a total consideration of Rs 1,913 crore. The company expects this acquisition to expand its transmission line network, and reduce operational costs.

  • Vehicle retail sales in May 2022 rises 206.8% YoY to 16.5 lakh units. Two-wheeler sales rise 197.7% YoY to 12.2 lakh units and three-wheeler sales rise 695.9% YoY to 41,508 units. Passenger vehicle sales rise 204% to 2.6 lakh units and commercial vehicle sales rise 278% YoY to 66,632 units. Hero Motocorp's market share falls to 37.6% from 47%, and TVS Motor's and Bajaj Auto's market share fall marginally to 13.9% and 10.1%, respectively.

  • The Centre directs Coal India to import 12 million tonnes of coal to avoid a shortage of coal stock for power utility companies. Coal India will import coal for the next 13 months to meet the demand of power supply companies.

  • Zydus Lifesciences receives final approval from the United States Food and Drug Administration (USFDA) to market Famotidine tablets in the strengths of 20mg and 40mg. This drug is used to prevent and treat heartburn and other symptoms caused by acid indigestion. This drug has a market size of $67 million and will be manufactured at the company’s drug formulation facility in Ahmedabad.

  • NTPC awards multiple contracts to Adani Enterprises to import 6.25 million tonnes of coal worth Rs 6,585 crore, according to reports. The power generating company is importing coal to meet the new target given by the Union power ministry to blend 10% imported coal to deal with the domestic coal shortage.

Riding High:

Largecap and midcap gainers today include Oil India Ltd. (278.90, 11.14%), Adani Power Ltd. (298.30, 5.00%) and Bajaj Auto Ltd. (3,817.00, 3.93%).

Downers:

Largecap and midcap losers today include Coforge Ltd. (3,606.85, -4.08%), Berger Paints (India) Ltd. (589.90, -3.12%) and Shree Cements Ltd. (20,002.70, -3.08%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Oil India Ltd. (278.90, 11.14%), Thyrocare Technologies Ltd. (670.50, 5.80%) and Indoco Remedies Ltd. (380.00, 4.89%).

Top high volume losers on BSE were V Mart Retail Ltd. (2,900.00, -6.66%), Anupam Rasayan India Ltd. (649.55, -4.75%) and Akzo Nobel India Ltd. (1,785.00, -0.60%).

Dhanuka Agritech Ltd. (710.05, 1.03%) was trading at 5.6 times of weekly average. Aegis Logistics Ltd. (228.65, 2.28%) was trading with volume 3.5 times weekly average on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

2 stocks hit their 52-week highs, while 19 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Oil India Ltd. (278.90, 11.14%) and Sumitomo Chemical India Ltd. (484.10, 4.87%).

Stocks making new 52 weeks lows included - Biocon Ltd. (318.70, -0.50%) and Birla Corporation Ltd. (882.25, -4.36%).

10 stocks climbed above their 200 day SMA including Adani Transmission Ltd. (2,017.10, 3.12%) and ZF Commercial Vehicle Control Systems India Ltd. (7,839.15, 2.85%). 18 stocks slipped below their 200 SMA including Suzlon Energy Ltd. (8.25, -9.34%) and Greaves Cotton Ltd. (158.15, -4.41%).

 
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The Baseline
06 Jun 2022
Five analyst picks that outperformed the Nifty 50

This week, we look at five analyst picks that outperformed the Nifty 50 and have a fresh buy call.

  1. Jubilant Foodworks: IDBI Capital maintains a ‘Buy’ call on this quick service restaurant operator with a target price of Rs 766. This indicates an upside of 42.8%. The company outperformed the Nifty 50 index by 2.3% over the past seven days.

“Jubilant Foodworks has reported in-line results for 4QFY22. Revenue grew 13%YoY (to Rs 1,157.9 crore in Q4FY22) led by 5.8% like-for-like growth. Delivery drove revenue growth while dine-in was impacted due to Omicron,” say analysts Varun Singh and Chetan Mahadik. The company’s profit grew 17.3% YoY to Rs 122.3 crore during the quarter. 

According to the analysts, in Q4FY22 the company added 80 Domino's stores (the highest ever, totaling 230 in FY22) along with 4 Popeyes stores, 1 Dunkin store, 1 Hong Kong Kitchen store, and 1 Ekdum store. The analysts are also positive about the appointment of the new CEO Sameer Khetarpal.

  1. Dixon Technologies (India): Axis Securities maintains a ‘Buy’ rating on this electronics contract manufacturer with a target price of Rs 4,450, indicating an upside of 21.6%. The company outperformed the Nifty 50 index by 5.7% over the past seven days.

“Dixon reported a consolidated revenue of Rs 2,953 crore in Q4FY22, down 3.9% QoQ but up 40% YoY, led by strong growth in the mobiles and home appliances segment,” says analyst Hiren Trivedi. In Q4FY22, net profit grew 37% YoY to Rs 63 crore. The analyst further added, “Dixon continues to focus on new client acquisition and product addition to aid its top line growth, backward integration, and increasing own design manufacturing revenues.”

Trivedi believes that the company will continue to benefit from its strong order book and execution capabilities to improve its operations. He also thinks that the company will enter into new product segments while deriving benefits from the PLI scheme in multiple segments. He expects the company’s revenue and profit to grow at a CAGR of 38% and 52% respectively, between FY 22-24

  1. Timken India: ICICIdirect has a 'Buy' rating on this industrial product manufacturer’s stock, with a target price of Rs 2,810. This indicates an upside of 15.4%. The company outperformed the Nifty 50 index by 22.6% over the past seven days.

“It (the company) has state-of-the-art manufacturing plants in Jamshedpur in Jharkhand, and Bharuch in Gujarat,” said analysts Chirag Shah and Yash Panwar. “Timken India reported an excellent set of numbers in Q4FY22, with revenues better than our expectation due to exceptional performance on the industrial segment side,” they added. Revenue for Q4FY22 came in at Rs 667.4 crore, up 40.4% YoY (versus the brokerage’s estimate of Rs 553.7 crore). In Q4FY22, the company registered a profit of Rs 121.3 crore (versus the brokerage’s estimate of Rs 68.1 crore), up 129.2% YoY, and EBIDTA margin was 26.9% against 18.3% in the consecutive quarter previous year (versus the brokerage’s estimate of 19.9%). The analysts believe that the surprise in the margin came due to higher gross margins, lower employee costs, and other expenses.

  1. Vedant Fashions: ICICI Securities initiates coverage on this branded apparel company with a ‘Buy’ rating and a target price of Rs 1,200, indicating an upside of 11.1%. This stock outperformed the Nifty 50 index by 10% over the past seven days.

Analysts Krupal Maniar and Harsh Mittal say that “first-mover advantage, scale efficiencies and no discounts on Manyavar allows Vedant Fashions to enjoy a significantly higher gross margin compared to most other listed brands”. They added that the company enjoys a higher gross margin of 75% on the net end customer sales than most other listed brands, which have a gross margin between 45-60%. The higher gross margin results in higher profitability and superior free cash flow generation for the company.

The analysts believe the asset-light business model followed by the company will continue to drive profitability. The company outsources a substantial portion of manufacturing and distribution, which enables it to reduce input costs, thereby improving profitability. The analysts expect Vendant’s profit to rise at a 23% CAGR over FY22-25.

  1. Mahindra & Mahindra: Motilal Oswal maintains a ‘Buy’ rating on this automaker’s stock with a target price of Rs 1,150, indicating an upside of 11.4%. This stock outperformed the Nifty 50 index by 6.9% over the past seven days.

“Mahindra & Mahindra’s Q4FY22 performance was above our estimate, as a strong recovery in the auto business made up for weakness in the tractor business,” say analysts Jinesh Gandhi, Vipul Agarwal, and Aniket Desai. They noted that the outlook for the tractor business is improving but it is the auto business that will drive growth over the next couple of years. They expect the growth in the auto business to be driven by new launches in the SUV (sport utility vehicle) segment and cyclical recovery in the LCV (light commercial vehicle) segment.

The company is the biggest player in the SUV market with a 17.8% market share, and expects a 16% volume CAGR in passenger utility vehicles over FY22-24. The analysts estimate the company’s revenue to grow at a 19.5% CAGR over FY22-24.

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