Blog posts

11 Apr 2022

Market closes lower, Axis Securities rates 'Buy' on Westlife Development

Trendlyne Analysis

Indian indices closed in the red with the Indian volatility index, India VIX rising. Most Asian indices closed lower ahead of an eventful week packed with central bank meetings and US inflation data release. Investors are also keeping an eye on the developments in China, where Shanghai is under a strict lockdown to curb Covid-19 cases. Crude oil prices head for a second straight weekly decline after member nations of the International Energy Agency plan to release 60 million barrels over the next six months to reduce the impact of supply chain disruption of Russian oil. European indices trade mixed as investors monitor French political uncertainty, an upcoming ECB policy meeting as well as the ongoing Ukraine conflict.

Nifty Next 50 closed in the green, despite the benchmark index closing lower. Nifty Bank closed in the red, while Nifty Media closed higher than Friday’s level. Nifty IT closed sharply lower, tracking the tech-heavy NASDAQ 100, which fell 1.41% on Friday.

Nifty 50 closed at 17,674.95 (-109.4, -0.6%), BSE Sensex closed at 58,964.57 (-482.6, -0.8%) while the broader Nifty 500 closed at 15,325.50 (-16.9, -0.1%)

Market breadth is in the green. Of the 1,923 stocks traded today, 1,048 were on the uptick, and 840 were down.

AIA Engineering, Galaxy Surfactants, Narayana Hrudayalaya, and Blue Star are trading with higher volumes as compared to Friday.
Sandur Manganese & Iron Ores surges as the company enters into a power purchase agreement and share subscription and share holding agreement with Renew Green Energy Solutions for the supply of solar and wind power. The company also announces right issue of 1.8 crore equity shares.
Edelweiss upgrades IndusInd Bank’s rating to ‘Buy’ from ‘Neutral’ and increases its target price by 11% to Rs 1,100 as its loan advances rise 13% YoY to Rs 2.4 lakh crore at the end of Q4FY22. The brokerage expects net NPA ratio to decline in Q4FY22.
Axis Securities initiates coverage on Westlife Development with a ‘Buy’ rating and a target price of Rs 625, indicating an upside of 30%. The brokerage believes the company is well-placed to capture QSR (Quick Service Restaurant) space opportunities. The brokerage is bullish on the company’s ability to innovate new products, capitalise on the rapidly growing delivery channel and penetrate fast-growing tier 2 & 3 cities.
Ruchi Soya is rising as its board approves enhancing synergies with Patanjali Ayurved's food business "on an arm's length basis". Although the company didn't specify what this transaction could be, the board authorises the comapny officials to negotiate and execute the transaction. The board also approved changing name of Ruchi Soya to Patanjali Foods.
Godfrey Phillips India is trading with more than 33 times its weekly average trading volume. Gujarat Ambuja Exports, Syngene International, Ambuja Cements, and Advanced Enzyme Technologies are trading at more than two times their weekly average trading volumes.
Glenmark Pharmaceuticals rises as its subsidiary Glenmark Specialty S.A receives approval from the Drug Controller General of India (DCGI) to conduct a phase 1 trial of its novel small molecule, GRC 54276. This molecule will be used to treat patients with advanced solid tumours and Hodgkins’s Lymphoma.
IT stocks like Infosys, L&T Technology Services, HCL Technologies, and Larsen & Toubro Infotech, among others, are falling in trade. The broader sectoral index Nifty IT is also trading in red.
Jindal Steel and Power rises as the company plans to setup India's second coal gasification plant at its Raigarh plant in Chhattisgarh, according to news reports. The company also intends to begin commercial operations in four of its eight coal mines (owned) so as to save on cost of acquiring thermal coal.
GTPL Hathway’s Q4FY22 revenue falls 17.5% YoY to Rs 617.3 crore and profit falls 4.3% YoY to Rs 54.5 crore largely due to a fall in EPC (Evolved Packet Core) project business. In FY22, revenue falls 2.1% YoY to Rs 2,414.1 crore but profit rises 6.1% YoY to Rs 199.6 crore.
Veranda Learnings’ shares list at 14.6% premium to the issue price of Rs 137 on its debut on the bourses after getting bids for 3.5X of total shares on offer.
Tata Motor’s wholly-owned subsidiary, Jaguar Land Rover’s (JLR) retail sales fall 36% YoY to 79,008 units in Q4FY22 due to global semiconductor shortage. JLR’s FY22 retail sales fall 14.4% YoY to 376,381 units.
Sobha’s Q4FY22 total sales volume rises 3.5% YoY to Rs 1,109.6 crore with average price realization increasing 3.1% YoY to Rs 8,265 per square feet. The company’s sales bookings in volumes grow 0.35% to 13.42 lakh square feet in Q4FY22 with maximum bookings coming in from Bengaluru (9.32 lakh square feet). The company attributes this growth to consistent rise in housing demand, low home loan rates, and improving economy.

Riding High:

Largecap and midcap gainers today include Adani Green Energy Ltd. (2,665.15, 14.79%), Adani Total Gas Ltd. (2,665.00, 9.80%) and Adani Transmission Ltd. (2,756.50, 8.51%).

Downers:

Largecap and midcap losers today include L&T Technology Services Ltd. (4,798.85, -3.89%), YES Bank Ltd. (15.10, -3.51%) and Deepak Nitrite Ltd. (2,287.60, -3.14%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Godfrey Phillips India Ltd. (1,234.70, 13.51%), Ambuja Cements Ltd. (360.20, 6.77%) and Advanced Enzyme Technologies Ltd. (316.55, 5.04%).

Top high volume loser on BSE was Indigo Paints Ltd. (1,625.25, -2.89%).

Shriram City Union Finance Ltd. (1,753.20, 0.58%) was trading at 8.2 times of weekly average. VST Industries Ltd. (3,148.95, 0.65%) and Prism Johnson Ltd. (129.90, 3.01%) were trading with volumes 8.2 and 7.6 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

26 stocks overperformed with 52-week highs,

Stocks touching their year highs included - Adani Transmission Ltd. (2,756.50, 8.51%), Bank of Baroda (120.30, 0.00%) and Bharat Electronics Ltd. (243.95, 1.82%).

27 stocks climbed above their 200 day SMA including Godfrey Phillips India Ltd. (1,234.70, 13.51%) and PCBL Ltd. (129.55, 8.14%). 4 stocks slipped below their 200 SMA including HCL Technologies Ltd. (1,133.50, -2.73%) and SBI Life Insurance Company Ltd. (1,142.50, -1.55%).

The Baseline

08 Apr 2022, 05:41PM

Five Interesting Stocks Today

Marico: The stock of this FMCG major fell nearly 6% after it released its Q4FY22 business update on April 5. According to the company, its Q4 revenue grew in ‘low-single digits’ while there was a marginal rise in the sales volumes. What this means is that the revenue growth was primarily driven by the growth in sales realisations in the quarter gone by. This is understandable as the company hiked prices of products in its value-added hair oils segment, Saffola Edible Oils segment and the FMCG segment in the wake of the current cost inflationary pressures.

What disappointed the street in general was the YoY fall in sales volumes reported by the company’s flagship product segment Parachute Coconut Oil. This segment’s volumes grew a mere 1% YoY back in Q3FY22 as well. Another interesting trend here is softening copra prices, a key raw material for Marico, since February 2021. In fact, the company cut prices for Parachute Oil back in October 2021, December 2021 and January 2022 in order to pass the benefit of lower copra prices to customers. Volumes were still subdued in the past two quarters. A possible reason for this could be market share gains by Dabur in the coconut oil segment. While the overall volumes for the FMCG sector fell in January 2022 and February 2022 (according to Neilsen), Marico’s flagship segment particularly seems at a saturation point even though product prices remain benign.

Titan: This jewellery and watchmaker’s stock fell over 3.3% on Thursday after it released its Q4FY22 business update. Titan’s jewellery segment revenue fell 4% YoY in Q4FY22 despite the quarter usually being a strong one for the jewellery industry. The disruption due to partial lockdowns in many states across India due to the Omicron wave in January 2022, which started in December 2021, hit revenues. In addition, the volatility in gold prices due to the ongoing Russia-Ukraine war also impacted jewellery sales.

The jewellery segment is a major revenue generator for the company as it contributes over 85% of total revenues. But network expansion continued to progress in Q4 in anticipation of an upbeat Q1FY23, which is expected to be a normal quarter after two years of intermittent lockdowns. Titan added 16 new jewellery stores in Q4FY22 compared to 14 stores in Q3FY22. This takes the total number of jewellery stores to 444. Revenue from the jewellery segment rose 37% YoY in Q3FY22 to Rs 8,563 crore on the back of festive purchases in October and November.

Titan gets 9% of its total revenues from the watches and wearables segments. This segment clocked a 12% YoY rise in revenue in Q4FY22, despite a challenging external environment with sales increasing across offline channels. Smartwatches and headphones also saw brisk business on the back of new launches like ‘Titan Smart Pro’ in Q4FY22. Eyecare segment’s revenues grew 5% YoY in Q4 while other businesses’ (fragrances and fashion accessories) revenues rose 23% YoY, driven by a strong performance by the fashion accessories businesses.

Zee Entertainment Enterprises: The stock of this media and entertainment company slipped nearly 2% in trade on April 7, 2022 after its single largest investor, Invesco announced its intention to sell nearly 7.8% stake in the company, according to news reports. Invesco will continue to hold around 11% stake in the company even after this stake sale. This comes shortly after Invesco decided not to pursue its demand for an extraordinary general meeting to remove Managing Director Punit Goenka and two independent directors. In fact, Invesco believes that the corporate governance issues that persisted earlier will get resolved once the board gets reconstituted after the merger of Sony Pictures and Zee Entertainment.

Notably, Invesco had picked up a 11% stake in Zee Entertainment for Rs 4,224 crore back in May 2019 to rescue its promoters as they were in dire need of funds. The average price of the stock as on May 27, 2019 was Rs 357.45. Hence, it is quite intriguing that Invesco now is willing to offload its stake at a loss of roughly 20% now, even though it reiterated its faith in the Sony-Zee merger deal. Invesco is reducing its stake in Zee Entertainment in accordance with their overall ‘portfolio construction approach’ for Asian markets. With Invesco cutting its stake to 11%, the merger deal going through is almost assured.

Bandhan Bank: This bank’s Q4FY22 business update indicates that its fortunes are turning for the better after three painful quarters in FY22. Its loan book grew 16% YoY to Rs 1.01 lakh crore, while its deposits grew 24% YoY to Rs 96,331 crore and retail by 21% YoY to Rs 74,441 crore. This is due to a strong recovery in credit demand as lockdowns eased. With economic activity picking up, the prospects for improvement in asset quality look promising as the overall collection efficiency ratio (CER) was 96% in Q4FY22 compared to 93% in Q3FY22. Collection efficiency ratio indicates the total loans recovered to total loans to be recovered during the same financial period. Emerging Entrepreneurs Business’ (EEB) collection efficiency was 98% in Q4FY22, close to its pre-covid level of 99%. “Improving trends in collection efficiency should continue to moderate credit cost and support earnings,” said analysts at Motilal Oswal.

Also, the bank's parent company-Bandhan Financial Holdings-led consortium is set to acquire IDFC Asset Management Company (AMC) Rs 4,500 crore. The acquisition brings the group closer to its goal of diversifying its product portfolio to expand its presence in the financial services sector. Through this acquisition, the group will be able to offer financial products such as mutual funds. For the bank though, this is an opportunity to boost its fee income through cross-selling of mutual fund products, as currently the share of non-interest income of the overall income for the bank is less than 25%. The holding company wants to scale up the business (post-acquisition) by strengthening the product portfolio. It plans to add more equity-based funds targeted toward retail investors and enhance the distribution footprint by tying up with banks and small finance banks.

Hindustan Aeronautics (HAL): This aerospace company’s stock rose 6.1% in five consecutive sessions, till Thursday, after it announced record high revenues. In FY22, revenue grew 6% YoY to Rs 24,000 crore. This was led by production and delivery of 44 new helicopters, 84 new engines, and the overhaul of 203 aircraft and 478 engines in FY22. Recently, the company bagged a contract to make aircrafts worth Rs 3,887 crore for the Indian Air Force and the Indian Army. Additional orders are expected for helicopters and the LCA (Light-Combat Aircraft) in the coming quarters.

With a robust order pipeline, the company's Chairman and Managing Director R Madhavan said revenues will grow 6-7% in FY23. The order inflow is expected to grow as the Centre pushes for more indigenisation of its defence needs to reduce dependence on imports. The Ministry of Defence has fixed timelines for indigenisation, after which certain products will be procured domestically. The share of domestic procurement in the total defence capital outlay is estimated to rise from less than 60% in FY20 to 68% in FY23. HAL’s order at the end of Q3FY22 stands at Rs 79,230 and the order pipeline for the next two years looks strong at Rs 50,000 crore. A strong order book and healthy business outlook bodes well for HAL.

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

Trendlyne Marketwatch

08 Apr 2022, 04:10PM

Market closes higher, RBI keeps repo rates at 4%, hikes reverse repo rate to 3.75%

Trendlyne Analysis

Nifty 50 closed in the green after gyrating between gains and losses. Most Asian stocks closed in the red as investors continue to monitor both Federal Reserve’s plan to tighten its monetary policy and the latest Covid-19 outbreak in China. US stocks closed higher on Thursday as buying pressure picked up towards the end of the trading session. Reserve Bank of India (RBI) keeps the repo rate unchanged at 4% to maintain an ‘accommodative stance’ for economic growth. However, RBI increases reverse repo rate by 40 bps to 3.75% to maintain liquidity in the market.

Nifty Smallcap 100 and Nifty Midcap 100 close in the green, following the benchmark index. Nifty Metal and Nifty Media close higher than Thursday’s level. Nifty IT closes flat, taking cues from the tech-heavy NASDAQ 100 futures, which is also trading flat.

Nifty 50 closed at 17,784.35 (144.8, 0.8%), BSE Sensex closed at 59,447.18 (412.2, 0.7%) while the broader Nifty 500 closed at 15,342.40 (141.2, 0.9%)

Market breadth is overwhelmingly positive. Of the 1,886 stocks traded today, 1,273 were on the uptick, and 576 were down.

Cholamandalam Financial Holdings, AIA Engineering, Phoenix Mills, and Shriram Transport Finance Company are trading with higher volumes as compared to Thursday.
If the proposed merger goes through, PVR and INOX could look into film production and enlarge its distribution and food & beverage business to diversify its revenue streams says management of both companies, according to reports.
Sterling and Wilson Renewable Energy's Q4FY22 loss narrows 63.2% YoY to Rs 126.61 crore and revenue falls 21.5% YoY to Rs 1,071 crore. In FY22, revenue rises 2.33% YoY to 5,198.94 crore and loss widens to Rs 909.46 crore from Rs 285.38 crore in FY21.
Varroc Engineering is trading with more than ten times its weekly average trading volume. TCNS Clothing Co., Bharat Dynamics, Syngene International, and Cholamandalam Investment & Finance Company are trading at more than six times their weekly average trading volumes.
Sobha reports flat sales volumes of 1.342 million square feet with sales booking value rising 3.5% YoY Rs 1,109.6 crore. Bengaluru market’s contribution was the highest with sales volumes increasing to 0.932 million square feet up by 4.4% YoY. The sales volumes for the Gurgaon market jump 44% YoY to 0.234 msf.
JSW Steel’s total steel crude production in Q4FY22 grows 37% YoY to 5.98 million tonnes (MT). In FY22, the total steel crude production grows 38% YoY to 21.47 MT.
RBI keeps repo rate constant at 4% for the 11th consecutive time to maintain an ‘accommodative stance’ for economy growth. However, reverse repo rate increases 40 bps to 3.75% to maintain liquidity in the market. Marginal Standing Facility (MSF) and bank rate stay the same at 4.25%.
Lupin launches Merzee capsules in the US market, under an exclusive license, marketing, and distribution agreement with Slayback Pharma. Merzee is a generic contraceptive drug, equivalent to Allergan Pharmaceuticals' Taytulla capsules.
Jindal Stainless’ sales volumes rise 6% YoY to 2.7 lakh tonnes in Q4FY22 because of its agile supply chain and a favourable product mix. The company’s exports increase 32% in Q4FY22 despite global disruptions in raw material supply and logistics.