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Trendlyne Marketwatch
Trendlyne Marketwatch
18 Sep 2024
Market closes flat, Siemens receives BSE approval to demerge its energy business
By Trendlyne Analysis

Nifty 50 closed at 25,377.55 (-41, -0.2%) , BSE Sensex closed at 82,948.23 (-131.4, -0.2%) while the broader Nifty 500 closed at 23,898.65 (-71.3, -0.3%). Market breadth is overwhelmingly negative. Of the 2,274 stocks traded today, 724 were in the positive territory and 1,536 were negative.

Nifty 50 touched a new all-time high of Rs 25,482.2 before paring its gains in the afternoon session to close lower. The Indian volatility index, Nifty VIX, surged 6.2% and closed at 13.4 points. Hindalco Industries reportedly plans a capex of Rs 2,450 crore to set up a copper and e-waste recycling plant in Dahej and a copper tube manufacturing plant in Vadodara.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red. Nifty Financial Services and Nifty Bank were among the top index gainers today. According to Trendlyne’s Sector dashboard, Healthcare Equipment & Supplies emerged as the best-performing sector of the day, with a rise of 1.8%.

Asian indices closed mixed. European indices are trading lower, except for Germany’s DAX which is trading flat. US index futures are trading in the green, indicating an optimistic start to the trading session as analysts are expecting the Federal Reserve to cut interest rates by a more aggressive 50 bps today.

  • Relative strength index (RSI) indicates that stocks like Jubilant Pharmova, Himadari Specialty Chemicals, Godrej Industries, and Radico Khaitan are in the overbought zone.

  • Siemens receives an observation letter from BSE with 'no adverse observations'. The letter approves the board's decision to demerge the company's energy business to Siemens Energy India (SEIL), a wholly owned subsidiary of Siemens

  • Heritage Foods' board of directors approves setting up a new ice cream manufacturing facility in Telangana with an estimated capex of Rs 204 crore.

  • Awfis Space Solutions launches a new centre in Gujarat International Finance Tec-City (GIFT City), Gandhinagar. The centre offers 30,221 sq ft and is located on the 26th floor in Gift One Tower.

  • Nifty IT drops over 3% as Morgan Stanley points out that macroeconomic risks, including a potential U.S. recession, could impact the sector. However, the brokerage also stated that while valuations are not inexpensive, they are not in the 'sell zone' either.

  • Indian Hume Pipe Company announces plans to double the production capacity at its Walwa and Dhule factories in Maharashtra. The expansion in Walwa is expected to be completed by October 2024, and in Dhule by January 2025, requiring an investment of Rs 37.6 crore.

  • REC is rising as it signs a memorandum of understanding (MoU) with renewable energy (RE) developers for funding worth Rs 1.1 lakh crore for the next five years to develop solar and hybrid power projects.

  • Lupin signs a non-exclusive patent license agreement with Takeda Pharmaceutical to commercialize Vonoprazan Tablets in the Indian market. Lupin will market the drug as Lupivon in two strengths: 10 mg and 20 mg.

  • Zee Entertainment Enterprises denies Star India's claims regarding the termination of their cricket broadcasting agreement. Star India is pursuing $940 million (Rs 7,952.7 crore) in damages from the company in the London Court of International Arbitration.

  • Tata Power Renewable Energy (TPREL), a subsidiary of Tata Power, secures a letter of award (LoA) for a 400 MW Wind-Solar Hybrid project from Maharashtra State Electricity Distribution Company (MSEDCL). The project includes an initial 200 MW capacity, with an additional 200 MW under the Greenshoe option, making it the largest renewable energy project in Maharashtra for TPREL.

  • Tata Consultancy Services signs a two-year partnership deal with Golden Arches Development Corporation (GADC), the master franchise holder of McDonald's in the Philippines. This partnership aims to standardize and digitize the IT operations for over 760 McDonald’s restaurants in the Philippines.

  • NTPC's joint venture (JV) with Nuclear Power Corp of India (NPCIL) receives the Indian government's approval to set up four 700 MW nuclear power plants in Rajasthan.

  • Morgan Stanley maintains its 'Overweight' rating on Bajaj Finance with a target price of Rs 9,000. The brokerage anticipates gradual improvement in the company’s standalone financials. They also view the valuations as attractive in relation to return on equity (RoE) and earnings per share (EPS) growth, projecting a 19% upside from current levels.

  • Restaurant Brands Asia rises sharply after 1.1 crore share (2.1% stake), worth Rs 113 crore, reportedly change hands in a block deal at an average price of Rs 105 per share.

  • Indo National announces the divestment of its entire 51% stake in Kineco for Rs 220 crore. The company plans to invest the funds in new-age enterprises, aerospace, defence industries, and the FMCG sector.

  • Reliance Power surges to its 5% upper circuit as it fully settles its obligations as a guarantor for Vidarbha Industries Power (VIPL). This results in the release and discharge of the corporate guarantee, undertakings, and all related claims tied to VIPL's outstanding debt of Rs 3,872 crore.

  • In FY24, proceeds from dividends and share buyback for individual promoters and prominent business families in India surpassed the Government of India’s earnings from listed central public-sector undertakings (CPSUs) and multinationals' earnings from their Indian subsidiaries. Collectively, these promoters earned approximately Rs 1.1 trillion, a slight increase of 0.2% from the previous year.

  • Hindalco Industries reportedly plans a capex of Rs 2,450 crore to set up a copper and e-waste recycling plant in Dahej and a copper tube manufacturing plant in Vadodara. The company expects a capex of Rs 2,000 crore for the Dahej plant with a capacity of 300-350 kilotonnes (KT) per annum, while the Vadodara plant has an estimated capex of Rs 450 crore with a capacity of 25,000 tonnes.

  • Dodona Holdings sells nearly 11 lakh shares (0.3% stake) in Trent, worth approximately Rs 803.2 crore, at average price of Rs 7,330 per share in a block deal. Siddharth Yog is the buyer in the transaction.

  • ICICI Securities retains its 'Buy' call on Gravita India with an upgraded target price of Rs 3,265 per share. This indicates a potential upside of 26.1%. The brokerage believes that the company is poised for medium-term growth owing to regulatory changes helping with the availability of scrap in the domestic market and its planned expansion in Europe. It expects the company's revenue to grow at a CAGR of 23.5% over FY25-26.

  • CRISIL notes that recent developments in Bangladesh have had a limited impact on India's trade, and future effects will depend on specific industry and sector nuances. However, prolonged disruptions could influence the revenue profiles and working capital cycles of certain export-oriented industries that rely on Bangladesh as a demand center or production hub.

  • Suraj Estate Developers rises sharply as LIC Mutual Fund - Flexi Cap Fund buys 2.8 lakh shares (or a 0.6% stake) in the company, for Rs 21.5 crore at an average price of Rs 758.9 per share, in a block deal on Tuesday.

  • Honasa Consumer enters a partnership with the Ministry of Defence to distribute its products to the Canteen Stores Department (CSD) across India.

  • Ceigall India rises sharply as it bags an order worth Rs 1,299.2 crore after emerging as the lowest bidder at an auction held by the National Highway Authority of India (NHAI). The order is to construct a 4 to 6 lane Southern Ayodhya Bypass.

  • Inox Wind rises sharply as it receives a letter of intent (LoI) from IGREL Renewables to execute a 550 megawatt (MW) wind project. Inox Wind will supply, install, and commission the Wind Turbine Generators (WTGs) and provide multi-year operations and maintenance (O&M) services after commissioning.

  • Nifty 50 was trading at 25,394.20 (-24.4, -0.1%) , BSE Sensex was trading at 82,964.56 (-115.1, -0.1%) while the broader Nifty 500 was trading at 23,962.15 (-7.8, 0.0%)

  • Market breadth is in the green. Of the 1,945 stocks traded today, 1,055 were gainers and 835 were losers.

Riding High:

Largecap and midcap gainers today include Torrent Power Ltd. (1,932.90, 8.6%), Samvardhana Motherson International Ltd. (204.16, 4.7%) and Shriram Finance Ltd. (3,574.70, 4.4%).

Downers:

Largecap and midcap losers today include Oracle Financial Services Software Ltd. (11,259.50, -8.3%), MphasiS Ltd. (3,004.40, -5.5%) and Sona BLW Precision Forgings Ltd. (717.55, -3.7%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Graphite India Ltd. (586.35, 9.3%), HEG Ltd. (2,290.50, 8.6%) and Torrent Power Ltd. (1,932.90, 8.6%).

Top high volume losers on BSE were MphasiS Ltd. (3,004.40, -5.5%) and Abbott India Ltd. (27,783.05, -3.7%).

Alkyl Amines Chemicals Ltd. (2,367.05, 6.7%) was trading at 33.6 times of weekly average. Fine Organic Industries Ltd. (5,435.95, 4.5%) and Balaji Amines Ltd. (2,345.35, 1.9%) were trading with volumes 16.2 and 10.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

27 stocks made 52 week highs,

Stocks touching their year highs included - Bajaj Auto Ltd. (11,764.65, -1.6%), Bharti Airtel Ltd. (1,654.90, -0.4%) and Cholamandalam Investment & Finance Company Ltd. (1,590.15, 1.0%).

6 stocks climbed above their 200 day SMA including Graphite India Ltd. (586.35, 9.3%) and Varroc Engineering Ltd. (564.45, 4.2%). 9 stocks slipped below their 200 SMA including Indian Bank (505.05, -2.8%) and TV18 Broadcast Ltd. (47.56, -2.4%).

 
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The Baseline
17 Sep 2024
By Satyam Kumar

Nifty50 hit an all-time high of 25,446 on Monday as India’s booming markets witnessed the fourth straight month of buying by foreign investors. The recent surge is driven by the likelihood that the US Fed will start the rate-cutting cycle tomorrow, September 18. Markets are rising due to expectations that the Fed will cut interest rates by 50 basis points (bps) rather than 25 bps as estimated earlier, which will lead to lower interest rates and boost flows into emerging markets.

Morgan Stanley Composite Index’s (MSCI) gauge of Indian shares is up 24% in 2024, in contrast to a 1.7% drop in a similar gauge for Chinese stocks. This has led to the rising influence of Indian stocks in the MSCI Global Standard Index, also known as the World Index. India currently holds a weightage of around 18%, second only to China, which has a weightage of approximately 25%. This marks a significant increase from levels below 10% at the start of 2021.

This chart of the week takes a look at FII & DII activity in the equity segment on a monthly basis over the past decade. We have compared the investing preferences of Indian and foreign investors and how they have fared over the past decade.

FIIs have almost quadrupled their investments in Indian equities over the past decade

Foreign institutional investors (FIIs) assets under management (AUM) in the equity segment stood at Rs 75.5 lakh crore, up from Rs 19.6 lakh crore at the start of 2015. Between January 2015 and September 2024, FIIs were net buyers in 68 out of 117 months and net sellers in the remaining months. This indicates that FIIs were net buyers in 58% of the total months over the past decade.

Over the past decade, FII's buy/sell decisions overlapped with positive and negative changes in the Nifty50 in 90 of the total 117 months. This implies that they bought whenever the markets rose and sold whenever the markets took a hit, and that too with an accuracy of 77%. This can be an interesting data point for traders and swing investors in their pursuit of timing the markets better. Another reason for this accuracy can be attributed to their higher stake of over 17% in the Indian equity markets. This results in their higher influence in the equity market, with prices moving in the direction they trade.

India following the SIP mantra, DIIs were net buyers in 84% of the total months over the past decade

Domestic institutional investors (DIIs) include entities like mutual funds, pension funds and insurance firms. Over the past decade, DIIs were net buyers in 98 of the total 117 months, while net sellers in the remaining months. On a monthly basis, they were net buyers in the market irrespective of where the market was headed. 

Central Depository Services’ annual report highlights rising investor confidence in the Indian equity market. This depository company currently has a market share of 76% as of March ‘24 with 11.6 crore investor accounts. This implies that the company has added new investors at a CAGR of more than 25%.  According to data released by the Association of Mutual Funds in India, retail investments via SIPs into mutual funds have increased at a CAGR of 24.1% over the past seven years.

Over the long term, both FIIs and DIIs have gained on their investments, thanks to the economic growth

According to Trendlyne’s Technicals, the broader equity market index, represented by the Nifty 500 index which consists of the top 500 listed Indian firms, has gained 273.8% over the past 10 years.

DIIs, even with their strategy of investing in markets consistently, rather than timing their investments like FIIs do, made outstanding returns. This is because India’s economic growth has consistently outperformed in comparison to its peers post-pandemic, highlighted by the GDP growth rate of 8.2% in FY24.

FIIs, on the other hand, have also gained on their investments significantly over the past years. The payoff has led them to consistently increase India’s weightage in their portfolio in comparison to other emerging market peers like Indonesia, South Korea, Thailand, etc. On top of that, foreign investors have witnessed a better risk-reward environment as the rupee has stabilized in comparison to the US dollar over the past few years. 

Stable political environment boosts investor confidence in the Indian equity market

FIIs divested over Rs 30,000 crore in the months before the election in June. However, they have re-entered the markets since then with consistent buying in the following months, as the BJP-led NDA alliance formed a government with Narendra Modi re-elected as Prime Minister for a third term.

In recent years, India has made strides in improving the ease of doing business, with reforms in taxation, labour laws, and corporate governance. This stability has attracted increasing FII inflows, further strengthening the Indian equity market. Initiatives like Make in India, Digital India, and Atmanirbhar Bharat have fueled investments in manufacturing, technology, and innovation, promoting growth and attracting both domestic and foreign investors.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
17 Sep 2024
Market closes higher, Torrent Power signs MoU with Gujarat for a 5 GW project
By Trendlyne Analysis

Nifty 50 closed at 25,418.55 (34.8, 0.1%) , BSE Sensex closed at 83,079.66 (90.9, 0.1%) while the broader Nifty 500 closed at 23,969.90 (1.7, 0.0%). Market breadth is in the red. Of the 2,277 stocks traded today, 847 were on the uptrend, and 1,400 went down.

Indian indices closed in the green, with the benchmark Nifty 50 index closing at 25,418.6 points. The Indian volatility index, Nifty VIX, rose by 1% and closed at 12.6 points. Spicejet’s board of directors approved the qualified institutional placement (QIP) of shares worth Rs 3,000 crore

Nifty Midcap 100 and Nifty Smallcap 100 closed in the red. S&P BSE Midsmallcap and S&P BSE Large MidCap were among the top index gainers today. According to Trendlyne’s Sector dashboard, Forest Materials emerged as the best-performing sector of the day, with a jump of over 6.6%.

Asian indices closed mixed while European indices are trading in the green except Russia’s MOEX & RTSI. US index futures traded in the green, indicating a positive start to the trading session. Brent crude oil futures are trading in the red. UBS has lowered its oil price forecasts for 2024-2026 due to weaker global demand and a stable supply outlook. The Q4CY24 Brent crude forecast is cut to $75 per barrel from $83, reducing the 2024 average price to $80 per barrel.

  • Money flow index (MFI) indicates that stocks like Glenmark Life Sciences, Jubilant Pharmova, Gujarat Fluorochemicals, and Radico Khaitan are in the overbought zone.

  • BLS International Services falls sharply as 55 lakh share (1.3% stake), worth Rs 224 crore, reportedly change hands in a block deal at an average price of Rs 408 per share.

  • Firstsource Solutions announces a collaboration with Microsoft to deliver advanced digital transformation services globally. The partnership utilizes Azure OpenAI Service and other tools to provide AI-powered solutions, enhancing innovation and efficiency across industries.

  • Nuvoco Vistas rises sharply as 45 lakh share (1.2% stake), worth Rs 158 crore, reportedly change hands in a block deal at an average price of Rs 352 per share.

  • Ahead of the festive season beginning in October, the Open Network for Digital Commerce (ONDC) informs network players via a memo that the maximum incentive they can claim this month is Rs 40 lakh. This represents an 84% reduction from the Rs 2.5 crore limit available in the previous month.

  • Veefin Solutions rises sharply as it announces its third acquisition in digital lending platform EpikIndifi, worth Rs 125 crore. The acquisition offers solutions in digital supply chain finance, identity verification, trade securitisation, and automated AR/AP services. The company's three recent acquisitions are valued at Rs 400 crore.

  • DCX Systems surges to its 5% upper circuit as its subsidiary, Raneal Advanced Systems, receives an industrial license from the government to manufacture defence electronic systems. The company will produce microwave submodules for command and guidance units for missile subsystems, avionics & defence electronic equipment, and radar systems.

  • Torrent Power surges as it signs a memorandum of understanding (MoU) with the Government of Gujarat for a 5 gigawatt (GW) solar, wind or solar-wind hybrid project in the Dwarka District of Gujarat.

  • Sharekhan maintains a 'Buy' rating on ITC with a target price of Rs 595. The brokerage highlights that the company is on a steady earnings growth path, with the core cigarette and non-cigarette FMCG businesses anticipated to maintain consistent performance. Additionally, a recovery is expected in the paperboard, paper, and packaging (PPP) sector in the coming quarters.

  • Reliance Infrastructure rises sharply as its board of directors is set to meet on Thursday to consider fundraising through preferential issue, qualified institutional placement (QIP), rights issue, or other modes.

  • P N Gadgil Jewellers' shares debut on the bourses at a 72.9% premium to the issue price of Rs 480. The Rs 1,100 crore IPO received bids for 59.4 times the total shares on offer.

  • RailTel Corporation of India receives a work order worth Rs 48.7 crore from Health Insurance TPA of India to develop an integrated claims management solution portal and mobile application.

  • India's WPI inflation eased to a 4-month low of 1.3% in August, down from 2% in July, due to a slowdown in major sub-indices like manufactured products. Additionally, prices for fuel and power also contracted.

  • JBM Auto's subsidiary, JBM ECOLIFE Mobility, secures $100 million (approx. ?838.3 crore) in strategic funding from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). The funds will support the supply and operation of electric buses across several states in India under the Gross Cost Contract (GCC) model.

  • Motilal Oswal upgrades Godrej Agrovet to a 'Buy' call with an improved target price of Rs 970. This indicates a potential upside of 20%. The brokerage believes that the company's profitability will improve across segments, owing to the segment-specific measures taken to improve efficiency. It expects the company's net profit to grow at a CAGR of 37.4% over FY25-26.

  • JK Tyre & Industries is falling as its board of directors approves its merger with its subsidiary, Cavendish Industries. As per the merger agreement, shareholders of Cavendish will receive 92 shares of JK Tyre for every 100 shares owned in Cavendish.

  • Phillip Capital initiates coverage with a 'Buy' rating on Bajaj Housing Finance and a target price of Rs 210. The brokerage emphasizes the company's promising outlook, especially in the Rs 50 lakh home loan segment, which makes up 65% of India's home loan market. It anticipates the company's balance sheet will surpass Rs 2 lakh crore within three years and expects credit costs to stay low in the near term.

  • Panacea Biotech surges to its 52-week high of Rs 349.8 per share as it enters a settlement with Sanofi Healthcare India concerning a patent infringement case filed in the Delhi High Court (HC). Panacea had previously filed a suit before the Delhi HC looking to restrain Sanofi from marketing its hexavalent vaccine which would infringe on Panacea's vaccine, EasySix.

  • Sandur Manganese & Iron Ores surges as its board of directors approves the issuance equity shares worth Rs 1,000 crore through a qualified institutional placement (QIP).

  • Ola Electric rises sharply as Godman Sachs reportedly initiates coverage with a 'Buy' call and a target price of Rs 160 per share. This indicates a potential upside of 44%. The brokerage believes that the company is well-positioned for long-term growth in the electric two-wheeler segment. It expects the company's revenue to grow at a CAGR of 40% over FY25-30.

  • In August, mutual funds, benefiting from record SIP inflows, invested over Rs 6,900 crore in eight IPOs. The biggest investment by mutual funds was in Brainbees Solutions with 4.21 crore shares worth Rs 2,810 crore. Most mutual fund investments in the primary market were made through anchor investments in public offerings.

  • Tata Motors falls sharply as 1.9 crore share (0.4% stake), worth Rs 1,758 crore, reportedly change hands in a block deal at an average price of Rs 970 per share.

  • Indo Count Industries is rising as its subsidiary, Indo Count Global, acquires an 81% stake in US-based quilt manufacturer, Fluvitex USA, for a cash consideration of $19.6 million (approx. Rs 164.6 crore). Indo Count also has the option to buy the remaining 19% stake in Fluvitex for $4.6 million (approx. Rs 38.6 crore) in the next five years.

  • Edelweiss Employees Welfare Trust sells 27.5 lakh shares (0.3% stake) in Edelweiss Financial Services, worth approximately Rs 34.1 crore, at an average price of Rs 124 per share in a block deal. Whiteoak Capital Asset Management is the buyer in the transaction.

  • Spicejet surges to its 52-week high of Rs 79.9 per share as its board of directors approves the qualified institutional placement (QIP) of shares worth Rs 3,000 crore at a floor price of Rs 64.8 per share.

  • Nifty 50 was trading at 25,366.95 (-16.8, -0.1%), BSE Sensex was trading at 82,955.20 (-33.6, 0.0%) while the broader Nifty 500 was trading at 23,958.75 (-9.5, 0.0%).

  • Market breadth is even. Of the 1,952 stocks traded today, 941 were on the uptrend, and 956 went down.

Riding High:

Largecap and midcap gainers today include Varun Beverages Ltd. (649.65, 4.6%), Max Healthcare Institute Ltd. (964.70, 3.6%) and Indraprastha Gas Ltd. (548.10, 3.4%).

Downers:

Largecap and midcap losers today include Biocon Ltd. (375.85, -3.9%), Suzlon Energy Ltd. (82, -3.2%) and Hindustan Aeronautics Ltd. (4,458.50, -3.0%).

Movers and Shakers

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

Top high volume gainers on BSE included Blue Dart Express Ltd. (9,253.65, 12.4%), Century Plyboards (India) Ltd. (885.05, 10.4%) and BASF India Ltd. (7,167.85, 4.9%).

Top high volume losers on BSE were BLS International Services Ltd. (408.20, -4.1%), Endurance Technologies Ltd. (2,407.80, -1.3%) and PCBL Ltd. (500.60, -0.9%).

Nuvoco Vistas Corporation Ltd. (365.35, 4.2%) was trading at 58.7 times of weekly average. Mahanagar Gas Ltd. (1,909.95, 4.9%) and Indraprastha Gas Ltd. (548.10, 3.4%) were trading with volumes 14.2 and 12.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

39 stocks made 52 week highs,

Stocks touching their year highs included - Apollo Hospitals Enterprise Ltd. (7,008.05, -0.3%), Bajaj Auto Ltd. (11,950.30, 2.2%) and Bharti Airtel Ltd. (1,661.75, 1.6%).

5 stocks climbed above their 200 day SMA including Action Construction Equipment Ltd. (1,366.05, 3.4%) and Tamilnad Mercantile Bank Ltd. (494, 3.1%). 12 stocks slipped below their 200 SMA including Kama Holdings Ltd. (2,634, -3.6%) and Ircon International Ltd. (231.75, -3.4%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
16 Sep 2024
Market closes higher, Reliance Power bags an order from SECI for battery storage project
By Trendlyne Analysis

Nifty 50 closed at 25,383.75 (27.3, 0.1%) , BSE Sensex closed at 82,988.78 (97.8, 0.1%) while the broader Nifty 500 closed at 23,968.20 (40, 0.2%). Market breadth is holding steady. Of the 2,302 stocks traded today, 1,110 were in the positive territory and 1,168 were negative.

Indian indices closed higher after hitting a new all-time high of Rs 25,445.7, due to anticipation of Federal Reserve rate cut this week. The Indian volatility index, Nifty VIX, fell 0.7% and closed at 12.4 points. Torrent Power plans a capital expenditure of Rs 64,200 crore to establish 10 GW of renewable energy by 2030 and to set up a 1 lakh kilo tonnes per annum (KTPA) green ammonia production facility.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green. S&P BSE Utiliti and BSE Power Index were among the top index gainers today. According to Trendlyne’s Sector dashboard, Utilities emerged as the best-performing sector of the day, with a rise of 1.9%.

Asian indices closed higher, except for Japan’s Nikkei 225, which closed lower. European indices are trading mixed. US index futures are trading mixed, indicating a cautious start to the trading session. Brent crude oil futures are trading higher.

  • Relative strength index (RSI) indicates that stocks like Jubilant Pharmova, Gujarat Fluorochemicals, Godrej Industries, and Bajaj Auto are in the overbought zone.

  • JSW Energy's subsidiary, JSW Renew Energy Two, commissions a 300 MW wind power project awarded by Solar Energy Corporation of India (SECI) in Tuticorin, Tamil Nadu. An additional 150 MW project in Dharapuram, also awarded by SECI, nears completion with 138 MW already operational.

  • Lumax Auto Technologies rises sharply as its subsidiary, Lumax Resources, acquires a 60% stake in Greenfuel Energy Solutions for Rs 221 crore. This acquisition will help the company to diversify its solutions for original equipment manufacturers (OEMs).

  • GMR Airports Infrastructure rises as its passenger traffic increases 9% YoY to 1.1 crore in August, while aircraft movements grow by 8% YoY to 69,786.

  • George Alexander Muthoot, Managing Director of Muthoot Finance, notes that the demand for gold loans is picking up, and they may revise assets under management (AUM) guidance of 15% for H2FY25. He adds that their cost of borrowings has peaked, and housing finance division is growing well. He expects Belstar MFI to grow by 20%.

  • Godrej Agrovet rises as V-Sciences Investments, an arm of Temasek Holdings, sells 27.1 lakh shares (1.4% stake) through a Rs 212 crore bulk deal at an average price of Rs 785.1 per unit.

  • Emkay initiates coverage on Bajaj Finserv with a 'Buy' call and a target price of Rs 2,150 per share. This indicates a potential upside of 15.9%. The brokerage believes the company is well-positioned to capture growth in financial products like lending, investing, and protecting owing to its strong portfolio and large customer base. It expects the company's net profit to grow at a CAGR of 23.6% over FY25-27.

  • Reliance Power rises sharply as it reportedly secures a contract for a 500 MW/1000 MWh battery energy storage systems (BESS) project from the Solar Energy Corporation of India (SECI).

  • The government plans to make automakers recycle a set percentage of steel from old vehicles, aiming to enhance the steel circular economy and increase scrap availability. Based on the draft Extended Producer Responsibility (EPR) regulations for end-of-life vehicles released on January 30, the Environment Ministry is expected to mandate that from FY26, automakers recycle or recover at least 8% of the steel from vehicles sold in 2005-06.

  • Jindal Steel and Power signs a memorandum of understanding (MoU) with Jindal Renewable Power to launch India's largest green hydrogen project in the steel industry. The initiative includes 4,500 tonnes of annual green hydrogen production, 36,000 tonnes of oxygen generation for Angul steelworks, and 3GW of renewable energy supply, reducing the steelmaker's dependence on coal-fired energy by 50% in two to three years.

  • Dixon Technologies (India) surges to its all-time high of Rs 13,848.2 as its wholly owned subsidiary, Padget Electronics, signs a memorandum of understanding (MoU) with Asus India to manufacture information technology products, specifically notebooks.

  • Torrent Power rises as it plans a capex worth Rs 64,200 crore to establish 10 GW of renewable energy by 2030 and to set up a 1 lakh kilo tonnes per annum (KTPA) green ammonia production facility. The projects are expected to generate employment for 26,000 people.

  • Shares of rice companies such as KRBL, LT Foods, and Kohinoor Foods rise following the government's removal of the $950/tonne (Rs 79,693/tonne) minimum export price for basmati rice. This move has increased global demand, with exporters now fielding inquiries from buyers around the world for Indian basmati rice.

  • Tolins Tyres' shares debut on the bourses at a 0.9% premium to the issue price of Rs 226. The Rs 230 crore IPO received bids for 23.9 times the total shares on offer.

  • Kross' shares make a flat debut on the bourses at Rs 240. The Rs 500 crore IPO received bids for 16.8 times the total shares on offer.

  • Bajaj Housing Finance's shares debut on the bourses at a 114.3% premium to the issue price of Rs 70. The Rs 6,560 crore IPO received bids for 63.6 times the total shares on offer.

  • Infosys partners with LIC to speed up digital transformation. Through this collaboration, it will develop NextGen Digital Platform designed to offer LIC’s customers seamless omnichannel engagement and data-driven, hyper-personalized experiences.

  • Apollo Micro Systems rises sharply as it receives orders from Economic Explosives and Defence Research and Development Organisation (DRDO) worth Rs 4.7 crore and emerges as the lowest bidder for a project worth Rs 72.3 crore from Munitions India for GNC Kit.

  • Systematix Corporate Services rises to its all-time high of Rs 1,688 per share as it approves a fundraise worth Rs 103.1 crore through a preferential allotment of shares for Rs 1,531 per share.

  • EIH rises as its board of directors approves a capex of Rs 972 crore to set up a Trident Hotel with 175 rooms and a commercial project with retail outlets in Pune. The company also acquires a 51% stake in Muttha Towers II for Rs 254 crore to jointly develop the projects.

  • In August, Adani Energy Solutions and Ambuja Cement attracted the most mutual fund investments, totaling Rs 1,541 crore and Rs 1,308 crore, respectively. Mutual fund interest in Adani Group companies has been steadily increasing, with net buying surpassing Rs 4,200 crore in August alone.

  • Phoenix Mills surges as its board of directors approves a bonus issue of shares to equity holders in the ratio of 1:1. The record date for the issue is September 21.

  • Sanvardhana Motherson International is rising as it acquires 36.4 lakh shares (or an 11% stake) in REE Automotive for a cash consideration of $15 million (approx. Rs 125.8 crore).

  • Adani Power surges as it signs a long-term power purchase agreement (PPA) with Maharashtra State Electricity Distribution Company (MSEDCL) to supply 5 GW of solar power from its renewable energy park in Khavda, Kutch District, Gujarat, to Maharashtra state.

  • Thermax rises as its subsidiary, Thermax Babcock & Wilcox Energy Solutions, bags an order worth Rs 516 crore from Jindal Energy Botswana for two 550 tonnes per hour (TPH) circulating fluidised bed combustion (CFBC) boilers.

  • Nifty 50 was trading at 25,395.30 (38.8, 0.2%), BSE Sensex was trading at 82,985.33 (94.4, 0.1%) while the broader Nifty 500 was trading at 23,986.70 (58.5, 0.2%).

  • Market breadth is overwhelmingly positive. Of the 2,014 stocks traded today, 1,377 were on the uptick, and 581 were down.

Riding High:

Largecap and midcap gainers today include Adani Green Energy Ltd. (1,930.80, 8.0%), Dixon Technologies (India) Ltd. (13,990.30, 7.4%) and Adani Power Ltd. (665.95, 5.1%).

Downers:

Largecap and midcap losers today include LIC Housing Finance Ltd. (680.75, -5.9%), Varun Beverages Ltd. (621.05, -4.0%) and Godrej Properties Ltd. (2,838.50, -3.8%).

Volume Shockers

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

Top high volume gainers on BSE included Galaxy Surfactants Ltd. (3,293.30, 8.4%), Adani Green Energy Ltd. (1,930.80, 8.0%) and Dixon Technologies (India) Ltd. (13,990.30, 7.4%).

Top high volume losers on BSE were LIC Housing Finance Ltd. (680.75, -5.9%), Emami Ltd. (751.95, -4.6%) and Schneider Electric Infrastructure Ltd. (787.65, -4.1%).

KRBL Ltd. (322.15, 5.9%) was trading at 21.6 times of weekly average. Vinati Organics Ltd. (1,948, 0.8%) and Maharashtra Scooters Ltd. (10,945, 4%) were trading with volumes 8.3 and 7.1 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

45 stocks overperformed with 52 week highs,

Stocks touching their year highs included - Bajaj Finserv Ltd. (1,857.60, -2.0%), Blue Star Ltd. (1,934.90, 2.5%) and Bombay Burmah Trading Corporation Ltd. (2,695, 0.2%).

16 stocks climbed above their 200 day SMA including KRBL Ltd. (322.15, 5.9%) and Chemplast Sanmar Ltd. (515.75, 5.2%). 7 stocks slipped below their 200 SMA including Engineers India Ltd. (215.59, -3.3%) and Medplus Health Services Ltd. (688, -2.8%).

 
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The Baseline
13 Sep 2024
Five Interesting Stocks Today - September 13, 2024

1. Suzlon Energy:

This heavy electrical equipment company has surged 9.4% over the past week and touched a new 52-week high of Rs 86 on Thursday. The rise comes after it secured a significant 1,166 MW order from NTPC's arm, NTPC Green Energy, making it the largest wind energy order in India. In addition, Morgan Stanley reiterated its ‘Overweight’ stance on the company after the order win. The brokerage noted this PSU contract as a major milestone for the company, as it was previously not allowed to bid because of its negative net worth.

The order requires Suzlon to install 370 S144 WTGs (wind turbine generators) with a rated capacity of around 3.2 MW each, which will generate electricity to power 30 lakh households. The project will be executed across three sites in Gujarat and also includes erection and commissioning, as well as operations & maintenance services post?commissioning. With this, the company’s order book nears 5 GW. As of June 2024, the company’s order book stood at 3.8 GW, 5x the FY24 WTG volume of 710MW. 

In Q1FY25, Suzlon’s net profit had jumped almost 3X to Rs 302.3 crore, helped by lower finance costs and foreign exchange shifts. Revenue increased by 50.1% YoY to Rs 2,044.4 crore. The wind turbine generator segment (which contributes over 70% to the revenue) grew by 86.3% YoY during the quarter. 

India's wind energy sector has been witnessing a recovery, due to rising power needs, wind-focused tenders, and growing industrial demand, offering opportunities for domestic players like Suzlon Energy. JP Chalasani, the Group CEO, said, “We anticipate an increase in wind installations in India between 5 to 5.5 GW in FY25, potentially reaching up to 9 GW in future years”.  

Morgan Stanley believes the large contract from NTPC will enhance Suzlon's earnings visibility for FY26-27. It has a target price of Rs 73, which the stock has already surpassed. The company is trading in the Strong Sell Zone, indicating that it is currently trading above its historical PE.

2. Divi’s Laboratories:

This pharmaceutical manufacturer surged 7.4% over the past week after the US House of Representatives approved the Biosecure Act. The bill is yet to be cleared by the US Senate. The legislation bans American firms from partnering with certain Chinese biotech and drug manufacturers over the next eight years, in a bid to prevent the potential misuse of US genomic data. This will prompt a major shift in the pharmaceutical supply chain.

Analysts expect the introduction of the Act by the US to accelerate the growth of CDMOs (contract development and manufacturing organisations) and CROs (contract research organisations) in India. According to Mordor Intelligence, the contract manufacturing segment is estimated to be worth $22.5 billion in 2024 and is projected to reach $44.6 billion by 2029, growing at a CAGR of 14.7%.

In Q1FY25, the company reported an 18% YoY revenue growth to Rs 2,197 crore, with net profit rising 20.8% YoY to Rs 430 crore. Exports accounted for about 86% of the revenue, with 70% coming from Europe and the US. The product mix between generics and custom synthesis (contract manufacturing) stood at 51% and 49%, respectively.

CEO Kiran Divi said, “With the Biosecure Act, we are now seeing more orders for Phase-II and Phase-III molecules than before, along with significant interest on the generic side.” She also highlighted that the company is planning a capacity expansion, with an investment of Rs 650 crore to Rs 700 crore.

KR Choksey maintains a ‘Hold’ rating on Divi's Laboratories as its Q1 results came in slightly below estimates due to weakness in generic pricing. They expect growth in custom synthesis and new generics to drive margins, and forecast revenue and net profit CAGR of 11% and 23.1%, respectively, over FY25-26.

3. Tata Steel:

This iron and steel company jumped 2.4% to Rs 152.4 per share on Thursday after it secured a £500 million (approx. Rs 5,475.1 crore) grant from the UK government to support a £1.25 billion green steel project in Port Talbot, South Wales. The project involves installing an Electric Arc Furnace (EAF) at the Port Talbot steelworks. The EAF will significantly reduce carbon emissions, both for the UK as a whole and for the Port Talbot plant. The project is expected to preserve 5,000 jobs in the UK steel industry that were impacted when operations were halted in July 2024 due to the company’s initiative to transition to green steel production. Tata Steel is offering voluntary redundancy, support packages, and paid retraining programs for affected employees.

In Q1FY25, the company had reported a 51.4% YoY increase in consolidated net profit, reaching Rs 959.6 crore, as operations in the Netherlands returned to normal levels. The profit growth was also supported by lower expenses and reduced raw material costs. Consolidated total revenue stood at Rs 54,771.4 crore, a 7.9% decline YoY due to subdued steel demand across many regions. Both revenue and net profit fell short of Trendlyne’s Forecaster estimates by 2.7% and 32.2%, respectively.

The management reported a buildup in working capital during the quarter, mainly driven by stock accumulation in the UK ahead of the closure of heavy-end facilities, as well as seasonal factors in India. Koushik Chatterjee, Executive Director and CFO of Tata Steel said, “We are focused on optimizing working capital. The net debt stands at about Rs. 82,162 crores and our group liquidity remains strong at about Rs. 36,460 crores, which includes about Rs. 10,799 crores of cash and cash equivalents.” 

BOB Capital Markets maintains a 'Hold' rating on Tata Steel but has raised the target price from Rs 170 to Rs 175, indicating an expected upside of 7%. They believe the stock to be overvalued now, however, they are confident in the company's ability to grow its earnings.

4. Global Health:

This healthcare facilities company rose by 3.8% over the past month. However  the company had announced last month that they are set to construct a 500-bed super specialty hospital in Mumbai with a Rs 1,200 crore investment. The project, financed equally by debt and internal funds, is expected to be completed in 3-4 years. In July 2024, the land for the hospital was acquired in Oshiwara through a public auction. Once finished, it will become the second largest private hospital, following the 750-bed Kokilaben Dhirubhai Ambani Hospital & Medical Research Institute (KDAH).

For Q1FY25, the company’s net profit rose by 4.2% YoY to 106.3 crore, while its revenue rose by 11.1% YoY due to improved traction in matured hospitals. The firm beat Trendlyne’s Forecaster estimates for revenue by 2.1% but missed the net profit estimate by 11.7% due to a flat Average Revenue per Occupied Bed (ARPOB) and a slight increase in occupancies. ARPOB increased to Rs 64,035, up 1.4% YoY, while occupancies improved by 70bps YoY. The low occupancies were primarily due to under-development hospitals. The stock appears in a screener for stocks with broker upgrades.

Analysts report that the company’s established hospitals are experiencing healthy annual volume growth of 7-8%, with a particularly strong performance over the past 2-3 months. While volume growth might slow after FY26 due to limited bed expansion, opportunities for bed optimization could still boost overall sales and EBITDA for these mature hospitals. The company, with a robust presence in northern and central India, currently has approximately 3,440 beds as of Q1FY25. by the end of FY25. The company’s management aims to grow their capacity to ~5,173 beds over the longer term. Area wise they plan to add 50 beds in Gurugram and Lucknow each, 150 beds in Patna, and 300 beds in Noida by the end of FY25. 

Motilal Oswal has maintained a “Buy” rating on Global Health, with a target price of Rs 1,380. The brokerage anticipates an 18% earnings CAGR from FY25-26. It notes that, while MEDANTA's ongoing efforts like expanding its operations in Lucknow and Patna, increasing bed capacity, and hiring additional clinical talent may lead to moderate earnings in FY25, robust earnings growth will follow from FY26 onwards.

5. JSW Infrastructure:

This port operator rose 7.4% over the past week after it approved a capital expenditure of Rs 2,359 crore for expanding capacity at its Jaigarh and Dharamtar ports. The expansion will boost the company's total cargo-handling capacity from 170 million tonnes per annum (MTPA) to 400 MTPA by 2030, with Jaigarh's capacity increasing to 70 MTPA and Dharamtar's to 55 MTPA. The Dharamtar port expansion focuses on handling increased cargo volumes from an anchor customer associated with a new 5 MTPA steel plant in Dolvi, Maharashtra.

JSW Infrastructure acquired a 70.4% stake in Navkar Corp for Rs 1,012 crore during Q1FY25. The company plans to become a complete logistics solutions provider by leveraging Navkar's existing resources, without requiring additional capital expenditure. CFO Lalit Singhvi said, "While the return on capital employed (ROCE) may see a temporary decline due to these investments, we expect it to recover to 18-19% in the long term as asset utilization improves and synergies with other group businesses come into play over the next 2-3 years.”

The company has outperformed the marine port services industry by 9.5% over the previous quarter. JSW Infra’s volumes grew 9% YoY to 27.8 million tonnes, despite its Dolvi plant shutdown. Singhvi explained that the 9% YoY growth was largely due to new acquisitions that were not part of the business last year. He also expects overall growth to be around 10-12% as the impact of these new assets fully reflects and existing operations continue to grow.

Jefferies initiates a ‘Buy’ on the firm with a target price of Rs 375, implying a potential upside of 13%. The brokerage believes the company’s recent entry into logistics through Navkar’s acquisition will drive significant growth. It expects JSW Infra's growth over 20% from current levels, with existing volumes showing strong capacity use.

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

 
Trendlyne Marketwatch
Trendlyne Marketwatch
13 Sep 2024
Market closes flat, Godfrey Phillips' board to consider a 2-for-1 bonus share issue
By Trendlyne Analysis

Nifty 50 closed at 25,356.50 (-32.4, -0.1%) , BSE Sensex closed at 82,890.94 (-71.8, -0.1%) while the broader Nifty 500 closed at 23,928.20 (20.9, 0.1%). Market breadth is in the green. Of the 2,268 stocks traded today, 1,396 were on the uptick, and 840 were down.

Indian indices pared their gains in the afternoon session to close flat. The Indian volatility index, Nifty VIX, declined by 4.8% and closed at 12.6 points. Adani Enterprises closed in the red as the Swiss Court reportedly froze $310 million (approx. Rs 2,600.4 crore) across multiple bank accounts in the country. This came as part of the ongoing investigation which showed significant financial activity tied to investment structures in offshore tax havens which owned Adani Group stocks.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the green. BSE Realty and Nifty Media were among the top index gainers today. According to Trendlyne’s Sector dashboard, Hardware Tecnology Services emerged as the best-performing sector of the day, with a jump of over 2.2%.

Most Asian indices closed higher, except Japan’s Nikkei 225 which closed 0.8% lower. European indices are trading in the green. US index futures traded in the green, indicating a positive start to the trading session. Brent crude oil futures are trading in the green. U.S. stock futures climbed in anticipation of a 25 bps cut in interest rates next week. 30,000 Boeing employees vote to go on a strike over demands of higher pay.

  • Money flow index (MFI) indicates that stocks like FDC, Glenmark Life Sciences, Gujarat Fluorochemicals, and Jubilant Pharmova are in the overbought zone.

  • Max Healthcare partners with Lakshdeep Group to acquire a 64% stake in Jaypee Healthcare (JHL), following National Company Law Appellate Tribunal (NCLAT) approval. The deal includes an option to acquire an additional 36% stake and involves raising up to Rs 1,000 crore in short-term loans.

  • Adani Enterprises is falling as the Swiss Court reportedly freezes $310 million (approx. Rs 2,600.4 crore) across multiple bank accounts in the country. This comes as part of the ongoing investigation which showed significant financial activity tied to investment structures in offshore tax havens, like the British Virgin Islands (BVI), Mauritius, and Bermuda that owned Adani stocks.

  • RailTel Corporation of India surges as it a receives a work order worth Rs 19.7 crore from Northern Railways to provide double distant signals for dedicated freight corridor feeder routes in the Lucknow division.

  • According to Prime Database, the Indian real estate sector is enjoying a remarkable year in the capital markets, having raised Rs 14,572 crore through equity issuances such as IPOs and QIPs by August 2024. This positions 2024 as the second-best year on record since the peak of 2007.

  • Foreign institutional investors buy equity worth Rs 8,909.3 crore in the market over the past week, according to Trendlyne's FII dashboard. Index options witness the highest outflow of Rs 32,336.2 crore from foreign investors. Meanwhile, mutual funds are net buyers in the equity market, investing Rs 727.9 crore during the same period.

  • Great Eastern Shipping Co sells its 2005-built Suezmax crude tanker, Jag Lalit, with a deadweight tonnage of about 158,344. The company will deliver the vessel to the new owner by Q3FY25.

  • Godfrey Phillips surges to its all-time high of Rs 7,431 as its board of directors are scheduled to meet on September 20 to consider issuing a 2-for-1 bonus shares to its equity shareholders.

  • Ford Motor plans to reopen a manufacturing plant in Tamil Nadu, India, specifically for exports. The company has submitted a letter of intent to the state's government, following discussions with the chief minister. Ford ceased domestic car production in India in 2021 due to low volumes and ended its export operations in 2022.

  • Sharekhan retains its 'Buy' call on Marico with an upgraded target price of Rs 821. This indicates a potential upside of 20.9%. The brokerage believes that the company's portfolio diversification to premium foods and personal care products will improve revenue growth in the long-term. It expects the company's revenue to grow at a CAGR of 11.4% over FY25-27.

  • Panacea Biotech surges to its 52-week high of Rs 317.9 per share as it receives a long-term loan worth $20 million from the US International Development Finance Corp (DFC). The proceeds from the loan will be used to expand the capacity of drug substance antigens manufacturing used in its hexavalent vaccine EasySix.

  • Transformers & Rectifiers (India) surges as it secures an order worth Rs 114 crore from Rajasthan Rajya Vidyut Prasaran Nigam (RRVPNL) to manufacture a 50 Mega Volt-Ampere (MVA), 132/33 Kilovolt (KV) power transformer.

  • Manappuram Finance and Muthoot Finance rise as high gold prices boost loan growth for gold loan companies and improve the loan-to-value ratio. Gold reached a record high after rising more than 2% yesterday, driven by the continued decline of the US dollar ahead of an anticipated Federal Reserve rate cut next week.

  • Zee Entertainment Enterprises rises as it receives approval from the National Company Law Tribunal (NCLT) to withdraw its merger application with Sony Pictures Networks India and Bangla Entertainment, reversing the previous sanction order from August 10, 2023.

  • HCL Technologies completes acquisition of Paris-based software company Zeenea SAS for aprrox. Rs 222.3 crore (€23.9 million). Zeenea’s platform offers metadata management, data cataloging, and governance solutions, enabling organizations to better manage their data assets.

  • BLS International signs an agreement to acquire a 100% stake in Citizenship Invest (CI), a Dubai-based advisory firm, for $31 million (approximately Rs 260 crore). This acquisition expands BLS's services in visas and consular support, particularly for long-term visas such as citizenship and residency.

  • The Solvent Extractors’ Association of India (SEA) reports that India's edible oil imports in August 2024 totaled 15.63 lakh tonnes, down 16% YoY. The share of palm oil imports decreased slightly to 57% from 59%, while the share of soft oils increased marginally to 43% from 41% compared to the previous year.

  • HPL Electric rises as it bags an order worth Rs 143.8 crore to supply smart and conventional meters for a repeat customer.

  • Tata Power rises as it signs a memorandum of understanding (MoU) with its subsidiary, Tata Power EV Charging Solutions, to set up 200 fast-charging stations for electric commercial vehicles (CVs) in Mumbai, Delhi, Chennai, Bengaluru, and Kolkata.

  • Bharat Petroleum Corp is rising as it plans a capex of Rs 1,138 crore to expand its capacity of the Cochin Coimbatore Karur (CCKPL) and Irugur Devangonthi (IDPL) pipelines. CCKPL's capacity will grow to 7 million metric tonnes per annum (MMTPA) from 3.3 MMTPA, while IDPL's capacity will increase to 3.5 MMTPA from 2.4 MMTPA.

  • State Bank of India (SBI) approves a Rs 10,050 crore loan for Damodar Valley Corporation (DVC) to support its 1,600 MW ultra-supercritical thermal power project in Koderma, Jharkhand. The Ministry of Power has designated this project as a key capacity addition initiative for 2030.

  • Godrej Agrovet surges as 24.7 lakh share (or a 1.3% stake), worth Rs 194.1 crore, reportedly change hands in a block deal at an average price of Rs 785 per share.

  • Patanjali Foods falls sharply as 1.2 crore shares (or a 3.3% stake), worth Rs 2,223.4 crore, reportedly change hands in a block deal. Patanjali Group is the likely seller in the transaction.

  • Nazara Technologies is rising as it acquires a 47.7% stake in Moonshine Technology for Rs 832 crore. The company will also invest an additional Rs 150 crore as primary capital in Moonshine in exchange for compulsory convertible preference shares.

  • H.G. Infra Engineering receives an order worth Rs 716.1 crore from Central Railway to construct a new broad-gauge line between the Dhule and Nardana sections under the engineering, procurement, and construction mode.

  • Nifty 50 was trading at 25,343.50 (-45.4, -0.2%) , BSE Sensex was trading at 83,091.55 (128.8, 0.2%) while the broader Nifty 500 was trading at 23,907.40 (0.1, 0%)

  • Market breadth is highly positive. Of the 1,931 stocks traded today, 1,322 were on the uptick, and 564 were down.

Riding High:

Largecap and midcap gainers today include Linde India Ltd. (8,229.35, 8.5%), IDBI Bank Ltd. (94.92, 7.9%) and Oracle Financial Services Software Ltd. (12,261.90, 5.9%).

Downers:

Largecap and midcap losers today include Zomato Ltd. (272.90, -3.9%), Patanjali Foods Ltd. (1,860.95, -3.7%) and Adani Power Ltd. (633.45, -2.7%).

Movers and Shakers

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

Top high volume gainers on BSE included Jubilant Pharmova Ltd. (1,191, 13.8%), Linde India Ltd. (8,229.35, 8.5%) and IDBI Bank Ltd. (94.92, 7.9%).

Top high volume loser on BSE was Patanjali Foods Ltd. (1,860.95, -3.7%).

Godrej Agrovet Ltd. (795.45, 1.8%) was trading at 31.1 times of weekly average. Home First Finance Company India Ltd. (1,203.15, 6.6%) and Westlife Foodworld Ltd. (853.30, 6.6%) were trading with volumes 24.1 and 14.9 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

57 stocks overperformed with 52 week highs,

Stocks touching their year highs included - Apollo Hospitals Enterprise Ltd. (7012, -0.7%), Aurobindo Pharma Ltd. (1,565, 0.2%) and Bajaj Auto Ltd. (11,737.15, 0.1%).

28 stocks climbed above their 200 day SMA including IIFL Finance Ltd. (521.45, 7.2%) and Westlife Foodworld Ltd. (853.30, 6.6%).

 
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The Baseline
12 Sep 2024
Between Nifty Smallcap, Midcap and Nifty50, one index comes on top | Screener: Stocks with PE lower than longer-term averages
By Tejas MD

On September 3, the Nifty 50 recorded its longest winning streak (14 days) since its inception in 1996. There have been other, shorter rallies like this before, and an analysis of the past six such events reveals a pattern: the index usually fell by 3% on average in the 30 days after a rally, according to Trendlyne's share price history and Samco. Whether this pattern will repeat this time around, is still an open question.

Nifty 50 has delivered negative returns historically after a long gaining streak

Indian indices have surged over the past year, driven by robust economic growth and lower inflation. While India’s growth story looks strong, current market valuations are beginning to worry both investors and analysts.

The Nifty 50 soared 26.3% over the past year. But the star performer has been the Nifty Smallcap 100, which posted a remarkable 50.8% gain in the same period.

Nifty Smallcap 100 remains the top gainer in the past year with a 50.8% rise

With such a rise across all three indices, is the stock market valuation a balloon about to burst?

In this week’s Analyticks,

  • Valuation check: We look into the Nifty Smallcap, Midcap and Nifty50
  • Screener: Stocks which have risen over the past quarter, with PE TTM lower than 3-year, 5-year, and 10-year averages

The winner in the middle: Nifty Midcap beats Smallcap and Nifty 50 indices

While the smallcap index has outperformed its peers over the past year, the longer-term view tells us a different story. When looking at 3, 5, and 10-year time frames, the Nifty Midcap 100 is the stronger performer by far, outshining both the Nifty Smallcap 100 and Nifty 50.

Nifty Midcap 100 outperforms peers in 10, 5 and 3 year gains

The Nifty Midcap 100 has historically commanded a higher price-to-earnings (PE) ratio due to its stronger growth potential. Currently, it has the highest PE among the three major indices, at 44.2. This elevated PE is also a result of a sharp drop in its earnings per share (EPS) following the Q4FY24 results.

Nifty Midcap 100's EPS falls in the past year, Nifty 50 on top in EPS growth

Q1FY25 results did not help the Nifty Midcap’s EPS to recover to March 2024 levels. This was due to companies like HPCL (Oil & Gas), Bharat Dynamics (Defence), Tata Chemicals(Commodity Chemicals) and BSE (Exchange) reporting a significant fall in their EPS. As a result, the Nifty Midcap continues to trade at a high PE. 

Bhaskar Laxminarayan, chief investment officer for Asia at Julius Baer says, “Every investor understands India's growth story, but valuation is a worry. Valuation of largecaps is not as much of a worry as with small and midcaps.”

Nifty 50 is analysts’ top pick, backed by historical data

When examining the valuations of the three indices, the Nifty Smallcap 100 stands out with a current PE of 30.3, well above its historical average. But this elevated valuation is somewhat supported by its strong performance in Q1FY25, where it posted the highest year-on-year (YoY) net profit growth among the three indices.

1 Yr Forward PE of indices below current PE

According to Trendlyne’s results dashboard, the revenue and net profit of the Nifty Smallcap 100 rose 11.9% and 50.9% YoY in Q1FY25 respectively. 

The big jump in net profit was mainly due to Raymond’s net profit rising 591% YoY due to income from discontinued operations. After excluding this, net profit growth for Nifty Smallcap comes to 15%. Nifty 50 and Nifty Midcap’s net profit increased by 6.8% and 9.2% respectively.

The strong growth in smallcaps is expected to continue, boosted by India's GDP growth. This is reflected in the smallcap index's much lower forward PE of 21, compared to its current PE of 30.3. The lower forward PE suggests that high profit growth is expected to continue for these smallcap companies, potentially justifying the current valuation. But a major earnings miss could trigger a sharp correction in the index.

In comparison, the Nifty 50 appears more reasonably valued. Its current PE is below its 5 and 10-year historical averages. It has a forward PE of a very modest 20.5, which makes it even more appealing valuation wise. Goldman Sachs’ Asia-Pacific strategist Sunil Koul said, “One of the key views we have is that you should see a rotation in the Indian market. It was the year of mid and small-caps, but that seems to be changing already over the past month.”

PSUs, auto and banking & finance sectors dominate the top gainer lists

Public sector units (PSUs) have had a great year, and it is not surprising to see some of these becoming star stocks in the Nifty 50, Nifty Midcap 100 and Nifty Smallcap 100 indices. Sectors that stand out are Banking and Finance and Auto. 

Banking and finance stocks are in focus with interest rate cuts on the horizon. The US Federal Reserve is expected to lower rates this month, and India’s RBI Monetary Policy Committee (MPC) will meet on October 9 to decide on its rate action.

Lower interest rates drive loan demand, benefiting banks. However, the top banks will face the challenge of keeping margins up as rates decline. Despite this, the banking and finance sector is attractively valued, with a relatively low PE ratio of 20.1, and the sector is up 10.1% over the past quarter.

Of the top five highest gainers in the Nifty 50, two are from the auto sector –  Bajaj Auto and Hero Motocorp. The auto sector has been on the rise with strong demand in the rural segment driving sales in the past quarter. The sector is also up 59.4% in the past year, according to Trendlyne’s sector dashboard, and has a PE ratio of 36.4 as opposed to Nifty 50’s 23.5. 

Banking and auto stocks outperform in the past year

The other three top gainers in the list include Bharat Petroleum Corp, Coal India and Adani Ports & Special Economic Zone. 

Among the Nifty Smallcap 100, Banking and Finance sector stocks appear twice. Housing and Urban Development Corp (HUDCO) and Multi Commodity Exchange of India (MCX) are from this sector. 

Other top-performing stocks include Rail Vikas Nigam (RVNL), Oil India, Suzlon Energy, Cochin Shipyard, NBCC, Prestige Estates Projects, Oracle Financial Services and Tata Investment Corp.  

Screener: Low PE stocks which have risen over the past quarter with PE TTM lower than 3-year, 5-year, and 10-year averages

Auto stocks’ TTM PE is lower than their 3yr average PE

PE ratio shows the stock price of the company relative to its earnings per share (EPS). It is widely used by investors and analysts reviewing a stock's relative valuation. This screener shows stocks with trailing twelve months (TTM) PE values less than average three-year, five-year and ten-year PE values. 

The screener is dominated by stocks from the automobiles & auto components, and pharmaceuticals & biotechnology sectors. Major stocks that feature in the screener are Great Eastern Shipping, JK Paper, Bharat Petroleum Corp, Tata Motors, Welspun Corp, Natco Pharma, Bombay Burmah Trading and Ceat.

Great Eastern Shipping’s TTM PE stands at 6.4 compared to its 3-year and 5-year PE at 7.3 and 8.4, respectively. The TTM PE ratio reflects the most recent earnings. The shipping company’s revenue and net profit increased by 18.1% YoY and 18% YoY, respectively in Q1FY25. This rise in earnings has led to a lower TTM PE ratio compared to the 3-year and 5-year average P/E ratios.

JK Paper also features in the screener with its TTM PE falling to 8 from its 3-year average of 10.3 and 5-year average of 8.2. This paper & paper products company’s TTM PE declined on the back of its stock price falling by 7.4% over the past month due to a disappointing Q1FY25 due to margin pressures. Despite a 16% rise in sales volume, net sales growth was offset by higher raw material costs, which rose 23% YoY. Other expenses increased 40% YoY due to an acquisition. Consequently, EBITDA margin fell by 1376 bps YoY to 16.4%, and net profit dropped 55% YoY to Rs 1.4 billion.

However, IDBI Capital expects the company’s margins to improve in Q2FY25 on account of price hikes across its product portfolio. 

You can find some popular screeners here.


 
Trendlyne Marketwatch
Trendlyne Marketwatch
12 Sep 2024
Market closes higher, Minda Corp's board approves raising Rs 1,000 crore via a QIP
By Trendlyne Analysis

Nifty 50 closed at 25,388.90 (470.5, 1.9%) , BSE Sensex closed at 82,962.71 (1,439.6, 1.8%) while the broader Nifty 500 closed at 23,907.35 (376.1, 1.6%). Market breadth is in the green. Of the 2,253 stocks traded today, 1,401 were in the positive territory and 823 were negative.

Indian indices closed in the green, with the benchmark Nifty 50 index touching a record high of 25,430.4 points. The Indian volatility index, Nifty VIX, declined by 3.3% and closed at 13.2 points. NBCC (India) signed a Rs 1,600 crore memorandum of understanding (MoU) with Mahanagar Telephone Nigam (MTNL) to jointly develop a 13.9 acre land parcel owned by MTNL in Delhi.

Nifty Midcap 100 and Nifty Smallcap 100 closed in the green, taking cues from the benchmark index. Nifty Metal and BSE Metal were among the top index gainers today. According to Trendlyne’s Sector dashboard, Telecom Services emerged as the best-performing sector of the day, with a jump of over 3.1%.

Asian indices closed mixed while European indices are trading in the green except Russia’s MOEX & RTSI. US index futures traded in the green, indicating a positive start to the trading session. Brent crude oil futures are trading in the green. U.S. stock futures climbed after a tech-driven rally on Wall Street in the previous session. Global semiconductor stocks also rose, with Nvidia's shares jumping 8.2% on Wednesday, marking its largest one-day gain in six weeks.

  • Granules India sees a short buildup in its September 26 futures series, with open interest increasing by 120.2% and a put-call ratio of 1.

  • Wanbury surges to its 5% upper circuit as it announces plans to launch two new active pharmaceutical ingredients, Dextromethorphan, a cough suppressant, and Ketamine, an anaesthetic used for medical purposes.

  • Ashika Credit Capital rises to its all-time high of Rs 308.6 per share as its board of directors schedules to meet on Tuesday to consider a fundraising proposal by issuing equity shares or convertible warrants.

  • Thermax rises sharply as it signs a license agreement with Ceres Power to manufacture and provide green hydrogen solutions using Ceres solid oxide electrolysis cell (SOEC) technology, covering stack modules and electrolyser systems.

  • Nifty 50 rises to a record high of 25,430.2 today, fueled by gains in financial and IT stocks, following economic data from the US that alleviated growth concerns.

  • HDFC Bank rises as reports emerge the company is in talks with global banks to offload loans worth $1 billion (approx. Rs 8,398 crore) in a bid to reduce its credit book and improve the credit-to-deposit ratio. Notable banks in discussions with HDFC Bank include Barclays Plc, Citigroup, JPMorgan Chase, and ICICI Bank.

  • Bharti Airtel rises to a new all-time high of Rs 1,609.2 after signing a deal with Sparkle for additional capacity on the Blue-Raman submarine cable system to diversify its global undersea cable network. Airtel will further diversify its global network and meet growing data demands in India and nearby regions.

  • Consumer durables stocks like Kalyan Jewellers, Aditya Birla Fashion & Retail, Havells India, and Amber Enterprises rise more than 1% in trade. All constituents of the broader BSE Consumer Durables index are trading in the green, helping it touch its all-time high of 66,009.4.

  • UBS maintains its ‘Buy’ rating on Zomato with a target price of Rs 283.6, citing optimism about the company’s growth. The brokerage highlights that Zomato vs Swiggy is a push-and-pull scenario, continuing into Q2FY25. It projects the company’s GMV to grow by 7% QoQ in Q2.

  • Varun Beverages rises sharply as it trades ex-stock split. The company had approved a 2:5 stock split, reducing the share price to Rs 635.5 from Rs 1,569.2, increasing the float in the market.

  • Minda Corp is rising as its board of directors approves raising Rs 1,000 crore through a preferential issue, qualified institutional placement (QIP), or other modes.

  • CE Info Systems rises as it partners with Zoomcar to offer car rental services on the Mappls app. The collaboration will leverage Zoomcar's fleet and Mappls' AI-powered integration to provide road trip and travel solutions.

  • Maruti Suzuki introduces a new CNG variant of the Swift hatchback in India, priced between Rs 8.2-9.2 lakh. This move is part of its eco-friendly strategy following the discontinuation of diesel models. The company aims to sell six lakh CNG vehicles by the end of FY25.

  • Kalpataru Projects International rises as it bags multiple orders worth Rs 2,774 crore from the domestic and international markets. The orders include transmission and distribution (T&D) projects overseas, and engineering, procurement, and construction (EPC) contracts for airport extensions and a residential building in India.

  • Shree Tirupati Balajee Agro Trading Company's shares debut on the bourses at an 8.4% premium to the issue price of Rs 83. The Rs 169.7 crore IPO received bids for 55.8 times the total shares on offer.

  • Bharat Petroleum Corp rises as its exploration and production arm, and its 50:50 joint venture (JV) partner, Indian Oil Corp, receives a production concession from the Supreme Council for Financial & Economic Affairs (SCFEA). The concession is for a 6,162 square kilometer (sq km) of land and gives the JV equity rights to the oil procured from the land.

  • Ola Electric Mobility, JBM Auto, and Ashok Leyland, along with other EV automakers, rise as the government approves a new Rs 10,900 crore subsidy scheme for the sector. The two-year scheme, called PM E-Drive, focuses on two-wheelers, three-wheelers, and buses, supporting 24.8 lakh electric two-wheelers, 3.2 lakh electric three-wheelers, and 14,028 electric buses.

  • Adani Ports & Special Economic Zone rises as it signs a 30-year concession agreement with Deendayal Port Authority to operate a 5.7 million tonne capacity multipurpose terminal in Kandla, Gujarat. The company secures the contract by offering Rs 200 per ton royalty.

  • Cholamandalam Investment & Finance surges to its all-time high of Rs 1,562.4 as Jefferies reportedly maintains 'Buy' on the stock with an upgraded target price of Rs 1,800 per share. This indicates a potential upside of 16%. The brokerage believes the company will benefit from the rate-cut cycle owing to its strong auto loan portfolio and focus on building a network in the non-auto business.

  • Inox Wind rises sharply as its subsidiary, Resco Global Wind Services, completes a Rs 350 crore equity raise through a preferential allotment to non-promoter investors. The funds will be used to scale up its wind energy business in India.

  • The Open Network for Digital Commerce (ONDC) has reached a new milestone of 100 million transactions in under 18 months. Namma Yatri, a ride-hailing platform on ONDC, has topped a cumulative $100 million (Rs 839.8 crore) in driver earnings and 50 million trips since its inception. CEO T Koshy highlights the platform's target to democratize e-commerce, ensuring equal participation for all segments of society, merchants, and buyers.

  • Honasa Consumer falls sharply as 3.5 crore shares (10.9% stake), worth approximately Rs 1,763.3 crore, change hands in a block deal at an average price of Rs 500 per share. Peak XV Partners, Sequoia Capital, Redwood Trust, Fireside Ventures, Stellaris Ventures, and Sofina Ventures are reportedly the sellers in the transaction.

  • Hindustan Petroleum Corp is rising as its board of directors approves the construction of a pipeline from Visakh to Raipur with an estimated capex of Rs 2,212 crore. The board has also revised its capex for the Visakh Refinery modernization project to Rs 30,609 crore, expected to be operational by October.

  • NBCC (India) rises sharply as it signs a Rs 1,600 crore memorandum of understanding (MoU) with Mahanagar Telephone Nigam (MTNL) to jointly develop a residential or commercial space at a 13.9-acre land parcel owned by MTNL in Delhi.

  • Tata Steel rises sharply as it signs a grant funding agreement worth £500 million (approx Rs 5,475.1 crore) with the UK government for its £1.3 billion project to install an electric arc furnace at Port Talbot.

  • Markets rise on early trading, Nifty 50 was trading at 25,016.35 (97.9, 0.4%), BSE Sensex was trading at 81,930.18 (407.0, 0.5%) while the broader Nifty 500 was trading at 23,665.85 (134.6, 0.6%).

  • Market breadth is ticking up strongly. Of the 1,926 stocks traded today, 1,436 were gainers and 450 were losers.

Riding High:

Largecap and midcap gainers today include Gujarat Fluorochemicals Ltd. (4,296.45, 6.5%), CG Power and Industrial Solutions Ltd. (729.15, 5.7%) and Zomato Ltd. (283.90, 4.5%).

Downers:

Largecap and midcap losers today include Biocon Ltd. (376.60, -2.3%), FSN E-Commerce Ventures Ltd. (207.69, -2%) and YES Bank Ltd. (23.43, -1.6%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Kaynes Technology India Ltd. (5,165.85, 10.8%), Engineers India Ltd. (226.91, 7.9%) and FDC Ltd. (612.65, 6.0%).

Top high volume losers on BSE were Granules India Ltd. (564.90, -16.5%), Honasa Consumer Ltd. (493.85, -5.4%) and Kama Holdings Ltd. (2,672.05, -0.9%).

Krishna Institute of Medical Sciences Ltd. (2,735.90, 2.6%) was trading at 10.0 times of weekly average. JBM Auto Ltd. (1,994.45, 3.6%) and CG Power and Industrial Solutions Ltd. (729.15, 5.7%) were trading with volumes 8.9 and 5.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

43 stocks took off, crossing 52 week highs,

Stocks touching their year highs included - Ajanta Pharma Ltd. (3,390, 0%), Apollo Hospitals Enterprise Ltd. (7,061.80, 2.3%) and Bajaj Auto Ltd. (11,723.50, 2.7%).

15 stocks climbed above their 200 day SMA including Engineers India Ltd. (226.91, 7.9%) and L&T Finance Ltd. (174.36, 4.9%). 10 stocks slipped below their 200 SMA including Tamilnad Mercantile Bank Ltd. (474.90, -0.8%) and ITI Ltd. (291.45, -0.6%).

 
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The Baseline
12 Sep 2024
Five stocks to buy from analysts this week - September 12, 2024
By Ruchir Sankhla

1. Bajaj Auto:

Sharekhan reiterates its ‘Buy’ rating for this 2/3 wheeler manufacturer, setting a target price of Rs 12,584, a potential upside of 7.8%. The analyst highlights that the company has seen a 9.8% increase in sales in FY25, with domestic volumes rising 12.6% and export volumes up 5.4%. While exports remain modest, recovery in the Nigerian market could drive further growth. Its CNG motorcycle, Freedom 125, is gaining popularity, and production capacity is set to expand to 50,000 units per month by January 2025.

The company is also strengthening its position in the electric vehicle (EV) market, holding a 14% share in the domestic electric 2-wheeler segment and a 36% share in the electric 3-wheeler segment. Upcoming EV product launches are expected to support future growth.

The brokerage expects the company’s volume growth to improve, supported by rural market recovery, strong 125cc sales, and festive season demand, while export recovery and CNG expansion should boost growth. The analysts anticipate a EBITDA CAGR of 19% over FY25-26 and EV/EBITDA to be 22.3 times in FY26.

2. Godrej Consumer Products:

Motilal Oswal maintains a ‘Buy’ rating on this personal products maker with a target price of Rs 1,700. This indicates an upside of 12.7%. Analysts Naveen Trivedi, Pratik Prajapati and Tanu Jindal highlight Godrej Consumer Products’ (GPCL)  strategic moves in FY24 across various geographies. In India, the company launched ‘Project Vistaar’ to improve its rural reach and expand sales channels. In Indonesia, it has adopted a distributor-led model in general trade, which it said lowered its operational costs. Additionally, GCPL’s focus on e-commerce in the US drove 15%+ growth, and now accounts for 8% of its total business.

GCPL aims to drive growth in rural markets by introducing affordable products for price-sensitive consumers. It has set up a transportation management system to streamline its delivery routes, improve demand forecasting, and reduce excess inventory.

Trivedi, Prajapati and Jindal are upbeat about GCPL’s acquisition of Raymond Consumer Care, which has added brands like Park Avenue to its portfolio. The company reduced RCCL’s inventory from 90 to 15-20 days, improving operational efficiency despite a 25% revenue drop in FY24 as it cuts excess stock. The management anticipates that the segment will generate Rs 600 crore in revenue in FY25.

3. AIA Engineering:

Asit C Mehta initiates a ‘Buy’ rating on this other industrial goods company with a target price of Rs 5,106, suggesting a upside potential of 18.2%. Analyst Abhinav Kapadia says that the company sees growth in supplying more advanced materials for mining. These materials are used to grind down gold, copper, and iron ore more efficiently than traditional ones. Currently, less than 15% of the market uses these advanced materials, suggesting a large opportunity to increase usage.

Analysts say AIA Engineering's new mill liner plant improves its products with less wear, better output, and lower costs. AIA is expected to gain a strong position in the global mining industry, similar to its leadership in the cement sector. Its partnerships with EE Milling Solutions and the purchase of MPS Australia have helped improve equipment design and cut costs for customers.

Kapadia highlighted that the company achieved a revenue, EBITDA, and PAT CAGR of 19%, 20%, and 27%, respectively, from FY21 to FY24. He expects EBITDA and PAT margins to remain stable at 29% and 24% in FY25 and FY26, despite export challenges arising from the ongoing Red Sea crisis.

4. Awfis Space Solutions:

Edelweiss maintains ‘Buy’ rating on this consumer services company with a target price of Rs 1,013, indicating a potential upside of 40%. Analysts Amit Agarwal and Rishith Shah point out that the company is set to benefit from favorable market dynamics, including a 25-27% CAGR in demand for flexible office space due to hybrid working models, increased global capability centres (GCCs), and decentralization of office space by larger firms. The company expects the average seat rental to rise by 5-6% annually.

The analysts note that the company plans to add 40,000 seats in FY25, expanding from its current inventory of 95,030 seats, and has a capex budget of around Rs 140 crore for fitouts. Their expansion strategy focuses on Tier I and Tier II cities, targeting smaller 100-200 seat centers for better pricing. The firm uses a capital-light managed aggregation model, sharing fitout costs with landlords to boost returns while maintaining an asset-light approach, without owning properties

Agarwal and Shah forecast a revenue, EBITDA, and PAT CAGR of 40.1%, 68.6%, and 92.3% respectively for FY25-27, excluding Ind AS 116 adjustments.

5. Va Tech Wabag:

ICICI Securities maintains its ‘Buy’ rating on Va Tech Wabag with a target price of Rs 1,541, suggesting an upside of 8.2%. Analysts Mohit Kumar, Abhijeet Singh and Nidhi Shah highlight that this non-electrical utilities company recently secured a contract from the Middle East for a 300 million litre per day (MLD) desalination plant. 

This greenfield project, located on the west coast of Saudi Arabia near Yanbu al-Bahr, is set to be completed in 30 months and is valued at Rs 2700 crore, exceeding FY24 engineering, procurement, and construction (EPC) revenues of Rs 2300 crore.

Analysts say that with this order, Wabag’s EPC order book is expected to rise to Rs 7800 crore, improving the book-to-bill ratio to 3.4 times. The operation and maintenance order book stands at Rs 4500 crore. Revenue growth estimates for FY26 have been increased to 20% from earlier projection of 15%. Wabag also has a strong pipeline in the Middle East, having bid for projects worth $100 crore and pre-qualified for a 1000 MLD desalination project.

Kumar, Singh, and Shah expect revenue and earnings CAGR of 15% and 20%, respectively, along with a 300 basis point expansion in return on equity from FY25 to FY26, driven by order book expansion, improved execution, and enhanced margins.

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

(You can find all analyst picks here)

 
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The Baseline
11 Sep 2024
Chart of the Week: Crude oil prices at 52-week low boosts prospects for India
By Satyam Kumar

Crude oil prices fell below $70, marking a new 52-week low on September 10 due to oversupply concerns and a weak demand outlook. A week ago, OPEC+ announced it would postpone its planned oil supply increase until the start of 2025.

OPEC, or the Organization of the Petroleum Exporting Countries, was established in 1960 by Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela. The organization has since grown to include 13 member nations. OPEC operates like a cartel, regularly meeting to set oil production targets and coordinate output to manage global oil prices.

In 2016, in response to falling oil prices driven by a surge in United States crude production—also known as shale oil—OPEC signed an agreement with 10 other oil-producing countries, forming OPEC+. Among these countries was Russia, the world’s third-largest oil producer accounting for more than 10% of global production.

This week’s Chart of the Week looks at the reasons behind falling crude oil prices and how these trends may affect India and its equity markets.

Weak demand in the US & China and an increasing supply of US crude led to decline in crude prices

US increases crude production to all-time high levels, while OPEC+ cuts

Oil posted its biggest weekly drop in 11 months as a weak US jobs report added to concerns about tepid demand in the world’s largest consumer of crude. Oil prices have trended lower since early July, with weakness in the economies of China and the US — the top two oil consumers — creating fears about demand.

According to U.S. Energy, the production of crude oil in the United States, also known as shale oil has steadily risen in recent years to all-time high levels, adding supply pressure and messing up OPEC’s calculations as oil demand weakens. 

Falling crude oil prices a boost for the Indian economy

India imports more than 80% of its crude oil needs, so falling oil prices will significantly reduce the country's import bill. This will help narrow the trade deficit and boost foreign exchange reserves. 

High oil prices typically lead to a stronger US dollar against other currencies, which puts downward pressure on the Indian rupee. This is because high oil prices drive up demand for dollars as it is the preferred currency used in oil trade across the globe–so much so that it is referred to as the petrodollar trade. So falling crude oil prices can alleviate the pressure on the rupee.

According to India Today, the government is considering lowering oil prices to reduce inflation by bringing down energy costs. High retail prices for petrol and diesel tend to drive up domestic commodity prices, as increased oil costs raise production and transportation expenses across various sectors, squeezing profit margins. As the world's fourth-largest energy consumer, behind China, the US, and the European Union, India is especially sensitive to shifts in global oil prices.

Indian oil marketing companies & airlines would directly benefit from lower crude oil prices

Oil marketing and distribution companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation stand to benefit from falling crude oil prices, as it is a key input material. Despite crude price fluctuations, retail fuel prices have remained near Rs 100 for the past few years. As a result, declining crude prices, coupled with stable retail prices, will significantly enhance their profit margins.

These companies saw their net profit surge nearly tenfold during the Russia-Ukraine war. This was due to US sanctions on Russian crude, which left Russia with limited buyers and forced it to sell at discounted rates. Consequently, India's crude imports from Russia skyrocketed, increasing from $2.3 billion in 2021 to $25.5 billion in 2022, and nearly doubling again to $48.6 billion in 2023. 

Although Russia still supplies 40% of India’s crude oil, the price advantage has lessened due to higher insurance and freight costs.

Similarly, for airlines like InterGlobe Aviation (IndiGo), fuel expenses make up more than 30% of its total expenses. Lower crude oil prices can help reduce operating costs and boost profit margins.

Paint, tyre and lubricant manufacturers that use crude oil derivatives as raw materials would witness higher gross profit

Paint manufacturers such as Asian Paints, Berger Paints (India), and Kansai Nerolac Paints will benefit from lower crude oil prices, as more than 40% of their revenue is spent on raw materials, many of which are crude oil derivatives. Gulf Oil Lubricants India will also see a reduction in operating costs in the coming quarters if crude oil prices remain low.

On the other hand, rubber prices have risen by 24% over the past year, squeezing profit margins for tyre manufacturers. Companies like Balkrishna Industries, MRF, Apollo Tyres, and Ceat have taken price hikes over the past year to offset rising costs. However, as the prices of crude oil derivatives decline with falling oil prices, rubber costs are expected to decrease, which will, in turn, benefit these tyre manufacturers.

The recent decline in crude oil prices offers significant advantages to various sectors in India. Overall, crude oil prices at or below $70, is good for the Indian economy. However, global economic dynamics, particularly demand trends in the US and China, will be critical in shaping the long-term outlook for crude prices and their impact on India.