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The Baseline
15 Sep 2023
Five Interesting Stocks Today

1. Escorts Kubota:

This commercial vehicles company has risen by 21.6% over the past month, on the back of reports that the government is planning a production-linked incentive (PLI) scheme for the railway industry. The capex for the PLI scheme is expected to be around Rs 800-1,200 crore over the next three years. The scheme aims to increase domestic manufacturing of wheels, brakes and transmission systems for Linke Hofmann Busch (LHB) and Vande Bharat train sets.

Escorts Kubota’s order book in the railway segment stands at Rs 950 crore as of Q1FY24 and contributes to 10% of the company’s overall revenue. The management is also focusing on expansion and diversification of the product lines in this segment. It  expects an increase in orders due to the PLI scheme, and this has helped the company appear in a screener of stocks that are up by more than 20% over the past month.

Axis Securities maintains its ‘Buy’ rating on the stock with an upgraded target price of Rs 2,900 per share. The brokerage believes that the introduction of new products, higher revenue from spare parts and exports will aid double-digit growth in the company’s revenue. It also expects the company’s EBITDA margins from all the segments to expand on the back of operating leverage and improvement in the product mix. The brokerage expects its revenue to grow at a CAGR of 12.4% over FY23-26.

2. KEC International: 

This power transmission equipment manufacturer hit its all-time high of Rs 747.7 on Wednesday after announcing multiple order wins during the week. The company won orders worth Rs 1,021 crore on Tuesday, including the construction of a data centre in Western India, the establishment of a manufacturing facility for an FMCG company, transmission and distribution projects from India and the Americas, and overseas order for the supply of cables. It also landed a Rs 1,145 crore order on Wednesday for the design, supply and installation of an overhead transmission line in Saudi Arabia.

KEC International has risen by 7.6% over the past month, outperforming the benchmark index. This surge followed a 36.5% YoY increase in its Q1FY24 profit to Rs 42.3 crore (beating Trendlyne Forecaster’s estimate by 9.9%). Its revenue also grew by 27.9% YoY on the back of a 71% YoY growth in the transmission and distribution (T&D) segment and a 60% YoY rise in the civil segment. The company also appears in a screener for stocks with improving cash flow. 

Vimal Kejriwal, the Managing Director of KEC, said, “Our year-to-date order intake has surpassed Rs 7,500 crore, a robust growth of 30% YoY.” The total order book currently stands at more than Rs 35,000 crore. Management expects to secure orders worth Rs 25,000 crore during FY24. The sector is also likely to benefit from increased government capex spending and a revival in private capital spending. With improving T&D execution and a healthy order book, Geojit BNP Paribas remains positive on KEC International on a long-term basis.

3. Larsen and Toubro:

This construction and engineering firm has risen by 9.4% over the past month, following its announcement of an increased buyback price and an order win worth $3.9 billion from Saudi Aramco.

The company rose 1.7% on Tuesday after it announced an increase in its buyback price to Rs 3,200 from Rs 3,000. At the same time, it reduced the number of shares for the buyback to 3.1 crore from the earlier 3.3 crore. The buyback is set to start on September 18. Due to the recent rise in its share price, the firm features in a screener of stocks trading above their short, medium and long-term moving averages.

The company’s order win from Saudi Aramco is for the second phase expansion of the Jafurah Unconventional Gas Field in Saudi Arabia. ICICI Securities projects that L&T could achieve over 20% YoY increase in order inflow in Q2, excluding services, with this order win. Although the company has given an order inflow growth guidance of 15% YoY in FY24, the brokerage believes that this figure is understated. Accordingly, it has upgraded the stock to ‘Buy’ from ‘Add’ and revised the target price to Rs 3,141. 

On Thursday, L&T also announced a partnership with BAE Systems Inc. to introduce the BvS10, an Articulated All-Terrain Vehicle (AATV), to the Indian market as part of the ‘Make in India’ programme. 

4. Praj Industries

This industrial machinery manufacturer rose by 14.4% over the week ending Friday, hitting a 52-week high of Rs 609.8. It started rising following the launch of the Global Biofuel Alliance (GBA) by Indian Prime Minister Narendra Modi at the G20 Summit on September 11. 

GBA aims to accelerate the global shift towards biofuels and reduce dependence on fossil fuels. 

The street expects Praj to benefit from this as it has a 50-55% market share in the domestic ethanol plant sector. Additionally, it has been expanding its global footprint, with its international order inflow now  35% of total orders in Q1FY24. This is a significant increase from 19% in Q1FY23. 

The Indian government has reiterated its target to blend 20% ethanol with petrol by 2025, a jump from the current 11.5%. Praj Industries is well-placed to capitalise on the Centre’s push to increase biofuel usage. On July 6, the company agreed to form a joint venture with Indian Oil Corp to strengthen biofuel capacities in India.

As of Q1FY24, the firm’s order book stands at Rs 3,780 crore, of which the bio-energy segment accounts for 78%, followed by engineering at 17% and hi-purity at 5%. The company has also begun to gain traction in the compressed biogas (CBG) market, securing orders for five CBG plants worth Rs 500 crore in total.

Prabhudas Lilladher is optimistic about the firm’s long-term growth prospects and expects its margins to remain healthy due to a pickup in export orders and normalising commodity prices. According to Trendlyne’s Forecaster, the stock holds a consensus recommendation of ‘Strong Buy’ from six analysts. 

5. Narayana Hrudayalaya: 

This healthcare facilities stock has outperformed the Nifty Healthcare index by 9.6% over the past month, rising 9.8% in just the past week, according to Trendlyne’s Technicals. This surge comes as the company announces its entry into the health insurance segment. The firm expects approval from the Insurance Regulatory and Development Authority of India (IRDAI) by the end of 2023. Narayana Hrudayalaya also plans to open clinics and pharmacies across India to increase its revenue sources. According to Vice-Chairman Viren Shetty, this “expansion into health insurance, clinics and pharmacies will integrate its hospital chains end-to-end and improve profitability”.

The firm reported a 19.4% revenue growth in Q1FY24, backed by improved surgical volumes and higher revenue per patient. Hospitals in the Bangalore region clocked 22% revenue growth YoY, followed by Mysore-Shivamogga hospitals at 16%. Its Cayman Islands facility registered a 32% YoY growth amid increased volumes in its newly opened oncology block. EBITDA margins also improved by 470 bps YoY due to better price realisation per bed. 

The company has a capex plan of Rs 1,110 crore for FY24, mainly for assets with a lower turnaround time like diagnostics, clinics, and enhanced bed capacity. The stock shows up in a screener for companies with high TTM EPS growth

Geojit BNP Paribas upgrades its rating for the company to 'Accumulate' from 'Hold', citing the firm’s focus on  revenue growth through capacity expansion and the margin-accretive revenue growth from its Cayman Islands operations. 

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
15 Sep 2023
Markets closes higher, R R Kabel's IPO gets bids for 18.7X of available shares

Trendlyne Analysis

Nifty 50 closed at 20,192.35 (89.3, 0.4%), BSE Sensex closed at 67,838.63 (319.6, 0.5%) while the broader Nifty 500 closed at 17665.80 (62.3, 0.4%). Market breadth is horizontal. Of the 1,915 stocks traded today, 967 were on the uptrend, and 909 went down.

Indian indices extended their gains from the afternoon session and closed in the green. The Nifty 50 hit its all-time high of 20,222.5 but closed at 20,192.4 points. The Indian volatility index, Nifty VIX, fell 3.7% and closed at 10.9 points. Ashok Leyland closed in the green as it signed an MoU with the Government of Uttar Pradesh to set up an integrated bus plant to produce electric buses in the state, with an initial investment of Rs 200 crore.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, taking cues from the benchmark index. Nifty Auto and Nifty Bank closed higher than their Thursday close. According to Trendlyne's sector dashboard, Fertilizers was the top-performing sector of the day as it rose 3%.

European stocks traded higher amid positive global cues. Major Asian indices closed up, except for China’s Shanghai SE Composite Index closing in the red. US index futures traded flat, indicating a cautious start to the trading session. Brent crude oil futures recovered from their day’s low and traded flat after rising 2.1% on Thursday.

  • Apollo Tyres sees a short buildup in its September 28 future series as its open interest rises 24.7% with a put-call ratio of 0.4.

  • Siyaram Silk Mills surges to its 52-week high of Rs 635 per share as its board of directors raises its buyback price to Rs 720 from Rs 650 per share. To compensate for this rise in price, the board has also reduced the maximum number of shares to be bought back to 15 lakh from 16.6 lakh.

  • Zydus Lifesciences rises as it receives final approval from the USFDA for its Norelgestromin and Ethinyl Estradiol Transdermal System, which is used to prevent pregnancy. This is the third hormonal transdermal patch to be approved from Zydus’ generics portfolio and has annual sales of $330 million (Rs 2,742.8 crore) in the United States (IQVIA MAT July 2023). It appears in a screener for stocks with strong momentum.

  • ICICI Securities maintains its ‘Buy’ rating on Archean Chemical Industries with a target price of Rs 750. This implies an upside of 23%. The brokerage believes that the company is well-placed to benefit from the likely recovery in bromine volume and prices by the end of FY24. It expects the firm’s net profit to grow at a CAGR of 36.6% over FY23-25.

  • Sudhir Singh, Cheif Executive Officer of Coforge, sells a 0.3% stake in the company for approx Rs 98.1 crore on Thursday.

  • Telecommunications equipment, telecom services and software & services sectors rise the most over the past week by 20.4%, 5% and 2.7% respectively.

  • Samhi Hotels' Rs 1,370.1 crore IPO gets bids for 0.1X the available 6.3 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 0.6X the available 1.1 crore shares on offer.

  • Zaggle Prepaid Ocean Services' Rs 563.4 crore IPO gets bids for 0.4X the available 1.9 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 1.9X the available 35.6 lakh shares on offer.

  • According to reports, TotalEnergies is in talks to invest roughly Rs 581.3 crore in renewable energy projects developed by Adani Green Energy as part of the efforts to grow its portfolio of clean energy projects. The French oil major is already the second largest shareholder in Adani Green Energy, holding a 19.8% stake.

  • SpiceJet rises as it complies with the Supreme Court's directive, completing a payment of $1.5 million (approximately Rs 12.5 crore) to Credit Suisse. The company appears in a screener for stocks with strong momentum.

  • Ashok Leyland is rising as it signs an MoU with the Government of Uttar Pradesh to set up an integrated bus plant to produce electric buses in the state, with an initial investment of Rs 200 crore. The stock shows up in a screener for companies with high TTM EPS growth.

  • R R Kabel's Rs 1,964 crore IPO gets bids for 18.7X the available 1.3 crore shares on offer on the Third day of bidding. The retail investor quota gets bids for 2.1X the available 66 lakh shares on offer.

  • Dixon Technologies is reportedly set to open a new factory spread over 3 lakh square feet on the outskirts of New Delhi. The firm is expected to invest more than Rs 400 crore in the factory over three years and will largely produce Xiaomi smartphones.

  • Oil India plans to invest Rs 25,000 crore in green hydrogen, solar, geothermal energy, 2G ethanol facilities, compressed biogas plants, and carbon capture utilisation & storage (CCUS) by 2040. Ranjit Rath, the company's Chairman and Managing Director, says its subsidiary, Numaligarh Refinery (NRL), has placed an order to switch from grey to green hydrogen, aiming for an annual capacity of 20 kilo tonnes.

  • Foreign institutional investors sell stocks worth Rs 1,254.3 crore in the equity market over the past week, according to Trendlyne's FII dashboard. Meanwhile, index options witness the highest outflow of Rs 46,714.5 crore from foreign investors.

  • IT stocks like Coforge, HCL Technologies, Mphasis, Tata Consultancy Services and Wipro are rising in trade. Barring Persistent Systems, all the other constituents of the broader sectoral index, Nifty IT, are trading in the green.

  • HDFC Securities maintains its 'Reduce' rating on Hindustan Unilever with a target price of Rs 2,550 per share. This indicates a potential upside of 3.2%. The brokerage believes that the company introducing price cuts to adjust for the falling raw material prices will stunt its growth in profitability in the near-term. It expects the company's revenue to grow at a CAGR of 6.8% over FY23-26.

  • Restaurant Brands Asia touches its 52-week high today as 12.5 crore shares (25.4% equity), amounting to Rs 1,494 crore, reportedly change hands in a block deal.

  • GMM Pfaudler rises more than 4% as its US subsidiary, GMM Pfaudler US, acquires 100% share capital of MixPro, a US-based company in the business of professional mixing equipment & other industrial applications. The deal is valued at Rs 58 crore. It appears on a screenerfor stocks with high DVM scores.

  • Bharat Forge touches its all-time high of Rs 1,148 as Paramount, a UAE-based global aerospace and technology company, announces its collaboration with the firm and its arm, Kalyani Strategic Systems. The partnership aims to produce armoured vehicles in India for its global customers. The company shows up in a screener for stocks with strong momentum.

  • Auto stocks like Bajaj Auto, Hero MotoCorp, Tube Investments of India and Tata Motors are rising in trade. All constituents of the broader BSE Auto index are also trading in the green.

  • BofA upgrades its rating on Bajaj Auto to 'Buy' and raises the target price to Rs 5,550 from Rs 5,100. The brokerage believes that the company's business segments are well-placed for growth in FY25, with a revenue growth of 14-15% CAGR for FY23-26. It feels that the firm's business strategy is suited to deal with structural and cyclical factors.

  • Lemon Tree Hotels rises to its all-time high of Rs 125.5 per share as it signs two properties in Gujarat and Nepal. The Gujarat property in Junagadh, under the Lemon Tree Hotels brand, is expected to be operational in FY25, while the other, named Tigerland Safari, is in Chitwan and will become operational later in FY24.

  • Strides Pharma Science rises to a new 52-week high of Rs 522.8 as its subsidiary, Strides Pharma Global, receives tentative approval from the US FDA for Dolutegravir 50mg tablets. The drug is used for antiretroviral therapy in HIV patients and has a market of $ 1,345 million. The company appears in ascreener of stocks with strong momentum.

  • According to reports, 30.2 lakh shares of Five-Star Business Finance, amounting to Rs 211 crore, change hands in a block deal.

  • Shyam Metalics and Energy's promoters, Subham Buildwell and Narantak Dealcomm, sell a 6.3% stake in the company on Thursday.

  • Shakti Pumps (India) receives an order worth Rs 293 crore from Uttar Pradesh's agriculture department for the supply of 10,000 pumps as part of the PM-KUSUM III scheme under component-B.

  • Patel Engineering rises as its joint venture bags an order worth Rs 250 crore from Maharashtra Krishna Valley Development Corporation, Pune. The company's share in the order will be Rs 100 crore. The project involves the construction of a pipeline distribution network in Satara. The company appears in a screener of stocks with improving net profit.

  • Infosys is rising as it signs a memorandum of understanding (MoU) with a global client to provide business operation services through its platforms and AI services. The client is expected to spend a total of $1.5 billion (approximately Rs 12,461.6 crore) over the next 15 years.

Riding High:

Largecap and midcap gainers today include Vodafone Idea Ltd. (11.70, 7.34%), General Insurance Corporation of India (235.15, 7.11%) and Indian Overseas Bank (39.50, 6.76%).

Downers:

Largecap and midcap losers today include Supreme Industries Ltd. (4,120.15, -4.07%), InterGlobe Aviation Ltd. (2,391.45, -2.97%) and Indian Oil Corporation Ltd. (91.95, -2.85%).

Movers and Shakers

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

Top high volume gainers on BSE included UCO Bank (40.40, 8.75%), Triveni Turbine Ltd. (433.35, 8.69%) and General Insurance Corporation of India (235.15, 7.11%).

Top high volume losers on BSE were Krishna Institute of Medical Sciences Ltd. (2,021.70, -5.53%), ZF Commercial Vehicle Control Systems India Ltd. (15,410.70, -5.46%) and 360 One Wam Ltd. (526.65, -3.83%).

Hatsun Agro Products Ltd. (1,186.45, -0.44%) was trading at 59.1 times of weekly average. Restaurant Brands Asia Ltd. (128.35, 6.69%) and The New India Assurance Company Ltd. (143.20, 6.75%) were trading with volumes 16.4 and 13.5 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

50 stocks overperformed with 52 week highs,

Stocks touching their year highs included - Axis Bank Ltd. (1,027.15, 0.61%), Bajaj Auto Ltd. (5,130.50, 5.90%) and Bank of India (105.75, -1.40%).

6 stocks climbed above their 200 day SMA including Aptus Value Housing Finance India Ltd. (278.45, 3.65%) and Aavas Financiers Ltd. (1,690.00, 1.82%). 2 stocks slipped below their 200 SMA including Britannia Industries Ltd. (4,532.85, -0.91%) and Vinati Organics Ltd. (1,893.10, -0.12%).

 
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The Baseline
14 Sep 2023
Chart of the week: Banking & finance sector leads IPOs in 2023, with stellar listing gains
By Akshat Singh

Initial Public Offerings (IPOs) are making a strong comeback as Indian markets recover from their declines in early 2023. Despite a 4.5% drop in Nifty 50 during January and February, the benchmark index has rallied 10.3% in the year to date. Market sentiment is crucial for IPO success, which explains why companies like Mama Earth and Ola postponed their IPOs amid 2022's negative market sentiment. Now, they are considering a launch in 2023’s more favourable conditions.

Currently, of the 24 mainline IPOs released in 2023, only Radiant Cash Management is trading below its issue price. 

In this edition of the Chart of the Week, we look at the most successful and least successful IPOs in terms of listing gains/losses, and also their current gains from the issue price.

Most successful IPOs: ideaForge posts highest listing gain of 92.7% in 2023

Kicking off with the year's top performer in terms of listing gains, ideaForge Technology from the general industrials sector listed at a premium of 92.7% over its issue price and raised Rs 567 crore to fund its investments in product development. The company's diverse portfolio includes hardware (including Unmanned Aerial Vehicles, payloads, batteries, chargers, and communication systems) and software (such as Ground Control Station for control and autopilot sub-systems). The IPO was subscribed for 106x of the available shares.

Despite a stellar listing, its share price fell by 18% in the listing week in July. Apart from profit booking, the decline can be attributed to the company's dependency on government orders, its presence in a heavily regulated space, and reliance on imports. In addition, its net profit fell by 54.3% YoY, triggering a 6% drop in share price on August 9. However, the stock is still trading 51% above its issue price.

Banking and finance sector stocks dominate the IPO success stories 

Two of the top five successful IPOs are from the banking and finance sector –  Utkarsh Small Finance Bank (USFB) and SBFC Finance. Both these IPOs listed at a premium of 92% and 61.8% respectively. Their share prices have remained stable post-listing, with Utkarsh and SBFC trading at 93% and 55.4%, respectively, above their issue prices, which is close to their listing gains.

USFB, with an issue size of Rs 500 crore, focuses on microfinance services in unserved or underserved segments, particularly in Uttar Pradesh and Bihar. The IPO was subscribed for 101.9x of the available shares. According to IDBI Capital, USFB has a cost-to-income ratio of 54.1 in FY23, lower than its peers like Equitas SFB (63.4), Suryoday SFB (60) and Ujjivan SFB (54.8). A lower cost-to-income ratio indicates effective expense management relative to income.

SBFC Finance’s IPO, aimed at funding future business growth, raised Rs 1,025 crore through a combination of fresh issue and offer for sale. This non-banking finance company provides secured MSME loans and loans against gold. The IPO was subscribed for 70.2x of the available shares.

Moving on to the software & services sector, only Netweb Technologies makes it to the top five successful IPOs in 2023. This original equipment manufacturer (OEM), which specialises in high-end computing solutions, listed at an 82.7% premium and now trades at a 69.7% premium to its issue price. 

The company filed the IPO to raise Rs 631 crore through a combination of fresh issue and offer for sale. It was subscribed for 90.4x of the available shares. This IT company achieved a revenue CAGR of 75% over FY21-23, along with profit growth of around 138% during the same period.

Lastly, Cyient DLM, an Integrated Electronics Manufacturing Solutions (EMS) provider from the margin-sensitive commercial services and supplies sector, listed at a premium of 58.7% over its issue price and continued to rise after listing. It currently trades 173% higher than its issue price. The IPO was subscribed for 67.3x of the available shares. In Q1FY24, the company secured orders worth $33.6 million (approximately Rs 270.9 crore), contributing to backlog growth and stability. 

From the successful IPOs, now we move on to the ones that failed to perform well in their listing. 

Least successful IPOs: Construction sector stumbles amid OPEC production cuts

Udayshivakumar Infra, a cement and construction company, saw its IPO open at a 10% discount to its issue price. However, the stock has risen since its listing and currently trades 18% above its issue price. According to analysts, the lackluster listing was due to a subdued market sentiment on the back of the unexpected announcement of OPEC+ crude oil production cuts in April The IPO was subscribed for 32.5x of the available shares.

Following closely in the listing losers list, Avalon Technologies from the general industrials sector listed 8.7% below its issue price. However, the stock has since recovered, now trading 38.6% above it. Avalon Technologies is a fully integrated electronic manufacturing services (EMS) provider in India, offering solutions including box build and PCB services. The IPO was subscribed for 2.2x of the available shares.

Food and transportation stocks rise post tepid debut

From the food, beverage and tobacco sector, HMA Agro Industries’ IPO listed at a marginal 0.1% premium to its issue price but is currently trading 36% above it. HMA Agro is involved in the export of buffalo meat to around 40 countries. The company raised Rs 480 crore, of which Rs 150 crore was fresh issue, with Rs 135 crore earmarked for working capital needs and less than 25% of the gross proceeds allocated for general corporate purposes. 

The IPO got a relatively modest subscription rate of 1.6x due to the high valuation of HMA Agro Industries, which had a PE of 49, higher than the sector’s PE of 41.

Moving on to the transportation sector, TVS Supply Chain Solutions posted a listing gain of 2% and is currently trading only 5.2% above its issue price. The company is involved in providing integrated supply chain solutions to its clients. It raised Rs 880 crore through a combination of fresh issue and offer for sale. The IPO was subscribed for 7.6x of the available shares.

Interestingly, its stock price rose by 6% on September 11 following reports of its plans to acquire a 100% stake in three of its subsidiaries for Rs 450 crore. However, the stock fell by 6% on September 12 due to its Q1FY24 loss widening to Rs 65.3 crore.  

Lastly, we have Divgi Torqtransfer Systems from the automobiles & auto components sector. Despite a modest listing gain of 2.6%, the stock is currently trading 65.8% above its issue price. The company raised Rs 412.1 crore via fresh issue and offer for sale. The company won orders worth Rs 549 crore on August 11, which led to a 12.2% surge in stock price on the same day. In addition, multiple bulk & block deals helped the stock to rise by 65.8%.  

One common thread among all 10 IPOs (both most and least successful) in focus is that they are all trading above their issue prices. This means that investors who subscribed to these IPOs are currently in profit, albeit with varying degrees of return on investment. 

As Indian indices continue to hit record highs, the number of companies filing for IPOs may rise, keen to take advantage of the bullish market sentiment. However, investors should look at a company's financial health, industry outlook, and valuation before subscribing. 

 
Trendlyne Marketwatch
Trendlyne Marketwatch
14 Sep 2023
Market closes higher, R R Kabel's IPO gets bids for 1.4X of available shares

Trendlyne Analysis

Nifty 50 closed at 20,103.10 (33.1, 0.2%), BSE Sensex closed at 67,519.00 (52.0, 0.1%) while the broader Nifty 500 closed at 17,603.50 (76.8, 0.4%). Market breadth is ticking up strongly. Of the 1,912 stocks traded today, 1,383 showed gains, and 495 showed losses.

Indian indices rose from the day’s low and closed in the green, with the Nifty 50 closing at 20,103. The volatility index, Nifty VIX, dropped by 4.3% and closed at 11.3 points. Bombay Dyeing and Manufacturing agree to sell a 22-acre land parcel in Worli, Mumbai, for Rs 5,200 crore.

Nifty Midcap 100 and Nifty Smallcap 100 closed sharply higher, following the benchmark index. Nifty Metal and Nifty PSU Bank closed higher, compared to Wednesday’s closing levels. According to Trendlyne’s sector dashboard, metals & mining emerged as the top-performing sector of the day, with a rise of over 1.8%.

Most European indices trade in the green, except for Germany’s DAX and France’s CAC 40, which are trading flat. US indices futures trade higher, indicating a positive start. Brent crude prices touched a 10-month high of $92 per barrel as OPEC’s extension of production cuts till the end of the year is expected to tighten the global oil supply.

  • Relative strength index (RSI) indicates that stocks like ITI, Cholamandalam Financial Holdings, GlaxoSmithKline Pharmaceuticals and Sundaram Finance are in the overbought zone.

  • ICICI Securities maintains its 'Add' rating on Computer Age Management Services with an upgraded target price of Rs 2,976 per share. This indicates a potential upside of 13.8%. The brokerage remains positive on the company's ability to provide effective digital solutions in the capital market and financial services space. It expects the company's revenue to grow at a CAGR of 9.5% over FY23-25.

  • Kirloskar Ferrous Industries rises as the National Company Law Tribunal (NCLT), New Delhi, approves a resolution plan initially approved by the Committee of Creditors of Oliver Engineering (Corporate Debtor), a company engaged in ferrous casting and machining. It appears in a screener for companies with low debt.

  • Tata Steel rises to a new 52-week high of Rs 134.2 as reports suggest advancements in negotiations for the Port Talbot Plant transformation project. The deal is valued at 500 million pound (Rs 5,177.9 crore). The company appears in a screener of stocks with strong momentum.

  • Zee Entertainment Enterprises is falling as Axis Finance files an appeal before the National Company Law Appellate Tribunal (NCLAT), New Delhi. The appeal challenges an order passed by the National Company Law Tribunal (NCLT), Mumbai, on August 10, which approved the merger of Zee Enterprises, Bangla Entertainment and Culver Max Entertainment (formerly Sony Pictures Network India).

  • Zydus Lifesciences sees four analyst target price upgrades and one recommendation upgrade in the past month. Phoenix Mills, NCC, Info Edge (India) and Glenmark Pharmaceuticals see three analyst target price upgrades over the same time period.

  • Rajneesh Chopra, Global Head of Va Tech Wabag, is optimistic about the prospects for the water business both in India and overseas. He highlights that strategic alliances with Gulf nations are in the pipeline. He expects that overseas business will account for 50% of the company's revenue. He adds that revenue contributions from the desalination plant in Tamil Nadu will start by H2FY24.

  • Aurionpro Solutions is rising as its transit business unit, Aurionpro Transit Pte, bags a $1.2 million (roughly Rs 10 crore) order for the first phase of a rapid transit bus project in Mexico. The order, to be completed in six months, has been awarded by the Government of the State of Yucatan and involves supplying validators and hardware.

  • Samhi Hotels' Rs 1,370.1 crore IPO gets bids for 0.1X the available 6.3 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 0.3X the available 1.1 crore shares on offer.

  • Zaggle Prepaid Ocean Services' Rs 563.4 crore IPO gets bids for 0.2X the available 1.9 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 0.9X the available 35.6 lakh shares on offer.

  • R R Kabel's Rs 1,964 crore IPO gets bids for 1.4X the available 1.3 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 0.9X the available 66 lakh shares on offer.

  • According to Fitch's Global Economic Outlook for September 2023, the Indian economy remains resilient despite a tight monetary policy and sluggish exports. The data suggests that India's growth rate will slacken between July and September.

  • Venus Remedies rises as it announces its registration with the Department of Scientific and Industrial Research, Ministry of Science and Technology. This registration allows the company to avail exemption on custom duty. The company appears in a screener of stocks with improving book value per share.

  • Oil and gas stocks like Oil & Natural Gas Corp, Petronet LNG, Indian Oil Corp, Indraprastha Gas and Adani Total Gas are rising in trade. All the constituents of the broader sectoral index, BSE Oil & Gas, are also trading in the green.

  • Grasim Industries rises to its all-time high of Rs 1,954 per share as the company unveils the name of its new paints business, branded as Birla Opus. The brand is expected to launch in Q4FY24.

  • Mahindra Holidays & Resorts India rises as the company signs a memorandum of understanding with the Government of Uttarakhand to establish and develop Club Mahindra Resorts in the region. The company plans to invest Rs 1,000 crore in the venture. It appears in a screener of stocks with strong momentum.

  • India’s WPI inflation contracts to -0.5% in August, continuing its negative trend for the fifth consecutive month. This is due to a fall in prices of mineral oils, basic metals, chemical & chemical products, and textiles.

  • Prabhudas Lilladher maintains its ‘Buy’ rating on Larsen & Toubro and raises the target price to Rs 3,302 from Rs 2,955. This implies an upside of 13.1%. The brokerage believes the company’s long-term prospects are bright on the back of strong tender prospects, improving order conversions and healthy traction in hydrocarbon and renewable energy orders from international markets.

  • Metal stocks like NMDC, Hindalco Industries, Welspun Corpand Steel Authority of India (SAIL) are rising in trade. All constituents of the broader Nifty Metal index are trading in the green.

  • Prestige Estates Projects aims to launch residential properties of around 18 million square feet (msf) in FY24, with a sales value of over Rs 16,000 crore, says its CEO, Venkat K Narayana. He highlights that the launches will be based in Bengaluru, Hyderabad, Mumbai, Chennai and Kochi.

  • Indian Railway Catering & Tourism Corporation rises after signing an MoU with Maharashtra State Road Transport Corporation (MSTRC) to enable MSRTC's online bus booking services via IRCTC's bus booking portal. It appears on a screener for stocks with strong momentum.

  • Adani Enterprises' Singapore subsidiary, Adani Global Pte, enters a 50:50 joint venture (JV) with Kowa Holdings Asia Pte for sales and marketing of green ammonia, green hydrogen and its derivatives in Japan, Taiwan and Hawaii.

  • Samhi Hotels raises Rs 616.5 crore from anchor investors ahead of its IPO by allotting around 4.9 crore shares at Rs 126 each. Investors include the Government of Singapore, Monetary Authority of Singapore, HSBC Global, CLSA Global Markets, Edelweiss, Nuvama and SBI Mutual Fund.

  • DAM Capital initiates coverage on sugar companies like Balrampur Chini Mills, Triveni Engineering, Dalmia Sugar and Dwarikesh Sugar with a ‘Buy’ rating. The brokerage expects El Nino conditions to affect sugar production and domestic sugar prices to remain above Rs 37 per kg.

  • Suven Pharmaceuticals is rising as reports suggest that the government has approved the acquisition of up to 76.1% shares of the company for Rs 9,589 crore by Berhyanda, a Cyprus-based company. This will take the foreign holding of the company to 90.1%.

  • NBCC (India) rises as it bags an order worth Rs 180 crore from Steel Authority of India's Bokaro Steel Plant. The project involves consultancy and project management services for upcoming infrastructural projects. The company appears in a screener of stocks nearing their 52-week highs with significant volumes.

  • Zaggle Prepaid Ocean Services raises Rs 253.5 crore from anchor investors ahead of its IPO by allotting 1.5 crore shares at Rs 164 each. Investors include Morgan Stanley Asia (Singapore), Goldman Sachs (Singapore), Societe Generale, Elara India Opportunities Fund, Founders Collective Fund and LIC Mutual Fund.

  • Bombay Dyeing and Manufacturing surges by more than 18% to touch its 52-week high of Rs 168.6 per share as its board of directors approves the sale of a 22-acre land parcel in Worli, Mumbai, for Rs 5,200 crore. The proceeds of the sale will be used to repay debt and fund future projects.

Riding High:

Largecap and midcap gainers today include NHPC Ltd. (55.90, 7.71%), Indian Overseas Bank (37.00, 5.71%) and NMDC Ltd. (150.20, 5.63%).

Downers:

Largecap and midcap losers today include Supreme Industries Ltd. (4,280.00, -3.06%), Torrent Pharmaceuticals Ltd. (1,839.70, -1.54%) and ACC Ltd. (2,038.30, -1.20%).

Movers and Shakers

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

Top high volume gainers on BSE included Central Bank of India (44.80, 10.89%), NBCC (India) Ltd. (60.65, 7.73%) and Avanti Feeds Ltd. (457.80, 6.60%).

Top high volume losers on BSE were Piramal Enterprises Ltd. (1,068.70, -0.47%) and TTK Prestige Ltd. (789.50, -0.30%).

Aster DM Healthcare Ltd. (341.45, 2.82%) was trading at 7.3 times of weekly average. Narayana Hrudayalaya Ltd. (1,092.00, 5.49%) and Suven Pharmaceuticals Ltd. (528.75, 2.01%) were trading with volumes 6.6 and 6.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

42 stocks hit their 52 week highs,

Stocks touching their year highs included - Axis Bank Ltd. (1,020.90, 0.64%), Bank of Baroda (211.90, 1.56%) and Bank of India (107.25, 3.57%).

9 stocks climbed above their 200 day SMA including EID Parry (India) Ltd. (544.75, 4.86%) and Eureka Forbes Ltd. (520.00, 2.56%). 2 stocks slipped below their 200 SMA including Aptus Value Housing Finance India Ltd. (268.65, -0.81%) and Crompton Greaves Consumer Electricals Ltd. (303.05, -0.69%).

 
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The Baseline
14 Sep 2023
Six hidden gems among overvalued smallcaps | Smallcap screener: ‘Buy’ analyst consensus and positive Forecaster growth
By Deeksha Janiani

The party on D-Street began on September 11, as the Nifty 50 made history and hit 20,000 for the first time ever. It crossed that level today, closing at 20070. Strong investments by domestic funds and retail investors have driven the rally, even as FIIs turned net sellers in September.

New Delhi was gleaming this month after the city got a $120 million facelift, with new murals, fountains and statues installed ahead of the G20 summit. The success of the summit has added to the optimism. 

A new economic corridor that links India with the Middle East and Europe, was announced at the summit. It includes an extensive rail and shipping network that will enable faster transportation of goods and services. 

But while India is making its presence felt on the global stage, analysts are concerned about its market valuations, especially in the small and midcap segments. According to Bloomberg, the Nifty Smallcap 100 and Nifty Midcap 100 are trading ahead of their five-year average PE valuations. 

Nifty smallcap outperforms benchmark since June 2023

The Nifty Smallcap is at its most overbought level since 2014, considering its 14-week relative strength index. Anish Tawakley, head of research at ICICI MF, observed that the relentless smallcap buying has made largecaps a better bet, “We are more comfortable with large-cap valuations. People are getting very optimistic in the small and mid-cap space around relatively weak business models.” 

Higher mutual fund investments have played a major part in this rally.

Smallcap funds remain popular among mutual fund investors

Although many stocks in the small-cap universe have already run up, there is still steam left in a few. In this week’s Analyticks:

  • Rough diamonds?: Six undervalued smallcaps with promising futures
  • Screener: Smallcaps with ‘Buy’ consensus from analysts and positive Forecaster growth

Let’s get into it.

Hidden gems: Six promising smallcaps with healthy valuations

With the smallcap sector hotter than ever, it's time to ask: where should you invest? With experts worrying about high valuations in smallcap stocks, we looked for companies whose growth and future outlook made them stand out.

We found six stocks from the BSE SmallCap index with strong TTM growth, trading at lower than their industry valuation. These stocks are priced lower than their 5-year average PE , and analysts are bullish on their future growth.

AIA Engineering: Strong demand puts spending plans into high gear 

This capital goods player has seen close to 30% revenue growth on a trailing 12-month basis, thanks to robust realisations and strong demand in the mining sector. Its EBITDA margins rose sharply in Q1FY24 due to lower freight costs. AIA Engineering is trading at a 25% discount to the industry PE ratio. 

The company is adding to its grinding media capacity in the current fiscal year. It also plans to upgrade its plants and invest in warehouses and renewable energy systems. Overall, its planned capex for the next two years is 56% higher than in FY22 and FY23. 

AIA Engineering’s management has guided for a volume growth of around 10% in FY24. It is bullish on the demand trends in North and Latin America. Analysts see the company’s revenue growing at 10% CAGR in the next two years. 

AIA Engineering to accelerate investments, revenue to rise in double-digits

Mahanagar Gas: Record margins are fuelling profits 

This city gas distributor has delivered a top-line growth of over 45% on a TTM basis. In Q1FY24, its margins rose to record levels due to lower gas costs. Commenting on this, Ashu Shinghal, the Managing Director at MGL, said, “With APM gas prices capped at $6.50 per MMBTU for two years, we are seeing very stable gas costs.”

MGL’s margins have improved in the past four quarters

Currently, MGL is trading at a discount of over 30% compared to its 5-year average PE ratio. Analysts see sales volumes improving as the company passes on the benefits of lower costs to its customers. The recent acquisition of Unison’s three geographical areas will also boost volumes. 

MGL’s margins may normalise in the upcoming quarters, but will stay considerably higher than the all-time rock bottom levels of FY23. Hence, analysts see MGL’s profits rising by over 20% YoY in FY24.

MGL may see robust profit growth on higher margins

Safari Industries: Riding on the travel industry boom

This luggage maker has seen a revenue jump of over 50% YoY on a TTM basis. Safari Industries is trading at a 25% discount to the industry. The company has also outperformed its peer VIP Industries, in both growth and returns.

Safari Industries has outperformed VIP on all counts

Safari’s EBITDA margins have risen steadily over the past six quarters, on lower input costs and an increase for in-house manufacturing. Just last month, the company added new production capacity of 1.25 lakh units. Traditionally a mass category player, Safari has also entered the premium market with its new ‘Urban Jungle’ brand. 

According to the consensus estimates of analysts, Safari Industries’ revenue may rise at a CAGR of over 20% in the next two years. This is thanks to more people travelling for leisure, and ongoing growth in business travel. 

Safari may clock topline growth of over 20% in the next two years 

Triveni Engineering: Sweet returns through distillery expansion 

This sugar and ethanol maker’s revenue has risen by nearly 25% YoY on a TTM basis. Triveni Engineering’s distillery segment, which is ethanol sales, has seen impressive growth in the past years. Oil marketing companies are also raising prices under their ethanol blending programmes. 

Triveni’s distillery sales volumes have consistently risen 

Triveni Engineering plans to invest Rs 700 crore across its businesses in FY24. It is also expanding its distillery capacity over the next two years. The rising prices of sugar are helping the company’s sales realisations, and analysts see a profit CAGR of over 25% in FY23-25.

Triveni is ramping up distillery capacity, to post robust profit growth

However, one risk for Triveni is a  possible ban on sugar exports, which could affect its profitability. Last year, the company exported 1.9 lakh tonnes of sugar at record prices. The industry body and the government may take the final call on an export ban by October 2023. 

HG Infra: Pre-election spending to build up order book 

This construction major has posted a 23% growth in standalone revenue on a TTM basis. A specialist in road and highway projects, HG Infra Engineering’s order book grew by over 50% in FY23. This provides good revenue visibility. 

The Centre has sped up its capex ahead of the upcoming elections, in the hope of wowing voters. Reports suggest that the Roads Ministry plans to spend 90% of its budget by December itself. This bodes well for order inflows to HG Infra. The company expects to receive orders worth Rs 7,000-8,000 crore in FY24. A strong line-up of projects from the NHAI and Indian Railways is also anticipated. 

According to consensus estimates of analysts, HG Infra’s revenue and profits may rise at a CAGR of over 15% in the next two years. 

HG Infra’s robust FY23 order book projects 15%+ CAGR growth

Blue Star: Strength in B2B business may boost revenue

This consumer durable maker has clocked a revenue growth of 18% on a TTM basis. Blue Star is trading at a discount of over 30% compared to its 5-year average PE, despite the stock gaining 38% over the past year. Its performance in Q1FY24 was supported by its projects and commercial air conditioning business.

Commenting on the demand scenario, Nikhil Sohoni, the CFO at Blue Star, said, “With continued investments in the infrastructure sector, we expect strong demand for our B2B products. While the summer season impacted the room AC category, we hope that the demand will revive in the festive season”. 

Blue Star may register over 15% revenue CAGR between FY23 and FY25

To meet demand, Blue Star is increasing its production capacity for both room and commercial AC units at Sri City. Analysts forecast that the company’s revenue will grow by over 15% CAGR in the next two years. Profits will also grow faster as the benefits of operating leverage kick in. 

Screener: Smallcaps with buy consensus from analysts, and positive growth forecasts in the upcoming quarter and year

Craftsman Automation set for highest revenue growth in Q2FY24 and FY24

Following the recent market rally, investor appetite for growth stocks is surging. This screener shows stocks from the BSE Small Cap index that had robust growth in Q1FY24, with positive revenue and net profit growth forecasts for Q2FY24 and FY24. These stocks also have a ‘Buy’ consensus from analysts, according to Trendlyne’s Forecaster. Note that this is a growth-focused screener and does not check for valuation.

Major stocks that appear in the screener are Craftsman Automation, CreditAccess Grameen, Equitas Small Finance Bank, APL Apollo Tubes, CE Info Systems and Cyient.

Craftsman Automation’s revenue is projected to grow by 51% YoY in Q2FY24. Its annual revenue is expected to rise by 44.2% in FY24. ICICI Securities anticipates accelerated revenue growth on the back of its acquisitions, higher sales of utility vehicles and a revival in the production of two-wheelers.

CreditAccess’ revenue is expected to grow by 47.8% and 34.2% in Q2FY24 and FY24, according to Trendlyne’s Forecasters. Geojit BNP Paribas expects the lender to sustain its revenue growth, led by improved loan disbursements and customer additions.

Equitas Small Finance Bank’s Q2FY24 revenue is set to expand by 26%, according to the Forecaster. According to BNP Paribas, the bank’s revenue growth will be aided by an increase in loan disbursements in the microfinance, consumer vehicles and affordable housing segments, combined with new product launches.

You can find some popular screenershere.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
13 Sep 2023
Market closes higher, Motilal Oswal maintains its ‘Buy’ rating on ICICI Bank

Trendlyne Analysis

Nifty 50 closed at 20,070.00 (76.8, 0.4%), BSE Sensex closed at 67,466.99 (245.9, 0.4%) while the broader Nifty 500 closed at 17,526.75 (66.2, 0.4%), of the 1,917 stocks traded today, 1,250 showed gains, and 630 showed losses.

Indian indices maintained their gains from the afternoon session and closed in the green, with the Nifty 50 closing above the 20,070 mark. The Indian volatility index, Nifty VIX, rose 1.2% and closed at 11.8 points. India’s Index of Industrial Production or IIP grew to a five-month high of 5.7% in July, up from 3.7% in June, led by robust growth in the mining and power sector.

Nifty Smallcap 100 outperformed the benchmark Nifty 50 index and closed 1% higher. Nifty Metal and Nifty Media closed higher than their Tuesday close. According to Trendlyne's sector dashboard, Telecommunications Equipment was the top-performing sector of the day as it rose 9.4%.

Major Asian indices closed flat or lower, except for India’s BSE Sensex, which closed in the green. European indices traded in the red amid mixed global cues. US index futures traded flat, indicating a cautious start to the trading session. Brent crude oil futures extended their gains from Tuesday and traded in the green for a fourth straight trading session.

  • Money flow index (MFI) indicates that stocks like ITI, Cholamandalam Financial Holdings, Indian Railway Finance Corp and TVS Motor are in the overbought zone.

  • Can Fin Homes is rising as Jefferies reportedly maintains its ‘Buy’ rating on the stock with a target price of Rs 970, implying an upside of 25%. The brokerage believes that the firm is well-placed to benefit from the rising home loan demand. It points out that the company has tightened internal controls following the Ambala branch fraud case.

  • Indiabulls Housing Finance rises after 22.5 lakh shares worth Rs 40.8 crore exchange hands in a large block deal.

  • Motilal Oswal maintains its ‘Buy’ rating on ICICI Bank with a target price of Rs 1,150, implying an upside of 16%. The brokerage remains positive about the bank’s prospects due to its healthy growth in the retail segment, robust asset quality, strong balance sheet and improving digital capabilities. It expects the company’s net profit to grow at a CAGR of 17.4% over FY23-25.

  • Alkem Laboratories, Titan Company, Ajanta Pharma, Bharti Airtel and Glenmark Pharmaceuticals are trading above their third resistance or R3 levels.

  • Supreme Industries, VIP Industries, Ashok Leyland, and Campus Activewear witness a decrease in mutual fund holdings in the past month.

  • Rail Vikas Nigam's joint venture with MPCC emerges as the lowest bidder in a Rs 245.7 crore auction held by the Vadodara Division of Western Railway. The bid focuses on civil engineering tasks for a gauge conversion project between Nadiad and Petlad.

  • UBS maintains its ‘Buy’ rating on MCX but raises the target price to Rs 2,100 citing strong options volume. The brokerage notes that options trading has been robust in India since August, with an average daily value (ADV) of Rs 87,000-89,000 crore.

  • R R Kabel's Rs 1,964 crore IPO gets bids for 0.3X the available 1.3 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 0.4X the available 66 lakh shares on offer.

  • Mining companies like Coal India, Vedanta, MOIL, Nalco and NMDC are rising as the government proposes a 25% incentive to exploration agencies under the National Mineral Exploration Trust to promote exploration of essential minerals.

  • Coffee Day Enterprises is rising as it reportedly reaches a settlement with IndusInd Bank to withdraw insolvency litigation. This resolution was addressed in the Chennai bench of NCLAT. Meanwhile, IDBI Trusteeship Services has filed a case against the company for an alleged default of Rs 228.5 crore in the Bengaluru bench of NCLAT.

  • India’s Index of Industrial Production or IIP grows to a five-month high of 5.7% in July, up from 3.7% in June, led by robust growth in the mining and power sector.

  • PSU Bank stocks like Punjab National Bank, Central Bank of India, Canara Bank and Union Bank of India are rising in trade. All constituents of the broader Nifty PSU Bank index are also trading in the green.

  • GMR Power and Urban Infra is rising as its arm, GMR Smart Electricity Distribution, bags a project worth Rs 2,469.7 crore. The order is from Dakshinanchal Vidyut Vitran Nigam to install 25.2 lakh smart meters in the Dakshinanchal area (Agra and Aligarh zone), Uttar Pradesh.

  • GE Power India surges as it wins an order worth Rs 25 crore from Vedanta for the combustion modification of a boiler.

  • India’s CPI inflation eases to 6.8% in August compared to 7.4% in July, due to a moderation in food and vegetable prices MoM.  Food inflation declined to 9.9% from 11.5% in July. However, the inflation rate remains above RBI’s tolerance limit of 2-6% for the second consecutive month.

  • Tata Power rises as its subsidiary, Tata Power Solar Systems, signs an MoU with Small Industries Development Bank of India (SIDBI) to offer easy financing to MSMEs for solar adoption. Together they are launching The Big Solar Fest, offering customized & innovative financing solutions with zero processing fees for solar loans. It appears in a screener for stocks with strong momentum.

  • Realty stocks like DLF, Macrotech Developers, Godrej Properties, Oberoi Realty and Phoenix Mills are falling in trade. The broader sectoral index, Nifty Realty, is also trading in the red.

  • ICICI Securities upgrades its rating on NMDC to ‘Buy’ from ‘Add’ and raises the target price to Rs 180 from Rs 130. This implies an upside of 30.9%. The brokerage expects the company's sales volumes and production volumes to see robust growth as its focus returns to the mining business after the steel plant demerger. It expects the firm’s revenue to grow at a CAGR of 15.1% over FY23-25.

  • Sanjeev Singhal, the Director of Finance at Mazagon Dock Shipbuilders, expects the company’s revenue to grow by 12-15% in FY24, up from the earlier guidance of 10-12%. He adds that its order book stands at 39,000 crore as of June 30, and believes that order visibility will improve in the next 6-12 months.

  • R R Kabel raises Rs 585.6 crore from anchor investors ahead of its IPO by allotting around 56.6 lakh shares at Rs 1,035 each. Investors include HSBC Global, Elara India Opportunities Fund, Abu Dhabi Investment Authority, TIMF Holdings, HDFC Mutual Fund, Franklin Mutual Fund and Mirae Asset.

  • Setu Securities sells a 0.6% stake (16.1 lakh shares) in Shyam Metalics and Energy for nearly Rs 71 crore in a bulk deal on Tuesday.

  • NTPC rises as it concludes the unit 1 (800 MW) trial run for the Telangana Super Thermal Power Project's first stage. This project has a total capacity of 2 X 800 MW. NTPC now has a total installed capacity of 57,838 MW. The company appears in a screener of stocks nearing their 52-week highs with significant volumes.

  • KEC International bags orders worth Rs 1,012 crore across its various business segments. These projects include the construction of a data centre, the establishment of a manufacturing facility for an FMCG company, transmission & distribution projects, and the supply of cables

Riding High:

Largecap and midcap gainers today include Punjab National Bank (72.55, 8.53%), Indian Overseas Bank (35.00, 8.19%) and GlaxoSmithKline Pharmaceuticals Ltd. (1,542.50, 5.52%).

Downers:

Largecap and midcap losers today include Max Healthcare Institute Ltd. (582.70, -5.78%), Indian Railway Finance Corporation Ltd. (78.90, -4.71%) and Schaeffler India Ltd. (3,295.70, -4.15%).

Movers and Shakers

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

Top high volume gainers on BSE included Indiabulls Housing Finance Ltd. (188.35, 12.18%), Poly Medicure Ltd. (1,424.75, 6.36%) and Ajanta Pharma Ltd. (1,821.25, 6.15%).

KEC International Ltd. (683.15, 2.69%) was trading at 20.2 times of weekly average. Suven Pharmaceuticals Ltd. (518.35, 0.95%) and Restaurant Brands Asia Ltd. (119.00, 2.45%) were trading with volumes 17.9 and 16.1 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

24 stocks overperformed with 52 week highs,

Stocks touching their year highs included - Ajanta Pharma Ltd. (1,821.25, 6.15%), Aurobindo Pharma Ltd. (902.50, 3.59%) and Axis Bank Ltd. (1,014.45, 1.35%).

7 stocks climbed above their 200 day SMA including Eureka Forbes Ltd. (505.50, 5.87%) and EID Parry (India) Ltd. (519.50, 2.82%). 18 stocks slipped below their 200 SMA including Honeywell Automation India Ltd. (39,344.65, -1.49%) and Sumitomo Chemical India Ltd. (424.50, -1.22%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
12 Sep 2023
Market closes flat, Axis Direct keeps its ‘Buy’ rating on HG Infra Engineering

Trendlyne Analysis

Nifty 50 closed at 19,993.20 (-3.2, 0.0%), BSE Sensex closed at 67,221.13 (94.1, 0.1%) while the broader Nifty 500 closed at 17,460.55 (-192.8, -1.1%). Market breadth is highly negative. Of the 1,932 stocks traded today, 162 showed gains, and 1,749 showed losses.

Indian indices pared the gains from the afternoon session and closed flat, with the Nifty 50 closing at 19,993. The volatility index, Nifty VIX, rose by 3% and closed at 11.7 points. Coal India has planned a capex of Rs 24,750 crore for 61 First Mile Connectivity (FMC) projects over the next few years.

Nifty Midcap 100 and Nifty Smallcap 100 closed sharply lower, with the benchmark index closing flat. Nifty IT and Nifty Pharma closed higher, compared to Monday’s closing levels. All other sectoral indices closed in the red. According to Trendlyne’s sector dashboard, software & services emerged as the top-performing sector of the day, with a rise of over 0.6%.

Most European indices trade in the red, except for England’s FTSE 100 and Switzerland’s SMI, which are trading in the green. US indices futures trade lower, indicating a negative start. The data released by the German Federal Statistical Office indicate that Germany’s wholesale price index (WPI) for August has increased by 0.2% MoM, against the estimates of a decline of 0.1%. The WPI for July declined by 0.2% MoM.

  • Larsen & Toubro sees a long buildup in its September 28 future series as its open interest rises 18.8% with a put-call ratio of 0.8.

  • Consumer Electricals company R R Kabel opens for IPO subscription tomorrow. The price band for the issue is Rs 983-1,035 per share. The size of the issue is Rs 1,964 crore, comprising a fresh issue of Rs 180 crore and an offer for sale for Rs 1,784 crore.

  • Realty stocks like Indiabulls Real Estate, Prestige Estates Projects, Sobha, Brigade Enterprises and Oberoi Realty are rising in trade. The broader sectoral index, BSE Realty, is also trading in the red.

  • CareEdge Ratings projects GRMs (gross refinery margins) of Indian refinery companies to remain in the range of $9-10 per barrel for the rest of FY24. This is despite increasing crude oil prices and possible constraints in the availability of Russian crude.

  • Axis Direct keeps its ‘Buy’ rating on HG Infra Engineering with a target price of Rs 1,140, implying an upside of 19.5%. The brokerage maintains its favourable outlook toward the firm’s prospects due to its robust order book, strong execution capabilities and focus on diversification. It expects the company’s net profit to grow at a CAGR of 19.7% over FY23-25.

  • Transport Minister Nitin Gadkari clarifies that the government is not actively considering any proposal on imposing an additional 10% GST on diesel vehicles.

  • Media stocks like Dish TV India, TV18 Broadcast, Hathway Cable & Datacom, Navneet Education and Network18 Media and Investments are falling. The broader sectoral index, Nifty Media, is also trading in the red.

  • EMS' Rs 321.3 crore IPO gets bids for 75.3X the available 1.1 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 29.8X the available 54.6 lakh shares on offer.

  • Jefferies maintains its ‘Hold’ rating on Havells India but raises the target price to Rs 1,420 as it expects the company to expand its network into tier 3 cities and rural areas. It also highlights Llyod’s healthy sales growth. However, it keeps its recommendation as the current valuation already reflects the positives.

  • Coal India plans a capex of Rs 24,750 crore for 61 First Mile Connectivity (FMC) projects over the next few years. The total capacity of the projects is 763.5 MTPA and they will be completed in three phases.

  • Ajmera Realty & Infra India declines in trade despite receiving an order worth Rs 330 crore to redevelop four residential societies at Yogi Nagar Borivali West, Mumbai. It appears on a screener of volume shocker stocks.

  • Hindalco Industries signs a technology partnership with Italy-based Metra SpA to utilise Metra's aluminium extrusion and fabrication technology to construct high-speed rail coaches in India.

  • Indian rupee appreciates 10 paise to 82.93 against the US dollar in early trade today, led by a positive trend in domestic equities and foreign fund inflows.

  • Auto stocks like Ashok Leyland, Escorts Kubota, Mahindra & Mahindra and Tata Motors are falling as Transport Minister Nitin Gadkari says he will propose imposing an additional 10% tax on diesel engine vehicles.                            

  • SpiceJet is falling as it announces its plan to complete the payment of Rs 100 crore to Kal Airways by paying Rs 22.5 crore today, in addition to the Rs 77.5 crore already paid. The company also acknowledges to pay $1.5 million to Credit Suisse as per a court directive. It has already paid a total of $8 million to Credit Suisse as per consent terms.               

  • TVS Supply Chain Solutions is falling as its Q1FY24 net loss widens to Rs 65.3 crore from Rs 1.8 crore in Q1FY23. Its revenue also drops by 12.3% YoY on the back of a 35% YoY decline in the network solutions segment. The stock features in a screener for companies with zero promoter pledge.                                                                                        

  • Ramesh Iyer, Vice-Chairman & MD of Mahindra & Mahindra Financial Services, says that growth in H2FY24 will be significantly higher than in H1. He anticipates the growth rate to be in the mid-teens for FY24, with disbursal growth similar to FY23 levels. He adds that the NIM guidance of more than 7% will be maintained in the long-term perspective.

  • Power Grid Corp receives a Letter of Intent to establish an interstate transmission system project in Rajasthan. The company will build, own and operate a 20-gigawatt interstate transmission project. The stock shows up in a screener for companies with Return on Capital Employed (RoCE) improving over the past two years.

  • HDFC Mutual Fund buys a 0.6% stake in KNR Constructions for approx Rs 42.4 crore in a bulk deal on Monday.

  • Norges Bank sells a 1.1% stake in Mahanagar Gas for approx Rs 111.8 crore in a bulk deal on Monday.

  • UBS maintains its ‘Neutral’ rating on Hindustan Unilever with a target price of Rs 2,860. The brokerage expects the company’s volume recovery to be moderate in the near term and the pace of volume recovery to be impacted by the increasing regional competition.

  • Reliance Industries' subsidiary, Reliance Retail Ventures, announces KKR's plan to invest Rs 2,069.5 crore in the company for a 0.3% stake. This will take KKR's holding in the company to 1.4%.

  • Power stocks like NHPC, JSW Energy, Bharat Heavy Electricals and Adani Power fall more than 3% in trade. All constituents of the broader BSE Power index are also trading in the red.

  • Larsen & Toubro touches its all-time high of Rs 3,009 per share as its board increases the buyback price to Rs 3,200 from Rs 3,000 per share. The board also reduces the number of shares proposed to be bought back to 3.1 crore (or 2.2% stake) from 3.3 crore.

  • Lupin is rising as its board of directors approves a business transfer agreement with its subsidiary, Lupin Manufacturing Solutions, for approximately Rs 800 crore. The agreement involves the transfer of the company's active pharmaceutical ingredients (API) manufacturing plants at Dabhasa and Visakhapatnam, and select R&D operatioins.

Riding High:

Largecap and midcap gainers today include Tata Consultancy Services Ltd. (3,580.80, 2.88%), Larsen & Toubro Ltd. (2,944.10, 1.72%) and Infosys Ltd. (1,501.10, 1.67%).

Downers:

Largecap and midcap losers today include Tube Investments of India Ltd. (3,365.60, -8.82%), REC Ltd. (248.35, -8.17%) and JSW Energy Ltd. (397.15, -7.91%).

Volume Shockers

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

Top high volume gainers on BSE included ITI Ltd. (167.25, 12.02%), Blue Dart Express Ltd. (6,628.05, 3.22%) and J B Chemicals & Pharmaceuticals Ltd. (2,924.10, 2.83%).

Top high volume losers on BSE were NLC India Ltd. (128.00, -9.51%), Indiabulls Housing Finance Ltd. (167.90, -9.12%) and SJVN Ltd. (70.35, -8.40%).

Elgi Equipments Ltd. (498.95, 2.09%) was trading at 23.6 times of weekly average. Quess Corp Ltd. (426.10, -0.23%) and Shyam Metalics and Energy Ltd. (437.90, -2.96%) 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

44 stocks made 52 week highs, while 2 stocks hit their 52 week lows.

Stocks touching their year highs included - Adani Power Ltd. (386.30, -3.04%), Alembic Pharmaceuticals Ltd. (751.05, -1.80%) and Axis Bank Ltd. (1,000.90, 0.05%).

Stocks making new 52 weeks lows included - Bajaj Electricals Ltd. (1,132.10, -3.24%) and Vedanta Ltd. (231.80, -2.73%).

4 stocks climbed above their 200 day SMA including Blue Dart Express Ltd. (6,628.05, 3.22%) and Honeywell Automation India Ltd. (39,858.20, 1.25%). 20 stocks slipped below their 200 SMA including Sterlite Technologies Ltd. (162.65, -7.40%) and Eureka Forbes Ltd. (479.60, -5.97%).

 
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The Baseline
12 Sep 2023
Five analyst picks this week
By Satyam Kumar

1. Cipla:

Geojit BNP Paribas keeps its ‘Buy’ rating on this pharmaceutical firm and raises the target price to Rs 1,420 from Rs 1,120. This implies an upside of 14.2%. In Q1FY24, the company’s net profit grew by 45.1% YoY to Rs 995.7 crore and revenue rose by 17.7% YoY. 

Analyst Vinod TP attributes this healthy performance to robust growth in both the US and Indian markets. Along with growth, the firm has gained market share in key product segments. He expects Cipla’s focus on India and the US to drive growth in the near term. “The company has a strong product launch pipeline for the US, India, and emerging markets, which is expected to boost the sales and profitability,” he adds. 

In addition to Cipla’s planned new launches, Vinod is positive about the management’s modernisation and capacity expansion plans. He expects the company’s revenue to grow at a CAGR of 13.1% over FY23-25.

2. Devyani International: 

Sharekhan maintains its ‘Buy’ rating on this quick service restaurant (QSR) with a target price of Rs 252, indicating an upside of 20.1%. The analysts at Sharekhan remain optimistic about the company’s long-term growth prospects, despite a recent slowdown in the domestic market. They say this weakening of demand is temporary and caused by high inflation, which prompted consumers to seek cheaper options. However, the analysts expect demand to improve in the coming quarters. “Softening of consumer inflation, easing dairy prices, good traction in multiplexes and a long festive season will aid good recovery in the QSR space in H2FY24,” they add.

They also expect gross margins to improve in H2 due to declining prices of chicken, vegetable oil and cheese. The management’s focus on expanding its store count and entering new markets is a key positive. The brokerage anticipates the company’s net profit to grow at a CAGR of 31.7% over FY23-25. 

3. Craftsman Automation:

ICICI Securities initiates a ‘Buy’ call on this auto ancillary company with a target price of Rs 5,557, indicating an upside of 19.7%. Analysts Basudeb Banerjee and Vishakha Maliwal say, “Craftsman Automation is undergoing diversification to reduce commercial vehicle exposure and improve RoCE, by doing casting/machining of engine cylinder blocks/heads for SUV makers like Hyundai, Kia and Mahindra & Mahindra.”

Beyond a 12% CAGR in organic free cash flow from FY26 to FY36, the analysts believe that Craftsman Automation has the financial bandwidth to make acquisitions of around Rs 1,500-1,800 crore in the next couple of years, contributing to its growth prospects. 

They expect the company to deliver a 22% revenue CAGR over FY24-26, led by a combination of acquisitions, continued growth in the private vehicle market, revival in two-wheeler production, and rising focus on industrial/farm equipment segments. However, the analysts remain cautious as a higher mix of the aluminium segment could impact the overall EBITDA margin. But they expect it to remain steady at 20-21% over FY24-26.

4. Titan: 

Motilal Oswal maintains a 'Buy' rating on this gems and jewellery company with a target price of Rs 3,570, indicating an upside of 12%. Analysts Pratik Bipinchandra Prajapati and Tanu Jindal express a positive outlook, citing the company's robust performance across all business segments. This growth is driven by strategic investments in supply chain, digital infrastructure, strong channel capabilities, retail networks, and international market penetration.

Prajapati and Jindal emphasize Titan's utilisation of technology to uphold its leadership in the organised retail jewelry sector. The analysts highlight the company's substantial market share in the watches and wearables segment in India, particularly in the premium brand segment, where it continues to achieve double-digit growth. 

Prajapati and Jindal add that the company's mobile point-of-sale software seamlessly integrates online and in-store retail experiences. Despite the recent surge in gold prices affecting demand, they expect Titan to maintain its historical resilience and perform well in the market.

5. Sobha:

HDFC Securities maintains a ‘Buy’ call on this realty company with a target price of Rs 1,024. This indicates an upside of 56.8%. Analysts Parikshit D Kandpal, Manoj Rawat and Nikhil Kanodia say that Sobha had lagged behind its peers in terms of presales. However, they note, “With the regulatory overhang largely behind, the robust financial health of the parent company, and a strong demand undercurrent in the Bengaluru market, Sobha has hit the reset-restart button.” The company has strengthened its balance sheet by reducing its net debt by Rs 1,500 crore.

The analysts remain optimistic as Sobha enjoys high client loyalty, differentiated architecture in premium offerings, in-house construction, the novelty factor and 15-25% brand premium. They believe these factors will help the company retain its pricing premium. “Valuation comfort, robust free cash flow generation, and likely deleveraging are key near-term triggers for rerating,” they note.

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

(You can find all analyst picks here)

 
Trendlyne Marketwatch
Trendlyne Marketwatch
11 Sep 2023
Market closes higher, Geojit upgrades rating on Equitas Small Finance Bank to ‘Buy’ from 'Hold'

Trendlyne Analysis

Nifty 50 closed at 19,996.35 (176.4, 0.9%) , BSE Sensex closed at 67,127.08 (528.2, 0.8%) while the broader Nifty 500 closed at 17,653.35 (165.9, 1.0%) of the 1,960 stocks traded today, 1,034 were on the uptick, and 879 were down.

Indian indices extended their gains from the afternoon session and closed in the green. The benchmark Nifty 50 index hit its new all-time high and breached the 20,000 mark but settled just below it at 19,996.4 points. The Indian volatility index fell 1.6% and closed at 11.4 points. The Society of Indian Automobile Manufacturers (SIAM) reported a 0.6% YoY rise in two-wheeler sales to 15.7 lakh units in August, while passenger vehicle sales increased by 9.4% YoY to reach 3.6 lakh units.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, outperforming the benchmark index. Nifty Auto and Nifty Energy closed higher than their Friday close. According to Trendlyne’s sector dashboard, Telecommunications Equipment was the top-performing sector of the day as it rose 7.1%.

Major European indices traded in the green, despite the Asian indices closing mixed. US index futures traded higher, indicating a positive start to the trading session. Brent crude oil futures traded lower after closing in the green on Friday.

  • Money flow index (MFI) indicates that stocks like BSE, Cochin Shipyard, Coal India and Indian Railway Finance Corp are in the overbought zone.

  • Automobile stocks like Tube Investments of India, Sona BLW Precision Forgings, Maruti Suzuki India, Samvardhana Motherson International and Hero MotoCorp are rising in trade. All the constituents of the broader sectoral index, Nifty Auto, are also trading in the green.

  • Medplus Health Services, Coforge, Suzlon Energy and BSE witness an increase in mutual fund holdings in the past month.

  • Geojit BNP Paribas upgrades its rating on Equitas Small Finance Bank to ‘Buy’ from 'Hold' and raises the target price to Rs 102 from Rs 74. This implies an upside of 16.8%. The brokerage believes the bank’s growth will be driven by strong business growth, investments in technology, product innovations and improving asset quality. It expects the bank’s net profit to grow at a CAGR of 29.9% over FY23-25.

  • Railway companies like Rail Vikas Nigam, Indian Railway Finance Corporation and Ircon International touch their 52-week highs following the US-EU agreement on the Mideast-India Rail and Shipping Corridor at the G-20.

  • Tata Consultancy Services is rising as it enters a partnership with Dassault Systems to refine its model and simulation to develop accurate, personalized digital human heart models for the Living Heart project.

  • HFCLrises as its subsidiary HTL bags an order worth Rs 82.6 crore from domestic telecom service providers for the supply of optical fiber cables. It appears on a screener for stocks with high TTM EPS growth.

  • EMS' Rs 321.3 crore IPO gets bids for 15X the available 1.1 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 16.6X the available 54.6 lakh shares on offer.

  • KV Pradeep, MD of Olectra Greentech, says that the company currently has around 9,000 bus orders valued at more than Rs 10,000 crore. He adds that their plan to deliver 1,200 buses in FY24 and over 2,500 buses in FY25 is on track, and they are seeking tenders for around 10,000 buses.

  • Utilities stocks like SJVN, JSW Energy, Gujarat Industries Power and Adani Power surge more than 7% in trade. The broader S&P BSE Utiliti index is trading 2% higher.

  • ITI surges as it develops a laptop and micro PC. Branded as ‘SMAASH’, the products have already been deployed in the market, and ITI has won many tenders.

  • ICICI Securities maintains its ‘Buy’ rating on GAIL (India) and raises the target price to Rs 154 from Rs 149. This implies an upside of 21.2%. The brokerage believes that the company will grow in the coming two to three years, driven by the increasing domestic gas supplies, LNG liquefaction capacity, and the normalisation of LPG prices.

  • Mutual Funds' net equity inflow surges MoM to Rs 20,161 crore in August, according to data released by the Association of Mutual Funds in India (AMFI).

  • Telecom stocks like ITI, Vodafone Idea, Tata Teleservices (Maharashtra), Tata Communication andIndus Towers are rising in trade. The broader sectoral index, S&P BSE Telecom, is also trading in the green.

  • Tata Communications touches a new 52-week high as reports suggest that it has signed an agreement with the US-based chipmaker Nvidia to assist the company in establishing an AI cloud in India. It aims to supply crucial infrastructure to support the next generation of computing. This partnership will enable swift data processing for businesses. It appears in a screener of stocks with strong momentum.

  • Coffee Day Enterprises plunges more than 10% as IDBI Trusteeship Services files an insolvency and bankruptcy plea before the National Company Law Tribunal. The move comes after the company defaults on a loan worth Rs 228.4 crore owed to IDBI Trusteeship.

  • Reliance Industries is rising as reports suggest that it has partnered with the US-based chipmaker Nvidia to set up cloud-based AI Infrastructure in India. Nvidia will provide Reliance Jio Infocomm access to its most advanced cloud-based supercomputing service to build AI applications.

  • The Society of Indian Automobile Manufacturers (SIAM) reports a 0.6% YoY rise in two-wheeler sales to 15.7 lakh units in August, while passenger vehicle sales increase by 9.4% YoY to reach 3.6 lakh units.

  • SJVN surges as its arm, SJVN Green Energy, inks a power purchase agreement with Bhakra Beas Management Board for 18 MW solar power.

  • Ratnaveer Precision Engineering’s shares debut on the bourses at a 25.7% premium to the issue price of Rs 98. The Rs 165 crore IPO has received bids for 94 times the total shares on offer.

  • Rishabh Instruments’ shares debut on the bourses at a 4.3% premium to the issue price of Rs 441. The Rs 490.8 crore IPO has received bids for 31.6 times the total shares on offer.

  • Citi maintains its 'Sell' rating on Persistent Systems with a target price of Rs 3,790. The brokerage believes that its Q2FY24 results will likely be muted compared to expectations. Although the company has fared well in recent months, the stock price does not account for the near-term downturn. It also keeps the stock on a 90-day downside catalyst watch.

  • IDFC First Bank is rising as GQG Partners acquires 5.1 crore shares of the bank from V Vaidyanathan, the MD & CEO of the bank, in a block deal worth Rs 478.7 crore. Vaidyanathan plans to use the proceeds from the deal to increase his stake in the bank to 1% from 0.6% by exercising stock options.

  • PSU banks like Bank of India, Canara Bank, Indian Overseas Bank, Union Bank of India, Bank of Maharashtra and Punjab National Bank are rising in trade. All constituents of the broader sectoral index, Nifty PSU Bank, are also trading in the green.

  • Anand Vijay Sankeshwar, the promoter of VRL Logistics, sells 35 lakh shares (4% stake) of the company for Rs 238.4 crore on Friday. SBI Mutual Funds buys 19.3 lakh shares (2.2% stake) for Rs 131.4 crore.

Riding High:

Largecap and midcap gainers today include Tube Investments of India Ltd. (3,691.25, 11.42%), Indian Railway Finance Corporation Ltd. (84.75, 9.92%) and JSW Energy Ltd. (431.25, 9.30%).

Downers:

Largecap and midcap losers today include Star Health and Allied Insurance Company Ltd. (654.85, -1.57%), United Breweries Ltd. (1,658.00, -1.31%) and Indian Railway Catering & Tourism Corporation Ltd. (717.40, -1.12%).

Volume Shockers

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

Top high volume gainers on BSE included SJVN Ltd. (76.80, 20.00%), ITI Ltd. (149.30, 19.97%) and Infibeam Avenues Ltd. (18.50, 14.91%).

Top high volume losers on BSE were Natco Pharma Ltd. (813.30, -7.76%), Shyam Metalics and Energy Ltd. (451.25, -3.54%) and Mahanagar Gas Ltd. (1,051.70, -0.47%).

Praj Industries Ltd. (591.65, 14.12%) was trading at 5.8 times of weekly average. Quess Corp Ltd. (427.00, 0.05%) and Computer Age Management Services Ltd. (2,604.60, 5.68%) were trading with volumes 5.8 and 5.7 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

78 stocks overperformed with 52 week highs,

Stocks touching their year highs included - AIA Engineering Ltd. (3,803.00, 2.14%), Axis Bank Ltd. (1,000.40, 2.05%) and Bank of Maharashtra (44.30, 5.35%).

9 stocks climbed above their 200 day SMA including Infibeam Avenues Ltd. (18.50, 14.91%) and Adani Enterprises Ltd. (2,614.95, 3.80%). 1 stock slipped below their 200 SMA including Chambal Fertilisers & Chemicals Ltd. (284.05, 0.21%).

 
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The Baseline
08 Sep 2023
Five Interesting Stocks Today

1. NMDC: 

This iron ore producer rose by 15.9% in the past week and hit its 52-week high of Rs 145.6 on Friday. The spike follows the announcement of a 37.5% YoY increase in its August 2023 production to 3.4 million tonnes (MT). Its sales has also improved by 25.1% YoY to 3.5 MT. In Q1FY24, NMDC reported a 14.6% YoY rise in net profit to Rs 1,652.2 crore, beating Trendlyne Forecaster’s estimate by 7.4%. Its revenue grew by 15.8% YoY.  

In August, NMDC had to decrease the price of lump ore and fines by Rs 300 per tonne to Rs 4,650 per tonne and Rs 3,910 per tonne, respectively, due to pricing pressure. China’s iron ore prices also dropped by 29.4% YoY from April 2023 to July 2023. Chairman and Managing Director Amitava Mukherjee says, “Prices have bottomed out and are expected to go up.” He believes that the rising volumes will compensate for the loss of pricing leverage. 

NMDC expects to clock higher production and sales on a YoY basis in Q2, and due to lingering inventory on its book, it also expects dispatches to surpass production. The management has guided iron ore production to be around 49 MT in FY24 and 50 MT in FY25. 

The company has planned a capex of Rs 2,000 crore in FY24, with Rs 610 crore already incurred. It also plans to incur incremental capex to increase the total capacity to 100 MT. Achieving this would require an annual capex of Rs 5,000 crore. NMDC is also poised to start gold mining in Australia by next month, subject to approval. 

Sharekhan maintains a ‘Buy’ call on NMDC on the back of strong domestic demand and rising volumes. The brokerage says these would be the key growth drivers over FY24-25. The company also appears in a screener for stocks with target price upgrades by brokers.

2. Nazara Technologies

This gaming & esports company has risen by 12.8% over the past week till Friday, as its board approved raising nearly Rs 510 crore through a preferential allotment of equity shares. 

On September 4, the firm announced a plan to raise Rs 100 crore by issuing just over 14 lakh shares to Kamath Associates and NKSquared, at a share price of Rs 714. These two entities are represented by the co-founders of Zerodha, Nikhil and Nithin Kamath. Then on September 7, it announced that its board approved raising Rs 410 crore from SBI Mutual Fund by issuing 57.2 lakh shares, again  at a price of Rs 714 per share. The stock shows up in a screener for companies in the PE ‘Buy’ zone with high durability and rising momentum scores. 

The management has stated that these funds will be utilised towards capital requirements and growth objectives, which will include acquisitions and investments in other companies. The fresh capital will largely be used for the company’s inorganic expansion plans. 

The street seems to be largely optimistic about the firm’s prospects, despite a mixed performance in Q1FY24. Its revenue fell by 12.1% QoQ to Rs 254.4 crore due to a sharp drop in the gaming segment. However, its net profit rose by nearly 7.5X QoQ, led by a drop in web-server expenses. 

ICICI Securities believes the company will recover from Q2FY24 onwards, driven by healthy growth in the esports and gaming segments, led by subscriber additions and price increases. According to Trendlyne’s Forecaster, the consensus recommendation on the stock from 10 analysts is ‘Buy’.

3. Bharat Heavy Electricals

This heavy electrical equipment manufacturer has risen by 19.8% over the past week till Friday, driven by expectations of healthy growth. This positive outlook comes on the back of a robust inflow of orders across segments such as transmission, power, defence and railways. On September 4, the company won an order to design and commission the electro-mechanical package for the 2,880 MW hydropower Dibang Multipurpose Project in Arunachal Pradesh. It won three major power projects in August, two from NTPC (one of them valued at Rs 2,241.9 crore) and another contract from Mahan Energen worth Rs 4,000 crore. 

Along with the strong order inflows, BHEL’s diversification efforts are starting to bear fruit. In a consortium with Titagarh Wagons, it won a project worth Rs 24,000 crore to build, supply and maintain 80 Vande Bharat train sets by 2029 and service them for 35 years. The company’s share in the order is estimated at Rs 15,000 crore. It also expects defence order inflows to rise in the coming quarters.

According to reports, orders from non-power sectors are expected to make up 30% of the firm’s order book by FY26. The stock also shows up in a screener for companies with improving cash flows and high durability scores. 

Overall, BHEL seems to be well-positioned to capitalise on India’s growing energy needs and the Centre’s increased focus on railways, defence indigenisation, and infrastructure. According to Trendlyne’s Forecaster, the company’s annual revenue and net profit are projected to rise by 13.6% YoY and 50.7% YoY, respectively, in FY24. 

4. Coal India

This coal producer has risen by 22.6% over the past week till Friday, outperforming the Nifty 50 by 19.7%. This comes after it reported healthy production and sales figures in August. Over the past quarter, the company’s share price rose by 22.3%, outperforming the index by 16.5%. Due to the sharp rise in price, it features in a screener of stocks with strong momentum. 

Coal India’s production increased by 13.2% YoY to 52.3 million tonnes (MT) in August. The company’s total coal supplies to all consuming sectors (which include the power, cement, and steel sectors) increased by 15.3% to 59 MT. Its supplies to the power sector (1.5 MT per day) also exceeded the committed quantity of 1.4 MT per day. 

In addition to the healthy business update, a positive outlook from analysts helped the rise in share price. Analysts anticipate an increase in thermal coal demand in the future, as thermal power generation picks up to meet increasing power demand. In the coming months, power demand, which has been on the rise since July due to unseasonal rains, is expected to remain elevated.

Following the company’s encouraging business update, ICICI Securities maintains its ‘Buy’ rating with an unchanged target price of Rs 285. The brokerage believes that its FY24E sales volume estimate of 741mt (up 6.5% YoY) will likely be achieved, as the company has already delivered 7.5% YoY growth in offtake YTD in August. 

5. Persistent Systems: 

This IT consulting & software company has risen by 22.3% in the past month, driven by its initiatives in the Generative AI segment. The firmannounced a partnership with Google Cloud to launch the Generative AI suite. This partnership is expected to enhance Persistent Systems' capabilities in data modernization and facilitate the expansion of its business operations for clients. It has also joined  hands with Amazon Web Services (Code Whisperer) to train more than 16,000 employees in developing AI technology for clients. Persistent Systems expects the AI segment to contribute significantly to the revenue stream in the next three quarters.  

The firm's Q1FY24 revenue improved by 23.6% YoY to Rs 2,321 crore on the back of strong deal wins and growth in the Hi-Tech (product engineering) segment. However, healthcare clients are cutting down on discretionary spending. The firm currently has a total contract value (TCV) of $380 million and an annual contract value (ACV) of $272 million. The stock shows up in a screener for companies with net profits increasing sequentially for the past four quarters.

The firm’s EBIT margin has declined by 162 bps YoY to 16.13% due to higher H1-B visa filing costs and wage hikes. Meanwhile, its attrition rates dropped to a two-year low of 15.5%, while the utilisation rate increased by 103 bps QoQ to 78.3%. The firm plans to add another 800 employees in the next two quarters. During the recent quarter, the company opened four new offices in Tier 1 cities like Ahmedabad, Gurugram, Jaipur and Noida.

The management has given a revenue guidance of 4% QoQ growth. However, the expected wage hike in Q2FY24 is likely to impact margins by 200 bps, which will be partly offset by higher utilisation, improvement in the offshore-onshore mix and a lower attrition rate.

According to KR Choksey, the company’s book-to-bill ratio of 1.3 and its healthy order wins provide good visibility for revenue growth. The company's diversification into new verticals like cyber security, artificial intelligence, and consumer technology will also help revenue growth. The brokerage maintains a ‘Buy’ rating on the firm.

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