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Trendlyne Marketwatch
Trendlyne Marketwatch
27 Jun 2023
Market closes higher, ideaForge Technology’s Rs 567 crore IPO gets bids for 13.3X of shares

Trendlyne Analysis

Nifty 50 closed at 18,817.40 (126.2, 0.7%) , BSE Sensex closed at 63,416.03 (446.0, 0.7%) while the broader Nifty 500 closed at 16,163.50 (97.4, 0.6%). Of the 1,963 stocks traded today, 1,147 were on the uptick, and 742 were down.

Indian indices rebounded from their day lows and closed in the green, with the benchmark Nifty 50 index rising above the 18,800 mark. Indian volatility index, Nifty VIX, fell sharply and closed below the 11% mark. NSE revised the stock market holiday this week for Bakri Id from Wednesday to Thursday.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, following the benchmark index. Nifty Bank and Nifty Realty closed over 1% higher than their Monday’s close. According to Trendlyne’s sector dashboard, Fertilizers was the top-performing sector of the day.

Major Asian markets closed in the green, except for Japan’s Nikkei 225 and Taiwan’s TSEC 50 Index. European stocks fell from their day highs and traded flat on a volatile day of trade. Brent crude oil futures traded over 1% lower after closing flat on Monday.

  • Money flow index (MFI) indicates that stocks like ICICI Securities, Alembic Pharmaceuticals, Poly Medicure and Swan Energy are in the overbought zone.

  • V-Guard Industries and InterGlobe Aviation reach their all-time highs of Rs 288.2 and Rs 2,544.4 per share, respectively. The former has risen 13.7% over the past month, while the latter grew 9%.

  • HDFC Bank and HDFC rise as they set July 1 to be the effective date of their merger. HDFC’s shares will stop trading and delist on July 13, while the merged entity of HDFC Bank is set to start trading on July 17.

  • Zee Entertainment Enterprises is rising as the Securities Appellate Tribunal (SAT) reserves its order on the appeal filed by Puneet Goenka and Subhash Chandra against SEBI. SEBI had issued an interim order restricting them from holding any key managerial positions in listed entities or their subsidiaries.

  • Cyient DLM’s Rs 592 crore IPO gets bids for 2.65X the available 1.3 crore shares on offer on the first day of bidding. The retail investor quota gets bids for 9.82X of the available 23.1 lakh shares on offer.

  • City Union Bank rises as its board approves a plan to raise Rs 500 crore through qualified institutional placements (QIP). It appears in a screener of stocks with improving book value.

  • ideaForge Technology’s Rs 567 crore IPO gets bids for 13.3X the available 46.5 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 36.4X of the available 8.4 lakh shares on offer.

  • UBS Group AG maintains its 'Buy' rating on InterGlobe Aviation and raises the target price to Rs 3,300 from Rs 2,690, according to reports. This indicates a potential upside of 30%. This target price upgrade comes on the back of increased demand, higher yields and lower fuel costs.

  • IIFL Securities rises following the Securities Appellate Tribunal's (SAT) decision to stay the SEBI order barring the company from onboarding new clients. The company appears in a screener of stocks with no promoter pledge.

  • According to reports, 30.3 lakh shares of Sapphire Foods change hands at Rs 1,377 per share through a block deal today.

  • PSU bank stocks like State Bank of India, Punjab National Bank, Canara Bank and Union Bank of India are rising in trade. Barring Indian Bank, all other constituents of the broader sectoral index, Nifty PSU Bank, are trading in the green.

  • CreditAccess Grameen is rising as it signs a $200 million external commercial borrowing deal with foreign banks and overseas branches of Indian banks. The company has already received commitments of $160 million from 12 banks. It shows up in a screener for stocks in the PE Buy zone, with high durability scores and rising momentum scores.

  • Ajay Chitkara, Chief Executive Officer of Airtel Business, resigns from Bharti Airtel, effective from the third week of August 2023. As a result, Airtel Business will be restructured into three separate businesses: global business, led by Vani Venkatesh; domestic business, led by Ganesh Lakshminarayanan; and Nxtra Data Centers, led by Ashish Arora.

  • Sixth Sense India Opportunities III buys an additional 0.7% equity stake (7,83,000 shares) in Parag Milk Foods. The deal has been executed at an average price of Rs 132 per share, amounting to Rs 10.3 crore. With this deal, Sixth Sense now has a 3.8% stake (45,04,503 shares) in the company.

  • Healthcare service providers like Dr. Lal Pathlabs, Metropolis Healthcare, Vijaya Diagnostic Centre and Thyrocare Technologies are rising in trade. The broader industry, Healthcare Services, is also trading in the green.

  • P Radhakrishna, Director (Production) of Bharat Dynamics, says the company’s current export order book stands at Rs 2,600 crore. He expects good traction in export orders in the future. He also anticipates the company’s revenue to surpass Rs 3,200 crore in FY24.

  • ICICI Securities downgrades its rating on Apollo Tyres to ‘Add’ from ‘Buy’ but raises the target price to Rs 450 from Rs 424. This implies an upside of 11.9%. The brokerage cites the stock’s expensive valuation and limited upside for lowering its rating. However, it remains optimistic about the firm’s prospects given the management’s focus on lowering debt, improving profitability and expanding margins.

  • Metal stocks likeAPL Apollo Tubes, Jindal Steel & Power, JSW Steel, Tata Steel and NMDC are rising in trade. Barring Vedanta, all other constituents of the broader sectoral index, BSE Metal, are trading in the green.

  • HBL Power System rises as it receives a Rs 135 crore order from Ashoka Buildcon. The order involves the supply and commissioning of all equipment required for the Kavach system. The company appears in a screener of stocks with improving RoCE.

  • Vivek Kumar Dewangan, Chairman and Managing Director of REC, expects a decline in the company’s borrowing cost, and AUM to improve to Rs 4.8 lakh crore by FY24. He also anticipates the net interest margin (NIM) to rise over 3.5% in the future.

  • Sun Pharmaceutical Industries' subsidiary Sun Pharma Canada receives Health Canada's approval for Absorica, an oral medication used to treat severe acne in patients aged 12 and above. The company appears in a screener of stocks with rising RoA.

  • Hindustan Unilever's Chief Executive Officer and Managing Director Sanjiv Mehta steps down from his position, effective from June 26, 2023.

  • Macquarie maintains its ‘Outperform’ rating on IndusInd Bank with a target price of Rs 1,510. The brokerage expects the bank’s credit costs to fall to 110-130 bps in FY24 from 160 bps in FY23. It believes IndusInd Bank’s NIMs will increase to 4.4%.

  • Cyient DLM raises Rs 259.6 crore from anchor investors ahead of its IPO by allotting 97.98 lakh shares at Rs 265 per share. Investors include Societe Generale, BNP Paribas Arbitrage, Amansa Holdings, HDFC Mutual Fund, Aditya Birla Sun Life Trustee and Tata Mutual Fund.

  • Star Health and Allied Insurance removes S Prakash from the position of Managing Director on June 26 and appoints him as a Strategic Management Executive.

  • ICICI Prudential Life Insurance receives a show cause cum demand notice for Rs 492.1 crore from GST authorities. The notice relates to GST credit issues affecting the whole industry. However, the company has denied any liability and plans to challenge the matter.

  • Aditya Birla Capital launches its Qualified Institutional Placement (QIP) issue with a floor price of Rs 175.99 per share. The company plans to offer preferential allotment of equity shares worth Rs 1,250 crore. The stock shows up in a screener for companies with high TTM EPS growth.

Riding High:

Largecap and midcap gainers today include Aditya Birla Capital Ltd. (192.30, 6.10%), HDFC Life Insurance Company Ltd. (667.20, 5.86%) and Star Health and Allied Insurance Company Ltd. (559.60, 4.19%).

Downers:

Largecap and midcap losers today include Bharat Electronics Ltd. (118.40, -2.47%), Vodafone Idea Ltd. (7.50, -1.96%) and Schaeffler India Ltd. (3,071.45, -1.91%).

Crowd Puller Stocks

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

Top high volume gainers on BSE included Aditya Birla Capital Ltd. (192.30, 6.10%), HDFC Life Insurance Company Ltd. (667.20, 5.86%) and Can Fin Homes Ltd. (780.10, 5.08%).

Top high volume losers on BSE were Ratnamani Metals & Tubes Ltd. (2,296.90, -1.84%), TCI Express Ltd. (1,567.30, -0.53%) and Gillette India Ltd. (5,081.40, -0.43%).

Gujarat Pipavav Port Ltd. (121.75, 4.15%) was trading at 24.1 times of weekly average. Sapphire Foods India Ltd. (1,410.05, 1.37%) and Suven Pharmaceuticals Ltd. (488.40, -0.01%) were trading with volumes 18.2 and 8.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

18 stocks overperformed with 52 week highs,

Stocks touching their year highs included - Zydus Lifesciences Ltd. (570.70, 1.58%), Can Fin Homes Ltd. (780.10, 5.08%) and Dr. Reddy's Laboratories Ltd. (5,025.60, -0.32%).

17 stocks climbed above their 200 day SMA including Dr. Lal Pathlabs Ltd. (2,220.05, 2.47%) and Shree Cements Ltd. (24,018.15, 1.33%). 4 stocks slipped below their 200 SMA including Vodafone Idea Ltd. (7.50, -1.96%) and Cipla Ltd. (1,009.25, -1.24%).

 
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The Baseline
26 Jun 2023
By Akshat Singh

India’s superstar investors have over the past decade, become famous for their stock picks and proven track record. Retail investors closely follow their investments and the sectors they favour, drawing inspiration from their investing strategies. A Kacholia buy for instance, can move the price of the stock the next day by a fair amount. In this edition of Chart of the Week, we take a look at superstar investors’ public portfolio holdings from December 2015 to June 2023 and analyse their preferred sectors and investing strategies. 

Trendlyne's superstar dashboard shows that superstars have significantly invested in  retailing, software & services, textiles, apparels & accessories, and banking & finance. Notably, Indian retail sales recorded strong growth, of 34% YoY in FY23. 

The textiles, apparels & accessories sector outperformed the Nifty 50 by 23.3 percentage points in the past year. On the other hand, the software & services sector saw a moderate growth of 9.2%, underperforming the Nifty 50 by 11.9 percentage points. Meanwhile, the banking & finance sector rose  35.4% over the same period. Prominent investors like Jhunjhunwala (now managed by RARE Enterprises), Kedia, and Damani saw significant changes in their net worth from June 2018 to June 2023, with a noticeable slowdown from Dec 2021 to Sep 2022. 

Radhakishan Damani, the promoter of retail chain DMart and the third richest Indian according to Forbes 100 richest Indian 2022, holds the biggest public stock portfolio among superstar investors. As of June 2023, this superstar investor’s net worth stood at Rs 1.8 lakh crore. The majority of his holdings are in retail (97.1%), food, beverages & tobacco (1.2%), and cement & construction (0.8%). In December 2015, he ranked 3rd in net worth, but after DMart went public in March 2017, his net worth soared to Rs 35,827 crore. During the COVID-19 pandemic in March 2020, Damani gained the pole position in portfolio net worth, surpassing Premji and Associates. Damani is a largely passive investor who has exited only four positions in the past two years: Man Infraconstruction, Prozone Intu Properties, Food & Inns, and Metropolis Healthcare. He has also trimmed holdings in three companies from December 2021 to March 2023: United Breweries in March 2023, Avenue Supermarts in March 2022, and India Cements in December 2021.

Another superstar investor who ranks high in net worth is Premji and Associates with a net worth of Rs 1.5 lakh crore as of June 2023. Its portfolio consists of only three stocks, with Wipro accounting for over 99% of the total holding. This means that this superstar investor’s public holding value completely depends on Wipro’s share price. Premji and Associates holds a 72.9% stake in Wipro as of March 2023. Damani overtook Premji in 2019 due to a 2% muted growth in revenue in the IT sector, during which Wipro lost 10% of its share value. The superstar investor’s net worth fell in 2022 as Wipro underperformed amid high inflation and rising rates, which led to slowed revenue growth and deal wins.

The late Rakesh Jhunjhunwala, also known as the big bull, has a portfolio consisting of 29 stocks, currently managed by Rare Enterprises. Its preferred sectors include textiles, apparels & accessories (36.6%), banking & finance (25.3%), and retail (10.3%). Despite the investment slowdown, Rare made additions to the portfolio in March 2023, including a 1.9% stake in Sun Pharma ARC and a 5.2% stake in Raghav Productivity Enhancers. Rare Enterprises also increased its stake in Jhunjhunwala's top pick, Titan, by 0.1%, while reducing stakes in Edelweiss Financial Services, Autoline Industries and Singer India by 0.2%, 0.4%, and 1% respectively in March 2023. Over the past year, Jhunjhunwala’s portfolio exited eight positions, with popular names like Delta Corp, TV18 Broadcast and Indiabulls Real Estate among them. 

Like Jhunjhunwala, Akash Bhansali also prefers textiles, apparels & accessories (9.9%) and banking & finance (8.9%). However, Bhansali stands out with a significant investment in the chemicals & petrochemicals (50.3%) sector. He holds substantial stakes in Sudarshan Chemicals (8.1%) and Gujarat Fluorochemicals (4.9%), which serve as the main drivers of his portfolio. 

Ashish Kacholia prefers  textiles, apparels & accessories and general industrial chemicals & petrochemicals. His portfolio has a mix of small-cap and mid-cap stocks. In March 2023, he added micro-cap stocks like Aditya Vision (1.1%), Virtuoso Optoelectronics (5.4%), DU Digital Global (5%). Kacholia actively manages his investments, regularly adding new stocks, increasing stakes, and exiting positions. In the past year, he entered and exited 7 positions, including popular ones such as VRL Logistics, Marksans Pharma, and Mahindra Logistics.

Sunil Singhania’s Abakkus Fund holds 24 out of 27 stocks from small-cap and mid-cap companies, with a focus on software & services (22.1%), consumer durables (14%) and cement & construction (12.5%). During the March 2020 quarter, Singhania’s portfolio fell by 24.3% due to the downturn in software stocks. Currently, he has added a 2.3% stake in Uniparts India and increased his stakes in IT consulting firm Mastek and commercial, services & supplies company Technocraft Industries by 0.2% each, reaching 2.3% and 3.2% respectively. In contrast, he has reduced his stakes in Tracxn Technologies and The Anup Engineering by 0.4% and 0.2% respectively. These quarterly updates in Singhania's portfolio make him an active investor.

Vijay Kedia focuses mainly on the telecom services (26.3%) sector, while Nemish Shah’s portfolio is dominated by the general industrial (62.8%) sector and Ashish Dhawan favours the banking & finance (46.14%) sector.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
26 Jun 2023
Market closes flat, ideaForge Technology’s IPO gets bids for 3.7X of shares

Trendlyne Analysis

Nifty 50 closed at 18,691.20 (25.7, 0.1%), BSE Sensex closed at 62,970.00 (-9.4, 0.0%) while the broader Nifty 500 closed at 16,066.15 (54.4, 0.3%). Of the 1,984 stocks traded today, 1,067 showed gains, and 843 showed losses.

Indian indices close flat, with the Nifty 50 hovering below the 18,700 mark. The volatility index, Nifty VIX, rose above 11 at the close.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green, with the benchmark index closing flat. Nifty Auto and Nifty Healthcare closed higher from Friday’s closing levels. According to Trendlyne’s sector dashboard, retailing emerged as the top-performing sector of the day with a rise of over 1.6%.

Most European indices trade in the red. US indices futures trade lower indicating a negative start. European energy stocks gained in early trade as Russian political unrest led to a rise in oil prices.

  • Info Edge (India) sees a long buildup in its June 29 future series as its open interest rises 26.3% with a put-call ratio of 0.72.

  • HDFC Securities upgrades Bharat Petroleum Corp to a 'Buy' from 'Add', with an upgraded target price of Rs 442. This indicates a potential upside of 22.8%. The upgrade is based on the company's strong gross refining margins (GRM) and swift recovery in auto fuel gross marketing margin, supported by the decline in Brent crude prices. The brokerage expects the company’s net sales to grow at a CAGR of 7.9% over FY22-25.

  • Aurobindo Pharma and V-Guard Industries touch their 52-week highs of Rs 725.3 and Rs 277.6 respectively. The former has risen 19.4% over the past month, while the latter increased by 9.1%.

  • RailTel Corporation of India rises as it receives an order worth Rs 294.4 crore from the Tamil Nadu State Marketing Corporation (TASMAC). The project aims to implement an integrated solution to computerise and connect the core and support functions of TASMAC. The implementation process is expected to span over five years.

  • Shree Cements is falling as reports emerge of a tax evasion amounting to Rs 23,000 crore discovered during raids conducted at the company's offices in Beawar, Jaipur, Chittorgarh, and Ajmer.

  • ideaForge Technology’s Rs 567 crore IPO gets bids for 3.7X the available 46.5 lakh shares on offer on the first day of bidding. The retail investor quota gets bids for 12.5X of the available 8.4 lakh shares on offer.

  • Commercial services & supplies stocks like Adani Enterprises, Container Corporation of India, Redington and Century Textiles & Industries are rising in trade. The broader commercial services & supplies sector is also trading in the green.

  • Pharmaceuticals stocks like Natco Pharma, Gland Pharma and Aurobindo Pharma are rising in trade. All constituents of the broader Nifty Pharma index are also trading in the green.

  • SBI Cards and Payment Services is falling as Nomura downgrades its rating to 'Reduce' and lowers the target price by 32% to Rs 700. Nomura believes that the company's profitability will continue to face pressure and points out that the growth of the credit card industry is moderating.

  • PB Fintech rises over 5.5% to reach a new 52-week high of Rs 698.9 and ranks high on Trendlyne's checklist with a score of 52.9%. The stock has 'Buy' ratings from 9 out of 12 brokerage firms. It appears in a screener of stocks with strong momentum.

  • Capacite Infraprojects rises after securing a contract worth Rs 452.5 crore from a reputable client in the sector. The order involves the construction of a residential and commercial tower in the National Capital Region (NCR). The company appears in a screener of stocks with strong EPS growth.

  • S&P Global Ratings maintains its forecast for India's FY24 GDP growth at 6% and says that it will be the fastest-growing economy in the Asia Pacific region. The rating agency also anticipates a decline in India's retail inflation to 5% in FY24 and expects the RBI to initiate interest rate cuts by early 2024.

  • Infosys enters into a strategic partnership with Danske Bank with an estimated deal value of $454 million (Rs 3,720.64 crore) for a period of 5 years. As part of the agreement, Infosys will also acquire Danske Bank's IT centre in India. The IT firm expects the transactions to be completed before Q2FY24.

  • HDFC Life Insurance receives a GST demand notice of Rs 942 crore from the government for claiming input tax credit on ineligible services. The insurer has deposited Rs 250 crore as a protest.

  • Larsen & Toubro's power & transmission business secures three orders worth Rs 1,000 to 2,500 crore in the Middle East and India. Two orders in the Middle East involve upgrading electrical networks in large industrial facilities by installing gas-insulated substations with high-voltage cable systems. The third order is for building a 765 kV transmission line in India.

  • ICICI Bank schedules a board meeting on Thursday to consider the proposal for delisting its arm, ICICI Securities.

  • ideaForge Technology raises Rs 254.9 crore from anchor investors ahead of its IPO by allotting 37.92 lakh shares at Rs 672 per share. Investors include Pinebridge Global Funds, Nomura Funds, Ashoka India Equity Investment Trust Plc, HSBC Mutual Fund and Goldman Sachs Funds.

  • Nishant Pitti, promoter of Easy Trip Planners, sells a 3.6% stake in the company on Friday. He now holds a 28.7% stake.

  • Citigroup maintains its ‘Buy’ rating on Apollo Tyres with a target price of Rs 445. The brokerage believes the company’s volume and revenue growth will be led by an improvement in demand momentum for TBR (Truck, Bus and Radial) tyres and PCR (Passenger Car Radial) tyres in FY24.

  • Sunil Singhania buys a 2.12% stake in Landmark Cars on Friday in multiple bulk and block deals.

  • Zydus Lifesciences' subsidiary, Zydus Animal Health and Investments, signs an agreement to buy a 6.5% stake in Mylab Discovery Solutions. The stake will be purchased from Rising Sun Holdings for Rs 106 crore.

  • Rail Vikas Nigam emerges as the lowest bidder in an auction conducted by the Maharashtra Metro Rail Corp (MMRCL) for the design and construction of a 6.9 km elevated metro viaduct, with a contract value of Rs 394.9 crore. The project is expected to be completed within 30 months.

Riding High:

Largecap and midcap gainers today include PB Fintech Ltd. (698.50, 6.32%), Varun Beverages Ltd. (799.20, 4.32%) and Gland Pharma Ltd. (1,021.00, 4.18%).

Downers:

Largecap and midcap losers today include Shree Cements Ltd. (23,702.15, -5.74%), Star Health and Allied Insurance Company Ltd. (537.10, -2.43%) and Schaeffler India Ltd. (3,131.40, -2.29%).

Movers and Shakers

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

Top high volume gainers on BSE included ICICI Securities Ltd. (621.90, 10.45%), Sun Pharma Advanced Research Company Ltd. (210.90, 9.08%) and SJVN Ltd. (42.00, 6.60%).

Top high volume losers on BSE were Shree Cements Ltd. (2,3702.15, -5.74%), Vedant Fashions Ltd. (1,288.90, -0.90%) and Vinati Organics Ltd. (1,822.05, -0.02%).

Zydus Wellness Ltd. (1488.10, 0.68%) was trading at 9.6 times of weekly average. Alembic Pharmaceuticals Ltd. (634.40, 4.99%) and Hatsun Agro Products Ltd. (957.80, 2.97%) were trading with volumes 8.0 and 6.1 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

13 stocks hit their 52-week highs, while 1 stock hit their 52-week lows.

Stocks touching their year highs included - Aurobindo Pharma Ltd. (721.35, 3.18%), Dr. Reddy's Laboratories Ltd. (5,041.60, 0.96%) and FDC Ltd. (323.70, 2.91%).

Stock making new 52 weeks lows included - Adani Total Gas Ltd. (644.00, 1.53%).

12 stocks climbed above their 200 day SMA including Sun Pharma Advanced Research Company Ltd. (210.90, 9.08%) and Gillette India Ltd. (5,081.00, 5.10%). 14 stocks slipped below their 200 SMA including Shree Cements Ltd. (23,702.15, -5.74%) and Godfrey Phillips India Ltd. (1,625.60, -3.09%).

 
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The Baseline
23 Jun 2023
Five Interesting Stocks Today
  1. Dixon Technologies (India) Ltd: Thisconsumer electronics manufacturer has made headlines for its partnership with Xiaomi to manufacture smartphones in India. The stock has gained 33.9% in the past month, according toTrendlyne Technicals. Recentreports also suggest that Dixon is in talks with Google to produce Google Pixel Phones in India. Dixon has received large orders from Jio and Nokia and has already started producing 4G phones for Jio since May 2023. The firm expects the revenue potential from smartphone manufacturing to reach around Rs 6,000 crore in FY24.

Dixon’s Q4FY23 revenue has increased marginally by 4% on account of lower sales in TVs and LED lights. Price corrections in open cells led to lower price realization for TVs. The firm has received orders for HD set-top boxes from Airtel, with production expected to start in the second half of FY24. Dixon’s EBITDA margin improved by 110 bps YoY to 5.1% and is expected to increase by another 30 bps in FY24. The firm plans to improve its margin by adding more products under original design manufacturing and backward integration, and a capex of Rs 400 crore for FY24. The stock shows up in thescreener with growth in quarterly net profit and increasing profit margin.

ICICI Securities says Dixon Technologies has the ability to deliver revenue and PAT growth of 42.5% and 65% respectively in FY24. However, the stock’s recent run-up discounts all its near-term positive outlook. The brokerage maintains a ‘Hold’ rating on the stock. It is currently in the Sell zone and trading above consensus estimates. 

  1. Lupin: This pharmaceuticals company rose by 6.4% in intra-day trade on Wednesday and touched its 52-week high of Rs 885.3. This comes as the US FDA approves the company’s generic version of Spiriva, a drug used to treat patients with COPD (Chronic Obstructive Pulmonary Disease). According to the management, this is the first generic approval for Spiriva in the US, making Lupin the first Indian pharmaceutical firm to get it. The drug has an estimated annual sales of $1.2 billion in the US as of March 2023. This is expected to help the company’s operations in the US as it will have the first-mover advantage for two-three years.

However, the street’s outlook on the company varies after this announcement. Axis Direct is optimistic about the approval, expecting Lupin to expand its market share and generate $100 million in sales from the generic drug in FY24. The brokerage also anticipates improved margins on the back of lower raw materials costs. 

On the other hand, ICICI Securities maintains its ‘Sell’ rating, as it believes the firm is trading at expensive levels. However, it has increased the target price on the stock as it sees the company’s new launches driving margin expansion and revenue growth in FY24. According to Trendlyne’s Forecaster, Lupin’s annual revenue and net profit are estimated to grow by 11.7% and 176.7% in FY24 respectively.  

The pharma giant’s new product launches in the US market look promising but the introduction of the Inflation Reduction Act of 2022 may dampen market conditions. The US government is focused on lowering drug prices for American consumers, and the Act includes provisions to bring down prescription drug costs across the board and reduce government spending. This has led to pharmaceutical industry lobby groups suing the US government. 

  1. Larsen & Toubro: This construction & engineering stock touched its all-time high of Rs 2,427 per share on Friday after signing a contract with DRDO (Defence Research & Development Organisation). The stock has risen 83.8% over the past five years, helping it appear in a screener of consistent high-return stocks.

The contract with DRDO involves the development of two indigenous air-independent propulsion systems for Indian Navy submarines. The company’s hydrocarbon business also won an order worth Rs 1,000-2,000 crore from an undisclosed overseas client on June 13. The order is for the engineering, procurement, construction and installation of hydrocarbon power plants.

The company’s order inflow for FY23 stood at approximately Rs 2.3 lakh crore, with 72% of orders coming from the domestic market and the remaining 28% from international clients. The management expects a 10-12% growth in its order book in FY24. Geojit BNP Paribas has upgraded the stock to ‘Buy’ from ‘Hold’, with a revised target price of Rs 2,610. This indicates a potential upside of 9.2%. The brokerage believes that the company has a healthy order pipeline, with a good mix of orders from both the government and private sectors.

The stock ranks high in Trendlyne’s checklist with a score of 71.4%, while it has a consensus recommendation of ‘Buy’ from 35 analysts. It appears in a screener of stocks where brokers have upgraded recommendations and target prices in the past three months. 

  1. InterGlobe Aviation (IndiGo): This airline company touched an all-time high of Rs 2,490 on Tuesday after placing an order worth $50 billion with the European aircraft manufacturer Airbus SE for 500 A320 Family aircraft. This is the largest-ever order in the global aviation industry and will be delivered between 2030 and 2035. The company already has a previous order of 480 aircraft, expected to be delivered by 2030.

    With this, IndiGo’s order book (a mix of A320NEO, A321NEO and A321XLR aircraft) consists of around 1,000 aircraft in the pipeline. The management expects IndiGo to benefit from the fuel-efficient A320NEO family aircraft, which will help reduce operating costs and deliver fuel efficiency.

The stock has risen by 2.5% in the past week till Friday, supported by an increase in its market share, which grew by 3.9 percentage points to 61.4% in May. Due to the recent rise in stock price, the company makes it to a screener of stocks with high momentum.

Following the order announcement, ICICI Securities maintains its ‘Buy’ rating with a target price of Rs 3,000, implying an upside of 21.1%. According to the brokerage, the repeat order indicates consistency in its business strategy. 

  1. Rail Vikas Nigam (RVNL): This execution arm of Indian railways opened 5.2% lower on Tuesday, following reports of challenges faced by the Vande Bharat train project. According to reports, RVNL has requested a higher stake in the joint venture (JV) with Russian company TMH Group’s Metrowagonmash. 

The consortium, which won the bid to supply 200 Vande Bharat sleeper trains in March 2023, originally had RVNL holding a 25% stake in the JV. Due to US sanctions on the Russian TMH Group, the Indian government has reportedly asked RVNL to be the majority shareholder to protect the JV. While RVNL is keen to take a higher stake of 69%, it clarified that reports on breaking the JV were “false”. The company added that the MoU is still valid. The Railway Ministry has asked the issue to be resolved at the earliest or a re-tender of the Rs 36,000 crore project will be undertaken.

RVNL’s stock is up by 305.2% in the past year and rose by 4.2% intra-day on Wednesday. This growth can be attributed to its huge order book of Rs 56,000 crore. Additionally, it recently bagged an order worth Rs 1,731 crore from Chennai Metro Rail for the construction of underground stations. RVNL has lately been diversifying from Railway projects and expanding into other EPC projects like highways, metros, and ports. 

Currently, RVNL’s average execution period is 2.5 to 3.5 years. However, JVs with technological partners aim to cut down the execution time and also improve its margins. Successful execution is key for RVNL's growth. The company features in a screener for stocks with strong cash-generating ability from core businesses.

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
23 Jun 2023
Market closes lower, HMA Agro Industries’ Rs 480 crore IPO gets bids for 1.6X of shares

Trendlyne Analysis

Nifty 50 closed at 18,665.50 (-105.8, -0.6%), BSE Sensex closed at 62,979.37 (-259.5, -0.4%) while the broader Nifty 500 closed at 16,011.80 (-129, -0.8%). Of the 1,973 stocks traded today, 486 were on the uptick, and 1,429 were down.

Indian indices extended their losses from the afternoon session and closed in the red. The benchmark Nifty 50 index fell over 100 points and closed below the 18,700 mark. Adani Group companies closed deep in the red after Bloomberg reported that US authorities are looking into what representations Adani Group made to its American investors following Hindenburg Research’s report. 

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, underperforming the benchmark index. Nifty Metal and Nifty Media closed over 2% lower than their Thursday’s close. According to Trendlyne’s sector dashboard, Hardware Technology & Equipment was the top-performing sector of the week.

Most Major European indices traded in the red, taking cues from the Asian indices. US index futures also trade in the red amid weak global cues. Brent crude oil futures traded over 1.2% lower after falling nearly 3.6% on Thursday.

  • Bharat Petroleum Corp sees a short buildup in its June 29 future series as its open interest rises 14.8% with a put-call ratio of 0.34.

  • Shilpa Medicare's stock rises as its board approves a rights issue of equity shares worth Rs 325 crore. The board also approves the amalgamation of Shilpa Therapeutics into the company. The company appears in a screener of stocks with low debt.

  • Bank of Maharashtra, NMDC Steel and Union Bank of India trade below their second support or S2 levels as market trades lower.

  • Adani Group stocks like Adani Enterprises, Adani Power, Adani Transmission and Adani Ports & SEZ are falling as reports suggest that US regulatory authorities have sent inquiries to American investors with large holdings in the conglomerate. The investigation follows Hindenburg Research's report. Adani Group claims that it is not aware of any subpoenas to investors.

  • ABB India, Titan Co, Godrej Properties, Siemens and APL Apollo Tubes outperform the Nifty 500 index over a five-year period.

  • HMA Agro Industries’ Rs 480 crore IPO gets bids for 1.6X the available 60.5 lakh shares on offer on the last day of bidding. The retail investor quota gets bids for 0.96X of the available 30.3 lakh shares on offer.

  • UPL falls as it transfers its specialty chemical business to its subsidiary, UPL Specialty Chemicals, on a slump sale basis. The transaction is valued at Rs 3,572 crore based on fair market value. The company appears in a screener of stocks with reduced MF holdings.

  • Nomura remains positive on the banking sector in the medium to long term on the back of decade-low NPLs (non-performing loans), strong return on assets (RoAs), and bank capitalisation at or near all-time highs. The brokerage identifies ICICI Bank, Axis Bank and IndusInd Bank as its top picks.

  • Movies & entertainment, electronic components, advertising & media and healthcare servicesindustries rise more than 6% in the past week.

  • Lupin is rising as it launches rufinamide oral solution, a generic version of banzel oral suspension used for preventing and controlling epileptic seizures. The drug has an estimated sales of $72 million in the US in the year ending April 2023, according to IQVIA.

  • KRChoksey maintains its ‘Buy’ rating on Hindustan Unilever with a target price of Rs 3,109. This indicates an upside of 18%. The brokerage is optimistic about the company’s prospects given its market share gains, volume growth, premiumisation efforts and expansive distribution network. It expects the firm’s revenue to grow at a CAGR of 9.6% over FY23-25.

  • PSU bank stocks like State Bank of India, Punjab National Bank, Canara Bank and Union Bank of India are falling in trade. Barring Bank of Baroda and Indian Bank, all other constituents of the broader sectoral index, Nifty PSU Bank, are trading in the red.

  • Rajesh Sharma, Managing Director of Capri Global Capital, says the company targets growth of more than 30% in FY24. He also expects net interest margins (NIMs) to improve and exceed 11%.

  • Consumer durables stocks like Rajesh Exports, Voltas, Havells India, VIP Industries and Blue Star are falling in trade. Barring Crompton Greaves Consumer Electricals, all other constituents of the broader sectoral index, BSE consumer durables, are trading in the red.

  • Jefferies upgrades its rating on Shriram Finance to a 'Buy' rating from 'Hold' with an upgraded target price of Rs 2,130, according to reports. This indicates a potential upside of 28.6%. The brokerage believes that factors like increasing demand outlook in the commercial vehicles segment and clearance of overhang concerns will aid the lender to drive revenue growth. It expects the company's net profit to grow at a CAGR of 16% over FY23-26.

  • Adani Enterprises falls more than 6% and ranks low on Trendlyne's checklist with a score of 43.5%. The stock is in the 'Sell' zone and appears in a screener with high promoter pledge.

  • Voltas is falling as UBS downgrades its rating to ‘Neutral and lowers the target price by 30% to Rs 840. The brokerage expects the industry challenges to persist, making it difficult for Voltas to expand its market share and improve its operating profit margin.

  • Aether Industries is falling despite raising Rs 750 crore through a qualified institutional placement (QIP) approved by its board of directors. The QIP involved issuing 80 lakh equity shares to 36 qualified institutional buyers at an issue price of Rs 936 per share. SBI Mutual Fund, Axis Mutual Fund, and Edelweiss Mutual Fund emerged as the largest buyers, acquiring stakes of 40%, 11.1%, and 6.7% respectively.

  • Metal stocks like Adani Enterprises, Hindalco Industries, National Aluminium Co, APL Apollo Tubes and Jindal Steel & Power are falling in trade. The broader sectoral index, Nifty Metal, is also trading in the red.

  • Khurshed Yazdi Daruvala, promoter of Sterling and Wilson Renewable Energy, sells a 0.79% stake in the company on Thursday. He now holds a 2.87% stake.

  • Reports suggest that 44.56 lakh shares (11% equity) of Landmark Cars, amounting to Rs 293 crore, have changed hands in a block deal. TPG Capital is the likely seller in this transaction.

  • Vedanta denies media reports about the sale of the Sterlite Copper Plant in Tamil Nadu. The firm says that the news articles are wrong, baseless and incorrect. It shows up in a screener for stocks with low PE ratios.

  • Murali S, promoter of Craftsman Automation, sells a 3.79% stake in the company on Thursday. He now holds 5.2%.

  • BofA Securities maintains its ‘Buy’ rating on One97 Communications (Paytm) with a target price of Rs 1,020. The brokerage expects a rapid improvement in the company’s margins. However, it highlights the risks of increased competition from peers, including PhonePe and Jio Financial Services.

  • Man Infraconstruction rises after securing a letter of acceptance for an order worth Rs 680 crore from Bharat Mumbai Container Terminal. The order is for the implementation of phase two infrastructure works at the fourth container terminal at Jawaharlal Nehru Port, Navi Mumbai. The project is expected to be completed within 2.5 years.

  • Coforge completes the acquisition of the remaining 20% stake in its subsidiary, Coforge Business Process Solutions, for Rs 336.9 crore. This brings the company's total stake to 80%. It shows up in a screener for stocks with improving cash flows from operations over the past two years.

Riding High:

Largecap and midcap gainers today include Aurobindo Pharma Ltd. (699.15, 4.09%), IndusInd Bank Ltd. (1,308.70, 2.83%) and Aditya Birla Capital Ltd. (175.00, 1.95%).

Downers:

Largecap and midcap losers today include Adani Enterprises Ltd. (2,233.55, -6.83%), Adani Transmission Ltd. (757.50, -5.83%) and Adani Power Ltd. (242.40, -5.53%).

Volume Rockets

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

Top high volume gainers on BSE included Natco Pharma Ltd. (674.00, 7.50%), ICICI Securities Ltd. (563.05, 7.04%) and DCM Shriram Ltd. (917.40, 5.86%).

Top high volume losers on BSE were Voltas Ltd. (750.50, -4.04%), Bharat Petroleum Corporation Ltd. (359.60, -3.70%) and Sterling and Wilson Renewable Energy Ltd. (289.15, -2.97%).

Chemplast Sanmar Ltd. (440.60, -1.40%) was trading at 5.2 times of weekly average. HLE Glasscoat Ltd. (661.80, -1.50%) and Gillette India Ltd. (4,835.00, 5.44%) were trading with volumes 4.8 and 4.3 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

11 stocks overperformed with 52-week highs, while 2 stocks were underachievers and hit their 52-week lows.

Stocks touching their year highs included - Aurobindo Pharma Ltd. (699.15, 4.09%), Blue Star Ltd. (785.85, -1.03%) and InterGlobe Aviation Ltd. (2,475.05, -0.08%).

Stocks making new 52 weeks lows included - City Union Bank Ltd. (119.90, -3.27%) and Adani Total Gas Ltd. (634.30, -3.18%).

7 stocks climbed above their 200 day SMA including DCM Shriram Ltd. (917.40, 5.86%) and Swan Energy Ltd. (271.25, 1.84%). 22 stocks slipped below their 200 SMA including India Cements Ltd. (209.70, -3.90%) and Dr. Lal Pathlabs Ltd. (2,109.85, -3.24%).

 
Trendlyne Marketwatch
Trendlyne Marketwatch
22 Jun 2023
Market closes lower, HMA Agro Industries’ Rs 480 crore IPO gets bids for 0.91X of shares

Trendlyne Analysis

Nifty 50 closed at 18,771.25 (-85.6, -0.5%), BSE Sensex closed at 63,238.89 (-284.3, -0.5%) while the broader Nifty 500 closed at 16,140.80 (-100.2, -0.6%). Of the 1,965 stocks traded today, 588 were gainers and 1,321 were losers.

Indian indices extend losses from the afternoon session and close in the red, with Nifty 50 hovering below the 18,800 mark. The volatility index, Nifty VIX, rose above 11 at the close. Fitch Ratings revised India’s GDP growth for FY24 to 6.3% from an earlier estimate of 6%.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Media closed flat from Wednesday’s closing levels. All other sectoral indices closed lower. According to Trendlyne’s sector dashboard, fertilizers emerged as the top-performing sector of the day with a rise of over 0.9%. 

Most European indices trade in the red. US indices futures trade lower indicating a negative start. Bank of England is set to increase interest rates by at least 25 bps as UK's inflation rate for May remained stubbornly high at 8.7% against an expectation of 8.4%.

Indian indices pare gains from themorning session and trade in the red, with the Nifty 50 hovering below the 18,800 mark. India's volatility index, Nifty 50 VIX, rises above 11. Piramal Enterprises sells an 8.3% stake in Shriram Finance for approximately Rs 4,824 crore. 

  • Money flow index (MFI) indicates that stocks like Poly Medicure, Britannia Industries, Blue Dart Express and Graphite India are in the overbought zone.

  • Fortis Healthcare signs an agreement to sell its Vadapalani Hospital in Chennai to Sri Kauvery Medical Care for Rs 152 crore. The sale is part of the company’s ongoing portfolio rationalisation strategy to deepen its presence in select geographic clusters.

  • Max Financial Services rises more than 6% and ranks high on Trendlyne's checklist with a score of 56.5%. The stock is in the 'Buy' zone and has 'Buy' ratings from 12 out of 13 brokerage firms. It appears in a screener of stocks with no debt.

  • Larsen & Toubro signs a contract with DRDO (Defence Research & Development Organisation) to develop two indigenous air-independent propulsion systems for submarines of the Indian Navy. The company shows up in a screener for stocks with consistently high returns over the past five years.

  • Credit rating agency Fitch Ratings raises its forecast for India’s GDP growth to 6.3% in FY24, from the earlier estimate of 6%. The rating agency notes that India’s GDP growth in January-March exceeded expectations, and there has been a recovery in the manufacturing sector.

  • Swan Energy, BSE, ICICI Securities and Trident are trading above their third resistance or R3 levels, despite Nifty 500 trading in the red.

  • HMA Agro Industries’ Rs 480 crore IPO gets bids for 0.91X the available 60.5 lakh shares on offer on the third day of bidding. The retail investor quota gets bids for 0.48X of the available 30.3 lakh shares on offer.

  • Hazoor Multi Projects is surging as it bags an order worth Rs 352.8 crore from Apco Infratech for the construction of an eight-lane access-controlled expressway for the Vadodara-Mumbai Expressway project.

  • Sugar stocks like Shree Renuka Sugars, EID Parry (India), Balrampur Chini Mills, Dalmia Bharat Sugar & Industries and Dhampur Sugar Mills are rising in trade. The broader sugar industry is also trading in the green.

  • PSU banks like Punjab National Bank, Bank of Baroda, Central Bank of India, Bank of Maharashtra and UCO Bank are falling in trade. All constituents of the broader sectoral index, Nifty PSU Bank, are also trading in the red.

  • According to reports, 30.3 lakh shares (0.1% equity) of Sun Pharmaceutical Industries, amounting to Rs 300.5 crore, have changed hands in a large trade.

  • L&T Technology Services extends its partnership with PCT to provide cloud-based solutions to the aerospace, defence and transportation sectors, according to reports. The companies will provide digital support for design and manufacturing to their shared clients.

  • Rail Vikas Nigam emerges as the lowest bidder for two projects commissioned by Madhya Pradesh Poorv Kshetra Vidyut Vitaran Co, Jabalpur. As a result, the company has secured orders worth Rs 281 crore. It appears in a screener of stocks with growing net profit.

  • Carborundum Universal appoints Sridharan Rangarajan as its Managing Director (MD), effective August 3, 2023. The decision comes after the current MD, Ananthaseshan, expressed his desire to retire. Sridharan is currently the Director of Finance and Strategy for the company.

  • Glenmark Pharmaceutical falls as its facility in Monroe, North Carolina, receives a warning letter from US FDA. The company appears in a screener of stocks with declining RoE.

  • According to Morgan Stanley, the near-term outlook on the IT sector continues to be challenging. The brokerage identifies Infosys, HCL Technologies and LTIMindtree as its preferred picks in the sector. It also downgrades its rating on Cyient to ‘Equal-weight’ from 'Overweight' due to expensive valuations following the recent uptrend in share price.

  • Sharekhan maintains its ‘Buy’ rating on Mahindra & Mahindra with a target price of Rs 1,550. This implies an upside of 12.3%. The brokerage remains optimistic about the firm due to its improvement in operating performance, market share gains, new launches and focus on scaling. It expects the company’s net profit to grow at a CAGR of 14% over FY23-25.

  • Tata Consultancy Services (TCS) expands its partnership with UK-based National Employment Savings Trust (NEST) through a contract worth £1.5 billion (Rs 1.6 lakh crore). Although the amount is for 18 years, the agreement has been signed for an initial tenure of 10 years with a value of £840 million (Rs 8788.2 crore). The contract will involve TCS enhancing the member experience for NEST.

  • IT stocks like Coforge, Infosys and Mphasis are falling in trade. All constituents of the broader Nifty IT index are also trading in the red.

  • According to reports, 1.84 crore shares (2.5% equity) of Delhivery, amounting to Rs 8.6 crore, have changed hands in the pre-open. Carlyle is the likely seller in this transaction.

  • Kavitha Reddy Gangapatnam, promoter of MTAR Technologies, sells a 0.37% stake in the company on Wednesday. She now holds a 1.99% stake.

  • Sansera Engineering is rising following reports of Client Ebene planning to sell a 9% stake (47.8 lakh shares) and CVCIGP II Employee Ebene intending to sell a 5% stake (26.8 lakh shares) in the company at a discount of up to 5% from Wednesday’s closing price. It appears in a screener of stocks with strong momentum.

  • US Federal Reserve Chairman Jerome Powell said on Wednesday that further interest rate hikes are likely to bring down inflation below 2%. The US Fed had announced a pause in rate hikes during their meeting last week.

  • Bharti Airtel acquires a 12.1% equity stake (2,83,400 shares) in Egan Solar Power for Rs 1.3 crore, at an average price of Rs 47.2 per share. The acquisition aims to comply with the captive power plant provisions of electricity laws.

  • Piramal Enterprises sells an 8.3% stake in Shriram Finance for approximately Rs 4,823.7 crore, while the Government of Singapore buys a 2.4% stake in the company for Rs 1,409.4 crore.

Riding High:

Largecap and midcap gainers today include Supreme Industries Ltd. (3,174.45, 4.07%), Max Financial Services Ltd. (762.95, 3.25%) and Polycab India Ltd. (3,483.95, 1.92%).

Downers:

Largecap and midcap losers today include IDFC First Bank Ltd. (77.60, -5.60%), Aditya Birla Capital Ltd. (171.65, -4.69%) and Mahindra & Mahindra Financial Services Ltd. (312.85, -3.99%).

Volume Rockets

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

Top high volume gainers on BSE included Swan Energy Ltd. (266.35, 8.10%), Aether Industries Ltd. (1,165.95, 6.01%) and KEI Industries Ltd. (2,353.60, 5.05%).

Top high volume losers on BSE were India Cements Ltd. (218.20, -5.75%), Indiabulls Housing Finance Ltd. (114.55, -2.22%) and Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (587.65, -2.06%).

ICICI Securities Ltd. (526.00, 2.11%) was trading at 7.7 times of weekly average. Coromandel International Ltd. (950.35, 0.86%) and Trident Ltd. (34.15, 2.25%) were trading with volumes 6.3 and 5.8 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

19 stocks took off, crossing 52-week highs,

Stocks touching their year highs included - Ajanta Pharma Ltd. (1,495.00, -0.99%), Apollo Tyres Ltd. (415.10, -1.04%) and Bank of Baroda (193.30, -2.42%).

15 stocks climbed above their 200 day SMA including Swan Energy Ltd. (266.35, 8.10%) and Max Financial Services Ltd. (762.95, 3.25%). 15 stocks slipped below their 200 SMA including Vodafone Idea Ltd. (7.45, -3.87%) and Aegis Logistics Ltd. (326.65, -3.70%).

 
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The Baseline
21 Jun 2023
Did Indian startups overestimate the online market? | Stocks that may see high revenue growth in FY24
By Deeksha Janiani

The Indian stock market has been very upbeat, thanks to a surge in foreign fund investment. The Sensex briefly touched a record high today, at 63588.3.

But one major part of the primary markets has stalled: so far this year, not a single tech startup has come out with an IPO. This is quite a contrast to the nine major startup IPOs during the bull run of 2021.  

Technology startups have delayed their IPOs, reduced their planned offer size or dropped their plans altogether. Take the case of Ixigo, a travel company whose DRHP expired in March, with no plans for a resubmission in the near future. Similarly, OYO reduced its offer size by nearly half to $400-600 million in its latest filing. 

What is holding back these companies? One factor is the underperformance of startup stocks that recently listed. And, the increase in interest rates significantly hit the excitement around startups in public markets and private capital. 

Startups were being funded at mind-boggling valuations as investors were afraid of missing out on the 'next big thing', and seemingly unconcerned with business models or profitability. Capital was cheap, as the Fed cut its interest rate to near zero in March 2020 and kept it there till March 2022. The mood was exuberant. For instance, Groww's valuation tripled to $3 billion post its series E funding in October 2021. 

Now, the funding taps are drying up, and venture capital for Indian startups has declined in recent quarters. The recent rise in interest rates is only partly to blame here. 

Scott Shleifer, partner at Tiger Global, a key backer of Indian startups, noted his disappointment during an investor call in February, “Returns on capital in India have sucked historically. If you look at internet market-leaders like Google, Facebook, or Tencent, revenue for them got bigger than costs a decade ago. But that did not happen in India”. 

So are startup investors right to worry?  

In this week’s Analyticks:

  • Are startups overestimating the Indian market opportunity?
  • Screener: New-age startups that may clock high revenue growth in FY24

Let’s get into it.

Market size questions: Did tech startups see the cake as bigger than it actually is?                 

Several Indian unicorns (startups valued at over $1 billion) have witnessed big markdowns in their valuations since the second half of 2022. American investment company Blackrock wrote off over 60% of Byju’s valuation in its recent quarterly filing. 

A company’s valuation is decided by two key factors: the estimated future growth rate and the discounting rate. With the rise in interest rates, the discounting rate increases, reducing the present value. But since most startups are burning cash, the future growth rate is much more relevant here.

The future growth of a startup depends on the market size, and its ability to capture a piece of it. And after years of pouring billions of dollars into the Indian market, it looks like startups and venture capitalists may have overestimated its true size.

A relatively small user base is powering online spending

At a conference in 2022, Narayana Murthy, former chairman of Infosys, said, “New-age startups have by habit, overestimated the Indian market. In the mid-90s, many foreign companies set shop in India, estimating that there are 200 million middle-class Indians who are willing to buy. And they found that they weren’t there. The same story has repeated today.”

Blume Ventures estimates that the real target market for tech startups consists of 30 million high-income households, with a total headcount of 120 million. The average per capita income of these households is $12,000 per annum (nearly Rs 10 lakh). 

Nithin Kamath, co-founder of Zerodha, suggests that the addressable market for B2C tech startups is a maximum of 150 million users. A Ken report estimates this market to be even smaller, at 70 million. Within this, just 10 million users are India’s ‘California users’ - the digitally savvy customers who account for 40% of India's online spends. 

Let’s consider another estimate of the number of users driving online spending. According to Redseer and TRAI, out of India’s 850 million internet subscribers, only 45 million are considered mature users who contribute significantly to online transactions. 

In the case of Zomato, only 5% of users drive 33% of its orders. Similarly, payment platforms like Paytm, PhonePe, Google Pay and UPI rely on 6.5% of users who are responsible for 44% of the total transactions. 

Flat growth in internet subscribers a concern for online business

Internet subscribers in India, the main driver for online businesses, grew at a CAGR of 20% between FY15-FY20. The broadband user base rose even faster, due to events like demonetization and the launch of cheap or free plans from Reliance Jio.  

But this user base growth has fallen to single digits post FY21. This isn’t a good sign for tech startups that are banking on high future growth. Ideally, as more people get connected to the internet, startups have a larger pool of users, some of which become their customers. 

If we go by Inc42 estimates, the internet user base in India may rise to over 130 crore by 2030, translating to a CAGR of roughly 6%. This is a rosy number, since the current growth rate has already fallen below that. 

Growth in e-commerce market slowed in FY23

The e-commerce sector contributes the largest share of 44% to the Indian internet economy, according to the ‘India eConomy Report’. This segment grew at an impressive CAGR of 40% between FY20 and FY22 due to intermittent shutdowns of physical stores during the pandemic. 

However, the growth in e-commerce GMV slowed to 22% in FY23 as the economy reopened. Accordingly, the e-commerce sector’s demand for warehousing also declined by 71%.

The impact of the slowing e-commerce market was also visible in the performance of Delhivery. The logistics tech player saw its revenues fall by double-digits in Q4FY23.

Commenting on this, Falguni Nayar, CEO of Nykaa, said in the recent earnings call, “On the fashion front, the physical store network of domestic brands was very large, and as these domestic stores opened, there was some adversity in growth.” 

Growth pace slows for listed tech startups

The overall slowdown in discretionary demand from November 2022 has trickled down to consumer-facing tech startups as well.

Zomato, for instance, saw a decline in user growth for its food delivery business. The company attributes this decline to its decision to shut operations in 225 cities, to focus on achieving profitability. The gross order value has remained within the Rs 6,400-6,700 crore range since Q1FY23. 

Nykaa also experienced slower order growth in its flagship beauty division post-Covid, while the average order value was more or less flat. Order trajectory in the emerging fashion segment has been steady between 1.3 million and 1.5 million since Q2FY22. 

As for Paytm, the growth in its merchant payments or B2B segment was much faster than its B2C growth.  

Foreign analysts expect India's internet economy to touch almost $1 trillion by 2030, with e-commerce contributing 50% to this number. Essentially, they are factoring in a 25% growth CAGR. But tech startups, including e-tailers, food tech, and edtech, are once again competing with brick-and-mortar establishments, while battling the seemingly stubborn preference among Indians to shop offline. 

Achieving high growth will be difficult without an increase in customer wallet spends and higher per capita incomes. Indians need to get rich quick, for tech startup dreams to come true.

Screener: New-age tech startups with strong Forecaster estimates for FY24 revenue growth

As FY24 unfolds, the growth prospects of new-age tech startups are under scrutiny. This screener shows startups that are likely to clock robust revenue growth in FY24, according to Trendlyne’s Forecaster.

Among the companies listed, RateGain Travel has the highest revenue growth estimates for FY24, followed by Easy Trip Planners, CE Info Systems, Zomato, Paytm and Nykaa. Notably, PB Fintech, Zomato and Paytm are projected to continue making losses in FY24, although at a lower rate compared to previous years.

According to analysts, RateGain Travel is expected to clock a revenue growth of 56% in FY24. The company posted a 70% YoY rise in Q4 revenue, while its net profit improved by 2.9x. This was driven by improvements in revenue from the distribution, marketing technology, and desktop as a service segments. Analysts expect its profits to double in FY24.

Consensus estimates of analysts see Easy Trip’s revenue rising by 39% in FY24, with a 32% growth in net profit. The company witnessed a YoY revenue rise of over 90% in Q4, backed by improvement in gross booking revenue.

CE Info Systems comes in next with a Trendlyne Forecaster revenue growth estimate of 35.1% in FY24 and a net profit growth estimate of nearly 25%. The company’s revenue rose by 28.1% YoY in Q4FY23, which was aided by a rise in customer base and order book. 

You can find some popular screenershere.

 
Trendlyne Marketwatch
Trendlyne Marketwatch
21 Jun 2023
Market closes higher, KRChoksey keeps its 'Accumulate' rating on HDFC Asset Management

Trendlyne Analysis

Nifty 50 closed at 18,856.85 (40.2, 0.2%), BSE Sensex closed at 63,523.15 (195.5, 0.3%) while the broader Nifty 500 closed at 16,240.95 (41, 0.3%). Of the 1,969 stocks traded today, 893 showed gains, and 1,014 showed losses.

Indian indices closed in the green, with the Nifty 50 settling above the 18,850 mark. BSE Sensex touched an all-time high of 63,588.3 but fell from its day high and closed above the 63,500 mark. Lupin closed over 5.4% higher after the company received US FDA approval for its abbreviated new drug application (ANDA) for tiotropium bromide inhalation powder.

Nifty Midcap 100 closed in the green, outperforming the benchmark index. Nifty Media and Nifty Infra closed higher than Tuesday’s close. According to Trendlyne’s sector dashboard, Hardware Technology & Equipment was the top-performing sector of the day.

European indices traded flat or lower, except for Germany’s DAX index, which traded marginally higher. Major Asian indices closed mixed, in line with US index futures. Brent crude oil futures traded higher after closing in the red on Tuesday.

  • Relative strength index (RSI) indicates that stocks like Brightcom Group, Mazagon Dock Shipbuilders, L&T Finance Holdings and IDFC First Bank are in the overbought zone.

  • KR Choksey maintains its 'Accumulate' rating on HDFC Asset Management with a target price of Rs 1,970 per share. This indicates a potential upside of 4%. The broker cites the company's strong distribution network, nationwide presence, and digital platform as sales drivers. It expects the company's revenue to grow at a CAGR of 4.5% for FY22-25.

  • Thermax falls more than 3% and ranks low on Trendlyne's checklist with a score of 47.8%. The stock is in the 'Sell' zone and appears in a screener with improving annual net profit.

  • Shree Cement is falling following reports of the Income Tax Department conducting raids at five of the company's locations in Rajasthan.

  • Electronic components, IT software products and education industries gain more than 50% over the past three months.

  • Shriram Finance and Aether Industries reach their all-time highs of Rs 1,793.5 and Rs 1,104.5 per share, respectively. The former has risen 29.5% over the past month, while the latter rose 19.2% over the same period.

  • Blue Dart Express rises 7% in trade today as Motilal Oswal upgrades its rating to ‘Buy’ from ‘Neutral’, with a target price of Rs 8,040. The brokerage believes that the company will benefit from decreasing aviation turbine fuel (ATF) prices, aircraft additions, and its focus on improving market share.

  • Archean Chemical Industries rises as Societe Generale buys a 0.5% equity stake (6,42,365 shares) via an open market transaction amounting to Rs 32.8 crore at an average price of Rs 510 per share. Meanwhile, Norges Bank sells a 0.8% stake (9,50,000 shares) in the company at an average price of Rs 510.9 per share, amounting to a total of Rs 48.5 crore.

  • HMA Agro Industries’ Rs 480 crore IPO gets bids for 0.55X the available 60.5 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 0.38X of the available 30.3 lakh shares on offer.

  • Lupin hits a 52-week high at Rs 867.5 per share with US FDA approval for its abbreviated new drug application (ANDA) for tiotropium bromide inhalation powder. This generic equivalent of Sprivia HandiDaler has estimated FY23 US sales of $1,264 million, according to IQVIA. Lupin also signs an MoU with the Maharashtra government to diagnose and treat cardiovascular diseases and chronic obstructive pulmonary disease in Palghar.

  • Apollo Micro Systems, Birlasoft, Power Mech Projects and JTEKT India witness a significant surge in mutual fund holdings in the past month.

  • According to reports, 21.4 lakh shares (0.14% equity) of ICICI Prudential Life Insurance Co, amounting to Rs 120.4 crore, have changed hands in a large trade.

  • IRB Infrastructure Developers, IDFC, Aptus Value Housing Finance and Oil India are trading below their second support or S2 level.

  • ICICI Securities keeps its ‘Buy’ rating on Bharat Electronics and raises the target price to Rs 150 from Rs 140. This implies an upside of 19.6%. The brokerage states that the company is its top pick in the defence sector, given its involvement in upcoming major orders. It expects the firm’s growth to be driven by steady execution and order book expansion.

  • Piramal Enterprises rises over 12.5% and ranks high on Trendlyne's checklist with a score of 65.2%. The stock is currently in the 'Buy' zone and has 'Buy' ratings from 8 brokerage firms. It appears in a screener of stocks with decreasing provisions. 

  • JP Morgan maintains its ‘Overweight’ rating on United Spirits with a target price of Rs 960. The brokerage is optimistic that the company will deliver double-digit revenue growth and improve its profitability metrics.

  • Media stocks like Zee Entertainment Enterprises, Saregama India, Tips Industries, Sun TV Network andPravegare rising in trade. The broader media sector is also trading in the green.

  • Metal & mining stocks like JSW Steel, Hindalco Industries, Jindal Steel & Power, APL Apollo Tubes and National Aluminium co are falling in trade. Barring Coal India, all other constituents of the broader sectoral index, BSE Metal, are trading in the red.

  • Aptus Value Housing Finance India falls over 6% in trade today as 90.5 lakh shares (1.8% equity) of the company, amounting to Rs 234 crore, change hands in a large trade, according to reports.

  • SpiceJet is rising as it signs a settlement agreement with its aircraft lessor, Nordic Aviation Capital, to settle all liabilities for the Q400 aircraft leased by the company. SpiceJet will also induct three previously repossessed Q400 aircraft into its fleet.

  • Pidilite Industries rises as it launches joint venture units with Litokol SPA Italy and Tenax SPA. The newly formed entities, Pidilite Litokol Pvt Ltd (PLPL) and Tenax Pidilite Pvt Ltd (TPPL), will manufacture in Amod, Gujarat. The manufacturing units occupy an area of 27,000 sq ft for Litokol and 21,000 sq ft for Tenax, respectively, and are fully automated.

  • According to reports, 3.1 crore shares (8.3% equity) of Shriram Finance have changed hands in a block deal. Piramal Enterprises is the likely seller in this transaction.

  • Rail Vikas Nigam rises as it receives a letter of acceptance from Chennai Metro Rail for orders worth Rs 4,058.2 crore. The order involves the construction of 12 metro stations for the phase two project of Chennai Metro.

  • SBI Mutual Fund buys a 1.6% stake in HDFC Asset Management Co for Rs 624.5 crore and Small Cap Fund acquires a 1.7% stake for Rs 697.6 crore on Tuesday. Meanwhile, Abrdn Investment Management sells a 10.2% stake for Rs 4,079 crore on the same day.

Riding High:

Largecap and midcap gainers today include Shriram Finance Ltd. (1,734.35, 11.20%), JSW Energy Ltd. (274.30, 6.71%) and Lupin Ltd. (875.05, 5.44%).

Downers:

Largecap and midcap losers today include Polycab India Ltd. (3,418.35, -3.50%), HDFC Asset Management Company Ltd. (2,048.50, -2.68%) and One97 Communications Ltd. (872.95, -2.55%).

Volume Rockets

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

Top high volume gainers on BSE included Piramal Enterprises Ltd. (950.15, 13.32%), Shriram Finance Ltd. (1,734.35, 11.20%) and Aether Industries Ltd. (1,099.80, 9.53%).

Top high volume losers on BSE were Aptus Value Housing Finance India Ltd. (242.50, -8.90%), Home First Finance Company India Ltd. (766.05, -5.53%) and Heidelberg Cement India Ltd. (1,72.85, -0.14%).

Poonawalla Fincorp Ltd. (349.90, 2.56%) was trading at 9.7 times of weekly average. Blue Dart Express Ltd. (7,250.00, 7.54%) and Happiest Minds Technologies Ltd. (1,005.10, 6.34%) were trading with volumes 9.4 and 8.4 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

59 stocks made 52 week highs,

Stocks touching their year highs included - Ajanta Pharma Ltd. (1,509.95, 2.37%), Apollo Tyres Ltd. (419.45, 2.57%) and Balkrishna Industries Ltd. (2,476.40, 0.94%).

19 stocks climbed above their 200 day SMA including Piramal Enterprises Ltd. (950.15, 13.32%) and Blue Dart Express Ltd. (7,250.00, 7.54%). 10 stocks slipped below their 200 SMA including Aegis Logistics Ltd. (339.20, -2.42%) and Alkyl Amines Chemicals Ltd. (2,637.45, -2.23%).

 
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The Baseline
20 Jun 2023
COTW: The biggest wealth destroyers in the Nifty500
By Abdullah Shah

The Indian equity market has witnessed impressive growth over the past five years, with the benchmark Nifty 50 index rising by over 73%. However, not all stocks have fared well during this period. In this edition of the Chart of the Week, we take a look at companies that saw a significant decline in their share prices over the past five years, underperforming the index and destroying investor wealth. 

There are 26 Nifty 500 companies in the wealth destroyers screener, which looks for stocks with negative share price changes in the past five years as well as the past year. The banking & finance sector has the highest number (four) of wealth destroyers. These include Piramal Enterprises, Bandhan Bank, City Union Bank and Motilal Oswal Financial Services. 

The telecom and pharmaceuticals sectors come in second with three companies each. Vodafone-Idea, Indus Towers and Sterlite Technologies represent the telecom industry, while Sun Pharma Advanced Research, Natco Pharma and Biocon show up in the Pharmaceuticals sector.

Though the banking and finance sector has four companies in the screener, overall it has achieved a high 5-year return of 106.5%. The worst performers from this segment are Piramal Enterprises and Bandhan Bank, with share price declines of 66.9% and 54.8% respectively over the past five years. 

Piramal Enterprises’ share price fall can be attributed to investor dissatisfaction with the demerger of Piramal Pharma. The company saw net profit margins decline from 44% to 8% and operating margins drop by 10% during 2018-2022. Bandhan Bank, on the other hand, has underperformed due to a decrease of 200 basis points in its net interest margin between 2018 and 2023. The bank has struggled with bad loans while other banks have improved their asset quality. 

The telecom sector has risen by 133% in the past five years, but companies like Vodafone-Idea, Indus Towers, and Sterlite Technologies have shown poor performance. Jio's disruptive entry in 2018 with free or highly discounted plans, caused a 41% decline in ARPU for the sector between 2018 and 2020. 

Vodafone-Idea has witnessed a significant share price decline of 87.5% over the past five years due to its high debt of Rs 2,22,890 crore. Raising funds remains challenging for the company, given its  debt and falling market share in a capital-intensive sector. Indus Towers, which gets 40% of its total revenue from Vodafone-Idea, has also seen its share price fall sharply in the past five years. Similarly, share price of Sterlite Technologies, a telecom equipment manufacturer, has fallen by 49.2% due to the closure of its Tamil Nadu plant in 2018 following protests citing health hazards.

The pharmaceutical sector has grown by 113.7% in the past five years, outperforming the Nifty 50 index. However, Sun Pharma Advanced Research Company's value declined by 54% over the same period due to decreasing net profit margins and widening losses by 13% from FY18 to FY23, reaching Rs 222.6 crore. 

Similarly, Graphite India, a General Industrials company, experienced a decline of 51.8% in five years as its overall capacity utilisation dropped from 90% in Q3FY22 to 42% in Q3FY23. This drop was due to the closure of a German electrode plant and weak global demand.

A favourite sector for investors over the past five years has been  software and services, which delivered an impressive growth of 141.2%. However, Quess Corp stands out as the sole Nifty500 company from the sector with a significant decline of 65.5%. The employment platform suffered challenges during the pandemic, leading to a 74% drop in its stock value. It reached an all-time low in March 2020. Quess Corp faced additional challenges in 2021 as the Income Tax department made allegations of a Rs 880 crore claim against the company. 

The realty sector also witnessed remarkable growth of 706.3% in the past five years, driven by increased demand for coworking and residential properties. In contrast, Indiabulls Real Estate experienced a sharp decline of 63.2% during the same period.  This decline came from shrinking operating profit margins and a significant net loss of Rs 608.4 crore in FY23, compared to a net profit of Rs 2372.8 crore in FY18. On May 9, 2023, the shares of Indiabulls Real Estate plummeted nearly 20% in trade after the company disclosed that the merger of Nam Estates Private Limited and Embassy One into the company had been withheld by the Chandigarh Bench of the National Company Law Tribunal (NCLT). 

In the media sector, which experienced an overall growth of 166.8% in five years, Zee Entertainment stands out with a decline of 65.2%. The company has been dogged over the years by controversy and scandal. In 2019, Zee faced allegations of links with Nityank Infrapower and Multiventures, which were being investigated by SFIO for deposits exceeding Rs 3,000 crore after demonetisation. This resulted in a 26% drop in Zee’s stock. In February 2023, IndusInd Bank filed a plea against Zee due to non-payment of a Rs 83.1 crore debt, leading to the withholding of the Sony deal. In May 2023, allegations surfaced regarding fund diversion to Essel Group's gold refinery. 

 
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The Baseline
20 Jun 2023
Five analyst picks this week
By Abhiraj Panchal
  1. Hero MotoCorp: Motilal Oswal maintains its ‘Buy’ rating on this two-wheeler manufacturer and increases the target price to Rs 3,500 from Rs 3,100. This implies an upside of 25%. Analysts Jinesh Gandhi, Amber Shukla and Aniket Desai believe that the company is well-placed to benefit from the recovery in domestic demand for two-wheelers, particularly in the 100cc motorcycle segment, which is its core strength. 

They also note that the firm is less vulnerable to the impact of electric vehicles (EVs), as scooters, the category where EVs have gained traction, make up just 8% of its volumes. 

Gandhi, Shukla and Desai highlight the firm’s focus on increasing its penetration in the 100cc motorcycle segment, where it already has a market share of 80%, by attracting first-time buyers through retail financing options. They also like the company’s plans to regain its lost market share in the 125cc segment through product portfolio expansion. The analysts expect the bike maker’s revenue to grow at a CAGR of 11.4% over CY23-25. 

  1. KPR Mill: Sharekhan keeps its ‘Buy’ rating on this textiles company and raises the target price to Rs 800 from Rs 685, implying an upside of 19.6%. Analysts at Sharekhan believe that the firm’s integrated business model and capacity expansion plans will drive growth and improve EBITDA margin in the coming quarters, as demand for sugar textiles and sugar recovers. They also expect strong margin expansion in the garment business on the back of the reduction in cotton prices and an enhanced product mix. They add, “The China+1 strategy, potential free trade agreement (FTA) with the UK, and increasing opportunities in the US market provide a scope of consistent growth for its high margin garment business.”

The analysts expect the garments segment to be the main driver of growth in the medium term, with an order book of Rs 1,000 crore for the next 6 months. They also anticipate the firm to benefit from the gradual demand recovery in Europe. The analysts project this textile manufacturer’s net profit to grow at a CAGR of 27% over FY23-25.  

  1. UltraTech Cement: HDFC Securities maintains a 'Buy' rating on this cement and cement product company with a target price of Rs 9,305. This signals a potential upside of 12.9%. Analysts Rajesh Ravi and Keshav Lahoti hold a positive outlook, given its robust volume growth fuelled by escalating demand. With its recent expansions and strong distribution network, the analysts are confident that the company is well-positioned to meet the growing demand in the market.

The analysts also anticipate improved margins for the company, supported by the significant decline in fuel prices, which will result in reduced operational expenses. They expect the company to sustain accelerated growth in the ready-mix concrete sector, with an increasing plant count at a CAGR of 28% since Q4FY20. As of March 2023, UltraTech Cement has successfully expanded to 231 plants and intends to double this figure. The analysts further project that the company will transition into a net cash position by FY25.

  1. Sundaram Finance: Axis Securities maintains a ‘Buy’ call on this auto-finance company with a target price of Rs 3,015, indicating an upside of 15.4%. In Q4FY23, the company reported a profit of Rs 433.2 crore (up 27.4% YoY), beating Axis’ estimate by 13.8%. But the company missed the brokerage’s net interest income estimate by 4.5%. 

Analysts Prathamesh Sawant, Bhavya Shah and Dnyanada Vaidya say, “We continue to have a positive outlook on Sundaram Finance, given that it’s one of the industry leaders in the vehicle finance segment, and its consistent delivery of superior return on assets.” They believe that the growth prospects in construction and agricultural equipment remain bright, and the recovery in commercial vehicles (CV) was strong throughout FY23. 

The analysts say that Sundaram Finance is well-positioned to maintain its growth momentum due to factors such as good disbursement growth aided by rising CV demand, moderation in cost-income ratio, amiable credit cost aiding improvement in asset quality, and adequate capital.

  1. KEC International: ICICI Securities reiterates its ‘Buy’ call on this heavy electrical equipment manufacturer with a target price of Rs 664. This indicates an upside of 18.4%. Analysts from ICICI, Ashwani Sharma, Mohit Kumar, Bharat Kumar Jain and Nikhil Abhyankar, who attended the company’s annual investor day, say that the management is confident of achieving a top line of Rs 20,000 crore and is cherry-picking orders to focus on profitability. 

The analysts remain optimistic as the company has already secured order inflows of Rs 2,400 crore, which account for approximately 10% of its guidance of Rs 25,000 crore in FY24. The management has also indicated a strong order pipeline worth Rs 1 lakh crore. 

The analysts say, “With a robust orderbook and order pipeline, stability in commodity prices and an improving supply chain, we expect execution to pick up over FY24, followed by improvement in margins.

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

(You can find all analyst picks here)