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The Baseline

01 Oct 2021

Five Interesting Stocks Today

Hindustan Unilever: This FMCG major’s stock saw three target price upgrades from analysts over the past month as they are enthused about the company’s prospects in Q2FY22. This confidence stems from resilient rural demand due to a good rabi harvesting season, rise in minimum support prices and an uptick in kharif sowing. The increased mobility across the country will also lead to a rise in demand for the company’s products, which will lead to decent growth, according to analysts.
JSW Energy: The expectation of reforms in the power sector sent this power utility stock flying over the past month and touched a 52-week high on Thursday. So much so that, based on technical indicators like RSI and MFI, this stock is now the most overbought stock among the Nifty 500 companies. The stock is currently trading above all its simple moving averages.
Bharat Forge: For the first time, a promoter group firm pledged shares of this company. This forging company’s promoter group firm Sundaram Trading And Investment pledged nearly 3.44% of its stake in the firm to cover corporate guarantees given by a promoter group company to lenders.
Coal India: With industrial activity picking up in India, this state-owned coal miner’s stock is back on investor’s radar. There is a shortage of supply of coal globally as many countries are looking to coal to run their power plants. A spike in natural gas prices is fueling this switch towards coal globally to run power plants due to an energy crisis. The expectation among investors seems to be that the shortage of coal will drive e-auction prices higher in India, despite Coal India’s assertions that it will ramp up production. Coal India might also plan price hikes on dry fuel to mitigate higher costs. Essentially, in an era of heightened attention towards climate change, good old coal seems to be the most reliable fuel.
SBI Life Insurance: This life insurance company expects FY22 to be among the best years for its business in the past few years. According to a report by Motilal Oswal, the management in a recent interaction at an investor conference said that new business picked up in Q2FY22 as reflected in its robust operating metrics in the months of July and August. The company said at the conference that business is expected to grow in double digits in FY22.

The Baseline

30 Sep 2021

Chart of the week: Big IPO winners of FY22 (so far)

Investors are loving the initial public offering (IPO) season. In FY22 so far, 22 companies across sectors like real estate, auto-components, specialty chemicals, and food tech have listed on public markets.

Among these, only five companies' stock prices are trading at twice the issue price - Clean Science & Technology, GR Infraprojects, Macrotech Developers, Ami Organics, and Tatva Chintan Pharma Chem.

Four companies listed at a discount to the issue price - CarTrade Tech, Windlas Biotech, Aptus Value Housing Finance, and Macrotech Developers. Of the companies that listed at a discount, only Macrotech Developers' stock managed to change course, while the rest are trading below their issue price.

With share sales from several big businesses lined up for the second half of FY22, IPO season is far from over.

The Baseline created a screener Highest Piotroski Scores - …

25 Sep 2021

Highest Piotroski Scores - Nifty500 companies that score 9/9

Screener tracking stocks with a High Piotroski Score (the well-known piotroski score checks the company's financial strength). To get notified of changes to the screener, set an alert.

The Baseline

24 Sep 2021

Five Interesting Stocks Today

Neogen Chemicals: Brokerages are positive about this specialty chemicals maker despite being in a market with many listed competitors. Three brokerages — ICICI Direct, HDFC Securities, and Edelweiss, gave the company a ‘Buy’ rating in recent reports. ICICI Direct expects the company’s capital expenditure to enhance capacity at its Dahej plant to generate revenue of Rs 350 crore by FY24. Even after the 33% price rise since the month began, the stock is trading 5.5% below the average broker target price.
Sundram Fasteners: The management of this auto-components maker expects the automobile market to recover strongly in Q3FY22. Arathi Krishna, the Managing Director of the company said that demand from automobile original equipment manufacturers is 80-85% of pre-Covid levels in Q2FY22. Even with the second wave disrupting economic activity in Q1FY22, the company’s revenues jumped nearly 3X YoY and declined by just 11% sequentially. The reason for this, according to brokerages, is its low sales to commercial vehicle makers (especially heavy commercial vehicles) which are 18% off pre-second wave levels.
Godrej Properties: Expecting a swift and steady revival in realty stocks, the Nifty Realty index gained nearly 30% in one month. This stock is leading the rally with a 42% gain in that time reaching a lifetime high. The developer registered sales of Rs 1,140 crore in the past six months from just one residential project in Noida. Over 50% of these sales came in one day. For the rest of FY22, the developer has a healthy pipeline of properties measuring 1.2 crore square ft. The market expects housing demand to remain robust in Q3FY22 especially with the festive season approaching.
Alkyl Amines Chemicals: This specialty chemicals’ Managing Director Yogesh Kothari is routinely selling shares as its stock price corrects. In September alone, he sold 7.5 lakh shares representing 1.4% of the company for Rs 30.7 crore across 14 insider trades. In Q2FY22 so far, he sold nearly 9 lakh shares for Rs 36.3 crore. Since reaching a lifetime high of Rs 4,622 per share in early July, the stock is down by 14%.
Vaibhav Global: This online retailer of fashion accessories and jewelry’s promoter is buying shares as the stock price declines. In September, its promoter (Brett Enterprises) holding a 55% stake, purchased over 3 lakh shares (0.18%) worth Rs 26.4 crore in seven insider trades. In FY22, the promoter has bought back over 12 lakh shares for Rs 56.7 crore in 17 insider trades. In that time, the stock price is down by 27%.

The Baseline created a screener Stocks at their ten …

24 Sep 2021

Stocks at their ten year highs

Stocks close to or at their ten year highs

The Baseline

23 Sep 2021

Chart of the week: Companies are filling in business gaps with acquisitions

September so far, has been a month of acquisitions. Firms across sectors are buying up businesses to boost their offerings.

It started with HDFC Life Insurance Company's Rs 6,687 crore acquisition of Exide Life Insurance Company (on September 3). Last week, two and three-wheeler maker TVS Motor Company acquired an 80% stake in Switzerland-based electric bike company EGO Movement to enter the European e-bike market. Rakesh Jhunjhunwala backed Nazara Technologies announced its third acquisition since its listing in March 2021 - the gaming company's esports business Nodwin Gaming acquired OML Entertainment's live events, gaming, and intellectual property verticals for Rs 73 crore on September 18.

This week, KEC International, KPIT Technologies, and Mphasis also announced acquisitions.

The Baseline

20 Sep 2021

Five stocks in the PE buy zone

Despite the runup in the market, some companies are still in the PE buy zone - trading below their average historical PEs. We took a look at five stocks that are in this PE buy range, and also have a high Durability Score. You can see the Buy Zone screener tracking historical PE for the full list.

Security and Intelligence Services (SIS): This security services company has traded below its current PE only 9% of its total trading days. The company has gained 29% over the last year, not a significant runup. It has a durability score of 80, with positive net profit and revenue growth YoY in its most recent quarter.
Sharda Cropchem: This agrochem business has got some investor attention in recent weeks, with the Momentum Score moving into the green. However the stock has traded below its current PE only 14% of its trading days. This is a low volatility stock that tends to maintain its gains for periods of time when it moves up, since rural demand patterns tend to be less volatile than other sectors.
Coal India: This coal and energy company has seen a recent upswing in its share price, with its Momentum Score back in the green and rising 11% over the past month. At its current PE, it has traded below this level for 25% of its trading days. The company delivered a strong performance in August, with resilient volumes despite a weak month, reduction in dues from state power generators and good E-auction revenues according to analysts.
Castrol India: This oil lubricant stock is another potentially underpriced company in PE compared to historical levels. Even as its share price has picked up in recent weeks, it trades below current PE levels for just 15% of its trading days. While it may look like a good pickup at its current levels, risks remain - the drag in the auto sector due to supply constraints however, remains a key negative for companies like Castrol.
Edelweiss Financial Services: Financial services have been on the upswing during the lockdown, although Edelweiss' stock was an underperformer, especially relative to the Nifty index. The company jumped back into the green in net profit numbers only in the last two quarters. It has traded below its current PE for just 20% of total trading days.

The Baseline created a screener Stocks At Their All …

17 Sep 2021

Stocks At Their All Time Highs

Stocks where the day high is the all time high

The Baseline

17 Sep 2021

Five Interesting Stocks Today

Mindtree: This IT services company’s stock is the most overbought stock among Nifty 500 companies based on technical indicators like RSI and MFI. Over the past 18 months, this stock rose 5.7 times from the lows of March 2020 and is touching new 52-week highs regularly (including on Thursday). Investors only need to look at the company’s average broker one-year target price of Rs 2,440 to get a sense of how much the stock has run up over the past many months.
Cipla: This pharmaceutical company’s promoter group-controlled entities sold a stake (0.73% stake) in the company in the open market for the first time in two years. This comes a couple of months after the stock touched a 52-week high of Rs 997, which is also incidentally its lifetime high. Like other pharmaceutical companies, Cipla also gained from the pandemic and reported revenues above Rs 5,000 crore in three out of the past four quarters. The only time quarterly revenues dipped below Rs 5,000 crore in the past four quarters was in Q4FY21, as a result of which its net profit dipped below Rs 500 crore. Analysts are upbeat about the company’s prospects as can be seen in the average target price of Rs 1,063.5.
Home First Finance: Home First Finance, a technology-based financing company for affordable housing, listed in stock markets earlier this year, and has continued to trade above its issue price post IPO. The company recently received a buy call from Edelweiss with a price target of Rs. 763, an upside of 35%. It delivered a robust 49% AUM CAGR over FY17-FY21 despite FY21 being impacted by the Covid-19 pandemic.
Vodafone Idea: This beleaguered telecom company’s stock is one of the best performing stocks over the past week among Nifty 500 companies, rising 34%, with 25% gains coming on Thursday. These gains come after the Union Cabinet approved a rescue plan for the telecom sector which would ease its cash flows over the next four years. The relief entails moratorium on all dues, including spectrum, spectrum usage charges, and annual gross revenues based levies, and also rationalisation of various levies. This move will enable the company to survive impending doom and help the Indian telecom industry to continue to have three private players.
Poonawalla Fincorp: This non-banking finance company’s Managing Director Abhay Bhutada was banned by the market regulator SEBI from accessing capital markets for a year due to a violation of its insider trading regulations. This relates to trades executed by entities related to Bhutada in the company (previously known as Magma Fincorp) before the announcement of its acquisition by Rising Sun Holdings, controlled by Adar Poonawalla. SEBI held that entities controlled by Bhutada, and seven others, traded in Magma Fincorp’s shares before the disclosure of Rising Sun Holdings acquisition of a majority stake in the company. Bhutada resigned as managing director of the NBFC on Thursday evening.

The Baseline

16 Sep 2021

Chart of the week: HDFC Life and ICICI Prudential’s rising market share

As the Life Insurance Corporation of India's (LIC) IPO looks to hit markets in FY22, all eyes are on life insurers. And for India's listed private life insurance companies, market share is changing fast.

The market share (based on first year premiums) of the largest private life insurance company - SBI Life Insurance Company (a joint venture between the State Bank of India and BNP Paribas Cardif) fell to 8% in August 2021 from 8.8% in January 2021. In that time, HDFC Life Insurance Company's market share improved to 6.4% from 5.8% while ICICI Prudential Life Insurance Company's market share improved to 4.6% from 0.4%. LIC of India commanded a 68% share of the life insurance market as of August up from 61.5% in January 2021.