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The Baseline

21 May 2021

Five Interesting Stocks Today

Colgate-Palmolive: This FMCG company reported strong revenue growth of 12% YoY in the March 2021 quarter, perking up broker expectations. Two brokers - ICICI Direct and Axis Direct have maintained a ‘Buy’ rating on the stock with a raised target price. Brokerages expect the company’s new product launches to aid revenue growth in Q1FY22, but higher raw materials costs might decrease earnings. The average broker target price is at an upside of 5%.
Sun Pharmaceutical Industries: This pharmaceutical company’s stock is up by 22% since March and is attracting the attention of institutional investors. This week, the Life Insurance Corporation (LIC) of India acquired 4.8 crore shares in the company via an insider trade. LIC now holds a 6.7% stake in the company (from 4.7% earlier).
ICICI Prudential Life Insurance Company: Mutual funds have changed their tune on this life insurer. In Q4, mutual funds sold 55 lakh shares in the company, lowering their holding by 7%. In April 2021, mutual funds bought 21.6 lakh shares, their first net purchase in the company since December 2020.
Godrej Agrovet: This agricultural product maker’s promoters are purchasing shares from the open market. This week, promoters acquired over 1 lakh shares worth Rs 5.5 crore via two market purchases. Since March 2021, promoters have bought back 3.5 lakh shares worth Rs 18.4 crore, in eight market purchases.
Berger Paints: This paints company’s stock is rising as markets are turning optimistic on the paints sector. Last week, Asian Paints, the paints market leader, reported a strong YoY revenue (43%) and volume (48%) growth. Brokerages expect Berger Paints’ revenues to grow as well. Its stock price is up by 9% in one week and its Q4 results will be declared on May 26, 2021.

The Baseline

19 May 2021

Chart of the week - Bharti Airtel's active subscribers pick up

In February 2021, the latest data according to the Telecom Regulatory Authority of India, 97.7% of Bharti Airtel's customers were active subscribers. This means 97% of its customers frequently renew their subscriptions and contribute revenues. Only 78.1% of Reliance Jio's total subscribers renew their subscriptions. This is lower than the industry's (84.1%) and Vodafone Idea's (90.5%) active subscriber base.

The Baseline

19 May 2021

Five Interesting Stocks Today

Solara Active Pharma Sciences: This active pharmaceutical ingredient maker’s promoter Padmakumar Karunakaran Pillai (10,000 shares) and another promoter group entity Pronomz Ventures LLP (21.5 lakh shares) together sold over 6% stake in the company through an open market sale of nearly 21.6 lakh shares of the company on May 12, 2021.
TCI Express: This logistics company’s stock traded with the highest spike in volumes in trade on Tuesday with volumes spiking to 6.05 lakh shares, which is 3.5 times its weekly average traded volumes. The company’s stock ended up 16.4% at the end of trade.
Hindustan Copper: This government-owned copper integrated copper manufacturer is the best performing stock in the Nifty 500 over the past six months. This is a result of the commodity super-cycle that has seen many metal prices rise to their highest ever levels. The company was fledgling a year ago, posting losses in the quarters ended September 2019 and December 2019. A year later, in the December 2020 quarter it posted a Rs 108 crore profit with revenues rising five times year-on-year.
Balkrishna Industries: This tyre maker’s stock is currently strongly overbought based on technical indicators like RSI and MFI. It has the second highest RSI and MFI indicators among Nifty 500 stocks.
Persistent Systems: This mid-tier IT services company saw eight brokerages upgrade their one-year target price for its stock. Such is the run up in its stock price that the average target price is currently at Rs 1,910.45, which is a 18.1% downside from last traded price of Rs 2,331.40. This stock is currently trading at a TTM PE of 39.5, well above the median for the IT services sector.

The Baseline

14 May 2021

Five Interesting Stocks Today

UPL: This chemicals company, which has been historically at a low average PE compared to its peers, has been rising steadily through the year and hit a fresh 52 week high today after a strong performance in its Q4 results. The company's year returns have outperformed the Nifty by over 37%.
Coforge: This tech company's promoter has sold off 1.9 million shares in the company via a market sale, amounting to 3.14% of traded shares. It saw its share price rise sharply over the past week on high volumes following its Q4 results, however analysts see limited upside on the stock owing to its already sky-high valuations.
Vedanta: This metals company has seen its share price gain at a steady clip as metals prices recover globally, and the stock hit a fresh year high in the past week. The company reported a sharp jump in both YoY and QoQ net profit growth in its Q4 results (see stocks with similar performance). While mutual funds have been reducing their holdings in the stock, FIIs/FPIs have increased their stake.
Persistent Systems: This product engineering company has got analysts across brokerages enthusiastic after its Q4 results, receiving six target price upgrades in the past couple of weeks. Analysts have cited improving deal wins, and strong Q4 growth despite seasonality in some verticals.
Castrol India: This oil lubricant company's stock has had a tough year, underperforming the Nifty by over 50%, and seeing a profit decline in CY20 due to Covid19 disruptions and the decline in auto demand. The stock is in the Buy Zone compared to both its historical PE and PBV. Analysts are however positive on the stock citing its wide distribution network and brand - but with the second wave, the company is likely to see ups and downs continue in the short term.

The Baseline

13 May 2021

Chart of the week - Tata Motors' retail sales rise in FY21

Automobile makers had a tough year. In FY21, 23 lakh passenger vehicles (PVs) were sold at a retail level, a 14% decline YoY. The country's largest carmaker Maruti Suzuki India (48% market share) sold 1.7 lakh fewer cars than the previous year. Mahindra & Mahindra sold 85,000 fewer cars in FY21 than FY20. Tata Motors and Kia Motors were the only PV makers to sell more cars in FY21 than the previous year among the top-10 carmakers in the country.

The Baseline

11 May 2021

Five Interesting Stocks Today

SBI Life Insurance Company: This life insurance company’s promoter Ca Emerald Investments cut its stake by 4.2% selling 4.2 crore shares. This share sale invited a host of foreign institutional investors (FIIs), domestic institutional investors (DIIs), and sovereign wealth funds. Among the top buyers - Axis Mutual Fund, HDFC Life Insurance Company, the Government of Singapore, Societe Generale, and the Vanguard Fund.
Caplin Point Laboratories: This pharmaceutical company’s stock is up by nearly 30% in one month and is 8% off its 52-week high. Its valuations remain cheap as the company’s trailing 12-month price to earnings ratio is 18.2, below the average historical PE of 27.9 times, putting it in the neutral zone.
Happiest Minds Technologies: This IT services stock is buzzing ahead of its Q4 results. In one week, the share is up by 14%. The Q4 results will be declared on 13 May.
Deepak Nitrite: This commodity chemicals company reported a 39% growth YoY in revenues and a 68% jump in net profits. However, some brokers are not convinced. In a report post the Q4 earnings, HDFC Securities downgraded its rating on the company to ‘Sell’ from ‘Add’ expecting no further growth in phenolic production and declining prices of isopropyl alcohol, a chemical used to produce sanitizers. The brokerage’s target price is at a downside of 14% against the market price.
Indian Energy Exchange: Foreign institutional investors (FIIs) are accumulating this power trading company’s stock, while domestic institutional investors (DIIs) are exiting. At the close of the March 2021 quarter, FIIs held a 37% stake in the company, against 29% in the previous quarter. On the other hand, DIIs sold 1.3 crore shares decreasing their holding in the company by 22% QoQ in Q4.

The Baseline

07 May 2021

Five Interesting Stocks Today

Praj Industries: HDFC Mutual Fund has cut its stake in this engineering company in Q4FY21 by selling over 363,000 shares of the company, amounting to a 0.2% stake.
Aarti Drugs: This pharma company saw its volumes rise to the highest ever. The stock’s traded volumes rose to four times its weekly average of around 19 lakh shares, which ended in the stock rising by over 11% in trade.
Angel Broking: After this stock broking company announced a tripling of its net profits in Q4FY21, the stock was among the top gainers and hit the upper circuit, and ended up being the most overbought, according to its RSI and MFI technicals
SBI Life Insurance: This life insurance company has seen at least 8 brokerages upgrade their target prices for its stock in the past month. It currently has an average one year target price of Rs 1,093.82.
Vedanta: This mining company has been in the news for its buyback offer, which even after revised terms got a lukewarm reception from investors. Another area of concern is that the company's entire promoter shareholding of 55.11% in the firm remains pledged to lenders as of March 31, 2021.

The Baseline

05 May 2021

Chart of the week - Zomato's gigantic IPO

Food aggregator Zomato has filed the draft red herring prospectus for its gigantic Rs 8,250 crore initial public offering (IPO). This is the biggest IPO since SBI Cards and Payment Services in March 2020. So far in 2021, the two biggest IPOs are Indian Railway Finance Corporation and PowerGrid Infrastructure Investment Trust.

Zomato's IPO is not only going to be one of the biggest IPOs of 2021 but is also an exciting one to watch as a unicorn goes public.

The Baseline

04 May 2021

Five Interesting Stocks Today

Cyient: Analysts are bullish on this midcap IT company, with six brokerages giving buy/accumulate ratings on this stock within the past month. The business has seen improving growth outlook in its services segment and strong margin performance. Management guidance is for double digit services growth in FY22, with Utilities, Communication and Transportation verticals powering the way.
Ambuja Cements: LIC has purchased 522,000 shares of this cement company, which posted strong March quarter results, with both sales volumes and revenues rising, driven by strength in infra spending as well as rural housing demand. The stock's share price has outperformed the index over the past year by more than 40%.
BASF India: This chemicals company has been rising steadily in share price ahead of its results on May 11. The company has gained 13.2% over the past week and 6.8% over the past month, and hit a fresh year high today. It is part of the Upcoming Results with Rising Share Price screeener.
Persistent Systems: Tech is buoyant, thanks to a reviving global market that is coming out of the Covid second wave even as India entered it. This IT stock hit a lifetime high today after its Q4FY21 results indicated resurgent demand, and Persistent has seen a rise in large deals of about $3-5 million in annual revenues over the past three quarters. Its MFI and RSI levels indicate that the company is currently in the overbought range.
WABCO India: This auto ancillary company, which specializes in braking solutions has hit the accelerator as far as mutual fund buys is concerned. The stock has seen sharp increases in mutual fund purchases QoQ overall, as well as in the month of March. The company's yearly share price performance has been muted, underperforming the Nifty over the past 1 year.

The Baseline

30 Apr 2021

Five Interesting Stocks Today

TVS Motor Company: The stock of the third largest two-wheeler maker in the country is rallying after it finished the quarter on a high. In one week, the stock is up by 20%, and it’s off the 52 week high by 2%. The company reported a 53% YoY growth in revenues, with a 3x YoY jump in net profits. While FY21 was a bad year for two-wheelers, the company’s sales in the last quarter of the year grew by 47% YoY.
Mastek: This software company reported strong numbers in Q4FY21, but has seen insider selling. In Q4, its revenues rose 43.5% YoY to Rs 483 crore, with net profits up by 94% YoY to Rs 76 crore. A few days before the results, IDFC Mutual Fund, which holds a 3.5% stake, sold over 18,000 shares via an insider trade. The company also counts Ashish Kacholia (2.8% stake) and Sunil Singhania’s Abakkus Fund (5.7% stake) as investors.
Kotak Mahindra Bank: This private sector bank’s stock is buzzing ahead of its Q4 results. In one week, the stock gained 7%, compared to the Nifty 50’s gain of 4%. The quarterly results will be declared on Monday, May 3.
Steel Authority of India (SAIL): Mutual funds are accumulating this PSU steel maker’s stock. In Q4FY21, mutual funds purchased 18.4 crore shares in the company. This was a stark turnaround, because mutual funds sold 19.5 crore shares and 39 crore shares in Q2 and Q3 respectively.
Symphony: Brokers are optimistic on this consumer electronics company following its Q4 results. Its gross margins were 48% due to price hikes taken to offset the rising input price of steel and copper. Two brokerages - Axis Direct and HDFC Securities gave it a ‘Buy’ rating post its results. The average target price is at an upside of 15% against the market price.