Emerging market strategist Jonathan Schiessl believes there could be short-term headwinds for the Indian markets from the dollar movement.
“Indian markets have done remarkably well. The sell-off that we saw as the second wave intensified did not last very long and the markets very quickly re-priced the recovery play. In the shortterm, there could be some headwinds for India from the dollar movement. However, from a medium to longer term view the Indian market is fine.”
He said there will be buying opportunities in the IT and manufacturing sectors.
“There will be opportunities from an export perspective in IT or in manufacturing sectors due to the supply chain shifting that is going on out of China.”
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Shares of Godawari Power and Ispat have given tremendous returns in the last one year. The stock surged nearly 900 percent from its 52-week low of Rs 153, hit on June 18, 2020, to around Rs 1,500 currently. In comparison, Sensex has risen 59 percent during the same period.
An amount of Rs 10,000 invested in Godawari Power stock a year ago would have turned into nearly a lakh today. The stock hit an all-time high of Rs 1,561.95 on June 15, 2021, and a 52-week low of Rs 153 on June 18, 2020. In the last month, it has gained nearly 55 percent.
The strong rally in Godawari Power stock is mainly on the back of robust financial performance and a rise in investor confidence. The number of FIIs holding a stake in Godawari Power has risen from zero to 15 in the March quarter of last fiscal.
The firm reported a phenomenal 879 percent rise in its Q4 net profit to Rs 326.95 crore as against Rs 33.37 crore profit in the corresponding quarter of the previous fiscal. Sales also rose 60 percent to Rs 1,262.25 in Q4 versus Rs 790 crore sales in the year-ago quarter.
Operating profit excluding other income surged 215 percent to Rs 489.63 crore in Q4 versus Rs 155.57 crore profit in the same period of the previous fiscal.
In the last one year, the Chhattisgarh-based power producer’s stock has outperformed its peers. While JSW Steel’s stock has surged 60 percent, Tata Steel has increased its stock by nearly 285 percent in a year. At the same time, SAIL rallied 371 percent, Hindalco Industries’ stock has increased by 170 percent.
The company’s shareholders recently approved a plan to divest its interest in Godawari Green Energy (GGEL), a major subsidiary, causing the stock to rise 18 percent during that session.
On May 27, the company’s board of directors authorised a proposal to build a captive solar PV power plant with a capacity of 250 MW in the Raigarh district of Chhattisgarh for Rs 750 crore. The project will be mostly supported by internal accruals. The electricity generated by this project would be used exclusively in the company’s existing plant at Chhattisgarh.
On March 15, 2021, the company got consent to operate the enhanced capacity of iron ore pellet plant and consent to set up manufacturing facilities in other divisions by the Chhattisgarh Environment Conservation Board, Raipur. Since then, the stock has soared over 150 percent.
Godawari Power and Ispat Limited is engaged in the business of manufacturing iron ore pellets, sponge iron, steel billets, hard bright (H.B.) wires, and generation of power. The company’s segments include steel and electricity.
As the Federal Reserve takes initial steps toward removing its massively accommodative policy, investors are preparing for the main show ahead.
Fed officials on Wednesday penciled in two potential rate hikes in 2023, sooner than policymakers had previously projected, and Chair Jerome Powell edged closer to unveiling plans to taper the Fed’s $120 billion a month of bond purchases, as per a Reuters report.
Pathik Gandotra, Partner at Dron Capital spoke to CNBC-TV18 to discuss fundamentals of the market in light of this.
“Inevitable Fed taper noise has started already and so my point is that this is what will reverberate across all central banks eventually over the next 6-12 months. So the news flow that you will get eventually is that every central bank is tapering, either reducing its accommodative monetary policy and that is certainly not good news for the markets from a short-term perspective,” Gandotra weighed in.
“The last time US Fed did the taper-tantrum that happened, we fell by 20 percent, but this time we are on a much stronger wicket. We have got a very strong foreign exchange reserves and the flows in the country are also very strong. The overall India macros are not looking that bad. So you might correct, you might consolidate, but at one notch bullishness will have to come down. I would be very circumspect about markets from here on,” he added further.
On portfolio approach Gandotra wants stay away from interest rate sensitives.
“Interest rates eventually will rise. So interest rate sensitives, banks etc. is what I would avoid,” he reasoned.
What is Gandotra bullish on? “I would put money into tech and pharma where you have had reasonable consolidation over a period of 3-4 months. I think stocks ran-up to fast and they had to catch up and they have caught up now and so I think tech earnings will be very robust and pharma selectively will also be pretty okay. So I would stick there,” he said.
For full interview, watch accompanying video.
Tata Consumer Products has outperformed most of its peers in the last one year as analysts remained upbeat on the FMCG firm owing to its strong balance sheet, potential revenue growth, and digital transformation drive.
The stock has risen 99 percent in the last one year, outperforming all FMCG stocks except Emami that gained over 170 percent during the period. In comparison, the benchmark Nifty has gained 59 percent and Nifty FMCG has added 26 percent during this period.
While Jubilant FoodWorks rose 95 percent, Varun Beverages, Marico, Godrej Consumer were up between 40 percent and 68 percent. Other largecaps like HUL, ITC, Nestle rose 10-15 percent in the last one year.
Tata Consumer’s three-year returns have been 165 percent while the stock has surged 483 percent in the last five years. On a YTD basis, the stock is up 22.14 percent.
Brokerages believe that the company is likely to be benefitted from the bounceback of the economy on the back of factors like diversification of products, and robust balance sheet. In the last couple of years, in order to improve effectiveness, optimise costs and streamline operations, the company exited some of its loss-making businesses and restructured its international operations.
Recently, global brokerage house Goldman Sachs initiated coverage on the stock with a ‘buy’ rating. It sees further upside in the stock from its asset-light strategy, its JV with Starbucks, as well as potential deployment of Rs 2,700 crore in net cash for inorganic opportunities.
“Tata Consumer is transforming to become a key player in India’s large packaged food segment. It is poised to drive revenue growth using its portfolio advantage, improving distribution network and strong balance sheet to grow sales at a 12 percent CAGR over FY21-26E. The expanding portfolio and distribution network should also allow it to drive operating cost optimization and grow its domestic EBIT by 4.5x by FY30E as it launches/acquires more
products to piggyback on its distribution network,” said Goldman Sachs.
According to Motilal Oswal, the India Food business comprising Tata Salt and Tata Sampan is expected to drive a major shift to the organised from the unorganised sector. The segment should drive the next phase of the firm’s growth.
For the March quarter, the company reported a consolidated net profit of Rs 53.9 crore as against a net loss of Rs 76.5 crore in the year-ago quarter. Its consolidated revenue from operations for the quarter surged 26 percent YoY to Rs 3,037.2 crore
The consolidated operating profits, however, were down 4.1 percent at Rs 234.33 crore in Q4 on account of raw material costs and advertisement expenses rising.
Somany Ceramics shares rallied over 14 percent to hit a 52-week high of Rs 558.95 following strong March quarter numbers. The company turned the corner during the quarter, reporting a consolidated net profit of Rs 31 crore against a loss of Rs 9.32 crore same period last year.
Quarterly revenues climbed nearly 60 percent year-on-year to Rs 562 crore.
The company’s EBITDA stood at Rs 90 crore, up 5.4 times YoY, driven by operating leverage and lower other costs. EBITDA margins in Q4 were at 15.8 percent, up 12 percentage points YoY.
Revenue was flat at Rs 1,663 crore as the tiles business was impacted by the construction activity and the supply chain constraints in FY21.
“While the recovery has been on a benign base and has some element of pent-up demand and reduced costs benefits, the balance sheet improvement remains the key takeaway. Somany’s working capital management and net debt reduction (down from Rs 444 crore in FY20 to Rs 173 crore in FY21) have been the key positives. The management commentary on growth will be key,” ICICI Securities said in a note.
At 12:00 pm, the shares of Somany Ceramics were trading 11.74 percent higher at Rs 546.95 apiece on the BSE.
Shares of Adani Group companies continue to reel under pressure on Thursday with the stocks of Adani Green, Adani Total Gas, Adani Power, and Adani Transmission frozen in their respective five percent lower circuit limits, while those of Adani Enterprises, Adani Ports & SEZ declined 10 percent each.
Since Monday, Adani Ports, Adani Total Gas, Adani Power, and Adani Transmission fell 18 percent. Meanwhile, Adani Enterprises lost 11 percent and Adani Green was down 7.5 percent during this period.
Adani Group stocks fell following media reports that the National Securities Depository Ltd (NSDL) had frozen the accounts of top foreign portfolio investors (FPIs) who own more than Rs 43,500 crore worth of shares in these companies. The NSDL and Adani Group later clarified that it’s not true.
The reports said that the FPIs had flouted the Know Your Customer (KYC) norms set by market regulator SEBI. Panicked investors dumped shares, sending the prices crashing down. In some stocks, trading was frozen after there were no buyers.
Adani Group called media reports blatantly erroneous. “We regret to mention that these reports are blatantly erroneous and are done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group,” it said in a regulatory filing.
In an interview with CNBC-TV18, Jugeshinder Singh, CFO of Adani Group said, “There has been a malicious attempt to push a patently false story.”
Meanwhile, Fitch Ratings has placed a ‘negative’ outlook on Gautam Adani-led Adani Ports and Special Economic Zone Limited’s (APSEZ) affirming long-term foreign-currency Issuer Default Rating (IDR) at ‘BBB-‘.
“We believe APSEZ has adequate liquidity to weather near-term challenges. The company had a readily available cash balance of about Rs 53 billion at FYE21, against operating expenses of Rs 33 billion and interest cost of about Rs21 billion. APSEZ has Rs 14 billion due in FY22 to be repaid or refinanced,” Fitch noted.
Citi, meanwhile, retained a ‘buy’ rating on Adani Ports as it feels that the negative news is likely to have any impact on the company’s business prospects. It added that the firm is well-positioned to grow its already high market share and that the current valuations are attractive.
Indian indices are likely to open lower on Thursday, tracking losses in global peers after the US federal reserve pulled up its timeline for rate hikes to 2023 from 2024 as inflation rises. CNBC-TV18’s in-house panel of experts have picked a list of stocks for the investors to buy/sell in trade today.
Here are the top buy-sell calls by market experts for Thursday:
Sudarshan Sukhani – s2analytics.com
—Buy Colgate Palmolive with a stop loss of Rs 1,690, target at Rs 1,740
—Buy Mindtree with a stop loss of 2,435, target at Rs 2,510
—Sell Havells with a stop loss of Rs 1,018, target at Rs 990
—Sell Vedanta with a stop loss of Rs 269, target at Rs 259
Mitessh Thakkar – mitesshthakkar.com
—Sell Cadila with a stop loss of Rs 637.5, target at Rs 614
—Buy HUL with a stop loss of Rs 2,380, target at Rs 2,455
—Buy Nestle with a stop loss of Rs 17,790, target at Rs 18,500
—Buy Petronet with a stop loss of Rs 234, target at Rs 220
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
The Indian market is likely to open lower Thursday following losses in global peers.
Here are the top 10 buzzing stocks for today:
1. Wipro: The company signed a partnership with Exaware, to develop advanced engineering solutions that foster innovation in the networking industry, streamline 5G technology upgrades, and open the door to future 6G compatibility.
2. State Bank of India: The bank’s central board will meet on June 21 to consider raising Additional Tier 1 (AT 1) capital via the public offer or private placement during FY22.
3. Tata Motors: The company is considering a further extension of up to a year for MD Guenter Butschek.
4. Punjab & Sind Bank: The bank has declared the NPA account of M/s Lanco Infratech Limited with outstanding dues of Rs 215.17 crore as fraud. The account has been fully provided for as per existing RBI norms.
5. Allcargo Logistics: The company’s board will consider raising up to Rs 1,000 crore via debt on June 23.
6. Federal Bank: The bank’s board approved issuing equity shares to World Bank arm International Finance Corporation and associates for over Rs 916.25 crore.
7. ISGEC Heavy Engineering: The company received an order for the fabrication of above ground piping spools from Tata Projects, India, for one of the projects of national importance.
8. Shriram Transport Finance Company: The company will buy back bonds issued by it in January 2019 for a limit of up to Rs 450 crore.
9. Welspun Enterprises: The company’s Q4FY21 consolidated net profit fell 54 percent to Rs 40.94 crore from Rs 89.08 crore, while total income rose to Rs 600.97 crore from Rs 515.70 crore, YoY.
10. CESC: The company’s Q4FY21 consolidated profit rose to Rs 429 crore from Rs 378 crore, revenue jumped to Rs 2,890 crore from Rs 2,621 crore YoY. The company approved a proposal for a sub-division of the existing 1 equity share of the nominal value of Rs 10 each to be sub-divided into 10 equity shares of the nominal value of Re 1 each.