Tag: Buzzing Stocks

FAQs: Chemical stocks under pressure; are they good bargains at these prices?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of chemical companies have fallen sharply over the past couple of months. Given the returns these stocks have given over the last year, many are looking at the recent declines as an opportunity to load up on them. But are they good bargains after the recent decline? We try to answer some of the commonly asked questions.

What has caused the steep fall in shares of chemical companies?

These stocks had run up significantly over the last year. The September quarter saw majority of the chemical companies reporting a decline in margins due to higher raw material prices. This came at a time when these stocks were already trading at expensive valuations. Recent listings like Tatva Chintan Pharma, and Clean Science were trading at 75-80 times estimated FY22 earnings, which was much higher than the sector average. So the correction in stock prices is largely a reaction to margin pressure in Q2 and high valuations for the stocks.

>>Also Read: RBL Bank shares crash 20% as concerns rise over financial health of lender

What is the outlook for the various segments? Which ones look promising and which don’t?

Chemical sector has a lot of sub segments like agrochemicals, specialty chemicals, commodity chemicals, active pharmaceutical ingredients, petrochemicals etc. Commodity chemicals are seeing an upcycle after years of underperformance. Chlor alkali in particular is seeing an upswing and companies like GACL, Grasim expect it to continue. There is a lot of investment going into green chemistry—chemical products and processes that reduce or eliminate the generation of hazardous substances. Some companies are planning production of lithium/chemicals used in electric vehicles. Neogen Chemicals, Tatva Chintan, Clean Science are some of the companies which are working in these areas. Long term fundamentals of the sector remain strong.

Does it make sense to buy shares of chemical companies at these levels?

Despite the sharp decline in prices, chemical stocks are still trading at valuations higher than long term averages. Most of them are promising growth but that is coming at high price. The fundamentals of the sector may be promising, but if you buy a stock at expensive valuations, it may take a while for it to deliver meaningful returns.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jubilant FoodWorks stock rises 5.5%; here’s what Morgan Stanley says

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Jubilant FoodWorks rose as much as 5.5 percent on Thursday as Morgan Stanley’s upbeat commentary cheered investors.

At 12:46 pm, shares of Jubilant FoodWorks, operator of Domino’s Pizza and Dunkin Donuts in India, were trading 3.3 percent higher at Rs 3,543.2 on BSE.

Morgan Stanley has an ‘overweight’ rating on shares of Jubilant FoodWorks with a target price of Rs 5,000 – a 46 percent upside from Wednesday’s closing price.

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The foreign brokerage said that its channel checks suggested that Domino’s Pizza India has raised prices by 5-6 percent on an average across its portfolio recently.

The brokerage pointed out that even after the price hike, Domino’s prices are lowest among pizza peers. Rather, it has taken the price hike positively as it helps offset some margin pressure without hurting demand.

Domino’s India remains focussed on maintaining its value for money proposition, and has taken minimal price hikes since 2016, Morgan Stanley added.

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Even though the stock valuation is high, the market will continue to be willing to pay for Jubilant FoodWorks’ strong market share gains, technology platform, revenue growth strategy and expanding addressable market, according to the brokerage firm.

The food service company holds the master franchise rights for three international brands, Domino’s Pizza, Dunkin’ Donuts and Popeyes, addressing three different food market segments.

Jubilant FoodWorks currently operates more than 1,435 outlets for Domino’s Pizza, Dunkin’ Donuts and Hong’s Kitchen and is a market leader in the pizza segment.

Catch all LIVE stock market updates here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Motors tumbles 4%, auto shares slump; should you buy or sell?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Likely selling by Foreign Institutional Investors (FII) ahead of the Christmas holidays resulted in a sharp fall in automobile stocks on Friday. Further, a sell-off in the overall market also had a spill-over effect on auto stocks.

At 14:11 pm, Nifty Auto fell 1.8 percent to 10,745.10 points. In the past month, the sectoral gauge has tanked 11 percent. This is in comparison to Nifty50 that has fallen 5 percent.

Shares of Tata Motors, TVS Motor Company, Bharat Forge, Maruti Suzuki India, Ashok Leyland, Hero MotoCorp, Bajaj Auto and Mahindra & Mahindra were down nearly 1-4 percent.

Also Read | Nomura says Maruti to face market share pressure; gives ‘neutral’ rating  

Several market participants believe, now is not the time to add auto stocks to one’s portfolio.

“Automobile stocks have been underperforming for quite some time. This is due to several factors like chip shortage, inventory build-up, uneven monsoon, lower discretionary spending, huge product price hike and uncertainty about the third COVID wave,” said Awanish Chandra, Head – Institutional Equities at SMIFS.

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Chandra considers it best to avoid auto stocks for now but sees Ashok Leyland as a good bet in the commercial vehicle space and believes Eicher Motors to be better placed among two-wheelers.

Meanwhile, Purvesh Shelatkar, Head of Institutional Broking at Monarch Networth Capital, also suggested avoiding auto stocks for another one or two quarters.

This is simply because of the chip shortage issue that will take time to resolve and secondly because Shelatkar awaits more clarity on the Electric Vehicle (EV) front as to who could clock higher EV sales.

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A report recently said that the Indian passenger vehicles industry will lose about 500,000 units of sales in FY22 on account of the semiconductor shortage which translates to about Rs 1,800-2,000 crore in lost sales opportunity.

Earlier this week, a note by Jefferies said that the Indian auto industry continues to witness divergent demand trends across segments.

“PVs and 2Ws are down 16-18 percent YoY MTD, although PVs have improved sequentially in a seasonally weak period as chip issues are easing, while
2Ws are broadly in-line with historical seasonality. In electric 2Ws, web analytics data suggests Ola has a lead over peers on website traffic and engagement,” the note by foreign brokerage said.

Catch LIVE stock market updates here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Infosys jumps 3%, TCS up 1%; Nifty IT outperforms on robust Accenture earnings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite the weakness in the overall market, Information Technology (IT) stocks jumped higher today as robust quarterly numbers from global IT major Accenture Plc boosted investor sentiment.

At the time of writing this copy at 9:53 am, Nifty IT was the sole gainer among other sectoral indices on the NSE. Nifty IT was up 1.8 percent at 36,803.65 points.

Accenture Plc’s Q1 revenue came in at $15 billion, up 27 percent. New bookings are a record $16.8 billion, a 30 percent on-year increase in dollar terms, with record consulting bookings of $9.4 billion and outsourcing bookings of $7.4 billion.

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The IT major’s management also highlighted that demand remains extraordinarily high, analysts noted.

Further, Accenture has raised its FY22 guidance from 12-15 percent to 19-22 percent.

“Accenture’s blockbuster performance and solid commentary support our thesis of robust tech upcycle that would continue for four-five years,” Edelweiss Securities said.

Edelweiss Securities prefers HCL Technologies, Tata Consultancy Services and Infosys among large-caps, and it prefers Coforge, Larsen & Toubro Infotech and Mindtree in midcaps. The brokerage likes Zensar Technologies, Persistent Systems, Birlasoft and Firstsource Solutions in the smallcap space.

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Some foreign brokerage firms are also bullish on the IT sector, particularly some stocks.

Goldman Sachs said that the global IT company’s earnings provide a positive read-across the Indian IT sector from both demand and margin perspectives. The brokerage has reiterated its ‘buy’ call on Infosys and Tata Consultancy Services (TCS).

Meanwhile, Credit Suisse’s preferred picks in the Indian IT space are Infosys, TCS and HCL Technologies.

Accenture’s earnings reinforce Morgan Stanley’s view on growth momentum for Indian IT companies. The foreign brokerage added that Accenture’s better-than-expected earnings in Q1, guidance hike and upbeat demand commentary bode well for Indian IT companies.

Morgan Stanley has said that it sees room for Indian IT stocks to react positively given large valuation discounts to Accenture.

The share price of Infosys, Wipro, HCL Technologies, Mphasis, Larsen & Toubro Infotech, Mindtree, TCS, Tech Mahindra and Coforge were up nearly 1-3 percent as of 9:55 am.

Catch LIVE stock market updates here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow