Tag: Edelweiss Securities

NTPC attractive and under-owned; structurally bullish on Tata Power: Edelweiss Securities

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

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[wealthdesk shortname=”NTPC” isinid=”INE733E01010″ bseid=”532555″ nseid=”NTPC” sector=”Power – Generation & Distribution” exchange=”nse”]

Power stocks rallied on Tuesday with Coal India, NTPC and Adani Power taking centre-stage. Power shortage is expected to grip as many as twelve states in India, with Maharashtra, Gujarat, Haryana being at the forefront of the crisis.

With the economy having opened up post the pandemic, demand has risen by 9 percent of pre-pandemic levels. The country’s coal crunch crisis is only making matters worse as the pan-India coal inventory slipped to that of 9 days as compared to 25 days’ average of the last ten years.

To understand the power crisis amid coal crunch, and also the best stock bets in the current scenario, CNBC-TV18 spoke to Swarnim Maheshwari, VP-Institutional Equities, Edelweiss Securities, and Rajib K Mishra, Director-Marketing & Business Development & CMD-Incharge, PTC India.

Maheshwari highlighted that NTPC is still quite attractive and under-owned. Among other stocks in the sector, he mentioned that he remains structurally positive on Tata Power. In fact, he expects a positive ripple effect of the Tata Power renewable deal on the sector.

“NTPC is still quite attractive, you haven’t seen that kind of rally and it is still significantly under-owned because of the ESG concerns and all, but given the fact that the next couple of quarters is going to be about energy security, so NTPCs of the world are going be in limelight,” he explained.

“What happened with the Tata Power renewable deal, will have a positive ripple effect on the entire sector, including NTPC also, because that’s again, one of the top players in the country. So we do believe that players like NTPC are still quite good, and can still fetch good returns from hereon. Companies like Tata Power, we remain very structurally positive on the company, because the way they have reoriented their businesses, there is a very strong perception change,” he added.

Also Read: Coal Shortage: Have stock enough for two more days, says Karnataka govt

On CESC, he pointed out that it is a play on the distribution sector. He also stressed that valuations are reasonable for the stock.

“CESC is essentially a play on the distribution franchises. Privatisation is likely to pick up and we are just waiting for the Electricity Amendment Act to get passed finally. CESC is a specialised player in the distribution space. In fact, they are just focusing on that space. So we believe that the next three to four years is going be good for the distribution companies (DISCOMs). So, we do expect a decent amount of growth of almost about 14-15 percent EPS CAGR and then at the same time, of course, the valuations are also reasonable,” Maheshwari mentioned.

Mishra of PTC India, inferred that there is a gap of 1 percent between demand and supply, which is not as substantive. He is of the opinion that high coal prices is a temporary phenomenon.

He said, “The international coal prices because of the geopolitical reasons have crossed $250 and it is something which is affecting the imported coal plants but I understand this is a very temporary phenomenon and it should not impact too much of the buying capacity of the DISCOMs and it should not last for more than fortnight or maximum to a month.”

“There is a gap of almost a percent, that is between what is being demanded by the states and what is being met, and it is not so substantive – it’s only 54 million units a day, some states may be having a wider gap, but overall in the country, there is hardly any gap. And there are a couple of factors, which have caused this kind of a gap, which we are seeing right now. But there are proactive steps, both by the government and the regulator,” he said.

Also Read: Coal shortage not singularly responsible for power crunch in 12 states: Haryana power secy

Watch the video for the full interview.

Catch all 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

Tech sector sees hiring boom as recruitment more than doubles in last 12 months: Edelweiss Securities

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

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[wealthdesk shortname=”Mindtree” isinid=”INE018I01017″ bseid=”532819″ nseid=”MINDTREE” sector=”Computers – Software” exchange=”nse”]

In an interview with CNBC-TV18, Sandip Agarwal, Research Analyst – Institutional Equities, Edelweiss Securities, said that there’s a hiring boom in the technology sector. In fact, recruitment in the space is up 2-3 times over the course of the last 12 months, he shared.

“The data of last 12 months of recruitment shows that it is 3x, 2x for most of the companies,” he said.

On the tech sector, he said that it is seeing a healthy correction in a long-term bull cycle. He added that some time correction in tech stocks is likely.

“This is this healthy correction or a short-term correction in a very long cycle. I think there is some time correction and there is some concern of supply which will get resolved in the next few months and then these stocks will start moving,” he added.

Also Read: Remain bullish on IT stocks due to strong hiring, revenue visibility: Jefferies

Mindtree posted its Q4 earnings. The Larsen & Toubro IT company reported a 49 percent year-on-year (YoY) jump in net profit at Rs 473.1 crore for the fourth quarter ended March 31, 2022. In the corresponding quarter last year, the company had posted a net profit of Rs 317 crore.

Sharing his insights on Mindtree post its Q4 results, he said that some short-term challenges on the supply side could be a possibility.

“We will see temporary, short-term challenges only on the supply side. And if you see yesterday’s numbers of Mindtree also, broadly, they were in line with expectation on all fronts, and the commentary was slightly better,” he said.

Agarwal remains optimistic on L&T Infotech (LTI) stock. He expects a profit after tax (PAT) growth of 25-30 percent from the company.

“If LTI put a 30 percent PAT growth, which I believe will happen, then we are looking at 26-27 times for a company, which is growing at more than 20 percent and PAT growth of 25 percent probably once the attrition issue gets resolved. So a ratio of 1-1.2 times for such good companies is not very expensive,” he explained.

Also Read: Pick sectors carefully as inflation, macro headwinds playing spoilsport: Aberdeen

Agarwal believes the price run is too sharp in Tata Elxsi even though it’s a good company.

“I think the stock has run up quite a bit. So I think this price run up is too sharp to justify a buy or even a hold. But it’s a very good company, great management. So for a long-term investor, it should not matter. But in near-term, I think this price may see a good correction from here,” he said.

Watch the video for the full interview.

Catch all 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

Spices market: Not a traditional FMCG market, says MTR’s Sharma; branded share can go up to 50%, Edelweiss Securities’ Roy

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

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India’s spices sector is in focus amid reports that FMCG major Hindustan Unilever (HUL) is in talks with spices maker MDH for picking up a majority stake in the company. The HUL-MDH M&A deal value is pegged to be in the range of Rs 10,000-15,000 crore.

Stakeholders from the industry reckon that the sector can scale up with plenty of opportunities for acquisition while challenges also abound given a large part of it remains in the unorganised sector as well. To discuss this, CNBC-TV18 spoke to Sanjay Sharma, CEO, MTR Foods, Sanjiv Bisht, VP-Spices and Aqua, ITC, and Abneesh Roy, ED-Institutional Equities, Edelweiss Securities.

ITC’s Bisht affirmed that there is plenty of opportunity in the Indian spice industry. He explained that the industry is valued at Rs 80,000 crore, whereas the branded market still stands at Rs 22,000 crore.

“The industry roughly will be around Rs 80,000 crore. Out of that, the branded category is around Rs 22,000 crore. The industry is growing at a rate of 7-10 percent and it has got good domestic and industrial potential,” he said.

Also Read: Demand hit by increase in prices; eyeing acquisitions in food space: Adani Wilmar

Concurring with Bisht, Edelweiss Securities’ Roy mentioned that branded spices account for 35 percent of the market and can definitely go up to 50 percent.

“Indian spice market will keep seeing consolidation. Last few years, we have seen multiple transactions happening; it is very attractive. So, branded spice currently is 35 percent of the total market, but I think in the long-term, this will be more like a 60-70 percent market and in the next five years, it can easily touch 50 percent of the market. So branded spices is growing more like 15-17 percent,” he said.

Also Read: FMCG makers to go for 10% price hike to mitigate inflationary pressures

MTR Foods’ Sharma, however, is of the view that the shift from unbranded to branded spices won’t be as seamless and quick. He explained that while the spices industry is more than a century old in India with established players, there is still no national brand per se in this space.

“This is 100 year old market. The structure though in the markets are well formed, it’s not something new that has started. We have been in this market now for 13-14 years. So we have seen how the market translates from branded to unbranded. It’s not that there is no competition in the market, in every local market, there are 100 plus brands that we have to compete with, to translate it from an unbranded to a branded market,” he mentioned.

It is not a traditional FMCG market and the movement towards the branded segment will vary, stressed Sharma.

“So we are being a little bit too optimistic in terms of what we think about things. This market is going to change towards the branded market, I am not disputing that fact, but the rate at which it is going to change, will vary. And this is not the first time that large multinationals have shown interest towards this market. We have seen people come into the market and exit out of the market, because this is not a traditional fast moving consumer goods (FMCG) market,” he explained.

Sharma added that there remains a lack of a national brand.

“It’s very different than what people may think. There is nothing called as a national brand. It’s not so easy for someone to just come in and say I am going to take over this market, and I’m going to convert it from unbranded to branded,” he added.

Watch the video for the full interview.

Catch all 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

Steel prices up 10% in Europe in last 2 days; industry facing energy cost threat: JSPL

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

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With the Russia-Ukraine war having taken centre stage, commodity prices have been set ablaze across various markets. Metal prices have reacted to the ongoing tensions as well. Steel prices have shot up by 10 percent in Europe in the last two days, shared VR Sharma, MD, JSPL, in an interview to CNBC-TV18. He added that input prices are very high at the moment, be it coking coal or gas, however, the only saving grace is that there are no shortages of raw materials in India.

He said, “There is a worldwide crisis because of the war (Russian-Ukraine). The energy prices have gone up everywhere in the world and steel prices, in Europe, shot up by 10 percent in the last two days. Yesterday, March 1, ArcelorMittal declared an increase of 150 euros on hot-rolled coil because input costs are very high. So this is going to create a lot of uncertainties in the market, but the benefit will be availed by the steel suppliers where there is no energy, raw material or input shortage, for example, in India.”

Delving deeper into the tribulations that the industry is currently grappling with, Sharma shared coking coal prices have gone up by $40 per tonne in the last two weeks. Further, he mentioned that around 50 percent of input costs for the steel industry is towards energy and it is facing a threat in terms of energy costs. He elaborated that natural gas prices are at $25-30/mmbtu. In order to combat the rising raw material price pressures, the company hiked its prices on Tuesday, Sharma mentioned.

He said, “We are trying to push the input cost rise to the market. The international market is excellent as far as prices are concerned because there are a lot of inquiries, a lot of orders coming from Europe and also from America.”

Meanwhile, Amit Dixit, Director-Institutional Equities, Edelweiss Securities, views the Russia-Ukraine conflict as an opportunity for the Indian steel players. He explained that Russia is a big exporter of steel in global markets and since Japanese and Korean mills don’t have meaningful steel exports, it naturally presents an opportunity on a platter to some of the Indian players in the steel industry.

He mentioned that JSPL, JSW Steel and Tata Steel could be some of the beneficiaries, meanwhile, Hindalco would benefit in the aluminium space.

Catch all the live updates on Russia-Ukraine war here

For the entire discussion, watch the accompanying video

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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

BFSI sector betting big on tech spends; experts assess impact on Indian IT cos

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

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Global banks are planning to spend big on technology based on customers’ expectations. There’s been a rise in the banking, financial services and insurance (BFSI) sector spending and this bodes well for the Indian IT companies. To discuss this, CNBC-TV18 spoke to Sandip Agarwal, Research Analyst, Institutional Equities, Edelweiss Securities, and Amit Chandra, Research Analyst- IT, HDFC Securities.

Agarwal affirmed that banking transactions are rising, which in turn is forcing companies to spend on cloud and agile operations. He also believes that the recent flurry of bank spending is driven to counter fintech disruptions.

He said, “The small and mid-sized banks in Europe and US are trying to aggressively counter the fintech disruption strategy and that’s one of the reasons why spends are coming. Also, within the BFSI, insurance is one segment where a lot of money is spent on the upgrades.”

Citing his top picks in the IT sector, he said that he likes HCL Technologies, Infosys and TCS. “In the largecaps, we like HCL Tech, Infosys and TCS. In the midcaps, we like Coforge, Mindtree, Larsen & Toubro Infotech (LTI) and in smallcaps, we like Birlasoft, Firstsource Solutions and Zensar Technologies, but I would reiterate that I don’t dislike any names; these are the preferred picks. In my view, all the stocks will do well, we are just at the beginning of the cycle and one will see a lot of money coming in tech spend side,” said Agarwal.

Also Read: Explained: Why SEBI plans to tighten IPO pricing rules for new-age tech firms

Meanwhile, Chandra pointed out that the chances of a further upgrade in IT valuations are limited from hereon. His preferred pick among the largecap players in the IT sector is Infosys.

He said, “From here on, the chances of further upgrade in multiples is limited, but the focus now will shift on how the FY23 and FY24 numbers will shape up and how the commentary of IT companies for FY23 is going to be.”

Also Read: Indian technology sector will play key role in global tech spend: NASSCOM

“In terms of preferred pick, in the largecaps, Infosys is the one which we like and apart from that Tech Mahindra is another one,” said Chandra.

For the entire discussion, watch the accompanying video

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

IT theme to sustain; ‘hold’ Zomato: Edelweiss Securities

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

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Aditya Narain, Managing Director, Head of Research, Edelweiss Securities, is of the view that the IT theme is here to stay over the long term. According to him, technology stocks will continue to rise. He is of the firm view that some exposure to the digitization, tech theme is a must.

“I think there are other themes like the IT theme, which we have been bullish on for quite a period of time. That will sustain, the excitement around it will probably ease off a little bit, but the underlying trend will actually tend to sustain,” he said.

He explained, “I think the whole technology space is very interesting for India. It’s something that one must capture and one must have a certain balance across one’s portfolios.”

When it comes to the new-age stocks, Narain believes investors need to take into account the long-term viability of the business models before diving head-first. He has a ‘hold’ rating on Zomato for now.

“We cover Zomato on which we have got a hold recommendation,” he said.

According to him, consumption has been concentrated at the top end and needs to go lower.

He said, “It’s going to be a time where the lower end, the bottom end of consumption starts climbing its way back, which is different from what we have seen so far, where it’s been the top end, it’s been a narrow segment that has been showing demand and consumption capability.”

“Next year, that’s going to be probably the more decisive thing that we will need to look at, which is the lower end whether it is two-wheeler demand or consumer staple demand picking up a little bit or the benefits of costs that come in, which plays to some of these businesses. So I would say that it is going to be a linear trend this year, that is probably not factored into the market,” he explained.

Narain stated that he likes real estate assets more than the real estate stocks.

“We like the theme, and the likelihood of there being continued momentum probably a little bit more than we like the stocks at a portfolio level,” he said.

For the full interview, watch the accompanying video.

Catch all market updates here.

Also Read: Positive on banks, IT; book profits in momentum stocks: Edelweiss Securities

Also Read: Three more yrs of IT upcycle left; Mindtree, L&T Info may see 30% earnings growth: Edelweiss Securities

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