Moneycontrol Pro Ideas For Profit

May 4, 2022

What is making analysts confident about IndusInd Bank’s growth in FY23

In a few ideas for profit from Moneycontrol Pro, Madhuchanda Dey of Moneycontrol.com talks about a stock that she is tracking closely, IndusInd Bank.

IndusInd Bank has been an outperformer in the past three months not only within the banking pack but also with respect to the benchmark Nifty. The steady execution in the fourth quarter, the promising outlook for 2022-23, and the undemanding valuation make analysts reasonably confident that the stock has headroom for further rerating, according to Dey.

All the issues with respect to either the corporate book or the whistleblower’s allegation with respect to the MFI portfolio of the bank’s subsidiary are behind us, said Dey.

“Growth is gradually picking up and the bank is getting ready for strong growth in FY23. With the high yielding retail book, steadily improving liability and waning asset quality concerns as the economy improves, analysts see sustenance of its high-interest margin and expansion in return ratios,” said Dey.

Also Read: Whistleblowers alert RBI about evergreening of loans at IndusInd Bank subsidiary

In this context, the valuation is still undemanding, according to Dey. The bank has seen an improvement in asset quality thanks to the revival of both vehicles as well as the microfinance portfolio.

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May 2, 2022May 2, 2022

Everything that makes Cyient an attractive stock right now

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In a few ideas for profit from Moneycontrol Pro, Nitin Sharma of Moneycontrol.com spoke about a stock he is tracking closely, Cyient.

Cyient is a midsize IT firm with around Rs 4,500 crore in revenue. Division wise, the services segment contributes around 82 percent while design-led manufacturing, the DLM segment, contributes the rest.

The company generates an EBITDA margin of 18 percent while EBIT margin ranges between 13 percent and 14 percent. The margin improvement in recent years came from employee cost rationalisation.

In the fourth quarter, the company’s revenue grew by 8.1 percent year-on-year driven by the utilities and portfolio sub-segment. The DLM segment saw a decline of 10.8 percent year-on-year due to global semiconductor shortage.

Sharma said, sequentially, the company’s EBIT margin expanded by 58 basis point to 14.5 percent during the quarter. Along with this, the company won seven large deals during the quarter. Its attrition was at 26.9 percent, which remains a major pain point.

The company recently acquired Citec and Grit Consulting to augment its position in the plant engineering and consulting space.

At the current market price, Cyient trades at an FY24 PE of 14.2 times, which is a significant discount to its peers. With a dividend yield of more than 3 percent it makes it an attractive pick. Sharma believes long-term investors can buy Cyient.

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April 29, 2022April 29, 2022

Investors can accumulate IFGL Refractories on decline. Learn why

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In a few ideas for profit from Moneycontrol Pro, Nandish Shah of Moneycontrol.com spoke about a stock he is tracking closely–IFGL Refractories.

IFGL is into manufacturing specialised refractories used by the iron and the steel industry. December quarter numbers were sub-par on the higher raw material cost.

Shah expects volume growth from existing and new customers backed by growth in steel demand. India will likely witness an incremental steel production capacity of 25-30 million tonnes in 2-3 years.

Higher raw material prices are passed on to the customers through price hikes, which help maintain and increase margins.

According to Shah, the new capacity addition at Vizag is superior in cost structure compared to the older plants. The new plant is modelled and efficient and closer to the port location, ensuring savings on freight costs.

Based on the FY23 projection, IFGL is trading at PE multiples of 11 times. So, according to Shah, investors can accumulate this stock on decline.

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April 28, 2022April 28, 2022

Phillips Carbon Black is attractive as it is pushing India to turn net exporter of the commodity

In a few ideas for profit from Moneycontrol Pro, Anubhav Sahu of Moneycontrol.com spoke about a stock that he is tracking closely–Phillips Carbon Black (PCBL).

PCBL is the largest carbon black producer in India. It benefits from the current geopolitical situation. Given the sanctions on Russia, there might be a shortfall in supply which Indian manufacturers can fill in.

India turned net exporter of carbon black in the financial year 2022, and this shift in trend was chiefly led by PCBL. PCBL accounted for more than 70 percent of carbon black exports from India in the financial year 2022.

While this trend will continue to benefit PCBL, the gain is likely to be more on the pricing side in the near future, according to Sahu.

Current capacity is optimally utilised. Having said that, capex projects for about 1,70,000 tonnes are on track which includes 20,000 tonnes for speciality applications, Sahu said. This will add about 30 percent to existing capacities and are likely to be available from the fourth quarter of the financial year 2023.

Margin pressure would remain due to elevated crude linked raw material prices in the near term.

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April 27, 2022April 27, 2022

Amara Raja Batteries stock offers a low risk, high return opportunity. Learn why

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In a few ideas for profit from Moneycontrol Pro, Nitin Agrawal of Moneycontrol.com spoke about a stock he is tracking closely–Amara Raja Batteries.

Amara Raja Batteries is an auto ancillary company. The stock price of the company corrected by around 45 percent from its high achieved in January 2021, and according to Agrawal, this has made the valuations very attractive.

He said one of the biggest concerns for the company is the rise in raw material prices, which has impacted its EBITDA (earnings before interest, taxes, depreciation, and amortisation) margins. The firm’s EBITDA margin contracted by as much as 362 basis points in Q3 FY22 on a year-on-year basis.

The company has been taking steps to arrest the impact of the raw material prices by taking price hikes and going for backward integration.

Post-COVID a significant recovery has been seen across all the segments. According to Agarwal, the demand from the automotive segment is strong and it is evident from its Q3 numbers. The company posted a growth of 20.7 percent. With the economy returning to normalcy, the industrial segment is also getting traction.

The company is all geared up for the electric vehicle space as well. It is coming up with a 100 megawatt-hour lithium-ion battery plant, has already launched an e-rickshaw battery, and has started supplying to original equipment manufacturers.

Agarwal believes the price correction has already captured the challenges that the company has been facing. With the current valuation of around 10.8 times FY24 projected earnings, he believes the stock offers a very low risk, high return opportunity to the investors.

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April 25, 2022

Moneycontrol Pro: Equitas Small Finance Bank in focus, here’s why

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In a few ideas for profit from Moneycontrol Pro, Madhuchanda Dey of Moneycontrol.Com spoke about a stock that she is tracking closely, Equitas Small Finance Bank.

The stock price has been largely flat in the past three months, asset quality picture had improved in the last reported quarter and there has been an improving trend in collection efficiency as well. Consequently the bank has lowered its credit cost guidance for the future.

On the ground, growth seems to be picking up as evident from the sharp pickup in disbursement as per the provisional figures of Q4. Equitas has put in substantial efforts in diversifying and derisking its asset book away from unsecured microfinance. At the end of 2021, 81 percent of the book was secured lending. Despite having a predominance of secured assets, interest margins have sustained and improved as Equitas saw steady decline in the cost of funds.

The company is spending aggressively on technology to stay ahead of competition and is adequately capitalized for the growth ahead.

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April 22, 2022April 22, 2022

Finolex Industries in focus; here’s why

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In a few ideas for profit from Moneycontrol Pro, Sachin Pal of Moneycontrol.Com spoke about a stock that he is tracking closely, Finolex Industries.

It is the largest and only backward integrated manufacturer of plastic pipes in India. The business has delivered an exceptional performance since the onset of COVID-19 primarily due to recuperating demand across its key operating markets as well as strong realizations in the PVC resin segment.

The margins of the company have come in the range of 25-30 percent and is exceptionally higher due to highest rates in the PVC segment. Going forward, margin performance is likely to moderate as the company is witnessing slowdown in demand from the rural markets.

Long-term prospects of the business appears fairly bright due to several government initiatives such as Nal Se Jal scheme as well as infrastructure spending.

The stock is corrected 30 percent from its all-time highs and is trading at reasonable valuations at this point of time. Investors can look forward to go long on the stock at current levels.

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April 20, 2022April 20, 2022

Here’s what augurs well for ICICI Prudential Life Insurance

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In a few ideas for profit from Moneycontrol Pro, Neha Dave of Moneycontrol.Com talks about a stock she is tracking closely– ICICI Prudential Life Insurance.

ICICI Prudential finished FY22 on a positive note. The topline growth as measured by the annualised premium equivalent (APE) was healthy and grew by 20 percent year-on-year. The business transformation, which is reflected in a better product mix, higher margins, the distribution network and the strong guidance for future augurs well for the stock.

ICICI Prudential’s new business margins expanded to 28 percent in FY22, from 25 percent in FY 21, and much of it can be attributed to a better business mix. Nearly 50 percent of the new business premium was contributed by protection and annuity segments, both of which are significantly under penetrated parts of the market.

Read Here | Life insurance companies’ new business premium income increased by 13% to Rs 3.14 lakh crore in FY22

The share of relatively more volatile linked business has come off and now constitutes 48 percent of the APE as compared to 80 percent in FY18.

In terms of valuation the stock is currently trading at around 2.4 times embedded value for FY22 which is reasonable considering the margin and growth levers in place.

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April 19, 2022

Why should you pay attention to Cochin Shipyard that’s trading at 9 times FY23e earnings

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In a few ideas for profit from Moneycontrol Pro, Jitendra Gupta of Moneycontrol.Com talks about a stock he is tracking closely–Cochin Shipyard.

Cochin Shipyard deserves attention at Rs 350. Currently, it is trading at 9 times its FY23 estimated earnings, which is quite good considering its strong order book, improving revenue visibility, zero debt, cash in the books and, of course, dividend yield of almost 4 percent.

Due to its execution capabilities, domain expertise, technology scale and very high entry barrier in this business, Cochin Shipyard is considered among very high-quality defence play, including Rs 10,000 crore L1 order pertaining to missile vessels.

It is currently sitting on an order book of close to Rs 20,000 crore, about seven times its annual revenue providing very good revenue visibility.

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April 18, 2022

Moneycontrol Pro: EIH in focus, here’s why

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In a few ideas for profit from Moneycontrol Pro, Bharat Gianani of Moneycontrol.Com talks about a stock that he is tracking closely, EIH Associated Hotels.

The demand improvement has been pretty strong post normalization after two years of COVID-19. The leisure demand is already above the pre-COVID levels, while the business in corporate is picking up.

The resumption of international travel last month is positive for the company. EIH with its luxury positioning under the Oberoi brand is preferred by many international tourists. Additionally, EIH supplies food for many international flights which should also benefit.

Expect margins to improve as the company has lowered its cost structure by reducing the employee expenses, power and fuel expenses as well as corporate overheads.

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