WEEKLY TRENDSETTER (FEB 4th,2022)
| 2021 | JAN 28 | FEB 4 | Ch % |
| NIFTY | 17102 | 17516 | 2.42 |
| BANK NIFTY | 37689 | 38789 | 2.92 |
| USD/INR | 75.07 | 74.69 | -0.51 |
MARKET REVIEW–The market went into the budget with a set of expectations and finally it turned out to be an infra oriented budget. An initial sell -off was bought into and the indices finally closed with healthy gains.
BACK TO RESULTS (Dec qtr.)
The Dec quarter results season has begun and several large cap results have been widely discussed. The small and mid-cap segments are the ones where some interesting results could be looked at. This week let’s explore some results: –
Rs in cr, Bracket indicates ch in % against Dec,20 quarter.
| Company | Revenue | Net profit |
| Westlife Devpt | 474(+46) | 20.8(+999) |
| Gokaldas Export | 520(+96) | 30.1(+398) |
| Arvind | 2275(+50) | 94.2(+324) |
| Kennametal | 239(+10) | 30.6(+86) |
Westlife Devpt (496)-There has been a significant jump in EBIDTA margin from 5.22% to 10.3%. Interest costs still continues to be high as interest cover is at 2.3 times which should ideally come down. This performance was also when lockdown was enforced in many States. Once it is lifted operations could see significant improvement.
Gokaldas Exports (405)-The company has continued with its momentum of the previous quarter and invested in manufacturing and processes and consolidated its place in global supply chains. It infused Rs 300 cr of equity capital during the Dec quarter it raised through a QIP in October. The company’s debt has dropped to Rs. 71 cr as compared to Rs. 166cr of end of FY20-21. The company has led the textile resurgence in the last few quarters.
Arvind (142)-Another robust quarter from the company with strong domestic and export performance which was despite sharp increase in cotton prices which could be passed off due to high price realization. The management has also indicated similar performance in the 4th quarter. Thus, EPS could be in the range of Rs 10-12 for FY21-22. Significant re-rating has already taken place in the past few quarters.
Kennametal (1963)- The company manufactures hard metal products and machine tools for use in the manufacturing, auto and general engineering industries. The company has benefitted from growth witnessed across segments in transportation earthwork, energy, aerospace and general engineering. The last 2 quarters have seen sharp increase in margins and profitability with EPS of Rs 27 for 6 months. It offers a good investment opportunity at declines.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index had corrected from 18350 to 16836.Subsequently it retraced 62% back to 17800. This could again act as a resistance in the coming week.
BANK NIFTY-This index has shown relatively higher strength compared to the Nifty and enjoys decent support around levels of 38300-400.PSU banks have been leading the pack and the trend is likely to continue in the coming week. The near-term resistance lies at 39200-300.
SCRIPS TO WATCH OUT
SAIL (106)-The scrip touched a 52-week high in May 21 and was in a correction mode. After touching a low of 94 the scrip looks poised to regain its losses and buying at declines could be considered for a possible target of 130-35
JSW Steel (657)-The scrip touched an all time high of 777 in Aug 21 and since then has been on a consolidation mode. Buying at declines can be considered for a possible target of 750.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam