WEEKLY TRENDSETTER (Nov 18th,2022)
| 2022 | Nov 4 | Nov 11 | Ch % |
| NIFTY | 18117 | 18350 | 1.29 |
| BANK NIFTY | 41258 | 42137 | 2.13 |
| USD/INR | 82.45 | 80.98 | -1.78 |
MARKET REVIEW–The week saw some range bound tussle before the US markets took off providing the boost to the Asian markets. The last day s action was more scrip specific with the likes of HDFC twins providing the momentum to the respective indices. While the Bank Nifty has already closed at an all-time high, the Nifty is about 300 points shy of the same.
BACK TO RESULTS (Sept qtr.)
The Sept quarter results are getting announced. The small and mid-cap segments are the ones where some interesting results could be looked at. This week let us explore some of them:
Rs in cr, Bracket indicates ch in % against Sep,21 quarter.
| Company | Revenue | Net profit |
| FSN E-Co Nykaa | 1231(+39) | 5.7(+383) |
| Himadri Spec | 1059(+64) | 35.9(+283) |
| Karnataka Bank | 1771(+14) | 411(+228) |
| Seshasayee Paper | 522(+58) | 100.3(+320) |
Nykaa -The company is a new age online business dealing in beauty and personal care which went public in 2021 at a premium of 1124.The 2018-22 period saw revenue showing a jump from Rs 1111 cr to 3773 cr. For FY19 and FY20 the company posted losses of Rs 24.5 cr and 16.61 cr respectively. The following years FY21 and FY22 turned out to be profitable with net profits of Rs 62 cr and Rs 41.3 cr respectively. Interest and depreciation costs have risen in FY 22 pulling down the bottom line. On a capital of Rs 47.41 cr(1 rupee paid up) the company posted EPS of 1.Recently the company announced bonus in the ratio of 5:1 which will result in the equity ballooning to Rs 250 cr. The trend of FY23 also reveals pressure on margins which are already slender at 2-3%. There is also a lock -in expiry of shares which will be available for selling post Nov 10. The stock could come under severe pressure in the next few months as the hefty bonus issue will also dilute the equity. With other online retailers bracing themselves for a presence in the space, the future looks challenging.
Himadri Speciality -In Aug ,2022 the company allotted 7.25 cr warrants to the promoters and other group entities at an exercise price of Rs 70 when the stock was trading at around 95. Subsequently the stock has seen a steady rise. The Sept quarter has shown a flat growth in topline However, margins have improved and profits zoomed 50%. After an exceptional write off of Rs 30 cr the net profit was trimmed. The stock looks interesting and levels of 80-90 offer good support.
Karnataka Bank – (135)-Like many of its peers the Sept quarter results showed good credit growth, expansion in NIM and a sharp fall in provisions. The EPS for the Sept quarter stands at Rs 13 which has enthused investors as reflected by the price which rose sharply from 90 to 140 in a matter of 2 weeks. Some cooling off could be seen but around 120 the buying interest could again resume.
Seshasayee Paper (308)-The year 2022 has been great for the company with 3 successive quarters of growth in revenue and profitability. The paper industry has been buoyant due to 3 factors -Firstly the packaging industry has seen a huge demand upsurge with e-commerce showing a sharp uptick. Secondly ban on single use of plastic (wef July,2022) could see a shift to use of paper. Thirdly, post Covid re-opening of schools have revived demand from the educational sector. The company is also well integrated with domestic availability of wood. To tackle sharp rise in coal prices it has partly shifted to bio-fuel. All this has seen a sharp rise in operating margins which have gone past 25% surpassing pre-Covid levels. With an EPS of 27 for the 6 months of FY22-23, the scrip has seen a huge run up. Some correction to levels of 250-75 would be ideal for fresh investment.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY –The closing for the week is just shy of 300 points from all-time high. The market could see some profit-taking closer to 18500.Any correction should see good support at around 18100.
BANK NIFTY-The index closed at an all-time high for the week. The notable uptrend has largely been seen in PSU banks while the private sector banks have largely remained range-bound. The coming week could see some profit-taking as the index tries to consolidate above 42000 after a 7-week run up. Any correction could see levels of 41700-900 acting as a good support.
SCRIPS TO WATCH OUT
Finolex Inds (151)-The scrip has largely been an underperformer in the last few months. However, it has seen consistent buying support around 130-140 levels. At current levels the scrip is an accumulation candidate for possible target of 200 in the coming weeks.
Hindalco (430)-After a strong rally in July the scrip has largely been range bound with selling emerging around levels of 440.Any advance to levels of 440 could be used to sell the scrip for a possible target of Rs 400 in the coming weeks.
Have a great trading week!Wishing all readers a very Happy Diwali ! Note: Any queries /clarifications may be addressed to stockmasala@gmail.com