WEEKLY TRENDSETTER (SEPT 8th ,2023
| 2023 | Aug 25 | Sep 1 | Ch % |
| NIFTY | 19266 | 19453 | +0.97 |
| BANK NIFTY | 44231 | 44436 | +0.46 |
| USD/INR | 82.66 | 82.74 | +0.10 |
MARKET REVIEW–The Aug expiry was at the low point of the month and Sept was expected to begin with a downward slide. However, the bulls had other ideas and the index managed to close the week in the green with a smart rally on the first day of Sept series. While it is too early to celebrate, the coming week at least looks like bulls will have an upper hand.
BACK TO RESULTS (June qtr.)
The June quarter results are almost at the fag end. So far, it has been a mixed bag. This week let us explore some Gujarat based companies which also announced blockbuster dividends
Rs in cr, Bracket indicates ch in % against June,22 quarter.
| Company | Revenue | Net profit |
| GMDC | 766(-36) | 216(-37) |
| GNFC | 1652(-38) | 85(-85) |
| GSFC | 2068(-31) | 112(-67) |
| Guj Alkalis | 913(-19) | -33 |
In April this year, the Gujarat Govt mandated a minimum 30% dividend or 5% of net worth whichever is higher from Gujarat PSUs.In this background its worth analysing some of these companies
GMDC-(245)-The company operates in lignite mining and power segments. While mining is the chief contributor, on the power side it operates both on thermal and renewable power plants. The company is also getting into coal mining from Orissa for a reserve of 1700 million tons and a capex of Rs 5000 cr over the lifetime of the project. Besides Rs 800 cr is earmarked towards new lignite project and Rs 650 cr towards existing lignite project in Bhavnagar. On the performance front the same has been subdued for the June quarter and the 2nd half could be a better period. The company has announced Rs 11.45 dividend. After this announcement the scrip shot up from 180 to 250 in Aug. The company could be expected to post EPS of Rs 40-45 for FY24.
GNFC (622)-The company is into fertilizer and chemicals. While the fertilizer division posted a loss for the June quarter, the chemical division posted a subdued quarter. The company posted an EPS of Rs 5.70 for the quarter. While the lower term outlook remains bright, the cyclical nature of business is a cause of worry and at current market price the stock looks well priced. It is also quoting cum dividend of Rs 30.
GSFC (176) -The company is one of the largest manufacturers of DAP, largest manufacturer of Nylon-6, largest manufacturer of caprolactam and the only manufacturer of Melamine. The June quarter was subdued and the company posted EPS of Rs 2.82. However, a hefty dividend of Rs 10 has kept investor buying active. Given the cyclical nature of business, discounting has been historically low. Levels of 180 and above could attract profit-taking.
Gujarat Alkali –The company is one of the largest manufacturers of caustic soda and its derivatives. The cyclical nature of business has also seen profits fluctuating over the years. It had reported an EPS of Rs 78 for FY23 and even the March quarter was decent with an EPS of Rs 15. However, the price downtrend in the products has pushed the company into losses for the June quarter with an EPS of (-)4.54. The stock is quoting cum dividend (Rs 23.55). At Rs 732 the stock looks well priced.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY – The index was on the brink of breaching 19200 at end of week before a smart short covering rally ensured a recovery to close above 19400.The index could see levels of 19550-600 where a fresh review needs to be taken.
BANK NIFTY-The index was a relative underperformer during the week. Weighed down by HDFC Bank the index looked heading for 43500. However, short covering ensured a closing above 44400.Levels of 44700-800 will be a stiff resistance.
PICKS FOR THE WEEK-
GAIL (121)-The scrip after weeks of consolidation between 110-120 looks to have broken out. A steady move towards 135 could be expected in the Sept series.
Trigyn Tech (131)-This small cap tech counter saw a sharp spike from 118 to 130 and managed to consolidate around those levels. Support around 125 could be expected while a target of 145-50 looks on cards.
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam