WEEKLY TRENDSETTER (FEB 16,2024)
| 2024 | FEB 2 | FEB 9 | Ch % |
| NIFTY | 21854 | 21782 | -0.33 |
| BANK NIFTY | 45971 | 45634 | -0.73 |
| USD/INR | 82.92 | 83.04 | 0.14 |
MARKET REVIEW-The week made a tepid start and levels of 22000 proved difficult to sustain. Towards close of week, it shed further ground and selling was broad based and even the mid and small cap stocks saw selling pressure. Advance decline ratio was negative as losers outweighed gainers.
BACK TO RESULTS (Dec qtr.)
The Dec quarter results are trickling in. So far, it has been a mixed bag. This week let us explore some of them:
Rs in cr, Bracket indicates ch in % against Dec,22 quarter.
| Company | Revenue | Net profit |
| Azad Engn | 89(+48) | 17(+325) |
| Orchid Pharma | 221(+38) | 30(+328) |
| Nelcast | 320(-2) | 26(+420) |
| TVS Supply | 2222(-10) | 9.56(-40) |
Azad Engn (970) –A high profile public issue which also has some marque investors posted an interesting set of numbers. The company manufactures complex, highly engineered precision forged & machined components with presence in aerospace, defence, energy and oil & gas. It has doubled its revenue in the past 2 years and despite a fall in profits in FY23, the performance appears promising as in the latest quarter it has seen good operational performance and further boosted by other income. With an EPS of Rs 3.37 for the quarter the stock looks heading to post an EPS of around Rs 15 for FY24.Recently it was in the news when it made a pact with Rolls Royce to make defence aero engine components in India. On the back of this news the stock sprinted from 700 to 1000 before some cooling off. Clearly a stock to keep on the radar.
Orchid Pharma (1015) -The company came out with stellar numbers and operating margins saw a surge from 8.7% to 16.2%. Exports constitutes 83% of the revenue and the management is optimistic that with some approvals from US revenue could see further boost. It got European approval for its Exblifep drug which is the first indigenously developed drug for treating complicated urinary tract infections, pneumonia, and bacteremia. With Rs 6 EPS for the quarter and growth prospect bright the company could end up FY23-24 with an EPS of around Rs 20. The scrip has surged past 1000 on the back of performance. The scrip could be considered for buying on any sharp declines.
Nelcast-(159)-The company manufactures ductile & grey iron castings which cater to the global automotive, tractor, construction, mining, railways, and general engineering sectors. Its products include un-machined castings and machined castings. Nelcast has an aggregate installed production capacity of 1.6 lac mtpa. The company has a strong export market and has targetted exports of Rs 400 cr for FY23-24. Rs 319 cr has already been achieved in the 9 months of the year so far. While operational performance is strong the quarter also saw a boost of bottom-line by an exceptional income. The company looks heading for EPS of Rs 6-7 for FY23-24.
TVS Supply Chain (185)-The company came out with an IPO and has been actively restructuring the company. To begin with it has brought down borrowings from Rs 1784 cr to Rs 744 cr as of Dec 23. It has also merged 4 entities into the company for better synergy on a global level. The Dec quarter has seen an improved performance and after losses in the previous 2 quarters it has posted profits. However, with the above merger in place and reduction in debt the company could see improved performance in the coming quarters. With a strong promoter backing the company offers high potential in the coming years. Valuation is high and the stock has been underperforming. However, on any strong correction it offers good value.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY – The index lost momentum again around 22000 level and is now at crossroads. While heavyweights like RIL, SBI, TCS have been holding steady, banking continues to be a drag with the private banks losing ground at higher levels. While 21500 will again be a good support area levels of 22000 will continue to be a challenge.
BANK NIFTY-The index belied expectations of a likely out performance during the week though PSU banks were outperformers. The private banks underperformance weighed down the index and it slipped below 45000 before some recovery. A strong recovery past 46300 is needed for the index to resume its uptrend.
PICKS FOR THE WEEK
Yes Bank (31.3)-An underperformer for more than 2 years, the stock has sprung back to action with a strong breakout past 30. Gradual buying can be considered at dips. Levels of 40 can be expected in the coming weeks.
Reliance (2922)-The stock has broken past 2650 and has been consolidating well above that level. Ideally a pull back to around 2850 would be ideal to buy into the scrip for a possible target of 3050.
Wishing all readers, a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam