WEEKLY TRENDSETTER (AUGUST 2,2024)
| 2024 | JULY 19 | JULY 26 | Ch % |
| NIFTY | 24531 | 24834 | +1.24 |
| BANK NIFTY | 52265 | 51296 | -1.85 |
| USD/INR | 83.65 | 83.72 | 0.08 |
MARKET REVIEW-The week was action packed as expected, with volatility at its best. A sell-off post budget saw the index dipping to almost 24000.After 2 days of sluggishness the first session of the Aug series saw a strong pullback which saw the index closing at the high for the week and 25000 could be seen early next week.
BACK TO RESULT SEASON
June quarter results are trickling in. Let’s explore some of them to get cues of where the stocks could be heading
Rs in cr, Bracket indicates ch in % against June,23 quarter.
| Company | Revenue | Net profit |
| Finolex Inds | 1140(-3) | 500(+362) |
| Dodla Diary | 828(+8) | 54(+100) |
| E Pack Durable | 774(+74) | 24(+166) |
| DCM Shriram | 3073(+10) | 100(+75) |
Finolex Inds (318)-The management has made an intent to shift agri to non- agri ratio from 65:35 to 50:50 in the next 3-4 years. This is primarily because of volatility in demand from the agri division which is dependent on farmers. On the other hand, the non-agri demand stems from projects where pipes constitute only 1.5-2% of the project cost and thus branded products are preferred which enjoy better margins. The company manufactures resin from imported PVC which helps in maintaining a steady supply of raw material for manufacture of pipes. The results are sequentially flat and only a spike in other income of Rs 417 cr has seen the net profit shoot up. With the above-mentioned initiatives and also plan for capex to increase capacity, the company is poised for a strong growth in the coming years with a low debt equity base. Ideal levels for entry would be around 275.
Dodla Diary (1176)-The company is making fresh initiatives to increase procurement of milk and also sell value added products which have started to show results with improvement in margins which is now into double digits. Compared to an EBIDTA margin of 7.5% in June 23 the same has climbed to 11.5% for the June 24 quarter. The company also has international footprints with presence in Uganda and Kenya. International revenue contributed 9.2% of the total revenue but scope is immense. With a low debt equity ratio, EPS of 33 and aggressive outlook the company could be a good long-term play at lower levels of 850-900.
E-Pack Durable (262)-The company is a recent entrant to the market with an IPO in Jan 2024. It is one of the early original design manufacturers of 5-mm copper tubing for heat exchangers. It claims to enjoy highest amount of backward integration for room Acs. However, margins are slender at 6.5 % which does not support this claim. It has a range of domestic appliances like induction cooktop, mixer grinder, water dispenser, etc. The topline has been seen an impressive growth over the last few quarters and profits have improved in the last 2 quarters post IPO. On current trend EPS of 6-8 could be expected though there is definitely scope for improvement in margins which could spike up margins. Definitely a scrip to watch out in an ever-growing market of consumer domestic appliances.
DCM Shriram (1029) A highly diversified company involved in sugar and distillery, rayons and nylon, organic chemicals, armoured vehicles, containers, hand sanitizers. Sequentially there has been a dip in performance with EPS at 6.4 as against 7.55 for the March 24 quarter. This is largely due to presence in sugar and chemicals which are historically volatile asset classes. The scrip has been on a consolidation phase for 3 years resulting in under-performance.At levels of around 950 it would be a decent pick.
NIFTY –The index saw a volatile week. Low was at around 24074 which was due to a post budget sell off. However, it shrugged off budget disappointment and managed to close at high with 25000 within touching distance. Lower levels of 24500 -600 should act as a good support level.
BANK NIFTY-A relative underperformer, it sank to a low of 50400 before some recovery. Levels closer to 52000 could again see selling pressure emerging while 50500-51000 could be the support levels.
PICKS FOR THE WEEK
Associated Alcohol (799)-Clearly on a high as it has broken to an all-time high after a 3-year consolidation. Levels around 750-770 would be ideal for entry. Accumulation could be done for the long term as the stock looks poised to go past 1000 in the next few months.
EIH Associated Hotels (930)-The stock has broken past 830 on good volumes. Levels of 875 and below is ideal for buying. However, even at current levels accumulation can be considered as it looks poised to cross levels of 1200 in the coming months.
Wishing all readers, a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam