WEEKLY TRENDSETTER (MARCH 1,2024)
| 2024 | FEB 16 | FEB 23 | Ch % |
| NIFTY | 22040 | 22212 | 0.78 |
| BANK NIFTY | 46385 | 46811 | 0.92 |
| USD/INR | 83.01 | 82.93 | -0.10 |
MARKET REVIEW-The week again played out the underlying strength of the market as dips were bought into and sector rotation was in action. The Nifty is steadily conquering higher levels while the Bank Nifty is in a struggle zone and keenly awaiting a bullish move from HDFC Bank which can enable it to keep pace with Nifty.
BACK TO RESULTS (Dec qtr.)
The Dec quarter results are almost over. 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 |
| Narayana Hruda | 1204(+6) | 188(+22) |
| Natco Pharma | 759(+53) | 213(+243) |
| Fineotex Chem | 138(+26) | 33(+50) |
| Ashapura Mine | 713(+33) | 46(+58) |
Narayana Hrudayala (1365)-The company posted decent set of numbers for the quarter. It has allocated a capex of over Rs 1136 cr for the current financial year, with 75% already deployed. It plans a substantial investment in upgrading and expanding its existing facilities over the next 3–4 years. Currently, it has a network of 19 hospitals and 3 heart centres across India, along with a presence in the Cayman Islands, with over 5,821 operational beds and a capacity of over 6,090 beds. Further, it expects to add more than 700 more beds in the next 3–4 years. The hospital chain has a huge network, and all of them need upgradation and expansion. Some of the hospitals in Jaipur, Ahmedabad, Raipur, and Delhi are all half built.
It also anticipates acquiring the necessary licenses from IRDAI) in this calendar year or possibly early next year. It will be initially focusing on Bengaluru and Mysuru for 1-3 years. It is a portfolio stock though could be considered at a good correction.
Natco Pharma (1027) -The company has shown decent performance in the last few quarters. With an EBIDTA margin of 38% and on the back of a surge in revenue, the bottom-line has seen a handsome spike. Exports constitutes 76% of its revenue. The high margins could be attributed to its vertically integrated model of API manufacture. It is also into contract manufacturing for other pharma companies and has also forayed into crop health science. The company could report an EPS of Rs 75-80 for FY 23-24 and is a serious rerating candidate. A gradual accumulation could be considered.
Fineotex Chemical (442)-The company has a niche presence in speciality chemicals and caters to the textile industry besides cleaning and hygiene & drilling industries. The total installed capacity stands at 1.04 lac MTPA and capacity utilization stands at 80% which reflects the sluggish trend prevailing in the speciality chemicals industry though the uptrend seems to have resumed as reflected by the EBIDTA margin which has risen sharply to 26.3% in the Dec quarter from 18.7% in the previous quarter. With low interest costs the company is in a sweet spot to benefit from further improvement in the industry cycle. The stock appears well priced for now though a decent portfolio bet.
Ashapura Minechem (414) –The company has 15% market in global bauxite exports and is the 3rd largest producer of bentonite and 2nd largest producer of Kaolin. Profits have been fluctuating over the years and even the Dec quarter saw a hefty other income to show a huge surge in profits. The stock has shown a multi-year breakout. In the near term it looks stretched and some cooling down could be expected.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY – The index has shown remarkable resilience as any dip has seen buying emerging. With monthly expiry due next week, levels of 22100 should act as a decent support and on the upper side levels of 22500 could be expected.
BANK NIFTY-The index is showing signs of catching up as it clawed above 46300 and even touched 47300 before cooling off. It has mirrored the move in HDFC Bank and if the stock manages to close above 1450, the index could soon swiftly regain 47500 considering the weightage it has.
PICKS FOR THE WEEK
Harrison Malayalam (203)-The stock has shown a strong break out. However, the near term looks stretched. Levels of around 190-95 could be ideal for entry for a target of 230.
HCC (44) -The stock after a consolidation looks ready for action again. Buying could be considered for levels of 55-60 in the coming weeks.
Wishing all readers, a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam