WEEKLY TRENDSETTER (August 26th,2022)
| 2022 | Aug 12 | Aug 19 | Ch % |
| NIFTY | 17698 | 17758 | 0.33 |
| BANK NIFTY | 39042 | 38986 | -0.14 |
| USD/INR | 79.74 | 79.80 | 0.08 |
MARKET REVIEW–The truncated week saw the bulls in form for most part of the week. Just when celebrations were planned for a re-visit to 18000 levels on the Nifty, sharp profit-taking emerged and both the indices saw trimming of gains and closed flat for the week. With monthly expiry next week and on the back of a near 3000 points gain on the Nifty, this could be a welcome correction.
BACK TO RESULTS (June qtr.)
The June 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’s explore some of them:
Rs in cr, Bracket indicates ch in % against June,21 quarter.
| Company | Revenue | Net profit |
| Minda Corp | 1010(+81) | 52.9(999) |
| Safari Inds | 293(144) | 26.6(+985) |
| Blue Star | 1970(+87) | 74.8(+481) |
| West Coast Pap | 1114(+107) | 209(433) |
Minda Corp (224-The company is one of the leading automotive component manufacturing companies in India with a pan-India presence and significant international footprint. The company has a diversified product portfolio that encompasses Mechatronics; Information and Connected Systems and Plastic and Interior for auto OEMs. These products cater to 2/3 wheelers, passenger vehicles, commercial vehicles, off-roaders and aftermarket. The company has a diversified customer base including Indian and global original equipment manufacturers. With this background the company is fairly insulated from demand slowdown with a wide product profile. With an expected EPS of around 10 for FY22-23, the scrip has attracted buying. Levels of around 190-200 could be ideal for entry.
Safari Inds (1444)-The company has posted a turnaround in operations post the Covid setback which saw travel and tourism taking a plunge. It has re-organised manufacturing operations which is now not dependant on China. However, on a year-to-year basis while the top line has surged in the FY17-22 period, profitability has remained flat. The coming quarters will be keenly watched for any margin improvement. Investor appetite is high for the scrip. At current levels it looks well priced.
Blue Star (1071) -The company has seen a strong surge in revenue. However, historically margins have been in the 5-8 % range and given the commodity price surge in the last few quarters the company has done better than its peers. However, going ahead with the commodity prices softening and demand outlook encouraging, the management sounds optimistic about FY23.The EPS has been in the Rs 15-20 band in the last few years. However, stock price has outmarched the growth in earnings. At current levels the scrip looks well priced.
West Coast Paper (553)-The industryis on a recovery mode as it rode the demand upsurge due to re-opening of schools. The e-commerce business proved to be a saviour as well with packaging requirements met by the paper industry. The net realization of paper companies surged as a result of demand upsurge. This has led to a bottom-line bounty which has resulted in an EPS of Rs 28 for the quarter. The scrip has already seen a sharp surge. However, with e-commerce well and truly entrenched, this space should continue to show demand uptick in the years to come. Some cooling off in the stock price to around Rs 500 should be ideal for entry.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index saw 2800 points rise in the past few weeks after making a low around 15200.It was in an overbought condition for the whole of last week before some sharp profit-taking cooled of the index to levels of 17800.The profit-taking could be expected to continue with global markets also in the same mode. Levels of 17400-500 could be the initial support area where some short covering could emerge.
BANK NIFTY-The index saw a strong surge of over 7000 points from the low of 32290 in June. Thus, it was ripe for profit-booking and finally it saw some cooling off towards close of week. Levels of38000- 38200 could be seen in the coming days where a fresh review could be done.
SCRIPS TO WATCH OUT
Tainwala Chemical (101)-A low profile stock and now is showing promise to break into a fresh territory. Volumes have been on a rise. On the monthly chart the stock has made a Head and Shoulder pattern which hints at better times for the scrip in the coming days. While near term the stock looks stretched, lower levels at around 90, the scrip is an accumulation candidate for a possible target of 125.
Hero Motor (2838)-The scrip has been on a strong recovery mode. While in the near-term levels near 3000 could prove to be a challenge, lower levels of around 2700 could be used for accumulation. The scrip looks poised to touch 3500 in the coming months.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam