WEEKLY TRENDSETTER (July 28th,2023)
| 2023 | July 14 | July 21 | Ch % |
| NIFTY | 19564 | 19745 | 0.93 |
| BANK NIFTY | 44819 | 46075 | 2.80 |
| USD/INR | 82.17 | 81.97 | -0.24 |
MARKET REVIEW–Just when the market started taking comfort in the quarterly results of the IT sector, a negative guidance from INFY spooked the rally and overall sentiment was also further dampened by a listless performance from HUL.This twin impact saw the Nifty turning down sharply just when 20000 was shy of 20 points. While the champagne bottles returned to cold storage, now the question is whether the heavyweight banking results over the weekend will aid sentiment next week.
BACK TO RESULTS (June qtr.)
The June 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 June,22 quarter.
| Company | Revenue | Net profit |
| Just Dial | 247(+32) | 83( -48 cr) |
| Himadri Speciality | 951(-9) | 86(+120) |
| KCP Sugar | 96(+29) | 31(+3200) |
| United Spirits | 5808(+140) | 477(+82) |
Just Dial (796)-This company is part of the Reliance wing since Dec 21 where a controlling stake (67%) was taken for a total consideration of Rs 5700 cr through various transactions for an average price of Rs 1022 per share. The company is India’s No 1 search engine that provides local search related services to users for multiple platforms such as website, mobile, Apps, etc. Besides this it has launched JD Omni, a business management solution for SMEs and JD Pay, a unique solution for digital payments.
Some of the key triggers for growth are -shift in advertising medium to digital mode and underpenetrated MSME (B2B) segment. Paid subscribers as a percentage of total MSME is just 1.5%.
The other income component has also been consistently aiding bottom-line.The interesting element is the EIR (effective interest rate) which exactly discounts the future cash payments or receipts over the expected life of of the financial instrument.
The stock clearly is a to be kept on watch as it rides the digital wave. With an EPS of 34 for FY23, current valuation looks attractive as it takes wings under the cash rich Reliance arm.
Himadri Speciality (141)- The company is positioning itself to cater to the raw material demand for lithium battery which is expected to grow by 33% annually for the next 7 years. It is also looking to participate in the recycling of EV batteries. The core business of coal tar pitch and carbon black continues to do well.
On the performance front the profitability has shown a significant gain and the debt level is being gradually trimmed which should further aid bottom-line in the coming quarters. At EPS levels of around Rs 8, the stock offers an interesting option which the market has clearly taken note of.
KCP Sugar (28) -A small cap sugar manufacturer has ignited the sugar stocks with its June quarter results. While sugar should continue to be the main profit contributor, industrial alcohol could be the icing on the cake in the coming quarters. While other income also has been giving boost to its bottomline, the income from operations also has shown an increasing trend. The stock is trading at a P/E of around 4 which could see an improvement in the coming quarters.
United Spirits (1039)-The June quarter saw a whopping 40% jump in topline and though the bottom-line did not keep pace, the market is clearly excited with the emerging trend in the sector. The last 5-year trend for revenue was flat between Rs 9500-10600 cr. With this sharp jump in the June quarter the company looks set to jump to the next bar on the upside. With an EPS of Rs 6.7 for the quarter, the expectations for the remaining quarters have soared as reflected by the stock price post results. Lower levels of around 900-1000 could be decent levels to enter.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY –The index started with a bang for the week. However just when 20000 was round the corner, IT stocks spooked the market sentiments and the index fell back below 19800.The coming week will begin on the background of results from RIL, ICICI Bank and Kotak Bank. The banking pack offers the last hope for the index to regain strength swiftly and make another attempt. Near term support should emerge around 19600 levels.
BANK NIFTY-The index was a relative out-performer with an all-round show from private and PSU banks. Near term support should ideally emerge around 45400-500 levels while upside could see levels of 46800-47000.
PICKS FOR THE WEEK-
KSB Pumps – (2187)-The stock is ideally a long-term prospect. After scaling a high of 2357 a few weeks back, it went into consolidation mode and now again looks set to scale past the previous high. Accumulation could be considered at declines.
Rajshree Sugar (47.30)-The sugar stocks have been on an uptrend and this stock also appears to be going with the trend. Ideally accumulation could be considered for possible target of 60 in the coming weeks.
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam