WEEKLY TRENDSETTER (MAY 6TH,2022)
| 2022 | April 29 | May 6 | Ch % |
| NIFTY | 17172 | 17102 | -0.41 |
| BANK NIFTY | 36044 | 36088 | 0.12 |
| USD/INR | 76.43 | 76.52 | 0.12 |
MARKET REVIEW–Another week of daily gap ups and gap downs and just when it looked like the week would end in the positive the last hour selling wiped out all gains and the indices again look like breaching critical levels on the downside.
BACK TO RESULTS (March qtr.)
The March 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 Mar,21 quarter.
| Company | Revenue | Net profit |
| Varun Beverages | 2827(+26) | 271(+98) |
| Datamatics | 313(+10) | 45(+55) |
| Fineotex Chem | 121(+62) | 17(+42) |
| Chennai Petro | 16413(+88) | 994(+329) |
Varun Beverages-(1084) is one of the largest franchisees of PepsiCo in the world. It produces & distributes carbonated drinks, juices & packaged drinking water in six countries including India. It has operations in India, Sri Lanka, Nepal, Morocco, Zambia &Zimbabwe. Robust demand in both domestic and international markets, also supported by the early onset of summer in India, translated to healthy volumes during the quarter and margins improved 175 bps to 18.8%. The stock is an investor’s favourite with FIIs owning 21.03% and DII s 7.2% with the promoter holding at 64.9%. The company also announced bonus in the ratio of 1:2. It had also declared bonus in 2019 and 2021 of a similar ratio. At current levels the stock looks fairly priced.
Datamatics (304)-The bottomline got a boost of other income which ensured a 50% growth. The company builts intelligent solutions for data driven businesses which has shown a steady growth over the years. It has consistently clocked EPS of Rs 6-7 in the last 4 quarters. With an EPS of Rs 24 for FY22 the stock trades at a reasonable PE of 13.
Fineotex Chem (193)- The company is a specialty chemicals manufacturer that caters to multiple sectors such as textile, home care, hygiene, mining, garment, water treatment, leather, construction, paint, agrochemicals and adhesives. Post Covid the company has been focusing on developing home care and hygiene specialties which has also been making inroads into the global market. The buoyant demand has motivated the company to increase capacity by 50% from 40000 MTA to 61000 MTA.The stock has seen a strong move even in an overall sluggish market and could be considered for investment at declines.
Chennai Petro (279)-The stock has been a star performer in April ,22 along with its peer MRPL. This is attributed to supply crunch shortage in refining capacity and an increase in crack spreads. The Singapore GRMs have hit a 4-year high and this is positive for all the refining companies. Standalone refiners have benefitted the most with EPS hitting Rs 67 for the quarter. The short-term momentum is strong.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index saw a see saw movement with gap -ups and gap-downs on almost all days of the week. The index looks to again test 17000 levels and possibly even 16800. Upside looks clearly capped at 17300-400.
BANK NIFTY– The index failed to sustain at higher levels and now looks the most vulnerable to a further fall to levels of 35100-35200 in the coming days.
SCRIPS TO WATCH OUT
Power Grid (229)-The scrip has seen value buying at lower levels in a market which has been correcting in the past few months. After touching a lifetime high of 240, it has retraced and could be added in the price range of 220-225 for a possible price target of Rs 260.
Shanti Gear (235)-The stock saw a multi-year high on strong volumes and looks poised to touch 300. Volumes are usually low and thus gradual accumulation could be considered.
Godfrey Philips (1218)-The stock has been moving in a band of 800-1200 for the past 6-7 years. It has seen buying at lower levels which could see it gradually scaling past 1400 in the coming months. Accumulation at declines could be considered.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam