WEEKLY TRENDSETTER (NOV 3RD,2023
| 2023 | Oct 20 | Oct 27 | Ch % |
| NIFTY | 19542 | 19047 | -2.53 |
| BANK NIFTY | 43723 | 42782 | -2.15 |
| USD/INR | 83.12 | 83.12 | 0.10 |
MARKET REVIEW–The correction continued and was broad based and losses were across the board. However, there was a short covering rally towards end of week which trimmed some of the losses. The global factors particularly the geo political tension is creating jitters as a prolonged period of tension could severely affect global economy.
BACK TO RESULTS (Sep qtr.)
The Sept quarter results are trickling in. So far, it has been a decent show. This week let us explore some of them:
Rs in cr, Bracket indicates ch in % against Sep,22 quarter.
| Company | Revenue | Net profit |
| Welspun India | 2509(+18) | 200(+2400) |
| Jindal Saw | 5466(+35) | 356(+1595) |
| Jindal Stainless | 9797(+74) | 757(+398) |
| Himadri Speciality | 1005(-5) | 101(+180) |
Welspun India (146)-Thetextile major has posted a strong quarter and outlook for the 2nd half is also encouraging as per the management. EBIDTA margin expanded by 819 bps to 14.3% resulting in PAT surging .Net debt is expected to reduce to less than Rs 1000 cr from Rs 1573 cr by end of FY24.The products have also now been approved for innovative medical applications, which has opened newer avenue .US marketshare has seen improvement with terry towel market share improving to 45% from 40% and bedsheets market share improving from 51% to 58%. The flooring business is expected to scale up fast and incrementally add to the company’s profitability. With EPS expected to be around Rs 7 for FY24, the stock appears well priced. Lower levels of around 125 would be ideal for any entry.
Jindal Saw (353) The company has earned international acclaim in the field of manufacturing submerged arc welded (SAW) pipes. It has had a dream run in the last 6 quarters with profits surging exponentially resulting in EPS surging from Rs 1.9 to to 11.8 in the latest quarter. The company has manufacturing facilities in India, US, Europe, and UAE.With a diverse customer base from industries like oil & gas, irrigation, power generation and other industrial applications, the company has seen sustained growth over the years. For FY 24 the company looks headed to post EPS more than Rs 35 and the scrip has seen investor interest at lower levels. The scrip has doubled in the past 6 months. With the mid cap segment in a profit taking mode levels of 275-300 could be ideal for any buying.
Jindal Stainless (450) –The company saw another excellent quarter with EPS more than Rs 9 for the last 3 quarters. The Sept quarter however saw a blip in sales which dipped 6% on sequential basis and profitability also showing some cool off. The growth has largely been volume led in the past few quarters which has also seen realization cooling off. Profitability has thus been balanced over the quarters. The company has commissioned facility of 1.6 mtpa in Jaipur which should reflect in the 2nd quarters. The stock looks well priced and could attract profit -taking after the sharp surge in the past few quarters. A wait and watch approach could be better.
HCIL–(239)– The company is engaged in the manufacture of coal tar by-products and derivatives like coal tar pitch (CTP), creosote oils, naphthalene, carbon black, advanced carbon materials,etc.It has seen a total financial transformation in the last 3 years where revenue has shown an impressive growth(Rs 1679 cr to Rs 4172 cr) ,profits have grown manifold(Rs 47 cr to Rs 208 cr) ,debt has seen a reduction (Rs 583 cr to Rs 200 cr) and EPS has risen from Rs 1.11 to Rs 4.94 .The latest quarter has seen the growth sustaining and the management is keen to part of the supply chain in the manufacture of Lithium ion batteries .That could be a major trigger point of growth for the company. The prospects have also seen investor interest resulting in a surge in stock price which looks fairly valued at current market price. Any strong market correction could be used to add on to the scrip. Ideal levels of entry would be around 170-80.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY – The index fared worse than expected as it slipped below 19300 and even breached 19000 before some recovery ensured closing above 19000.While the market is still trying to find its base, levels of 18600 could also be seen in the coming weeks while 19300 will act as a supply zone. However, caution is advised against aggressive shorts as the global scenario could largely dictate the movement of the market.
BANK NIFTY-The index slipped below 43000 and touched 42500 during the week. It closed for the week finally at 42780. Any downside could see the index touching 42000 and on the upside 43500 will remain a near term resistance.
PICKS FOR THE WEEK-
BPL (83)-The stock has been making interesting moves in the past few weeks. After a sharp spike to 103 it corrected to 83. While volatility could be seen in the next few weeks, gradual buying could be considered for a possible target of 125.
IPCA Labs (982)-The scrip has been on a steady accumulation phase in a market which has been correcting. After touching 52-week high it has cooled down. Accumulation could be considered for a possible long-term target of 1200.
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam