WEEKLY TRENDSETTER (MAY 13th,2022)
| 2022 | May 6 | May 13 | Ch % |
| NIFTY | 17102 | 16411 | -4.04 |
| BANK NIFTY | 36088 | 34591 | -4.15 |
| USD/INR | 76.52 | 76.88 | 0.47 |
MARKET REVIEW–The week opened with a gap down and never really recovered as global markets were also not supportive. The market has also been reacting to corporate results.
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 |
| Adani Power | 10598(+66) | 4645(+999) |
| Tata Chem | 3480(+32) | 421.2(+999) |
| GHCL | 1273(+54) | 271(+144) |
| Punjab Chem | 259(+23) | 19.4(+85) |
Adani Power (292)- There has been exceptional income during the quarter but even if this is removed the revenue is up by 42 % and profit before tax by 490 %. Further, they have completed the acquisition of Essar Power MP Limited which has a 1,200 MW operational unit in Mahan, MP. UMPP at Mundra was a big overhang on the company for years. It seems subsiding with 1234 MW PPA with Gujarat Government now revived. The average plant load factor of 51.5 per cent during the FY22 is very low. But it also signifies those better times are ahead. Debt equity at 2 times has improved. The scrip has already been on a tearaway rally and with power demand surging the scrip could still hold some surprise on the upside.
Tata Chem (1033)-The key revenue segments are Salt, soda and specialty chemicals. The quarter results saw a sharp expansion in EBIDTA margin by 816 bps to 18.9%. According to the management the demand for soda ash is expected to stay robust over the next 18 months. They added that there are no additional capacities coming in from China and that soda ash capacity of 1 mn has been shut recently in the country.
GHCL (596)-The company is the single largest location manufacturer of Soda Ash in India. Prices of the same are on an uptrend due to solar glass demand surging. Recently the company divested the textile business to Indo Count for Rs 608 cr. The company plans to heavily invest in soda ash and spinning business and also in green energy like solar and wind which will meet 80-85% of power requirement. With EPS of >Rs 70 and demerger plans, the stock looks interesting in a falling market.
Punjab Chem (1322)- produces various Agrotechnical, Geoformations, API’s, Pharmaceutical Intermediates, Phosphorous Derivatives and Specialty Chemicals. It has come out with another robust quarter. With an EPS of Rs 60 the stock looks attractively priced and could be added at declines.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index closed on a weak note and going ahead 16800-17000 could act as a stiff resistance zone. The recent low of 15671 could be retested if the current downtrend persists.
BANK NIFTY– The index breached the critical 35000 levels also and the downward momentum to take it down to levels of 33800. Some near-term bounce could meet resistance at 35400.
SCRIPS TO WATCH OUT
GHCL (586)-The scrip hit a life time high of 682 before a sharp correction. The correction could take it down to levels of 500-525 where long-term buying could be considered.
Time Techno (101)-The scrip has been on a rally in the last few weeks and levels closer to 90 should act as a decent support. Buying could be considered at declines with a possible price target of 130-35.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam