WEEKLY TRENDSETTER (Sept 16th,2022)
| 2022 | Sep 2 | Sep 9 | Ch % |
| NIFTY | 17539 | 17833 | 1.67 |
| BANK NIFTY | 39421 | 40415 | 2.52 |
| USD/INR | 79.72 | 79.57 | -0.19 |
MARKET REVIEW–The week turned out to be interesting and while banking counters continued with their out-performance, the tech counters made a comeback towards close of week. With Nifty again facing selling pressure around 18000 levels, tech will be in focus next week and could provide the impetus to close past the critical level.
BACK TO RESULTS (June qtr.)
The June quarter results are coming to an end. The small and mid-cap segments are the ones where some turnaround results could be looked at. This week let’s explore some of them:
Rs in cr, Bracket indicates actual losses in June,21 quarter.
| Company | Revenue | Net profit |
| Barbaqu Nation | 315(+209) | 16(-43.9) |
| Westlife Dev | 536(+108) | 23.6(-33.4) |
| Mahindra H’day | 605(+63.1) | 29.7(-21.4) |
| Sapphire Food | 546(999) | 38.1(-2.6) |
Barbeque Nation (1188)-A recent listing, the stock has seen a 50% correction from its listing price of around 2000.The company has a dine and delivery model. It had 185 restaurants till March 22 and plans to add another 80 by FY25.The company is coming out of the Covid effect which hampered business and with an established brand, prospects look bright. The EPS for the quarter stands at Rs 3.90. While interests’ costs are currently high with a cover of just over 2 times, with the topline heading for over Rs 1000 cr for FY23, margins could elevate earnings in the coming quarters. The scrip is still steeply priced and levels of around 1000 could be seen in the coming weeks.
Westlife Development (680)-The McDonald franchisee currently operates 326 restaurants and 262 McCafé across 47 cities and plans to add 30-40 additional stores in FY23.The June quarter saw a decent uptick in margins though interest costs remain at elevated levels. With an EPS of Rs 1.5 for the quarter the scrip has raced to an all-time high. Though valuation looks expensive, the scrip has historically commanded a premium. With a strong brand and on an expansion mode, the scrip is a proxy play for consumer consumption which is showing strong momentum in urban and rural alike.
Mahindra Holiday (286)- The scrip is the only listed one in vacation ownership business in India. It has 3 lac members with over 100 resorts in India and abroad. It added 1000 rooms in the last 3 years taking total inventory rooms to 4600 and another 1400-500 rooms are expected to be added in the 2-3 years. The company has chosen exotic locations which has attracted membership. Another trigger is the membership fees which is expected to be hiked in the coming quarters. The company had an 89% occupancy for the June quarter despite a seasonally weak quarter and with festive season coming, the 2nd half of the year should see robust growth in revenue. The Govt is also looking to give boost to travel and tourism which could further boost sentiments towards the sector. Looking at long term prospects, the scrip could be a decent long-term bet.
Sapphire Food (1412)- Franchisee of KFC and Pizza Hut which are prime dine outs in India with 390 outlets in India and 70 in Sri Lanka. The QSR industry has seen a strong revival post Covid. With 70% domination by unorganized sector there is a huge scope for the organized sector to increase its market share with hygiene awareness post Covid. The company has taken a price hike in the range of 8-10 %. It has operating margins of 20% which has seen a strong surge in bottomline. With an EPS of Rs 6 for the June quarter and with the best of quarters ahead, the scrip has grabbed attention of investors as an attractive bet.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index has been flirting with the 18000 levels for the last couple of weeks even when global markets were not supportive. The index should enjoy good support at around 17700-800 levels and odds are high that levels of 18100 could be seen in the coming week.
BANK NIFTY-The index has outperformed the Nifty and is just 1500 pts shy of the all time high touched in Oct 21. Some consolidation could be seen in the coming week which should see support at around 39800-40000 and on the higher side levels of 40600-41000 could see profit-taking.
SCRIPS TO WATCH OUT
CIPLA (1058)-The scrip is coming out of a long consolidation phase and approaching its all time high which stands at 1083.Ideal levels for entry would be 1040-50 for a possible target of 1100.
FSL (116)-The scrip has seen a significant correction in 2022 and closer to levels of 100 has seen decent buying. Accumulation could be considered around 110 for a possible target of 130-35.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .
Krish Subramanyam