WEEKLY TRENDSETTER (June 24th,2022)
| 2022 | June 10 | June 17 | Ch % |
| NIFTY | 16202 | 15293 | -5.61 |
| BANK NIFTY | 34483 | 32743 | -5.05 |
| USD/INR | 77.85 | 78.07 | 0.28 |
MARKET REVIEW–The week started sharply down and there was not much respite as even modest recoveries were sold into. With the indices closing at 2022 lows, even the broader market is facing the brunt of sellers.
INTERESTING MUSINGS
Most of us were active applicants for the high-profile IPO s in 2020-21 and rued the fact that we received no allotment and watched the listing at insane premiums and cursed our luck. The last 3 months market meltdown has taken a toll of all these IPO s and its time to take a review of these companies and their performances.3 such high-profile listings are reviewed this week: –
| NAME | Issue price (FV) | Listing price | EPS- FY22 FY21 | PRICE (June 18) |
| Clean Science | 900(Re 1) | 1790 | 19 21 | 1572 |
| Tatva Chintan | 1083(Re 10) | 2110 | 45 34 | 2180 |
| Happiest minds | 166(Rs 2) | 351 | 13 11.7 | 826 |
1.Clean Science Energy-The company manufactures functionally critical specialty chemicals such as performance chemicals, pharma intermediates and FMCG chemicals. It supplies its products to manufacturers and distributors in India as well as overseas markets i.e., China, Europe, USA, Korea, Taiwan, and Japan. It generates 65-70% of revenues through export. It has two production facilities at Kurkumbh (Maharashtra) with an aggregated installed production capacity of 29,900 MTPA.
On the performance front the company posted revenue of Rs 685(507) cr and net profits of Rs 305(267) cr for FY22(FY21). The EBIDTA margins are at a whopping 48% for the last 3 years in succession which is commendable. What remains to be seen if the company is able to maintain such high margins in the long run. At a P/E of 70+ even after a price correction, the stock still looks stretched.
2.Tatva Chintan -The company manufactures structure directing agents (SDAs), phase transfer catalyst (PTCs), pharmaceutical and agrochemical intermediates, and other speciality chemicals. It is among the largest manufacturer of SDAs for zeolites in India. It serves customers across industries i.e., automotive, petroleum, agrochemicals, dyes and pigments, paints and coatings, pharmaceutical, personal care, and others. Its exports contribute to 76% of total revenue from operations.
On the performance front the company posted revenue of Rs 428(306) cr and net profits of Rs 96(52.2) cr for FY22(FY21). With a 25% EBIDTA margin and healthy growth, the stock still looks stretched.
Happiest Minds -The business of the company is divided into three categories; Digital Business Service (DBS), Product Engineering Service (PES) and Infrastructure and Management Security Service (IMSS).
The DBS unit offers digital application development & modernisation, assistance in designing & testing of operations, management of the platform, consulting and domain led offerings.
PES unit helps by transforming the potential of digital by making the product secure and smart. Wherein, IMSS provides an end-to-end monitoring and management capability for applications and infrastructure of the clients. The company has 90% revenue coming from digital services which is one of the highest among Indian IT companies.
On the performance front the company posted revenue of Rs 1022(760) cr and net profits of 186(161) cr for FY22(FY21). The high fancy of the stock is clearly on the basis of high-profile promoters, high potential digital space and the company’s scorching growth in the last 4-5 years. However, the market meltdown could take toll of the high valuation.
Investors should keep the above 3 companies on the radar and wait for some more correction.
MARKET OUTLOOK
Some technical cues are as follows going by market trends: –
NIFTY-The index broke below 16000 and relentless selling pressure saw it close near 15300.In the near term the index looks oversold. One could see a range of 15100-15500 for the week.
BANK NIFTY– The meltdown has been fast and furious and 33000 was breached effortlessly and though 32500- 32700 promises to be a short covering zone, levels of 33000-33500 could see further selling pressure.
SCRIPS TO WATCH OUT
L&T Infotech-(4002)-After a euphoric high of 7500 in Jan 22, the scrip has shed 40% from the top and now is down to oversold levels of 3800-4000 which should ideally provide some short covering for a possible target of 4500. Buying can accordingly be considered.
Wipro – (405)-The scrip has seen a very steep decline in the past few weeks and now is entering into an extreme oversold zone. Any further dip closer to levels of 380-85 should be ideal for entry for a possible recovery to levels of 430-440.
Have a great trading week!
Note: Any queries /clarifications may be addressed to stockmasala@gmail.com .