Share Market Highlights 09 January 2024: Sensex, Nifty end marginally higher; Adani stocks gain, ZEEL tumbles

“Positive sentiments in the Indian IT sector fuelled by a US tech rally and demand on emerging technologies, overshadowed the anticipated muted Q3 results of the sector. Auto & realty continued to remain favourites on account of strong demand. Market optimism about potential softening of US inflation is driving expectations of near-term rate cuts, bolstering overall sentiment. But in-between profit booking is emerging due to mixed cues from Asian markets as well high valuation concerns. “

Indian equities moved in tandem with their strong global counterparts and started the session higher at 21,650. As the day progressed, the Index was seen compounding its gains but towards the end, a steep decline in the banking stocks dragged the Index lower to settle the day at 21,544.85 with gains of 31.85 points. 

With gains of 2.52%, the Realty sector was the top gainer followed by Pharma and Auto; and on the flip side, Media was the major laggard. BankNifty and PSU Banking sector also ended the day in red. Looking at the larger picture, the Index is oscillating in a range of 21,500-21,800, breakout in either direction will provide clarity.

The stock jumps 19.17% on the NSE, trading at ₹1,258.

The sales during this period are attributed to 16.13 mn sft volume with an Average Realization of ₹10,143/sft (for Apartments/ Villas). 

Prestige stock trades at ₹1,344.50 on the NSE, up by 1.15%.

Hero Motocorp (2.72%); Adani Ports (2.49%); SBI Life (2.17%); Apollo Hospitals (2.08%); LT (1.68%)

Major losers:

Nestle India (-1.04%); Britannia (-0.85%); HDFC Bank (-0.83%); Asian Paints (-0.83%); HDFC Life (-0.70%)

Total stocks traded were 3,923. The number of stocks that recorded a 52-week high was 458, and those that hit a 52-week low was 7.

Suzlon Energy has announced Sairam Prasad has been appointed as the Chief Executive Officer of Suzlon Global Services Limited (SGSL), a wholly owned subsidiary, with effect Jan 16, 2024. 

Ishwar Chand Mangal, the existing Chief Executive Officer of SGSL, would now act as CEO – New Business reporting to the Group Chief Executive Officer of the Company. He has also been appointed as the non-executive director of SGSL with effect from February 1, 2024. 

The stock rises by 1.17% on the NSE,trading at ₹43.10

The company’s stock trades at ₹299.50 on the NSE, up by 0.57%.

Tube Investments of India’s stock trades at ₹3,784.90 on the BSE, up by 0.37%.

Skipper Limited has obtained board approval to raise Rs. 199 crore through issuance of 1,02,67,021 right shares at Rs. 194 per share including premium of Rs. 193 per share. 

The funds raised through the issue will be utilised to meet the working capital requirements and general operating purposes. 

The right issue will close on Thursday, February 08, 2024.

Tata Power Company Limited has informed the Exchange regarding ‘Memoranda of Understanding with Tamil Nadu Government by Tata Power Renewable Energy Limited, a subsidiary Company.

TPREL plans to explore opportunities to develop 10,000 MW of Renewable Energy Power Projects across solar, wind, hybrid, RTC, peak, Firm and Dispatchable Renewable Energy (FDRE), etc. over the next five to seven years. Under this MoU, these renewable projects will be strategically located across nearly 50,000 acres of land in Tamil Nadu with investment potential of nearly ₹70,000 crore, potentially generating around 3,000 green job opportunities and transforming adjoining areas into employment hubs. 

Jaipan Industries stock surges by 9.97% on the NSE, trading at ₹39.47.

M&M will hold 73.9 per cent stake and the arm 15.7 per cent in the trust.

Tata Motors Group global wholesales in Q3 FY24, including Jaguar Land Rover were at 338,177 nos., higher by 9%, as compared to Q3 FY23. Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range in Q3 FY24 were at 98,679 nos., higher by 1%, over Q3 FY23. 

Global wholesales of passenger vehicles in Q3 FY24 were at 138,455 nos., higher by 5% as compared to Q3 FY23. 

Global wholesales for Jaguar Land Rover were 101,043 vehicles, higher by 27%. Jaguar wholesales for the quarter were 12,149 vehicles, while Land Rover wholesales for the quarter were 88,894 vehicles.

Zee Entertainment Enterprises is committed to merger with Sony and is working towards a successful closure of proposed merger, the company said. Post clarification, Zee stock recovered a bit to trade at Rs 260. However, the stock is still down over 6 per cent over its previous close.

Robust inflows & execution to drive healthy Q3

“We expect our capital goods coverage universe to report healthy performance in Q3FY24 led by 1) continued execution of strong opening order books, 2) robust demand/orders/volumes in domestic market, and 3) traction in key export markets such as Middle East, Americas, Africa etc. Overall, we expect Revenue/Adj. PAT growth of ~16.6%/22.0% YoY (13.5%/14.1% YoY ex-L&T). Margin guidance, European demand outlook, order/enquiry pipeline and impact of elections on domestic demand/orders will be key monitorables. Our top picks are L&T, Siemens, ABB, Triveni Turbine, and Praj Industries.”

Macpower CNC Machines Ltd has submitted its Memorandum of Understanding (MoU) to the Gujarat Government for the “The Tenth Vibrant Gujarat Summit 2024” and under the Gujarat Government Defence Policy for a project of up to ₹100 crore to setup a CNC Machine manufacturing facility focused on aerospace and defence.

Hero Motocorp (1.22%); Balakrishna Industries (2.89%); Motherson (2.74%); Bharat Forge (2.59%)

The board of Kings Infra Ventures has approved the allotment of 9,93,200 fully paid-up equity shares of ₹10 each at a price of ₹142.50 on preferential basis by way of private

placement. 

“Steady growth expected Q3FY24 Revenue and EBITDA of telecom companies in our coverage universe (Jio (unrated) + Bharti) is expected to increase by 3%QoQ and 4% QoQ to Rs617.9bn and Rs324.7bn respectively led by healthy subscriber addition of 13.2mn, besides building gradual increase in ARPU growth (1.1%QoQ). Due to falling competitive intensity, given weak financial position of peers, we maintain our positive stance on the sector. We also factor in delayed tariff hikes and build in ARPU of Rs225/236 for FY25/26. Reiterate ‘Accumulate’ on Bharti at SOTP based TP of Rs 1088 as we incorporate minor changes in our assumptions.”

Godrej Properties (3.92%)

Brigade Enterprises (3.15%)

Oberoi Realty (3.01%)

DLF (2.46%)

Phoenix Mills (1.53%)

Grasim Industries said in a stock exchange filing that Birla Cellulose’s Kharach plant in Gujarat has commissioned CAP (Carbon-disulphide Adsorption plant) CS2 recovery system from exhaust gases and has achieved EU BAT status. Closed-loop technologies have been deployed to minimise CS2 and H2S (Hydrogen Sulphide) emissions by recovering CS2 and elemental sulphur from H2S. The target to recover 90-95% of Sulphur has been achieved. 

Subscription Data (as of 12:42 PM, January 09, 2024) 

QIB – 0.00x

NII – 1.17x - {(NII 10L+) – 0.72x, (NII 2L-10L) – 1.95x}, 

Retail – 4.60x

Employee - 2.01x

Total – 1.15x

Issue to close on Thursday, January 11, 2024

Jyoti CNC Automation Limited raises ₹ 448 crore from 37 anchor investors at the upper price band of ₹ 331 per equity share

Marquee Anchor Names: 

Nomura Funds Ireland Public Limited Company 

Goldman Sachs Funds 

Eastspring Investments India Fund 

HDFC Life Insurance Company Limited 

Bajaj Allianz Life Insurance Company Limited 

ICICI Prudential Fund 

Nippon Life India Trustee Ltd 

Axis Mutual Fund Trustee Limited

CESC Projects Limited, a wholly owned subsidiary of CESC Limited, has been selected as the successful bidder for setting up 10,500 MT/annum of Green Hydrogen Production facility. 

Mold-Tek Packaging Limited (MTPL), a rigid plastic packaging solutions company, has inaugurated three three manufacturing plants at Panipat (Haryana), Cheyyar (Tamilnadu) and Sultanpur (Telangana) in the first week.

The company invested over Rs 100 crore on these plants, which will enhance its capacity to 5,500 tonnes a year, taking the total capacity to 54,000 tonnes a year during the financial year 2024-25.

“While Panipat facility was inaugurated on January 3, the plants in Tamil Nadu and Telangana were inaugurated on January 6,” J. Laxman Rao, Chairman and Managing Director of MTPL, told businessline.

REC Limited hosted a conference on ‘Financing for Roads and Highways’, in New Delhi on January 8, 2024.

During the conference, four MoUs worth ₹16,000 Crore were signed, with Dilip Buildcon Limited, GMR Power & Urban Infra, CDS Infra Projects Limited & DP Jain & Co. Infrastructure Pvt. Ltd.

REC stock trades at ₹430.95 on the NSE, down by 0.92%.

Zinc prices have come down over the last one week. The Zinc Futures contract traded on the Multi Commodity Exchange (MCX) made a high of ₹233.85 per kg last week and declined over 4 per cent since then. It is currently trading at ₹224 per kg.

In its report on Retail Asset Securitisation, CareEdge Ratings believes the market is still on track to cross overall volumes of ₹2 lakh crore in FY24. The quarterly securitisation market volume has remained in the range of ₹42,000 - ₹45,000 crore across the three quarters in FY24 (ex-HDFC Limited volume). However, CareEdge Ratings expects that there will be significant expansion in credit growth going forward, which will boost the Q4 volumes in the Indian securitisation market.

The securitisation market is progressing steadily towards a record high in FY24, with total volumes reaching ₹1,44,000 crore for the first nine months. The initial half of FY24 (H1FY24) reported volumes of approximately ₹1.01 lakh crore, predominantly driven by a stellar first quarter (Q1FY24). The third quarter (Q3FY24) registered a combined volume (encompassing both pass-through certificate (PTC) issuances and direct assignment (DA) transactions) of around ₹43,000 crore. The stagnant volumes in Q3FY24 may be linked to a mismatch in the pricing expectations of investors and originators, influenced by tighter liquidity conditions and the Reserve Bank of India’s (RBI) concerns about the rapid expansion in unsecured lending. Traditionally, the final quarter of the fiscal year records the highest volumes, and current trends suggest that this pattern is likely to continue.

Nippon Paint India (Decorative), Asia’s no. 1 paint announces its entry into the e-commerce market with Amazon, Flipkart, and JioMart. The brand has recently made available a wide range of over 8,000 decorative paint products for purchase on these platforms, marking a significant milestone in the company’s digital transformation journey.

Major stocks that hit 52-week high:

• Pavna Industries (20%)
• Motisons Jewellers (19.15%)
• Pondy Oxides & Chemicals (16.67%)
• PNB Gilts (15.21%)
• Morarjee Textiles (13.48%)

Airtel Business, the B2B arm of Bharti Airtel, has announced that it will power over 20 million smart meters for Adani Energy Solutions Limited (AESL). 

Bharti Airtel stock trades at ₹1,054 on the NSE, up by 0.47%.

Major gainers:

Hero Motocorp (3.02%); Adani Ports (2.66%); LT (2.51%); Adani Enterprises (1.87%); Infosys (1.83%)

Major losers:

Nestle India (-0.96%); Asian Paints (-0.47%); Britannia (-0.34%); ONGC (-0.30%); UPL (-0.29%)

Stocks advanced on BSE at 12 noon on January 9, 2024, were 2,551 against 1,148 stocks that declined; 131 stocks remain unchanged. Total stocks traded were 3,830. The number of stocks that recorded a 52-week high was 414, and those that hit a 52-week low was 6.

Zerodha Fund House has announced the launch of its new scheme Zerodha Nifty 1D Rate Liquid ETF. The fund is expected to be listed on NSE and BSE exchanges by January 24, 2024.

Coal India Limited (CIL) has begun tranche-VII of the linkage auction to non-regulated sector (NRS) within days of completion of tranche-VI. CIL has proactively increased the tenure of fuel supply agreement (FSA) to 10 years, beginning with seventh tranche, to ensure long term assurance of coal supply through linkage auction to NRS.

The stock rises by 1.54% on the NSE, trading at ₹386.25.

Insurance behemoth Life Insurance Corporation of India (LIC) is planning to acquire up to 10 percent equity stake in a company promoted by the National Housing Bank (NHB).

The Board of Directors of LIC on Monday gave their approval to the proposal to invest in the NHB promoted entity that would focus on residential mortgage-backed securities (RMBS), according to a regulatory filing by LIC with the stock exchanges.

IndusInd Bank has announced the launch of the UPI-enabled ‘IndusInd Bank Samman RuPay Credit Card’, in collaboration with National Payments Corporation of India (NPCI). 

IndusInd stock inches up by 0.88% on the NSE, trading at ₹1,641.45.

Today, all sectoral indices are currently showing positive trends driven by favorable global signals. In the Nifty, the 21700 Call strike stands out with a significant Open Interest (OI) of approximately 95 lakh shares. Conversely, on the Put side, the 21500 strikes have notable OI of around 60 lakh shares. The immediate resistance for Nifty is identified at the 21700 levels, while the support zone ranges from 21450 to 21525.

For Bank Nifty, a robust support range is observed between 47,200 and 47,400. Within Bank Nifty, the 47800 Call strike holds a meaningful OI of approximately 42 lakh shares, while on the Put side, the 47500 strike has a substantial OI of about 23 lakh shares. Despite positive global sentiments, the domestic scenario is relatively subdued. However, any potential correction in the market is viewed as a buying opportunity.

Hindustan Aeronautics: Performance to be driven by R&O revenue

After the Rs265bn order inflow in FY23, Hindustan Aeronautics or HAL’s new orders may remain muted in 9MFY24F. 3QFY24F sales may be driven primarily by the Repair and Overhaul (R&O) segment & some manufacturing revenue from platforms such as Light Combat Aircraft (LCA) and Advanced Light Helicopter (ALH). We expect its EBITDA margin to be at 22%, up yoy, due to a favourable product mix. Higher other income yoy because of a strong net cash position to lift PAT growth.

Bharat Electronics: Order win momentum continues in 3QFY24

After a strong order inflow of Rs154bn in 1HFY24, the new order win momentum continued in 3QFY24 (Rs112bn). We expect a 22% yoy growth in sales, primarily driven by increased execution of significant orders and fulfillment of delayed 2Q dispatches. The EBITDA margin is expected to remain consistent compared to the previous year. Management commentary on the order pipeline & the impact of supply chain issues are key monitorables. Bharat Electronics’ order book (OB) as of 2QFY24-end was at Rs687bn (4x TTM sales).

Data Patterns: Higher production revenue to aid growth

Data Patterns won new orders worth Rs1.3bn in 1QFY24. We expect the strong new order momentum to continue, as orders worth over Rs1bn were in the advanced stage of negotiations. The company’s OB as of 1QFY24-end stood at Rs9.7bn (2x TTM sales). We expect the robust execution to continue and the EBITDA margin at 36% to remain similar yoy. Higher other income yoy because of a strong net cash position to boost PAT growth.

Bharat Dynamics: We expect an uptick in execution

We expect new order wins to ramp up in 2HFY24F, aided by a robust order pipeline. We expect order execution to pick up in 2HFY24F, driven by the high order backlog and the completion of delayed projects. We expect the EBITDA margin at ~20% in 3QFY24F, which can be attributed to the pick-up in execution and easing supply chain challenges. Management’s commentary on realization of large orders for future programs is crucial. As of Sep 2023-end, Bharat Dynamics or BDL’s order book stood at Rs208bn (8.4x FY23 sales), implying new orders wins worth just Rs16bn in 1HFY24.

Maintain Overweight rating on the aerospace and defence sector

We remain cautiously optimistic on the aerospace and defence sector as its valuations currently factor in robust growth led by a strong order pipeline on the back of various schemes like Atmanirbhar Bharat, Positive Indigenization List and Defence Modernization Plan. We have an ADD rating on Bharat Electronics or BEL, HAL, Data Patterns and BDL. Delay in order finalization and slower-than-expected execution are key downside risks.

Topline growth is seen at 8.8% y/y, reflecting a slight pick-up compared to the previous two quarters. This can be attributed to a rebound in economic activity. EBITDA margins are likely to expand by 186bps y/y basis, touching 19.4%, the best seen in the past 7 quarters, however sequentially the number is growing by a mere 4bps. PAT growth of 27% y/y basis is the strongest seen in the last 8 quarters.

Topline growth of 8.8%y/y for our coverage universe is a positive takeaway as it snaps the falling revenue growth trend observed over the last seven quarters. The revenue growth for Q3 will be primarily driven by Consumption and infra-based sectors like Consumer Durables, Auto, Cement, and Capital Goods.

Q3 margins are likely to witness an improvement of 186bps y/y to 19.4%, marking the second consecutive quarter of y/y expansion. However, on a sequential basis, the expansion rate has tapered to a mere 4bps, indicating the best is behind us. Consumption and Infra sectors which witnessed a strong uptick in topline, are also witnessing strong rebound in operational margins. For global-facing sectors, Pharma is likely to witness decent margin expansion while IT is likely to report a 36bps contraction.

Topline growth along with improving operational efficiency drives PAT growth of 27% y/y, the best traction seen in the last eight quarters. In the current quarter, Metal companies are likely to turn black (Q2 FY24 reported losses on an aggregate basis). On the negative side, margin erosion in IT is likely to impact aggregate profitability.

Nifty after the small pullback, once again witnessed a big bearish candle with heavy profit booking seen to erode the gains and has arrived near the crucial support zone of 21500 levels with bias turning cautious. The next important support level would be near 21350 levels of the lower band of the ascending channel pattern on the daily chart below which the bias and sentiment shall turn weak and with the result season beginning, we anticipate volatility and fluctuations in the market. The support for the day is seen at 21350 zone while the resistance is seen at 21650 level. 

BankNifty tanked heavily losing more than 700 points and closing near 47450 levels with all the major frontline banking stocks shedding their gains. With the index eroding heavily, the bias has turned little bit cautious with next major support zone maintained near 46300 levels. BankNifty would have a daily range of 47000–47800 levels.

Datamatics has announced a new partnership with OutSystems offering an enterprise grade low-code platform that empowers businesses to transform and accelerate software development and delivery. 

Datamatics Global Services stock trades at ₹726.75 on the BSE, up by 0.85%.

Muted equity fund inflow and volatile debt fund inflow

As per the data released by AMFI (Association of Mutual Funds in India) for Dec 2023, equity funds witnessed an inflow of Rs169bn (against a peak inflow of Rs202bn in Aug 2023) while the inflow was broad-based across schemes with sectoral funds having a dominant share, registering Rs60bn of net inflow (35% of equity funds’ net inflow). Debt funds continued to remain volatile, with an outflow of Rs755bn. We believe the incremental inflow in debt and equity funds will remain volatile in the near term following the change in interest rate movement expectations, equity valuations and the global economic turmoil.

SIPs witness life-time high inflow; new folios led by small-caps

Systematic investment plans or SIPs’ inflow remained strong at Rs176bn, +29.6% yoy and +3.5% mom, indicating strong inflow from the retail segment. Exchange traded funds (ETFs) witnessed a muted inflow of Rs5.7bn in Dec 2023 which, we believe, is due to all- time high index levels. Overall ETFs’ AUM grew by ~30.8% yoy/6.2% mom to Rs8.7tr.

Industry AUM growth driven by equity prices

Overall industry assets under management or AUM witnessed a growth of 27.3% yoy/3.5% mom and are now at an all-time high of Rs50.7tr, driven by equity pricing. Equity fund AUM of the industry grew by ~42.9% yoy/7.2% mom to an all-time high level of Rs21.7tr. We expect the near-term volatility to continue, but we remain optimistic over the mid- to long-term horizon.

Uncertainty over SEBI regulations to weigh on the sector

The Securities and Exchange Board of India or SEBI’s consultation paper released on 18 May 2023 indicated asset management companies or AMCs’ AUM-wise cap on the total expense ratio (TER), bringing the Goods and Services Tax or GST, brokerage and securities transaction tax or STT under TER, etc. However, SEBI recently indicated that its norms would be less impactful than those detailed in the consultation paper.

Regulatory overhang on AMC stocks

Though we expect the regulatory overhang to weigh on AMC stock prices for some time, the probable earnings impact, based on our scenario analysis, is already factored in. As per the consultation paper, though large AMCs have a lower cap on TER than smaller AMCs, with the increase in the size of equity AUM, the incremental impact will be lower on large AMCs than the smaller ones. We have a HOLD rating on HDFC AMC with a target price (TP) of Rs2,700, corresponding to a P/E of 34x FY25F EPS. We have an ADD rating on UTI AMC with a target price of Rs1,050 or 19x FY25F EPS, on NAM India AMC with a target price of Rs430 or a P/E of 28.8x FY25F EPS, and on ABSL AMC with a target price of Rs520, or a P/E of 23x FY25F EPS.

Bharat Forge has entered into a Memorandum of Understanding (MoU) with Guidance, the Nodal Agency of Government of Tamil Nadu as part of the Tamil Nadu Global Investors Meet 2024, for investing up to ₹1,000 Crore over a 5- year period to expand manufacturing footprint in Tamil Nadu.

The stock rises by 2.57% on the NSE, trading at ₹1,288.35.

HDFC Life Insurance has received a demand order from the Additional Commissioner, Office of the Commissioner of GST & Central Excise, Chennai on January 8, 2024. 

Allegations:

a) short reversal of proportionate input tax credit on common services attributable to exempted supplies; and 

b) excess availment of Input Tax Credit with reference to GSTR 2A vs GSTR 3B, ISD credit, blocked credit and Inter & Intra state supplies 

HDFC Life Insurance stock trades at ₹643.95 on the NSE, down by 0.29%.

Major gainers:

GSFC (10.13%); Ashoka (8.82%); IRB (7.12%); Nykaa (6.87%); GMDC Ltd (6.63%)

Major losers:

ZEE (-10.11%); Allcargo (-6.57%); IDEA (-5.07%); Polycab (-3.58%); Sula (-3.52%)

The Bank Nifty index is trading higher today. The index is currently at 47,828, up 0.8 per cent. The advance/decline ratio is at 11:1 which is very positive.

Nifty 50 has risen back well after witnessing a sharp fall on Monday. The index is currently trading at 21,668, up 0.72 per cent. Despite this bounce, Nifty has not yet recovered the losses registered on Monday. The charts indicate that 21,500-21,850 seems to be the trading range within which the Nifty has been oscillating over the last few days. So, we may have to wait for this range to breakout on either side to get clarity.

Retail portion fully subscribed within opening of IPO.

Subscription Data (as of 10:30 AM, January 09, 2024) 

QIB – 0.00x

NII – 0.27x - {(NII 10L+) – 0.13x, (NII 2L-10L) – 0.55x}, 

Retail – 1.34x

Employee - 0.39x

Total – 0.32x

Issue to close on Thursday, January 11, 2024

Jyoti CNC Automation Limited raises ₹ 448 crore from 37 anchor investors at the upper price band of ₹ 331 per equity share

Marquee Anchor Names:

Nomura Funds Ireland Public Limited Company 

Goldman Sachs Funds 

Eastspring Investments India Fund 

HDFC Life Insurance Company Limited 

Bajaj Allianz Life Insurance Company Limited 

ICICI Prudential Fund 

Nippon Life India Trustee Ltd 

Axis Mutual Fund Trustee Limited

Skipper Limited, one of the world’s leading manufacturers for Power Transmission & Distribution structures and a prominent manufacturer of Telecom and Railway structures, has obtained board approval to raise Rs. 199 crore through issuance of 1,02,67,021 right shares at Rs. 194 per share including premium of Rs. 193 per share.

Suzuki Motor Gujarat Private Limited, a wholly owned subsidiary of Maruti Suzuki India Limited, has received a Show Cause Notice from the Office of the Deputy Commissioner of Customs, Ahmedabad. 

It has been alleged that SMG has made an import of goods viz “LIGHTING EQUIPMENT (EB121- 2) - PARTS OF PRESS MACHINE (FOC). The imported goods appear to attract IGST @18% of assessable value, however, SMG has paid IGST @12% of assessable value at the time of clearance. SMG has been directed to pay the differential duty Rs. 6,211/- and has also been asked as to why interest & penalty should not be imposed.

The company will file reply before the adjudicating authority.

Maruti Suzuki stock trades at ₹9,936.15 on the NSE, down by 0.11%.

Larsen & Toubro (L&T) Buildings & Factories (B&F) business has secured an order from HITES (A Mini Ratna PSU) under the Ministry of Health and Family Welfare. The Health Business Unit of the HRC SBG has secured an order to construct a new AIIMS at Rewari (Haryana) on a Design, Engineering, Procurement and Construction (EPC) basis in Q3 FY’24.

LT stock is up by 1.24% on the NSE, trading at ₹3,544.60.

The Indian mutual fund industry, which has witnessed good Inflows into equity mutual fund schemes backed by strong macroeconomic fundamentals and resilient earnings growth, is likely to witness good inflows in the coming months if interest rates in the country softens over the year and global crude oil prices continue to remain at lower levels, said, Ashwini Kumar, Head Market Data, ICRA Analytics. ICRA Analytics is a wholly owned subsidiary of ICRA Ltd.

The AUM of the domestic mutual fund industry, which has crossed the historic Rs 50 lakh crore mark in December 2023, is well on track to achieve the targeted aim of Rs 100 lakh crore in the next few years. Strong macroeconomic fundamentals of the Indian economy coupled with the possibility of an interest rate cut by the Reserve Bank of India if inflation remains under control, are some of the key factors that are expected to aid market sentiments moving forward. Theme based funds, particularly relating to infrastructure, healthcare and IT, have been gaining steady traction and the trend is likely to sustain moving forward backed by the government’s increased thrust on these sectors, Kumar said.

Crude oil futures gained on Tuesday morning after losing more than 3 per cent in Monday’s session. Saudi Arabia’s decision to cut oil prices had impacted the crude oil prices on Monday.

At 9.53 am on Tuesday, March Brent oil futures were at $76.27, up by 0.20 per cent, and February crude oil futures on WTI (West Texas Intermediate) were at $70.81, up by 0.06 per cent.

IRB Infrastrcuture Developers stock jumps 9.73% on the NSE, trading at ₹46.25. The company had received Administrative Warning letter from SEBI for alleged delay in filing of information under regulation 30(6) of SEBI (LODR) Regulations, 2015 regarding the announcement in respect of Vadodara-Kim Expressway Project. The Company emerged as the preferred bidder on Friday, March 16, 2018, post market hours. We state that the company had filed information of its emergence as the preferred bidder before opening of market hour on Monday, March 19, 2018.

Indian equity markets opened on a positive note on Tuesday. At 10 am, NSE Nifty was up by 0.51 per cent or 109.95 points to 21,655.95, while BSE Sensex was at 71.720.83, up by 0.58 per cent or 353.22 points.

Of the 3,229 stocks traded, 2,314 advanced, 813 declined and 102 stocks remained unchanged. While 275 stocks hit 52 week high and 5 stocks hit 52 week low.

Nifty outlook:

Having slipped into the vicinity of the 5 day low, and not far from the 20d SMA at 21451, Nifty will begin the day weighing the prospects of a bounce back and a sideways move. Yesterday’s pivot at 21630 could keep a lid on such hopes though. We favour a sideways move, and this will be a crucial phase that should set the stage for directional moves shortly.

LTIMindtree informed that Shuchi Sarkar has joined the Company as Chief Marketing Officer on January 8, 2024 . 

The stock is up by 1.44% on the NSE, trading at ₹5,929.95.

The rupee stayed on upward track for the third straight session and rose 6 paise to 83.08 against the US dollar in early trade on Tuesday amid a weak American currency and favourable crude oil prices.

A positive cue from domestic equity markets and sustained buying by foreign institutional investors also supported the Indian currency, forex traders said.

Aether Industries has made a joint announcement with H.B. Fuller and Saudi Aramco Technologies Company for the first commercialisation of the sustainable ConvergeÒ polyols technology. The stock rises by 1.35% on the NSE, trading at ₹908.05.

Brigade Enterprises stock rises by 3.72% on the NSE, trading at ₹974.50. The company had signed MoUs with the Government of Tamil Nadu to invest over ₹3400 crore in the state with a potential employment for around 25,000 people over the next three-four years. The company signed two MoUs, one with the Chennai Metropolitan Development Authority (CMDA) and the other with ELCOT, Information Technology and Digital Services Department, Government of Tamil Nadu as part of Tamil Nadu’s Global Investors Meet (GIM) 2024.

Aurobindo Pharma’s manufacturing unit at Sangareddy District, Telangana, had received Establishment Inspection Report from the USFDA classifying the facility as “Voluntary Action Indicated”. 

Stock trades at ₹1,122.75 on the NSE, up by 0.71%.

RailTel Corporation of India Ltd has received the work order from Bihar Education Project Council for Supply of Teaching Learning Material for Class IV to V amounting to ₹ 39.88 Crore. The stock is up by 1.69% on the NSE, trading at ₹353.

Genesys International’s New India map platform has been chosen as the official map for Ayodhya city by the Ayodhya Development Authority. The stock surges by 6.47% on the NSE, trading at ₹484.30.

The share price of Zee Entertainment Enterprise Ltd (ZEEL) touched the lower circuit in early trade on Tuesday amid lingering doubts over the completion of the proposed merger deal between ZEEL and Sony. The share price of ZEEL dipped to the lower circuit at ₹249.75, per information available on the BSE website.

Major gainers:

Bajaj Auto (2.51%); Adani Ports (2.41%); Wipro (1.69%); LTIMindtree (1.67%); Adani Enterprises (1.55%)

Major losers:

Britannia (-0.27%); HDFC Life (-0.13%); Maruti (-0.02%)

Inox Wind Limited (IWL) has received a Letter of Intent (LoI) for executing a 50 MW ISTS connected wind power project on a turnkey basis from NLC India Limited, a Navratna CPSU. As part of the project, Inox Wind will supply, install and commission its DF 113/92 - 2.0 MW capacity Wind Turbine Generators (WTGs), and provide operations & maintenance (O&M) services for over 10 years post commissioning. The project will be executed at the mega Dayapar site in Kutch district of Gujarat.

Gensol Engineering Limited (GEL) announced partnership with the Government of Gujarat, and it marks ₹2,000 crore investment in a state-of-the-art Electric Vehicle (EV) manufacturing for Gensol EV, poised to generate around 1,500 green jobs in the region.

JSW Steel consolidated Crude Steel production for the third quarter of FY 24 stood at 6.87 million tonnes, higher by 8% QoQ and 12% YoY. Capacity utilisation at Indian Operations level stood at 94% for Q3 FY 24.

India’s key indices, the Sensex and Nifty, opened higher on Tuesday, in line with a rebound among Asian counterparts. The 30-share BSE Sensex climbed 396.26 points to 71,751.48 in early trade. The NSE Nifty gained 136.20 points to 21,649.20. 

The broader Asia-Pacific shares, excluding Japan, increased by approximately 0.5%, as per MSCI’s comprehensive index.

While Wall Street registered gains in equities, U.S. Treasury yields decreased in anticipation of key inflation data scheduled for Thursday.

Analysts anticipate that corporate earnings and local macroeconomic figures will influence domestic equity trends in the short term, alongside U.S. inflation indicators.

On Monday, the Nifty declined by 0.91%, impacted by concerns about the earnings of financial and consumer stocks.

Foreign institutional investors acquired shares worth Rs 16,030 crore, contrasting with domestic investors’ purchase of Rs 156 crore, as per exchange data.

December marked a record monthly FPI buying in Indian equities, coinciding with India’s mutual fund assets reaching a record Rs 50 lakh crore during the same period.

Crude oil futures gained on Tuesday morning after losing more than 3 per cent in Monday’s session. 

Saudi Arabia’s decision to cut oil prices had impacted the crude oil prices on Monday. At 9.13 am on Tuesday, March Brent oil futures were at $76.38, up by 0.34 per cent; and February crude oil futures on WTI (West Texas Intermediate) were at $70.92, up by 0.21 per cent. January crude oil futures were trading at ₹5909 on Multi Commodity Exchange (MCX) in the initial trading hour of Tuesday morning against the previous close of ₹5863, up by 0.78 per cent; and February futures were trading at ₹5943 as against the previous close of ₹5902, up by 0.69 per cent.

Gensol Engineering signs MoU with Gujarat government to invest Rs 2,000 crore for EV manufacturing

Issue Open - 17-January-24

Issue Close - 29-January-24

Right issue Size: Rs. 3999.8 Crs (2.21 Crs Shares)

Stock Price – 2067.80 /-

Right issue Price: Rs. 1812 /-

Payment Terms: Rs.1812 /- (On application Rs. 453 and Balance to be paid at such time as may be determined by the Board)

Rights Entitlement Ratio: 6 Rights Equity Shares for every 179 (Effectively 0.03 for every 1 share held).

Last Trade date (Cum Right): 09 January 2024 (Today)

Ex-Right Trading date: 10 January 2024

Record Date: 10 January 2024

Right Entitlement (RE) Trading Period:- 17 January 2024 to 23 January 2024

Last day of Renunciation of Rights Entitlements: 23 January 2024

Date of Allotment (on or about): 8 February 2024

Date of listing (on or about): 12 February 2024

Effective Discount Per share – Rs. 8.30

{CMP-[(no. of Shares * CMP) + (No. of RE * Right issue Price) ]/ No. of Shares incl. RE}

Route – Tender 

Buyback Price: 10,000/- 

Current Market Price: 6985.70/-

Market Cap: Rs 1,97,820 crores 

Buyback Size: ₹4,000 Crs (Representing 16.33% and 14.49% of the aggregate of the Company’s fully paid-up equity capital and free reserves) 

Buyback Size: 40,00,000 shares (Representing 1.41 % of O/s. shares) 

Retail Quota: 6,00,000 Shares 

Buyback Record Date: Not Yet Announced

Jefferies on Nippon AMC: Maintain Buy on Company, raise target price at Rs 540/sh 

Jefferies on HDFC AMC: Maintain Buy on Company, raise target price at Rs 3890/sh 

Jefferies on KFin Tech: Maintain Buy on Company, raise target price at Rs 660/sh 

Jefferies on Max Financials: Maintain Buy on Company, raise target price at Rs 1200/sh 

Jefferies on BSE: Maintain Buy on Company, raise target price at Rs 3000/sh (Positive) 

JP Morgan on Tata Motors: Maintain Overweight on Company, target price at Rs 925/sh 

HSBC on Nykaa: Maintain Buy on Company, target price at Rs 250/sh 

Jefferies on DLF: Maintain Buy on Company, raise target price at Rs 875/sh 

Jefferies on Godrej Prop: Maintain Buy on Company, raise target price at Rs 2635/sh 

Jefferies on Macrotech: Maintain Buy on Company, raise target price at Rs 1290/sh 

Jefferies on Oberoi Real: Maintain Hold on Company, raise target price at Rs 1375/sh 

Jefferies on Sunteck: Maintain Hold on Company, raise target price at Rs 555/sh 

Jefferies on Mindspace REITs: Upgrade to Buy on Company, raise target price at Rs 365/sh 

Jefferies on Embassy REITs: Maintain Buy on Company, raise target price at Rs 394/sh 

Jefferies on PIIND: Maintain Buy on Company, target price at Rs 4290/sh 

HSBC on Banks: Prefer Axis Bank & IndusInd in banking space 

Jefferies on Prestige: Downgrade to underperform on Company, raise target price at Rs 1000/sh 

Jefferies on Sobha: Downgrade to underperform on Company, raise target price at Rs 1265/sh 

Citi on Bata India: Maintain Sell on Company, target price at Rs 1340/sh 

Citi on Page Ind: Maintain Sell on Company, target price at Rs 35400/sh 

Citi on Star Health: Maintain Sell on Company, target price at Rs 540/sh 

UBS on Bajaj Auto: Maintain Sell on Company, target price at Rs 5600/sh 

Emkay on Zee Ent: Breakdown of the deal can be a setback to both Sony and Zee 

Jefferies on SRF: Downgrade to Underperform on Company, target price at Rs 2140/sh 

Antique on TVS Motors: Downgrade to Sell on Company, target price at Rs 1729/sh 

Buy, TP raised to Rs 1410

Strong volume growth to boost performance

Well positioned to surpass volume guidance of FY24

Management reiterated its focus to reach its FY25 port traffic target of 500MMT vs 339MMT in FY23

Sell, TP Rs 5600

Buy-back announced at Rs10k/sh; promoters expected to participate

This means co will buy-back c1.41% of total equity& implies promoter group will potentially receive Rs22bn

Stk has already run-up c6% since news of a board meeting

Downgrade to sell, TP Rs 1729

Vals running ahead of fundamentals

Build in 12.5% volume CAGR over FY23–26

Also see ltd scope for further improvement in margin 

Find val of 40x 1-yr fwd EPS exorbitant & that limits STK upside

For 3QF24, mix remained strong, with RR + Sport + Defender forming 62% of wholesale (vs. 64% in 2Q) and 76% of order backlog (vs 77% in 2Q)

Co did not comment on FCF, but believe JLR’s FCF momentum will continue

Downgrade SRF to Unpf as expect biz recovery to lag recent stock rally making risk-reward unfavourable

Stay on sidelines in NFIL as await onboarding of new MD, articulation of growth targets & addressing high leadership turnover

Developer stocks doubled in 2023 taking sector to peak multiples.

Expectations are high and easy scaleup is now behind.

Downgrade Prestige to UPF, Sobha to HOLD

Genpharmasec Ltd

Right Issue of Equity Shares

AGOL

General;Quarterly Results

BETALA

Quarterly Results

CMMHOSP

General

CROPSTER

Quarterly Results;General

DELTACORP

Quarterly Results

NIHARINF

General

PGFOILQ

General

RELHOME

Quarterly Results

TIGERLOGS

General;Stock Spli

Price band revised from 20% to 10%: Allcargo Terminals. 

Price band revised from 5% to 20%: Motisons Jewellers. 

Moved into a short-term ASM framework: GTL Infrastructure.

Emami: Promoter group Suraj Finvest revoked a pledge for 6.7 lakh shares between Jan. 3 and 4.

Promoter Diwakar Finvest revoked a pledge for 3 lakh shares on Jan. 4.

Hi-Tech Pipes: Manisha Gupta sold 9.99 lakh shares (0.76%), while Bandhan Mutual Fund bought 10 lakh shares (0.76%) at Rs 141 apiece. 

Jyoti CNC Automation: The IPO will open for bids on Tuesday. It will comprise a fresh issue of Rs 1,000 crore. The price band is fixed at Rs 315–331 apiece. The company has raised Rs 447.7 crore from anchor investors.

Bajaj Auto: The company has approved a Rs 4,000-crore buyback via a tender offer. It plans to buy back 40 lakh fully paid-up equity shares of face value of Rs 10 each at Rs 10,000 apiece.

* Zee Entertainment Enterprises:* Sony Group is planning to call off the $10 billion merger pact with the company, according to Bloomberg.

* Adani Group Companies:* The conglomerate has signed a Memorandum of Understanding to invest over Rs 42,700 crore in Tamil Nadu.

* Eicher Motors:* The company’s unit, Royal Enfield, signed a non-binding Memorandum of Understanding with the Tamil Nadu government. It will invest around Rs 3,000 crore over eight years in the state to set up greenfield and brownfield projects in the region.

* Brigade Enterprises:* The company has signed a Memorandum of Understanding with the Tamil Nadu government to invest over Rs 3,400 crore for multiple construction projects.

* Ashok Leyland:* The company signed a Memorandum of Understanding with the Tamil Nadu government to invest Rs 1,200 crore in three to five years.

* Bajaj Finserv:* The company’s unit, Bajaj Alliance, reported a total new business premium of Rs 962 crore and a gross direct premium of Rs 1,425.1 crore for December.

* IRB Energy:* The company signed a Memorandum of Understanding with the Tamil Nadu government to invest up to Rs 858 crore over the years.

* Caplin Point Laboratories:* The company signed a Memorandum of Understanding with the Tamil Nadu government to invest Rs 700 crore over five years in diverse projects.

* BEML:* The company bagged an order worth Rs 329.87 crore from the Ministry of Defence for the supply of Mechanical Minefield Marking Equipment Mark-ll.

* Adani Enterprises:* The company’s unit, Mumbai International Airport, secured relief from an arbitration panel against the Airports Authority of India in the matter related to payment of the monthly annual fee during the COVID-19 period.

* Cipla:* The company’s UK-based arm announced a joint venture with Kemwell Biopharma and Manipal Education & Medical Group to develop novel cell therapy products for major unmet medical needs in the United States, Japan, and EU regions.

* Life Insurance Corp.:* The company will invest 10% in the new company promoted by the National Housing Bank for residential mortgage-backed securities.

* Cupid:* The company has received an additional purchase order worth Rs 16.23 crore from the Central Medical Services Society for the supply of male condoms.

* Tata Motors:* The company reported Jaguar Land Rover wholesales at 1.01 lakh units, up 27% YoY and retail sales at 1.09 lakh units, up 29% YoY. The order book continues to be strong, the company said.

* Sanghi Industries:* Ambuja Cements’ open offer for acquiring a 26% stake in the company will open on Jan. 15 and close on Jan. 29.

Aurobindo Pharma: The U.S. FDA conducted its inspection at the company’s Telangana manufacturing facility. It ended with a ‘Voluntary Action Indicated’ classification.

* Gujarat State Fertilizers and Chemicals:* The company has commissioned a manufacturing plant at Fertilizernagar in Vadodara for the production of ammonium sulphate. The facility has an installed capacity of manufacturing 1,32,000 MT of ammonium sulphate.

* Gujarat Mineral Development Corp:* has received approval for environmental clearance from the Ministry of Environment, Forestry, and Climate Change to expand its capacity from 3 MTPA to 5

МТРА of lignite at Surkha (N) Lignite Mine.

* Metropolis Healthcare:* The company, in its Q3 business update, announced that its core business revenue grew by 12% YoY. It was largely driven by 9% volume growth and lower margins.

* Fino Payments Bank:* The company has applied for a small finance bank licence from the Reserve Bank of India.

IndiGrid has signed a share purchase agreement with ReNew Solar Power to acquire an asset ReNew Solar Urja at an enterprise valuation of Rs 1,550 crores. 

The valuation, including net working capital and cash, will be Rs 1,650 crore. Additionally, there will be an earn-out related to Change-In-Law in basic customs duty and GST, to be paid to ReNew Solar Power as and when the first payment is realized. In line with the terms of the definitive agreements and the power purchase agreement (PPA), along with the lock-in restrictions therein, IndiGrid will acquire 100% shareholding and management control of ReNew Solar Urja (RSUPL), subject to requisite regulatory approvals.

Operational since December 2021, RSUPL is a 300 MW (AC) solar generation asset located in Jaisalmer, Rajasthan with a 25-year Purchase Power Agreement (PPA) with Solar Energy Corporation of India (SECI) to sell power generated at tariff of Rs 2.71 per unit. The project has been operational and revenue generating for 2 years and the balance term of PPA is 23 years. It fits well with IndiGrid’s strategy of holding operational and revenue generating assets till maturity.

RSUPL is a strategic addition to IndiGrid’s portfolio as it would be the largest capacity project located at a single site for the company. With this acquisition, IndiGrid’s peak solar capacity will cross 1 GW of operating solar assets and the total Assets Under Management (AUM) of Rs 28,500 crore. 

Commenting on the acquisition, Harsh Shah, Chief Executive Officer, and Whole Time Director of IndiGrid, said,” India is witnessing a steep increase in its power demand to fuel its rapid economic growth. In view of India’s focus on energy transition, we are confident of the strategic value of renewable energy projects in the coming decades. RSUPL is a high-quality solar generation asset located in one of the highest irradiation regions of India with reasonable operating track record. In-line with our strategic focus, RSUPL will help us ensure sustainable growth of our portfolio and aid in long-term cash-flow addition.

Fino Payments Bank: has applied for small finance bank license under RBI’s ‘on tap’ licensing norms: RBI

SPIC has signed MoU with Tamil Nadu Govt. Under Agreement TN Govt Will Provide Infra Support & Regulatory Facilitation To SPIC Group Of Companies.

Bajaj Finserve said Bajaj Allianz General insurance gross direct premium underwritten at Rs 1,425.10 crore in December

FIIS F & O : RS. CRS. : 

TOTAL NET SELL : -45813 😭😭

INDEX FUT. : -1418 

INDEX OPT. : -40858

STOCK FUT. : -2752

STOCK OPT. : -781

🔹SEC. IN F&O BAN FOR, 09-JAN-24 :

\u0009

1. \u0009BALRAMCHIN 2.\u0009BANDHANBNK 3.\u0009CHAMBLFERT 4.\u0009DELTACORP 5.\u0009ESCORTS 6.\u0009 GNFC 7.\u0009 HINDCOPPER 8. \u0009IEX 9.\u0009 INDIACEM 10. \u0009NATIONALUM 11. PEL 12.\u0009SAIL 13.\u0009ZEEL

ADDITION : BANDHANBNK, HINDCOPPER

DELETION : NIL

🔹INSTL. INVEST. EQUITY CASH PROV. TRADES AS ON : 08-JAN-2024 : 

FIIS : BUY +16 (10,246-10,230) 😳

DIIS : BUY +156 (9,837-9,681) 🙂

BSE SENSEX : -671 (71,355)🔽 

NSE NIFTY : -198 (21,513)🔽

BSE MIDCAP. : -328 (37,378)🔽

BSE SMLCAP. : -159 (43,660)🔽

B. CRUDE : $ 75.46 🔽 😃😃

GOLD: $ 2,024=INR 63,000(10gr)🔽😥

SILVER : RS. 76,700 (kg)(5pm)🔽☺️ 

FOREX : RS. $ 83.13 🔼 🙂

7.18%NEW ‘33: 7.2016%(99.8425)🔽😊

7.18%GOI ‘37: 7.3141% (98.8550)🔽😊

- We expect MOFSL earnings to jump 20% YoY, while Nifty earnings are likely to grow 10% YoY in 3QFY24.

- Overall earnings growth is projected to be driven once again by domestic Cyclicals, such as BFSI and Auto, while O&G’s earnings are likely to surge 21% YoY underpinned by strong marketing margins of the OMCs.

- BFSI’s earnings are predicted to remain buoyant at 17% YoY. Auto sector’s earnings are expected to grow 35% YoY during the quarter. Key sectors such as Cement, Capital goods, Metals, and Healthcare would report a healthy 98%, 32%, 25%, and 20% YoY growth, respectively. However, Technology is anticipated to report its first YoY earnings decline of 2% in 26 quarters.

- Sales/EBITDA/PAT of MOFSL Universe would increase 4%/10%/20% YoY while those of Nifty would grow 6%/7%/10% YoY in 3QFY24.

- EBITDA margin is projected to expand 160bp YoY for the MOFSL Universe (ex- Financials) to 16.1%. On the other hand, EBITDA margin for Nifty-50, excluding Financials, is likely to expand 50bp YoY to 19.5% during the quarter.

- We have cut our FY24E Nifty EPS marginally by ~2% to INR976 and while FY25E Nifty EPS is stable at INR1,142. We now forecast the Nifty EPS to grow 21%/17% in FY24/FY25.

The 3Ps—penetration, per-capita income, and premiumization—have gained significance for our FMCG universe in the current decade. We see our FMCG coverage companies devising a topline growth strategy (key for earnings growth), with enhanced focus on organic, disruptive innovation, and inorganic opportunity. EBITDA margin is likely to see recovery, but is unlikely to be an earnings driver, as was the case last decade. Our report highlights the top-10 themes for the FMCG sector. Sector valuations would remain range-bound in our view, given a weak near-term outlook, though long-term prospects are firm. We prefer enterprises like Dabur, ITC and Emami that showcase better execution with favorable valuations. Valuations of HUL, Britannia and Marico look fair, while being a tad expensive for Colgate

Ferrous: JSP and TATA to post sequential margin recovery

We expect a QoQ uptick in steel prices to provide relief to steel firms for our steel coverage universe companies. However, this benefit might be partly offset by higher coking coal prices and softer volume. Following a challenging pricing environment in Q2FY24, average prices in Q3FY24 for flat and long products showed a recovery in the range of 1-4% QoQ. Thus, we expect blended realization for most steel firms, to improve in the range of INR 1,500-2,500 per tonne QoQ. On the volume front, we expect a varied trend, with ~5% YoY growth for JSW Steel (JSTL IN) and Tata Steel (TATA IN) is likely to see a flat YoY trend. Conversely, Jindal Steel and Power (JSP IN) and Steel Authority of India (SAIL IN) may report a decline of ~4% YoY and ~9% YoY, respectively. On a QoQ basis, we except TATA to post ~1% growth while other firms are set to report a QoQ decline in the range of 6-20% with SAIL facing a higher contraction of ~20%. Further, we expect the impact of higher coking coal prices to party inflate cost. Overall, we expect an EBITDA/tonne of our steel coverage universe, barring SAIL, to rise by INR 700-2,000 YoY. SAIL may post a decline of ~INR 2,200 YoY. On a QoQ basis, JSTL and SAIL are likely to report contraction in the range of INR 2,350-5,300/tonne while TATA and JSP should report an increase in the range of INR 600-900/tonne. We expect Jindal Stainless (JDSL IN) volume to grow ~10% YoY but decline ~6% QoQ, dragged by muted exports opportunities and technical upgradation activities at the plant level. Standalone EBITDA/tonne may fall ~4% YoY and ~1% QoQ.

Oct-Dec’23 Earnings Preview – Weak Festive, delayed winters impacts demand

We estimate our coverage universe to report Sales, EBIDTA and PAT growth of 8.7%/11%/10.9% YoY on 45bps EBIDTA margin expansion. Demand conditions in rural India and mass segment remain sluggish while premium products are doing better. Margin expansion will be led by low input costs. APNT, KNPL, CLGT, PIDI and NEST will have strong profit. QSR (JUBI, WFL and BK) will report decline in profits. 

Staples demand & sentiments remained under pressure amid sustained inflationary pressure and slower than expected rural recovery, however urban markets remained resilient. Winter products saw lower consumption due to soft onset of winter season. We expect staples to post low to mid-single digit volume growth in 3Q24.

Demand across discretionary categories like QSR, Footwear and Retail remained under pressure amid moderate festive season. QSR had volatile quarter with strong demand on specific occasions and tepid normally. Paints gained from robust festive & wedding season which leading to strong volume growth while organized Jewellery players gained share and grew despite sluggish industry demand due to higher gold prices.

We remain positive on discretionary segments structurally, however recent stock price movements leave little scope for further re-rating in near term. We believe valuation in most staple companies’ factors in recovery in rural demand, softer commodity basket and margin expansion.

TOP SELL

Colgate: We downgrade our rating for Colgate to REDUCE from HOLD given 4.4% Sales CAGR since 2016 while 9.5% PAT CAGR is led by ~760bps margin expansion which don’t have any room for further expansion and sales growth and non-oral care traction remains limited. Given current run up in the stock price, we see no further upside given valuations at 45.8xFY26 with 8.2% PAT CAGR post FY24. ‘REDUCE’ with target price of Rs2140

Agrochemicals: channel inventory position is key

The earnings trajectory of agrochemicals companies under our coverage in Q3 is expected to be divergent. Companies that are light on channel inventory and have liquidated high-cost inventory are likely to be on a strong footing while earnings for the rest of the universe are likely to be under pressure.

Domestically, Q3 has been positive. Demand has been healthy in North, Central India and Southeast India. Demand is soft in West and Southwest India, especially in the pockets of Maharashtra and Karnataka, due to lingering effects of a deficit Monsoon. Fungicide liquidation also has been slow in Maharashtra due to clear climate as well as decline in sowing of onion crop. Internationally, demand continues to be weak, especially in North America, which has a huge pile of herbicides inventory. Demand is slightly better in Brazil.

Lower subsidy for fertilizers to weigh on profitability

The government has lowered complex fertilizer subsidy rates for H2 by more than 40%, which would lead to pressure on EBITDA per tonne. Companies have taken price hikes and lower discounts to dealers. Since subsidy reduction on phosphate heavy fertilizers is high, companies have not been pushing for volume aggressively. Fertilizer with lower phosphate content is being pushed. We expect a significant decline in EBITDA per tonne for complex fertilizer companies. Coromandel International is our top pick in the sector.

Muted road awarding; buildings, hydrocarbons, railways better off 

The Ministry of Road Transport and Highways (MORTH) awarding was down 48% YoY to 2,595km until October 2023 vs FY24 target of 12,500km and construction was up 10% YoY to 5,248km (~22km/day). The National Highways Authority of India (NHAI) new project awarding also was lackluster YTD. Within our coverage universe, road infrastructure-focused companies saw low-value order inflows YTD on account of less tendering from NHAI and MORTH. On the other hand, EPC-focused firms, such as NCC (NJCC IN), PSP Projects (PSPPL IN) and large companies, such as Larsen & Toubro (LT IN), have seen good inflows. Order inflows for our coverage companies for Q3FY24 stood at ~INR 680bn, which includes L&T, from sectors, such as buildings, hydrocarbon, railways, power and electrical. A majority of the orders was bagged by L&T at INR 660bn, NCC at INR 5bn, PSP Projects at INR 3bn, PNC Infratech (PNCL IN) at INR 11bn and Ashoka Buildcon (ASBL IN) at INR 2bn while KNR Constructions (KNRC IN) and HG Infra Engineering (HGINFRA IN) have yet to see order inflows this quarter. The aggregate orderbook of our coverage universe, including L&T, stood at INR 5.7tn, up 15% YoY, as on Q3FY24 with an average book-bill ratio of 2.0x.

Healthy domestic volume growth - Domestic growth favourable vs International and EXIM

B2C Ecommerce festive related volume growth expected to continue in mid teens led by sale period by platform while growth of D2C brands continues to be faster. Pricing remains competitive as companies pass on gains of economies of scale to customers. In B2B/PTL segment, expect growth to continue to be healthy despite lesser number of working days due to festivals. Shift from unorganised to organised sector continues as GST collections up 13% and E-way bill generation up 19% in 3QFYTD. Diesel prices remain stable QoQ. Domestic air cargo volumes as per DGCA is up just 1.8% FYTD and share of freighters is at 17%. Crude and ATF prices are down 7% and 8% YoY respectively. BDE pricing is benchmarked to crude prices. International air and ocean freight prices continue to be unfavourable due to slow demand and rising capacity thereby impacting cross border services revenues. Major ports volume for FY24YTD is up 5.5% led by iron ore and fertilizer growth and container growth stood at 9%. However private ports continue to witness faster growth. Trade imbalance continues leading to lower EXIM volumes and higher empty running.

Our preferred pick in the logistics space is VRL Logistics

According to media reports, Sony India is close to calling off the merger with Zee Entertainment. Sony is likely to issue a termination notice by 20-Jan-24; now, the decision on who would be at the helm of the merged company is the contentious issue, according to these reports. After receiving all necessary regulatory approvals, this breakdown can be a setback to both Sony and Zee, having both reported subpar growth over the last year. We believe the merger not going through will be a lose-lose for both parties, particularly in the face of competition with a much larger entity of Reliance-Disney (if the merger goes through). Both parties will potentially have to recalibrate their strategies from ground zero, which would be a tall order. We believe clarity should emerge in the next couple of weeks regarding a final decision concerning the merger, and if it does not go through, we see significant downside from current levels. Hence, we advise caution in the stock

Royal Enfield, an arm of Eicher Motors, has signed a non-binding MoU with the Tamil Nadu government to invest ₹3,000 crore over the next 8 years to build greenfield and brownfield projects at Tamil Nadu Global Investors Meet 2024

Brigade Enterprises has signed memorandum of understandings with the Tamil Nadu government worth ₹3400 crore to develop projects in the next 3–4 years as part of the Tamil Nadu Global Investors Meet 2024. The company signed MoUs with the Chennai Metropolitan Development Authority (CMDA) and ELCOT, Information Technology and Digital Services Department.

Sangeetha S & Associates Name appears in National Plastic Industries Ltd with 1.36% stake for the quarter ended December 2023.

Life Insurance Corporation of India’s share price has run up materially (up 36 per cent vs Nifty50: up 12 per cent) following the company’s H1-FY24 results. The outperformance has been primarily driven by: attractive valuation after a long underperformance spell since listing; strong EV growth led by buoyant equity markets; the worst, in terms of structural issues of lower growth and higher cost, now likely behind, with expectations of growth revival from FY25 on a favorable base and widening of product offerings; and possibility of step up in dividend.

Motilal Oswal Financial Services (MOSL) has maintained a strategy of riding on the structural trend in financialisation over the years. The phygital strategy bodes well considering the franchise strength and the possible premiumisation opportunities.

Our constructive stance on the stock has been based on individual growth levers in all business segments (market share improvement in broking, improved fund performance in AMC, increase in RM efficiency in wealth management, traction in PE and improving RoE in affordable housing business) at attractive valuations.

The board of Bajaj Auto Ltd on Monday approved buyback of company shares at ₹10,000 a share. 

The board approved a proposal for buy-back of up to 40 lakh fully paid-up shares, representing 1.41 per cent of the total number of equity shares of the company, for a consideration not exceeding ₹4,000 crore.

The buyback would be through tender offer on a proportionate basis, from equity shareholders including promoters, members of promoter group and persons acting in concert, as on the record date, which will be announced later. 

The overall asset under management of the mutual fund industry crossed the ₹50-lakh crore mark to hit ₹50.78-lakh crore last month against ₹49.05-lakh crore logged in November, aided largely by strong rally in equity markets and steady SIP inflows.

The inflow into equity mutual funds increased by nine per cent last month to ₹16,997 crore against ₹15,536 crore in November largely due to six new fund offers garnering ₹6,321 crore.

Small-caps continued to hog the limelight by attracting ₹3,857 crore (₹3,699 crore) followed by thematic and large- and mid-cap fund getting inflows of ₹6,005 crore (₹1,965 crore) and ₹2,339 crore (₹1,847 crore), respectively.

Morgan Stanley, a global investment bank and wealth management firm, sees benchmark Sensex hitting a level of 74,000 by end December this year on a base case scenario. 

On a bull case, BSE Sensex could touch 86,000 by end December this year, Morgan Stanley India Equity Strategists Ridham Desai and Nayant Parekh said in a new Research Note titled “Is the Market Overbought?”.

SAREGAMA has received listing approval for 3.86 crore fully paid-up equity shares post demerger and allotment.

CESC Projects, subsidiary of CESC Ltd, has been selected as the successful bidder for setting up a Green Hydrogen Production facility.

The board of Chambal Fertilisers & Chemicals on Monday approved buy back of fully paid-up equity shares of face value of ₹10 each, not exceeding 1,55,55,555 shares at a price of ₹450 per equity share for ₹700 crore.

The promoters and promoter group of the company have expressed their intention to tender shares under the buyback offer.

The company has fixed January 18 as the record date to determine eligible shareholders to participate in the buyback, which would be through tender route on a proportionate basis.

Mahindra is doing everything to succeed in the EV sector, Anand Mahindra says, emphasising on the importance of EV from a planet and a geopolitical point of view

BGR Energy on Monday announced that it had defaulted on repayment of a principal of ₹631 crore, to its lenders – ICICI Bank, Indian Bank and Bank of India.

BGR Energy is into the manufacture and supply of ‘balance of plant’ for power projects.

On the NSE on Monday, the price of the BGR Energy share (₹10 face value) dipped ₹3.45 (3.65 per cent) to close at ₹91.

The short-term outlook is bullish for Unichem Laboratories. The stock has begun the week on a positive note by rising about 2 per cent on Monday. The rise, last week has taken the share price well above the key resistance at ₹440. This level of ₹440 will now act as a good resistance-turned-support and limit the downside. 

Here are the intraday supports and resistances for widely traded stocks such as Reliance Industries, ITC, ONGC, Infosys, HDFC Bank, TCS, and SBI

FIIS : BUY +16 (10,246-10,230)

DIIS : BUY +156 (9,837-9,681)

• BALRAMCHIN 

• BANDHANBNK 

• CHAMBLFERT 

• DELTACORP 

• ESCORTS 

• GNFC 

• HINDCOPPER 

• IEX 

• INDIACEM 

• NATIONALUM 

• PEL

• SAIL

• ZEEL

19.00 U.S. Trade Balance (Expected: -64.9B versus Previous:-64.3B)

Albertsons Companies, Inc. (Pre market) (Sector- FMCG)

TD SYNNEX Corporation (Pre market) (Sector- Technology)

Acuity Brands, Inc. (Pre market) (Sector- Construction)

MSC Industrial Direct Company, Inc. (Pre market) (Sector- Capital Goods)

Neogen Corporation (Pre market) (Sector- Healthcare

Asian markets started positively on Tuesday, drawing encouragement from robust gains in Wall Street, particularly in the tech sector. Early trading saw the Nikkei 225 climb by 1.74%, or 581.79 points, reaching 33,959.21, while the broader Topix index rose by 1.10%, or 26.34 points, reaching 2,419.88. South Korea’s KOSPI followed suit, ascending by 0.84% or 21.66 points to 2,589.48. 

Later this week, the U.S. December CPI report holds significance as it could offer crucial insights for global investors.

On Tuesday, Australian shares rebounded by more than 1%, recovering from a four-session decline, driven by strong performances in the mining and financial sectors. The S&P/ASX 200 index surged by 1.14% to reach 7,536.70. Meanwhile, Hong Kong’s Hang Seng Index edged up by 0.2%, or 31.65 points, to settle at 16,256.10.

The Nasdaq scored its first gain of at least 1% in 2024 on Monday, as a fall in Treasury yields helped lift megacap stocks, while a sharp drop in Boeing shares kept gains on the Dow Industrials in check.

Megacaps advanced, lifting stocks such as Amazon.com which closed up 2.66% and Alphabet, which rose 2.29%, as Treasury yields fell ahead of readings on inflation and a new supply of government debt this week, with the benchmark 10-year U.S. Treasury yield hitting a low of 3.966% on the session.

In addition, Apple climbed 2.42% after the iPhone maker said its Vision Pro mixed-reality device will be available for sale from Feb. 2 in the United States.

The Dow Jones Industrial Average rose 216.90 points, or 0.58%, to 37,683.01, the S&P 500 gained 66.30 points, or 1.41 %, to 4,763.54 and the Nasdaq Composite gained 319.70 points, or 2.20%, to 14,843.77. - Reuters