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Monday Blues
Yash Upadhyaya
July 29, 2024
Tale of the Tape
Good evening everyone. Welcome back to the Daily Rip!
Markets were volatile AF! Nifty and Sensex collapsed in the second half of the day to end barely unchanged. PS - Nifty missed the 25,000-mark by just 0.25 points! Midcaps (+1%) and Smallcaps (+1%) popped off. The advance-decline ratio was in favour of the bulls (3:2).
Most sectors ended in the green. PSU Banks (+2.3%), Real Estate (+1.4%) and Oil & Gas (+1%) saw the most buying. IT (-0.4%) and FMCG (-0.3%) witnessed minor cuts.
The rupee hit a record low of 83.73 against the dollar before recovering later.
UltraTech is buying India Cements! Read our top story to understand the Adani angle and what it means for India’s cement industry.
ICICI Bank’s Q1 shows it continues to lead the private sector pack. Meanwhile, Bharat Electronics (+4%) gained after posting great Q1 numbers. More details below.
Bandhan Bank, RITES and BPCL all saw big movements today. Check out their charts below to find out why.
Results reaction. Punjab National Bank gained +6% after reporting its highest-ever Q1 profit; +159% YoY. Meanwhile, SBI Cards was down -2% after reporting flat PAT. PS - the stock got a downgrade from UBS, which slashed its target price to Rs 620 p/sh vs Rs 805 p/sh earlier).
Adani Green Energy (+2%) was in focus after Jefferies initiated coverage on the stock; the brokerage sees a +16% potential upside from current levels.
Order wins. NBCC jumped +8% after its subsidiary bagged a Rs 411 cr medical college project in Maharashtra. Cyient DLM gained +5% after winning a contract to produce parts for Boeing’s 787 Dreamliner.
Here are the closing prints:
Nifty | 24,836 | FLAT |
Sensex | 81,356 | FLAT |
Bank Nifty | 51,406 | +0.2% |
Spotlight
SEBI RA Spotlight
Buy the dip in Carysil Ltd!!! Artha Capital says that the stock is showing signs of a reversal from its key support level. In the short term, the stock can revisit its previous all-time high, according to them. Interestingly, institutional ownership of the stock has also gone up recently. PS - renowned investor Ashish Kacholia is an investor in the company.
Artha Capital, established by Sidhant Daga and Devanshu Damani, is a SEBI-registered research analyst firm specializing in premium techno-funda research. Sidhant, a CFA and CMT charterholder with 8 years of market experience, is adept in technical analysis, options and system trading. Devanshu brings over 7 years of experience from prominent institutions like Emkay Global and HDFC Mutual Fund. He holds a Master’s in Strategic Management from IE Business School in Spain and a BSc in Economics from NMIMS in Mumbai. Together, they combine their expertise to identify top-quality stocks at optimal prices, offering you superior techno-funda stock picks.
Stock
Done Deal
UltraTech (+2%) will buy India Cements for Rs 5,843 cr. FYI - the deal will trigger an open offer and may end up costing UltraTech a little over Rs 7,000 cr.
ICYMI - this is the seventh deal in the cement sector since Adani entered in 2022. So, WTF is going on? Firstly, India is seeing a major infra boom, which means cement demand is at an all-time high. Secondly, it’s cheaper to acquire a cement plant than build a new one. Finally, Adani is on a mission to beat Birla, which means growth at any costs.
Which brings us to the India Cements deal. Tbh, experts are divided over whether it’s a great bargain for UltraTech. Yes, India Cements has 14.5 mtpa capacity in Tamil Nadu and access to strategic limestone reserves, all of which are POSITIVES. But it’s also loss-making, its cement plants are old and its overall operations are inefficient. UltraTech also already had 25 mtpa in the South and was expected to add another 10.75 mtpa due to its Kesoram deal. It makes more sense though if you assume the real deal is that Birla didn’t want Adani to get his hands on India Cements. This has BIG implications for other cement stocks.
For starters, all small & regional companies are targets right now. This includes Orient Cement (+5%), where there’s been a LOT of buzz. Others include Sagar Cement (+3%) Saurashtra Cement (+1%) and Mangalam Cement.
Next up are the mid-tier players: Dalmia, Shree Cement, JSW Cement, Ramco etc. These are probably too big to be acquired just yet. This means they will deal with increased competition, pricing pressures and a buttload of other stuff. India’s cement sector used to have regional dynamics but with UltraTech and Adani forging a national market, this removes a lot of the edge that smaller players had. Let's see how this goes!
What’s your view on the stock? |
Specials
Rakesh Jhunjhunwala Portfolio Changes
We all miss the legendary investor – Rakesh Jhunjhunwala! In this video, we cover his top holdings and latest portfolio updates along with fundamental and technical views on the same.
Earnings
Earnings Roundup
ICICI Bank’s Q1 results beat Street estimates! Strong loan growth across verticals helped propped up the topline. FYI - deposit growth lagged behind advances, but only slightly, which is a positive!
On the flipside, ICICI isn’t immune to problems plaguing all lenders. Credit costs were higher, hitting net interest margins (4.36% vs 4.78% last year). Provisions were also up +85% QoQ, but this was on expected lines.
Big Picture: Overall, good, but not great results! ICICI continues to lead the private sector, something we’ve seen for a few years now. This explains its solid stock performance. FYI - Nuvama has a target price of Rs 1,450 p/sh; +17% potential upside from current levels!
Here are its key stats:
Net Interest Income: Rs 19,553 cr; +7% YoY (vs Est: Rs 19,580 cr)
PAT: Rs 11,059 cr; +15% YoY (vs Est: Rs 10,564 cr)
GNPA: 2.15% vs 2.16% QoQ
Net NPA: 0.43% vs 0.42% QoQ
ICICI Bank is +24% YTD.
Bharat Electronics (+4%) Q1 results beat Street estimates! Strong demand across key verticals helped boost the topline. Raw material costs and tax expenses also dropped QoQ, helping boost margins and the bottomline! FYI - the company bagged Rs 422 cr in orders since its last disclosure, including key contracts for fighter aircraft modules. Its total order book as of July 1 stood at a whopping Rs 76,705 cr.
Here is its Q1 report card:
Revenue: Rs 4,199 cr; +20% YoY (vs Est: Rs 3,953 cr)
EBITDA: Rs 937 cr; +41% YoY (vs Est: Rs 860 cr)
EBITDA Margin: 22.3% vs 19% last year
PAT: Rs 776 cr; +46% YoY (vs Est: Rs 706 cr)
Bharat Electronics is +74% YTD
Charts
Chartbusters
Here are three companies that saw big movements today!
1) Bandhan Bank jumped +13% intraday after its Q1 results beat Street estimates. It reported a +47% YoY surge in net profit and a +21% YoY bump in net interest income. But where it really shined was in maintaining its net interest margins AND reducing provisions. These are two things that have hit ALL other private lenders.
2) RITES soared after it said its board would meet on July 31 to consider issuing bonus shares. FYI - the last time the PSU firm did this was back in 2019, when declared a 1:4 bonus issue. PS - the stock also benefited from a broader railways rally today. After multiple days of losses, investors are buying the dip!
3) BPCL was up after UBS raised its target price on the stock. The brokerage says the global market should ease by Q3-2024 and expects the company to benefit as profits shift from refining to marketing. Finally, it says that valuations are attractive right now! FYI - UBS sees a +19% potential upside from current levels.
Check out their charts below:
Links That Don’t Suck
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