WTF! HDFC Bank

Author

Yash Upadhyaya
July 05, 2024

Tale of the Tape 

Hola Amigos! 😎

Markets closed up for a 5th straight week. Nifty and Sensex traded mixed as largecaps continued to consolidate at record highs. On the other hand, Midcaps (+0.8%) and Smallcaps (+0.8%) continued to sizzle. The advance-decline ratio (3:2) remained in favor of the bulls. 💪

Most sectors ended in the green. Oil & Gas (+1.6%) stocks were lit AF! Pharma, PSU Banks and FMCG rose +1% each. Banks and NBFCs were under pressure following a series of mixed Q1 business updates. 😣

HDFC Bank got KO-ed after reporting its Q1 business update. On the other hand, Raymond hit a new all-time high after approving the demerger of its real estate business. Read more below. 📊

Chemical stocks have failed to participate in the recent rally. What’s hurting the sector and what are the expectations from 2024? More details below. 🔍

Titan slipped 2% after a DOUBLE DOWNGRADE by Kotak Institutional Equities. They see a further -6% correction from current levels. 👀

Bajaj Auto launched the world’s FIRST CNG motorcycle, Freedom 125 priced at Rs 95K. Here’s more details. 🏍️

Off the charts. Yes Bank shot up 11% out of nowhere. Railways stocks were on fire. RVNL (+17%) was the top gainer on NSE500, IRCON rallied +10% and RailTel jumped +7%. 🔥

VST Industries (+2%) was in focus after ace investor Radhakishan Damani increased his stake by 2%. He now holds a 36.33% stake in the company. 🤑

Blue Star (+6%) said that it is targeting a 15% market share in the room air conditioning market by the end of next year. 👍

Order wins. Ahluwalia Contracts (+12%) won a Rs 572 cr order from the Airport Authority of India. Thermax (+6%) won a Rs 513 cr order to set up a 600 MW green energy project in Africa.

Here are the closing prints:

Nifty

24,324

+0.1%

Sensex

79,997

-0.1%

Bank Nifty

52,660

-0.8%

Stocks
Aaj Ki Taaza Khabar

💣 HDFC Bank got BOMBED today after reporting what could be one of its worst set of results. Gross advances dipped -1% QoQ led by a fall in its corporate loan book. Deposits were FLAT. But, CASA (current account, savings account) fell by 5% over the previous quarter. This is a HUGE negative as CASA deposits are low-cost and lucrative, which is exactly what the lender needs right now. Just to be clear, Q1 is a seasonally weak quarter but HDFC Bank’s performance suggests FURTHER weakness which spooked investors. We’ll have to wait for the fine print when the rest of the Q1 numbers come out. But overall, this looks like a washout quarter. At current valuations, we do not see a case for significant outperformance vs other private banks, said global brokerage firm Nomura. 

🚀 Raymond hit a new all-time high after approving the demerger of its real estate business. Raymond Group has recently announced a slew of measures to revamp its corporate structure. The company says it is undertaking this exercise to unlock shareholder value. But what does it even mean? Corporate restructuring simply means the reorganization of the legal, ownership, and operational aspects of a company. This includes mergers, demergers, stake sales, and more. Companies undergo restructuring to streamline business operations, improve profitability and reduce risks. Raymond says that the demerger is aimed at exploiting the growth potential of the real estate business and attract a fresh set of investors. Under the proposed scheme, shareholders of Raymond will receive 1 share in Raymond Realty for every share held.

Specials

Best Dividend Stocks 2024

Who doesn't love dividend income? In our recent video, we cover 3 stocks with high dividend yields. Additionally, we also share targets on these stocks as provided by SEBI RAs.

Market

Good Times A’ Comin’

The Indian chemical sector saw a dream run between 2017 to 2022. Favorable global demand-supply, India’s rising competitiveness and a significant improvement in product development spearheaded the rally. Consequently, valuations shot through the roof hitting a peak of 46x price-to-earnings! That was unreal and something never seen before. 🤯

However, in the last two years, the sector has gone through a brutal de-rating of sorts. Channel destocking by global players, rising costs + supply chain bottlenecks destroyed their pricing power. Barring a couple, almost every sub-segment witnessed a sharp correction in EBITDA margins and ROCE during this period. 📊

Having said that, recent reports and management commentaries seem to suggest that the chemical sector is on the cusp of a MAJOR TURNAROUND. After a difficult couple of years, the IMD predicts above-average rainfall in 2024. This bodes well for domestic agrochemical companies and should result in the sector coming back strongly this year, according to experts.

Bayer AG, one of the largest ag-chem and pharma companies in the world, said: 💯

“We do expect for the full year, not only EMEA, but the rest of the globe as well, to report higher volumes of our crop protection business.”

Prices and spreads of key raw materials like Phenol Acetone have also rebounded sharply in recent months, indicating a return to normalcy. Lastly, with ample capacity already in place, most chemical companies won't need to invest heavily on CAPEX. This in turn would lead to an exponential growth in the operating profit across the sector. Ambit Capital says they’ve increased their weightage in the chemical sector and have added Rossari Biotech and Alkyl Amines to their portfolio. 📈

What’s your view on the sector?

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Charts

Movers and Shakers

Here’s a look at this week’s top NSE500 movers. Mazagon Dock Shipbuilders took the pole position after rallying +33%. 🥇 Garden Reach Shipbuilders (+29%) hit a new all-time high. Motilal Oswal Financial Services (-10%) and Angel One (-9%) were under pressure after SEBI proposed new rules to standardize transaction costs. 📉 Check out their charts below: 

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