Trade Setup | While #Nifty may remain muted ahead of MPC decision, technical data suggests lukewarm moves in BFSI. #BQLive
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00:00 Good morning and thanks so much for tuning in to the Trade Set of the Big MPC Day.
00:04 Let's take stock of the global news flow first.
00:06 The US futures inched higher ahead of the key inflation report in the US, but the Asian
00:11 markets are lower by virtue of what the US markets did yesterday.
00:15 China has warned Japan over the resolve to fight remarks on Taiwan.
00:17 So there's a bit of a geopolitical stress there.
00:22 In fact, a lot of stories around China and Taiwan and the West as well emanating in the
00:27 dailies today.
00:28 Premium or white sugar trades near the highest level since 2011.
00:33 A lot of agri commodities are shooting higher.
00:35 Rice too.
00:36 Rice prices have inched up quite substantially in the last few days.
00:39 I think trading at some 11-year highs or something like that.
00:42 And India's loan growth surpassed 20 percent for the first time in over a decade.
00:46 Credit growth really picking up by virtue of the growth that maybe the country is doing
00:50 and the demand everywhere.
00:51 But be that as it may, the US markets were a bit soft.
00:55 In fact, the yoyoed but ended lower than Nasdaq down over a percent.
00:59 So that's not great news.
01:01 The other Q's, I mean, the yields at about 4 percent, 4.01 or 4.02.
01:07 Everything else was steady.
01:08 The GIFT-Nifty, independent of what it shows, because yesterday too it was showing a mild
01:14 uptick, but it did up about half a percent or higher or thereabouts, up a third of a
01:18 percent higher.
01:19 For now, showing plattish and I reckon that's how it will start out of the MPC decision.
01:23 By the way, what happened yesterday was interesting because the Nifty did well despite the Bank
01:27 Nifty not doing well.
01:28 So the Bank Nifty clearly under the spot of bother.
01:31 But the Nifty went up about 61 points, led no doubt by Metals, which was a top gainer,
01:36 followed by Nifty Auto, which showed a bit of a bounce back.
01:38 And the broader markets too were in the positive yesterday, about a third of a percent for
01:43 the mid caps and small caps up about half a percent.
01:45 And a lot of result boys reacted.
01:47 You could see in the way some of the stocks with price and volume action, the liquid side
01:52 did with Bharat Forge being up 7 percent on very high volumes or even a trend going up
01:58 4.2 percent on very high volumes.
02:01 Both of these had come out with results and reacted duly.
02:04 There was also India Cements, Voltas, AVFRL.
02:07 So pretty interesting day of trade yesterday for the result boys.
02:10 So what's the trade set up therefore in such a scenario?
02:13 Well, I think BFSI is unlikely to see very sharp up moves, even if the policy commentary
02:18 is benign.
02:19 Because just you can see the kind of cloud that banks are trading in now.
02:22 These may be the famous last words and we may see the bank really rally today.
02:27 But I doubt that will happen.
02:29 Pharma remains the key bucket and cement is likely to see some strength as well as for
02:33 what I'm hearing.
02:34 A bunch of market experts talk to me about in terms of volume growth as well.
02:40 And yesterday, I would urge all of you to hear the Bharat Forge interview that they
02:45 did with us.
02:48 The commentary around forging demand is very strong and I would reckon that forging companies
02:52 may continue to get a leg up post results and commentary.
02:55 Bharat Forge is a mix of multiple businesses, but even pure play forging companies, there
03:01 is an MM forging, Ram Krishna forging, maybe some others that are missing.
03:05 But the commentary around the Europe demand and US demand continues to be very, very positive
03:11 since the start of the year.
03:12 And yesterday, you heard Bharat Forge say a pretty similar thing for not just 2023 or
03:19 2024, but 2023 and 2024 both.
03:23 So pretty interesting what could happen there.
03:25 This is the interview that I'm talking about.
03:27 It's worth listening in.
03:28 It's a short 15 minute conversation.
03:29 It gives you a lot of insight about what Bharat Forge is doing, yes, but also what's happening
03:34 within that auto ecosystem.
03:37 Very important day for numbers.
03:38 A lot of large names as well.
03:41 So LIC, of course, right up there, but Hidomoto Corp, I mean, all the news surrounding it
03:46 is important as of course would be SAIL and Pidilite.
03:51 There is also Astral, I think today, coming out with numbers.
03:57 And then pharma names in Biocon, Alchem and Ipeca are coming out with numbers.
04:00 There is Mazgon Dock, which will be very, very interesting for people by virtue of the
04:04 kind of moves that the stock has done.
04:07 And I think everybody will be watching for Campus Activewear, now that the supply overhang
04:12 is out of the way, what is it the company does in terms of numbers.
04:16 Then very quickly, we're moving on to the stocks to watch in the session today.
04:21 Starting off with the newsmakers first, then going on to the result, Suzlon, 19.5 rupees
04:25 per share.
04:26 It's launched the QIP, plans to raise about 1800 to 2000 crores.
04:30 The floor price of the QIP is 18.44 rupees per share.
04:33 The successful completion of this QIP will see Suzlon being able to retire a large portion
04:38 of its debt, if not all of it.
04:41 And that might help the stock.
04:42 Remember, viewers, you know what happened to Inox.
04:44 I'm not saying the same thing will happen to Suzlon, but you know what happened to Inox
04:47 Wind.
04:48 A large 10% block got absorbed fairly easily, I would reckon.
04:53 The stock saw a bump up after that.
04:55 Suzlon is going to use the same, I mean, the way Inox Wind Energy used the proceeds from
05:00 Inox Wind sale to retire debt, or at least that's the intent.
05:05 Similar thing for Suzlon, retire debt, successful completion of the QIP, could actually see
05:09 the stock do well.
05:10 So do watch out for Suzlon.
05:11 In fact, if you look at the last maybe 15, 20 days, Inox Wind has valued quite a bit,
05:17 Suzlon has not.
05:19 So it would be an interesting one.
05:20 I'm not predicting it will rally, but I think the decks are set that if they do the successful
05:25 completion of the QIP, then it could auger well for the stock.
05:29 And Hero Motocorp, it faces a tax probe over links to vendors, 11 million false expenditure
05:37 as per agencies.
05:38 Now, we don't know, I mean, we at BQ Prime personally do not know the veracity of this,
05:44 but agencies have quoted this, so I'm putting this out because the stock may react.
05:49 So you should know that if Hero Motocorp is reacting negatively, why is it doing so?
05:54 Max Life is in focus.
05:56 This bank is going to invest $195 million in Max Life at about Rs.113 per share, would
06:01 increase stake to 16.2%.
06:03 The deal is likely to be completed in four to six months.
06:07 This news about Titagard came in just around market closing.
06:10 Maybe all of us didn't catch it.
06:12 So therefore, I thought to bring it that Skoda Group is going to deliver rail cars worth
06:16 733 million euros to Italy with company units, Titagard, Firemana.
06:21 You know, to my mind, Titagard sold off this unit.
06:26 Okay.
06:27 We've tried to reach out to Titagard and ask them about whether this is indeed true and
06:31 whether Titagard Rail Systems benefits out of this fundamentally or not, because I thought
06:37 Titagard sold off this unit, but it's out there.
06:40 I'm bringing it to you.
06:41 I urge you to please do all your diligence before you get excited about this.
06:46 Now, NHS, even if this is true, we do not know what the quantum of stake between Skoda
06:51 and Titagard, even if this unit belongs to Titagard even now.
06:54 So please do all your diligence before you go out and trade into this.
06:58 I mean, there's still an hour left for the markets to open.
07:00 If you are interested in Titagard, I would urge you to kind of look this up.
07:04 Zee Entertainment could be interesting because NCLT is going to pronounce the Zee-Sony merger
07:09 today.
07:11 I would reckon that the announcements could come in sometime post 2.30pm, whether it happens
07:16 during market hours or not remains to be seen.
07:18 But this viewers is the most important thing for Zee today.
07:22 And as a result of which the numbers from Zee hold little significance.
07:26 It was not a great quarter.
07:28 Revenues were lower than estimated, margins completely collapsed and much lower than estimated.
07:33 Net loss of 53 crores versus a profit of 106 crores.
07:37 Terrible quarter.
07:39 But what is more important for Zee is the previous play, which is NCLT will pronounce
07:44 the Zee-Sony merger today.
07:46 A lot of strong OI build up there in Zee Entertainment.
07:49 I think it will be important to see how the stock fares.
07:53 But this is the most important thing.
07:55 I really doubt Zee may have a small reaction here at the open, but a large portion of the
08:00 OI will either profit book or loss book, depending on what the announcement from NCLT comes in
08:07 today.
08:08 We had spoken about how the OI for Zee is at some one year high, is up 50% from June
08:15 and the call put ratio and maximum calls are written about 250 rupees per share.
08:22 So Zee could be interesting.
08:23 Then result boys, Tata Power, very strong set of numbers, revenues at 15,000 crores
08:29 estimated of 15,696.
08:32 But EBITDA margins really did better than what was estimated.
08:36 19.35% versus 11.6%.
08:42 The Bluemug estimates were 16.9% back at 1140 crores.
08:47 The estimate was 768 crores.
08:48 So good going for Tata Power.
08:49 PI Industries is the other one which posted a very strong set of numbers.
08:56 Revenues were up 23.8% at 1910 versus 1543.
09:04 EBITDA margins at 24.49 versus 22.4.
09:07 And net profit up 45.9% at 382 crores versus 262 crores.
09:11 So good showing by PI Industries as well.
09:14 Force Motors had a really strong showing.
09:17 Revenue of 53%.
09:19 EBITDA margins at 12.14 versus 4.61.
09:21 And profit at 68.5 versus net loss of 16.5 crores.
09:26 So good showing by Force Motors.
09:29 FDC, revenues up 8.4% but EBITDA margins expand and net profit therefore expands 55% to 109.4
09:39 versus 71.66.
09:41 Then there's Likita Infrastructure.
09:44 Revenues were up 10% at 90 crores.
09:47 EBITDA up 10%.
09:49 Performance almost steady and therefore net profit just about 17% higher.
09:53 So flattish performance by Likita.
09:57 So therefore watch out for that stock too.
10:00 J.P.
10:01 Chemicals, interesting numbers.
10:02 Revenues up 14%.
10:04 EBITDA margins at 25.9 versus 22.01.
10:09 So interesting margin expansion there as a result of which the net profit number looked
10:16 pretty robust there.
10:18 Expansion out there on the net profit side was very, very interesting.
10:22 So do watch out for that.
10:26 Then there is Abbott India wherein revenues were up 13% at 14.79.
10:33 The Bloomberg estimate was 14.29.
10:35 EBITDA margins at 24 versus 20%.
10:37 The estimate was 22.8%.
10:40 And net profit up 41% at 290 crores versus 205 crores.
10:44 The estimates were 249 crores.
10:46 So related to the previous quarter, I think it did really well for itself.
10:50 So good numbers for that one.
10:55 Schneider Electric, again, a good set of numbers.
10:58 Revenues up 33%.
10:59 EBITDA margins 9.99 versus 7.79.
11:02 Net profit up 31% at 35 versus 26.
11:05 So good showing there.
11:07 Then the slightly tricky ones, BLS and IOL wherein the revenues were down but the margins
11:14 expanded as a result of which the net profit loss in BLS was not that bad.
11:18 And IOL actually showed an expansion in profit despite revenues being flattish to marginally
11:22 lower.
11:23 1.3% lower revenue.
11:24 But EBITDA margin for IOL chemicals was 12.88% versus 9.87%.
11:32 And net profit was 32.3% higher at 45 crores versus 34.67 crores.
11:40 So do watch out for that as well.
11:43 Well, Vmart, you know, sales, the numbers will come up on your screen for Vmart.
11:51 Revenue was up about 15.4% at 678 versus 587 crores.
11:56 EBITDA margin at 7.73% versus 15.08%.
12:06 And there was a loss of 21.94 crores versus a 20 crore profit.
12:12 There was a loss QOQ as well, by the way, in Vmart.
12:15 But IOL there's a loss which continued, which happened, which is a profit of 20 crores as
12:20 a result of which not the best of numbers for Vmart.
12:23 We see a bit of a reaction.
12:25 Timex, not the best of numbers.
12:27 Revenues up 12% but margins came off completely.
12:29 Net profit down 64% could correct as well as Sula vineyards, which the wine sales were
12:35 okay.
12:36 But and revenues therefore, 116 crores versus estimates of 100 crores.
12:41 Margins came up a little bit relative to estimates.
12:43 Net profit at 11 crores versus estimate of 12.5 crores.
12:47 Just about okay.
12:48 And then two stocks which did really well yesterday.
12:52 What our brokerage is saying about them.
12:54 I think that is important.
12:55 So thought would bring them to you.
12:56 Morgan Stanley and Bharat Forge, overweight rating, target price of 1028.
13:00 They said the core business is well placed and companies positioned to capture growth
13:04 in new segments.
13:05 The expansion of non-auto will make the business less cyclical and open up new growth segments.
13:11 The stock trades at 30 times F by 25 earnings versus 26 times for the auto component peers.
13:17 And the high visibility on new business wins supports high multiples versus the auto component
13:21 peers.
13:22 That's Morgan Stanley and Bharat Forge.
13:24 And Jefferies on trend, which was up 5% yesterday.
13:27 They were hold on expensive valuation.
13:29 The target price has been raised to 1640 from 1400.
13:33 They say they posted strong revenue growth with doubling of Zudio revenues.
13:36 Finally, Zudio as it is, which is driving growth.
13:39 Cost margins picked up quarter on quarter, though fell about YOY.
13:42 The company 700 stores with hefty additions continuing Zudio in particular, which is now
13:47 almost as good as Westside on profitability metrics.
13:51 And the focused approach and some hard measures helped turn some subsidiaries a bit positive
13:55 for the first time, which also should look that well.
13:58 So now trend is expensive.
14:00 Yes, it is.
14:01 But does it, is it worth getting that kind of valuations?
14:10 People would say yes, most likely yes.
14:13 So that's the set of companies that I think you've got to look at.
14:19 Pharma, Abbott, FTC and J.B.
14:21 Chemicals today, in addition to, of course, what Forge Motors has done.
14:28 Gurkha is just doing the magic out there, extremely strong showing.
14:33 Then Tata Power, of course, very strong set of numbers.
14:36 Some people may argue it's in line, but I thought the numbers were very, very strong.
14:40 IOL took line, but otherwise did okay.
14:45 What did not do well, like I said, aside of, of course, Sulabh Inyas, which was okayish,
14:52 I thought the numbers that I missed was Ratnamani Metal, which was a wobbly number.
15:00 Granules had a very wobbly quarter.
15:03 Valiant Organics had a slightly iffy quarter.
15:06 DMCC Chemicals didn't have the best of quarters.
15:09 So that's to be watched out for.
15:16 That's it on the trade setup viewers.
15:17 We'll, of course, have a bunch of conversations today, but the more important one is the MPC.
15:24 So clearly watch out for that.
15:27 The decisions come out at 10, the press conference at 12, both of which will be live on BQ Prime.
15:32 And then a set of conversations with some key people, including Rajiv Ghanan, Tanvi
15:37 Gupta Jain, as well as Jayesh Mehta to give you the banking, economic and bond market
15:42 perspective.
15:43 And of course, clutch of other result conversations will happen on BQ Prime, as you do try and
15:47 tune in for some of those, whichever is of interest.
15:49 Thanks so much for tuning into the trade setup.
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