Market View 28th July 2023

View on market: Volatility Prevails, Market is searching for better value

Asian stocks fell after a report saying the Bank of Japan will discuss tweaking policy on Friday rumbled through financial markets. The Topix and Nikkei 225 equity indexes both slid more than 1%, leading declines in Asia. Futures for Hong Kong stocks also dropped. U.S. equities had gained earlier on Thursday as domestic gross domestic product picked up steam in the second quarter, however the equites swung to losses and the markets ended lower. Meanwhile, Brent crude was above $84 a barrel and West Texas Intermediate was below the $80-mark. The yield on the 10-year U.S. bond was trading at 4.01% and Bitcoin was below 30,000-level. At 5:33 a.m., the GIFT Nifty, an early indicator of the Nifty 50 Index’s performance in India was up 9 points or 0.05% at 19,660.

Economic Calendar:

• USD : Core PCE Price Index (MoM) (Jun) on 28th July, 2023
• USD : JOLTs Job Openings (Jun) on 01st Aug, 2023
• INR : FX Reserves, USD on 28th July, 2023
• INR : Infrastructure Output (YoY) (Jun) on 28th July, 2023

Brokerage Radar:

MS ON ACC: UW, TP Rs 1650; EBITDA much higher than expected, led by higher vol (implied utilization rate at >100%), & lower opex/t, while realizations were weaker

On a per-ton basis, EBITDA (calculated) was Rs824/t, vs forecast of Rs691/t

JPM ON SONA BLW: UW. TP Rs 450; New program wins +ve but growth expectations already in price; Rev grew 24% YoY but came in 9% softer than JPMe while EBITDA at Rs2bn (+43% YoY) was 6% below expectations; Vals (FY25EV/reve of 7.4x & 43x P/E) leave little room for margin of safety

JEFFERIES ON TECH MAHINDRA: U-P, TP cut to Rs 900; Revenues, down 4% QoQ, 440bps fall in EBIT margins & 39% QoQ decline in deal bookings disappointed.

Sharp 9% QoQ decline in CME vertical & single digit margins were key -ve surprises; Cut FY24-26 earnings est by 4-20%

International Markets

U.S & Europe:

Asian markets:

ADR Watch:

Commodities & Currency

FIIs & DIIs:

News Update:

Adani Enterprises: Adani New Industries has raised a trade finance facility of $394 million, or Rs 3,231 crore, from Barclays PLC and Deutsche Bank AG. This is to secure working capital for its integrated solar module manufacturing facility.

Lupin: The drug maker has addressed the concerns raised in the warning letter by the U.S. FDA for its Goa and Pithampur facilities through its corrective actions.

Indian Hotels: The company or one of its subsidiaries will purchase 100% equity in Pamodzi Hotels PLC, a listed company in Zambia, from Tata International Singapore PTE Ltd. It will buy 90% of Tata’s stake while acquiring the remaining 10% through the delisting process in Zambia.

JK Lakshmi Cement: The company has acquired 100% of the equity shareholding of Hidrive Developers and Industries for Rs 16.33 crore in cash. It has also agreed to raise up to Rs 2,500 crore through debt to partly finance its ongoing projects and for various growth opportunities.

Rail Vikas Nigam: The government has agreed to exercise the green shoe option in Rail Vikas Nigam’s offer for sale. It will divest an additional 1.96% stake in Rail Vikas Nigam under its green shoe option. The non-retail portion had 273% demand on Day 1.

Ipca Laboratories: The Competition Commission of India has approved Ipca Laboratories proposal to acquire a controlling stake in Unichem Laboratories. Ipca will acquire one-third of Unichem’s overall shareholding for a cash consideration of Rs 1,034.06 crore. It will make the necessary open offer to public shareholders for a 26% stake in Unichem as per SEBI regulations.

Welspun Enterprises: The company has signed a share purchase agreement with Authum Investment & Infrastructure, Sansaar Housing Finance, and Michigan Engineers to acquire a 50.10% stake in Michigan Engineers for Rs 137.07 crore in cash.

NACL: The company has been approved to foray into specialty materials and intermediates, specialty nutrition, and bioproducts. It has considered an investment of Rs 1,000 crore over the next three years for the business, including expansion of its existing manufacturing and R&D facilities for captive as well as custom development and contract manufacturing opportunities.

Source: Moneycontrol, Bloomberg Quint, Investing 

Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014

Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.

For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)

Disclosure Appendix

Analyst Certification (For Reports)

Kiran Tahlani, Elite Wealth Limited, kirantahlani@elitestock.com

The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.

As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:

(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and

(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.

For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.

Research Excerpts

This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.

Company-Specific Disclosures

Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or e-mailing research@elitestock.com with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail research@elitestock.com.

Options related research:

If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in

Other Disclosures

All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.

Ownership and material conflicts of interest Disclosure

Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.

Country Specific Disclosures

India – For private circulation only, not for sale.

Legal Entities Disclosures

Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth  Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone: 011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in

EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:

1. Reports
2. a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;

(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;

(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;

2. Compensation

(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;

(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;

(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;

(d) EWL  or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;

(e) EWL or its associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.

3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL

Provided that research analyst or research entity shall not be required to make a disclosure as per sub-clauses (c), (d) and (e) of clause (ii) or sub-clauses (a) and (b) of clause (iii) to the extent such disclosure would reveal material non-public information regarding specific potential future investment banking or merchant banking or brokerage services transactions of the subject company.
(4) EWL or its proprietor has never served as an officer, director or employee of the subject company;
(5) EWL has never been engaged in market making activity for the subject company;
(6) EWL shall provide all other disclosures in research report and public appearance as specified by the Board under any other regulations.