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Trade Setup | Markets look skittish, unlikely to find strong rebound levels today. #BQLive
Transcript
00:00 Good morning and thanks so much for tuning into the Trade Setup. I'm Neeraj Shah. It's a
00:03 it's an interesting morning to take stock off because for most part of the weekend I was under
00:12 the assumption that we will not have a really strong day. Let's see if the markets prove me
00:18 wrong. The global news go first. Oil dropped after Hamas released two US hostages and Israel
00:24 delayed the Gaza attacks. US stock futures have edged higher ahead of big tech earnings.
00:29 South Korea, US and Japan are going to hold joint aerial drills as per Yonhap. And US has released
00:37 declassified images of "unsafe" encounters with Chinese fighter jets. I tell you, we focused on
00:44 geopolitics happening in the Middle East. There is geopolitical tension building elsewhere as well.
00:49 US stocks didn't have a great day, by the way, on Friday's session. Yet again, it was a sea of red
00:55 with 1.53% for the Nasdaq, S&P down 1.26, Dow down about a percent. The only respite, if you will,
01:03 that after hitting 5%, the 10-year yield cooled off a little bit, 4.96 currently. By the way,
01:09 I must say even gold has come off a little bit. So the safe haven move of the US Treasury,
01:17 gold, etc. has all come off. So oil is down, gold is marginally lower, US 10-year yields are off
01:23 from the 5% mark. Does all of that lead to some bit of a respite? Well, you know, surprisingly to
01:29 me, the GIFT Nifty apparently shows a positive sign this morning, 19484. Let's see if this lasts,
01:37 because to my mind, the trade setup, the market looks skittish and are very unlikely to find a
01:42 very strong rebound level today. But as I said, that I might be proven completely wrong because
01:48 the GIFT Nifty is already showing a sign of a marginal uptick. Let's see if this builds up.
01:53 I'll be happy for the bulls if it builds up. Somehow I think the scenario doesn't look or
01:58 point towards any major optimism, if you will, as yet. In fact, the banking commentary is talking
02:04 about even further lower NIMS and is likely to weigh on the banking stocks. Keep in mind,
02:09 in Friday's session, viewers, the private banking index was the only index which had held out.
02:15 And I know that private banks have been guiding towards lower NIMS for a while now. But I still
02:22 think that the uniform commentary from all banks in terms of what's happened in the quarter on the
02:28 NIMS and what could happen in the quarters ahead of the NIMS might just be something that might
02:33 not sit well. The only respite I must say is that, and for a select band of people already,
02:41 not just yesterday, but for the last few days, is that this is now getting factored in the pricing
02:48 of some of the private banks and the valuations that they are trading at. So let's wait and watch
02:52 if indeed the market agrees with that. For now, I think that there is maybe some bit of
03:00 commentary overhang on some of the private banks. Let's see if the valuations come to the rescue.
03:08 From most conversations that I have, power as well as capital marketplace,
03:13 continue to be the pockets of hiding. You would argue that some real estate and
03:18 ancillaries also fit that bill, but largely it is these. It's not a very heavy results day and
03:23 therefore, in terms of results to come out today, and therefore I'll quickly move to the stocks that
03:29 should be focused on. Now, I haven't quite given the graphics for credit access gramming, but that
03:36 certainly was one name to watch out for. So do keep in mind that stock. Then for the big boys,
03:42 I'm starting off with the brokerage recommendations first, and then I'll come to the smaller names,
03:46 or relatively smaller names, or relatively less traded names as opposed to the larger ones. So
03:51 a 197 or ATM numbers and the phone call post that Bernstein has a outperformed rating with
03:58 the target price of 1100. They say that continued strong growth, stable margins and progress towards
04:03 back level profitability is now looking certain. The payment growth remains healthy. The value of
04:08 net payment revenues are growing at 60% by a while. The overall EBITDA margin improved led by higher
04:14 share of lending revenues and QOQ stabilization of non-direct expenses. Clearly, is some favor
04:20 that Bernstein has with PayTM and kind of sums up what happened in the quarter. Strong growth,
04:25 stable margins, payment growth looking healthy, value of net payment revenues growing by 60% by
04:32 a while. That was some in substance of I think PayTM's quarter. Let's see. I mean, it's trading
04:37 really well, northwards of 950 if I'm not wrong. PayTM, let's see how it trades moving ahead.
04:44 Then the banking names. ICCA Bank, Jefferies is a buy with a target price of 1250. Look at the
04:51 contours of the report. It's a profit ahead of estimates with a tad better NII and lower credit
04:55 cost. And management is confident about the quality of retail unsecured loans, which is a
04:59 respite. But the NIMS compressed by 25 basis points as expected and should go down 20 pips
05:04 over the next two quarters. So they say that they see lower NIMS and higher credit costs,
05:09 but the bank would still deliver 18% ROE in FY25, which leads them to having this bullish.
05:14 Then Morgan Stanley on Kotec Bank, equal weight rating with a target price of 2250. They say it
05:21 continues to deliver on asset quality, growth and profitability. The deposit growth remains strong,
05:27 which is 4% QOQ, 23% YOY versus a 22% YOY last quarter. The potential for operating leverage
05:34 remains strong, according to Morgan Stanley. The capital market trends have picked up and expected
05:39 to sustain strong earnings as a result of all of that. So Morgan Stanley is an outlier, if you will,
05:45 because most of the other nodes, I must say, have spoken about some bit of skittishness
05:50 around Kotec Bank, despite the new MDCO announcement as well. It's a bit of a generational
05:56 shift, if you will, in Kotec. It will be interesting to see how it shapes up.
06:01 Now, the point I was making about lower NIMS, look at what Kotec has said in the conference. The drop
06:06 in NIMS of 14 to 15 point pips is due to CRR impact and liquidity buffer. NIMS will reduce
06:12 going forward. The cost of deposits is up by 20 basis points with yield or advances remaining
06:17 stable. Alert is that ICICI Bank also expects margins for NIMS to moderate further from Q2
06:24 levels. Viewers, keep all of this in mind. The point being, if you are a trader and a very
06:30 short term trader, then I don't quite know whether banks give you a bang for the buck if you buy them
06:35 and that is the overhang. Sure, if you're a long term investor, some of the valuations look
06:41 extremely attractive for the private banks in particular. So keep that in mind. RBL Bank came
06:48 out with very good numbers. I thought I should bring the trading more RBL Bank as well. So MK
06:53 Alternative has put out a note where they say the stock will maintain a positive zone above the 238
06:58 level and resistance at 250 to 252 level. There are heavy longs added since September end. The
07:04 OI for RBL Bank is at 176 million dollars above the one year average of 97 plus 2.3 standard deviation.
07:13 Massive longs already existing in RBL. If indeed the stock sees further up move ahead,
07:19 you've got to be prepared for some bit of these longs, even booking profits. So bear that in mind.
07:24 So that's the view on RBL. Then the results for JSW Energy look solid. Revenues up 36 percent,
07:31 EBITDA 111 percent higher, margins at 57 versus 37 and back up 87 percent. Reported net profit at
07:39 87 percent higher at 856 crores versus 456 crores. The company's been tiling to strong numbers and
07:46 you couldn't find too many faults there. Some other strong numbers include Lloyds Engineering,
07:50 wherein margins improved dramatically as a result of which the net profit was up 46 percent. Or
07:56 Tanfax, both of which reported significant revenue growth but margin expansion. In Tanfax case, the
08:02 PAT was up about 33 percent. Kfin revenues were up 15 percent QOQ and the margin improvement again
08:08 was very strong. 38.8 versus 31.92. PAT was up 41 percent at 61 crores versus 43 crores. Watch out
08:16 for this one too. Schilcher Tech had some good numbers. Revenue sales up 78 percent, revenues
08:22 up 78 percent, EBITDA margin at 28 percent versus 17 percent. PAT up 167 percent at 24 crores versus
08:29 9 crores. Really strong show. Sterling Wills and Solar, where Sterling Wills of Renewable Energy,
08:35 excuse me, new name, very strong quarter. Sales up 143 percent, EBITDA at 1 crores versus EBITDA
08:41 loss. Net loss narrows from 297 crores to 57 crores. They're showing a trend, viewers, if you
08:48 look at our website, BSE Screener, you just see the trend changing for Sterling Wills and Renewable
08:55 Energy. It's a stock that was up about 5 percent, I think, on Thursday as well. Watch out for this
09:00 one. Could well be the standout performer. L&D Finance Holdings, again, not a bad quarter,
09:05 I thought. Total income up 7 percent. NIMS at 10.84 versus 8.43. PAT at 46 percent, higher at
09:12 595 crores. Strong showing, where are you at? Sasken. I'm not completely sure whether the PAT
09:19 number downtick, but everything else looked solid. QOQ, revenues up 4 percent, EBITDA up 70
09:25 percent, margins improved so strongly. I would reckon this stock would do well today despite
09:29 the PAT downtick. Amber Enterprises, the PAT downtick is because of the uptick in interest
09:34 costs and higher depreciation. So revenues up 23 percent, looks OK, but lower than estimates.
09:39 Margins at 6.42 versus 4.88. I must say in that business, expanding margins is difficult. Amber
09:45 has managed to do that, so that is kudos to them. But the net loss is because of, as I said,
09:50 the higher interest costs. TASIS Networks left a bit to be desired despite the strong uptick in
09:55 revenues, because EBITDA down 39 percent, margins 3.27 versus 9.79, and a net loss of 12.64 crores
10:03 versus a loss of 3 crores. Clearly left a bit to be desired. Sharda Crop Camp, sales down 20 percent,
10:10 EBITDA down 67 percent, EBITDA margin at 4 percent, loss at 28 crores. Howler of a quarter
10:17 should react to these numbers, very likely will go down. So watch out for both of these,
10:22 but TASIS has the advantage of higher revenues, Sharda doesn't have that either. Adani Green
10:29 Solutions received, Adani Energy Solutions received smart meter LO is worth 17,000 crores.
10:34 So do watch out for that one as well. Now there is a query about whether should we buy big banks
10:40 like ICICI, HDFC Bank with a one-year time frame. Vasu, I can't give stock calls to be honest,
10:45 but most notes and sales notes that I've read speak about how maybe there's a quarter or two
10:51 of pain, but from a valuation perspective, these banks look very attractive. I'm going to be doing
10:56 a short piece today on what's happening in BFSI and the argument between private versus PSUs as
11:01 well. Maybe that will help you give an answer, get an answer. But yes, most notes that I read speak
11:08 about how from a valuation perspective, it's a great time to be logging in to some of these
11:12 private sector banks. They may not be the blowout winners, but valuation is in your favor and that
11:19 is what you always need when you want to make an investment bet. Now whether it's one year,
11:24 one and a half years, two years, I'm no one to say, but most sales notes, most brokerage
11:28 monthly read from a one-year perspective, it's not a bad call. Interesting day in terms of results
11:34 and conversations on BQ Prime today. Of course, Gautam Trivedi, co-founder and managing partner
11:40 of Nipian Capital, very smart cookie, joins in at 9.50am to talk about his thoughts and some
11:46 high-frequency indicators. So that's the talking point conversation today. Shekhar Patel, MD of
11:50 Ganesh Housing, joins in to talk about their quarter. Remember, they have a lot of different
11:57 sets of businesses and triggers which give them numbers. So do watch out for that conversation
12:01 as well. Then there is Dr. Satyanarayan Chawla of Loris Labs at 12pm today after not so great
12:08 quarter. Kotak has downgraded or kept the stock lower with the target price of 270. So watch out
12:14 for this conversation at 12.20, not 12.20, maybe 12.30. You will hear Ajit Venkatraman, MD of
12:20 Pinolex Industries at 1pm. IDBI Bank joins in to talk about their quarter. So do try and tune in
12:26 for that as well. And of course, a clutch of market conversations during the day, including
12:30 Ask BQ and the FNO Show at 11.30am. Ask BQ, of course, and the FNO Show at 10.30am with Osho
12:40 Krishnan, my colleague. Thanks so much for tuning in to the Trade Sera viewers. Have a great day and
12:45 to everybody who I might not meet again for the rest of the day. Wishing you a very happy Dashera.
12:59 Transcribed by https://otter.ai
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