Bank Nifty Expiry & HDFC Bank In Focus | The F&O Show | NDTV Profit
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16:33 Welcome back.
16:35 This is the EFNO Show.
16:36 And we now shift focus to all the stocks which
16:38 are seeing a substantial increase and a decrease
16:40 in open interest.
16:41 Let's start with those which are seeing
16:43 an increase in positioning.
16:44 So we will, of course, have a handful of counters.
16:47 HDFC Bank is right at the top of that list
16:49 even as it moves down by 6.5% and 13% added in open interest
16:54 towards shorts.
16:55 SAIL is the other one, declining by about 3.7%, pardon me.
17:00 And that's where we're seeing increase towards shorts.
17:03 Kotak Mahindra Bank is losing out around 2.6%.
17:06 And now that one also moves below the mark of 1,800 rupees
17:10 per share.
17:12 Are market participants casting a shadow
17:15 on a whole host of other banks?
17:18 That's the question, really.
17:20 And we're seeing Longs Unwinding and Nalco, Bajaj Finance,
17:23 Torrent, Pharma, along with Berger Pains,
17:26 all of these counters are under pressure.
17:29 The question is, what do we do with these stocks?
17:32 Ajit, I'll come back to you on this one.
17:35 Stock ideas that you have on your radar at the moment.
17:39 So among the names that you just shared,
17:42 Kotak definitely looks weak to us,
17:44 considering that HDFC and Kotak, they
17:47 are among the underperformers within the private banking
17:49 space.
17:50 And we feel that this breakdown below 1,800 mark now,
17:54 plus it has slipped below the major averages,
17:57 just in line with what we were seeing in HDFC,
18:00 though the quantum is still less.
18:02 We feel that the kind of attempt that we were seeing for recovery
18:06 would subside again and decline below 1,780
18:09 might push the stock further lower towards 1,720, 1,700 levels.
18:13 But there is one stock that one should
18:16 look for shorting opportunities with 1,820 as a stock.
18:20 And other than that, we have two recommendations for the day.
18:23 The first one on the list, we have TCS.
18:25 So IT, the overhang of the results are over.
18:28 And we feel that the kind of buoyancy
18:30 that we are seeing in the IT bag,
18:32 there's a possibility that TCS will continue to do well
18:35 from the current level.
18:36 So one can look for buying opportunity
18:38 in TCS at current levels with 38 to 55 being the stock,
18:42 and 4,010 as a target area.
18:44 At the same time, we are seeing distribution breakdown
18:46 in Ramco Cement.
18:47 It's almost like two months of consolidation breakdown.
18:50 So 940, 935 is what we are eyeing as the immediate target
18:53 in Ramco, which will stop at 992.
18:56 OK.
18:57 Well, incidentally, Ramco is also on the radar of Dhvani.
19:01 Dhvani, I believe there's Ramco and also Nalco.
19:03 Can you tell us-- can you take us through your views here?
19:07 Yes, absolutely.
19:08 Ramco is also one of the counters that I have picked up.
19:11 I'm going short on Ramco from the current level.
19:13 We are already seeing some breakdown coming
19:16 in on this particular counter.
19:18 The weakness over here in this counter would continue till 950.
19:21 And the next target that I have on my radar is 938.
19:25 The stop loss that ideally one can maintain over here
19:27 is of 995.
19:29 The next counter that I have is that apart from the banking,
19:32 we are also seeing some profit taking coming in
19:35 in the metal sector as well.
19:36 We are seeing some profit cut coming over here
19:39 in sale in Jundal Steel and Nalco.
19:42 So Nalco is the one which I've picked up from this entire pack.
19:46 I see Nalco showing weakness till 130 to 128 as a target.
19:51 And the stop loss--
19:52 --to ideally maintain over here is of 138.
19:57 OK.
19:58 All right.
19:59 So those are two more trading ideas.
20:01 Well, let's pull up once again the Bank Nifty specifically
20:05 and the constituents of the Bank Nifty
20:07 and see where there is some sort of short buildup,
20:10 perhaps a long-- or pardon me, some longs unwinding there
20:15 when it comes to the Bank Nifty constituents.
20:17 And there you have it.
20:19 That's the chart I'm looking for.
20:21 So take a look at ICICI Bank.
20:24 So the short's building up there.
20:26 Axis Bank is looking at shorts to the tune of nearly 3.8%.
20:31 SPI is looking at a decline of around 1.5%
20:34 as we see about a 1.5% increase in open interest.
20:37 Kotak Mahindra Bank is something that we've addressed.
20:40 We have IndusInd Bank.
20:42 And, well, I believe out of the 12 constituents,
20:46 we are looking at shorts in about 9 to 10 companies out there.
20:54 So the banking index is certainly looking a lot weaker at the moment
20:58 as we speak.
20:59 And even the relatively smaller ones, something like an IDFC First
21:03 or a federal bank or an AU Small Finance Bank
21:06 is all looking at a significant buildup as far as open interest is concerned.
21:12 So there certainly is a lot of weakness off late.
21:14 But on the flip side, what we are also looking at
21:18 is gains in the oil and gas space.
21:21 So I do want to address-- and possibly not today--
21:24 but I do want to address what's happening with something like a BPCL,
21:28 for that matter, because that's where--
21:31 it's marginally in the green for now.
21:33 But the question really is that are there more legs to rally
21:36 because we've had a little bit of a consensus of positivity
21:40 as far as BPCL is concerned.
21:42 Let's take this up with our experts.
21:44 Dhvani, if you are tracking BPCL, your view here,
21:48 and would you perhaps balance your short calls with a long on BPCL?
21:55 Agam, BPCL over here, I'm definitely seeing that--
21:58 we are seeing that the 460 mark was taken out in yesterday's session,
22:02 and we are seeing some up moves coming in on this particular counter.
22:05 But I do see a close by resistance coming in at 480 to 482 mark.
22:10 Rather than BPCL, I would like to go for Gale in this particular entire pack.
22:16 Gale is definitely showing strength over here.
22:19 And we've got a fresh breakout coming in in this particular counter.
22:22 So Gale is the one which I would like to go into the buy recommendation side.
22:26 And from current levels, I'm expecting the next upward target over here of 172
22:31 coming in on this counter with a stop loss on the lower side at 164.
22:36 Okay, there you have it. That's your view on a handful of oil and gas names.
22:40 But we are out of time, so I'm going to take a moment to thank both our experts,
22:45 Dhvani and Ajit, for joining us and taking us through their views on the markets
22:48 and also giving us a handful of trading ideas.
22:51 And we wrap, but before that, ICICI, Lombard's third quarter profit
22:55 jumped 22% and fell short of analysts' expectations.
23:00 We spoke to the management on the company's motor segment and their loss ratio.
23:06 Take a look.
23:08 If you look at new vehicle sales across categories, whether it is private car,
23:14 whether it is two-wheeler or for the matter of fact, commercial vehicles,
23:19 I think we are seeing a lot of positive momentum getting played out.
23:23 A lot of it is also to do with in the context of the festive demand as well as rural pickups.
23:29 So across the three categories, insofar as the market momentum is concerned,
23:33 that's looking very, very positive.
23:35 That's why as a part of our earnings call last evening,
23:39 we had also kind of put out what has been the new vehicle volume sales
23:42 that one has seen insofar as the market is concerned.
23:45 So in that sense, I think the demand momentum seems to be looking very, very positive.
23:50 Now, let me put it in the context of how the insurance industry has been kind of also
23:55 responding insofar as motor as a segment is concerned.
23:59 Directionally, if you see, while the combined ratio still stands elevated,
24:03 but definitely it is kind of 4% to 6% better than what combined ratios that the market
24:08 has been operating, let's say, one year back.
24:10 So again, even from a market perspective, I think there seems to be a sign of semblance
24:15 that is kind of possibly getting played out, and hence,
24:18 which is where the directional change for improvement in combined ratios is also
24:22 getting exhibited insofar as the insurance market is concerned.
24:26 And within that, now when I talk in the context of ICS and Lombard,
24:30 our approach to writing this, whether it is for motor or whether it is for any other
24:35 category of businesses, we have always chosen to drive profitable growth as a theme.
24:40 And what we effectively try doing as a part of this theme is whenever we see
24:47 opportunities of growth, we obviously kind of significantly kind of deliver
24:51 better growth momentum.
24:53 But at the same time, as I said, maybe for a couple of years,
24:56 when the market has been at elevated levels of competitive intensity,
25:00 we have always been a bit guarded/cautious.
25:03 So it is in that context is where maybe for the last couple of years,
25:06 we have been growing a shade lower than insofar as the market growth is concerned,
25:11 particularly in the context of motor.
25:13 But what we are very happy in the context of ICS and Lombard is if you look at
25:16 the relative gap between what was existing as industry growth numbers in motor
25:22 and ICS and Lombard growth numbers in motor, that has been significantly coming off
25:27 over the last, I would say, pretty much on a sequential basis quarter on quarter.
25:32 For the half year, for example, the gap between industry numbers
25:35 and Lombard numbers were about 8%.
25:37 But for quarter three, that gap is down to less than 4%.
25:41 And for the month of December, we actually have kind of outgrown the market.
25:44 So, hence, I think we are very, very positive and optimistic in the way how
25:49 one is seeing the growth momentum play out in motor as a category.
25:53 And for ICS and Lombard, I think we are rightly positioned
25:55 to capitalize an opportunity for growth.
25:57 In the context of loss ratios, I think on motor, I think, again,
26:02 we are quite comfortable at the loss ratio ranges that you are seeing for us
26:05 on nine months, which for the segment has been at an aggregate at about 65%.
26:10 I think the range that we have generally spoken to the market is comfortable
26:14 in the range of 65% to 67%.
26:17 So, at this point of time, I think whatever we are seeing on the loss ratio trends,
26:20 from an ICS and Lombard standpoint, I think we are quite comfortable
26:23 at the range at which we are operating at.
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45:30 >> Welcome back. You're watching the Small and Mid-Cap Show.
45:34 Let's pull up a Nelco on the screens and see what the company is doing in trade.
45:38 Post their numbers as well. The stock is down nearly
45:42 1, 1.5% as we speak. Clearly the margins have seen a dip
45:46 and that's mainly on the back of a higher employee expense as well as the change
45:50 in inventory that we've seen. Revenues up around 12%. If you talk about
45:54 the profitability as well, that has gone up around 23%.
45:58 But let's welcome in the management and understand the breakup
46:02 so far. Mr. PJ Nath, MD and CEO of Nelco joins in.
46:06 Mr. Nath, good morning and welcome to the show. And my first question coming
46:10 to you is have the numbers met your internal expectations?
46:14 >> Yeah, the numbers are good.
46:18 We are happy with what we are doing. Of course, we want to do more than that.
46:22 But we are definitely satisfied with what has happened in the last quarter.
46:26 Both in terms of the revenue growth as well as
46:30 the profit growth that we've seen sequentially as well
46:34 as over the last year. So it has been very
46:38 healthy for us. Our
46:42 overall debt equity ratio has gone down to 0.2.
46:46 Our debt has gone down to 23 crores, which is the lowest
46:50 for us so far. So overall, the company has become fairly
46:54 healthy and we expect to therefore see much better
46:58 growth going forward. >> Right. So in terms
47:02 of the debt that you mentioned as well, the lowest in history
47:06 that you've seen at 23 odd crores, is that going to be a comfortable number
47:10 or you think how soon will you become debt free?
47:14 >> We believe that this 23 crores is not the
47:18 last. We'll go down below that as well. I would not like to comment
47:22 at the moment in terms of when we become debt free, but our debt
47:26 will certainly go down as we go forward in the
47:30 current quarter. >> Right. But my question was, is the
47:34 plan to become debt free? >> Well,
47:38 there are a lot of new investments we'll be making because of new
47:42 satellite capacities coming. There will be new teleports will be opening up.
47:46 And therefore, we will also be investing in that. And therefore,
47:50 the main objective is not to necessarily become debt free,
47:54 but it is certainly to become more efficient so that
47:58 we reduce our debt and yet manage our growth that we'll be
48:02 having going forward. >> Right. Overall, if you
48:06 look at the business, what are you seeing in terms of the
48:10 business as well? Where are you seeing the opportunities emerge
48:14 now for the company? >> We are present in
48:18 all the three segments, which is enterprise, which is
48:22 maritime, as well as aircraft communication. We see growth
48:26 in all the three segments. Now, of course, there are
48:30 timing issues for the aircraft communication. The time could be slightly later
48:34 than the time to get the aircraft equipped for
48:38 getting connected for satellite communication. Maritime, we've already
48:42 seen a fair amount of growth. Enterprise has been
48:46 a big story. There are multiple segments within that. Some of the segments
48:50 have not grown the way we expected it to grow so far. But
48:54 going forward, we see them to be growing. So overall, therefore, we see
48:58 all enterprise, maritime, as well as aircraft communication to be
49:02 growing over the years. But immediately in this particular quarter, we will
49:06 see both enterprise and maritime communication growing.
49:10 >> Right. So if you're seeing enterprise and maritime communication are going to be the
49:14 growth drivers in the coming quarters as well, what's the
49:18 revenue contribution you're expecting from these two segments? Do you expect that mix to
49:22 change? >> Yeah. Currently, our in-flight and maritime
49:26 communication is about 27% of the total revenue. It'll
49:30 be around that because while the enterprise is growing, maritime will also be growing. So
49:34 overall, our in-flight and maritime communication will be in the range of 26%
49:38 to 27% the total revenue going forward in this particular
49:42 quarter. >> Right. And what's the current order book overall?
49:46 >> We don't specifically talk of
49:50 any order book because of our business is more in terms of annuity contracts
49:54 as well as new projects that we have. We focus on getting more
49:58 annuity contracts so that our base is strong
50:02 and growing. So suffice to say that we've got enough
50:06 contracts with us to give us the kind of growth that we've seen this quarter
50:10 going forward as well. >> Okay. And in terms
50:14 of the Indian space sector, which has been identified as
50:18 a growth driver as well by the government, what is the role
50:22 that a company like yours will have? And how are you looking
50:26 at growing the space as well? >> Yeah.
50:30 We are a satellite communication service provider. We are the ones who
50:34 offer the end-to-end service to our customers. So far, we are
50:38 focusing more into the enterprise customers, the maritime communication, and
50:42 in-flight communication. We see all the three sectors to be growing, and we will
50:46 be playing a very important role as an industry in terms of
50:50 offering the end-customer service, service to the end customers.
50:54 So that's where we'll be. We will
50:58 be seeing a lot of change in terms of the kind of
51:02 satellite being launched, and therefore the type of satellite capacity being
51:06 available, and the price at which we can -- we'll get them, which will
51:10 obviously come down, because of which satellite communication service will be more
51:14 affordable for the end customers, and therefore
51:18 that will grow further. So we will be playing a very important role
51:22 in terms of ultimately touching the end customer
51:26 in terms of the satellite communication services. So that's where we'll be.
51:30 >> Okay. And overall, Mr. Nath, if you have to look
51:34 at even the Indian aviation sector, right, you're talking
51:38 about in-flight connectivity services.
51:42 Any talks that you already have ongoing, and how
51:46 long do you think will it take to actually scale up that part of the business?
51:50 >> We are in talks. First, let me
51:54 give the perspective that even in the aircraft communication service, Aero
51:58 IFC as we call it, we've been growing. It's just that our growth so far has been
52:02 more with respect to international aircrafts flying over India. We are
52:06 in touch with the domestic airlines operators as well
52:10 for offering the service in the domestic routes.
52:14 We believe that it will take about a year, year and a half for it to
52:18 get started. There are different discussions happening in terms of the business
52:22 model, the business case, what kind of services could be offered,
52:26 et cetera, et cetera. So I think that's where it is. So we believe that
52:30 that will happen in about a year to year and a half's time.
52:34 >> Okay. You know, the recent acquisition or investment that you've made
52:38 as well with regards to where business networks is concerned, I hope I'm
52:42 pronouncing it correctly, what's the status of that and how
52:46 is that going to contribute to overall Nelco's business?
52:50 >> Okay. Let me give a perspective. We are a satellite
52:54 communication service provider, which means we offer end-to-end
52:58 connectivity service to our customers using a satellite
53:02 spectrum. Now, we have also felt a need in the market that
53:06 apart from satellite communication, the customers would also want to have
53:10 another media for different reasons, for some time for backup, some time for redundancy,
53:14 et cetera. And for to do that, we require what we call as a software
53:18 defined modem or SD-WAN. So we
53:22 have the option of buying SD-WAN from various vendors which are
53:26 available globally and offer it as an end-to-end service to our
53:30 customer or have a product of our own. But because we are not a
53:34 OEM ourselves, we are a service provider, and therefore we invested in
53:38 this company, you pronounce it right, it's called Pisces. That's a very
53:42 innovative company. It is a startup but
53:46 has got a -- developed a very good solution,
53:50 very good product, which caters to the needs of our customer
53:54 and therefore we are able to offer a solution to our customer which is
53:58 combination of satellite communication as well as either a 4G or a
54:02 broadband. So that is what we have done. And
54:06 we see -- and we've invested 30% in that company. And
54:10 this has also given a lot of confidence to our customers that
54:14 we are serious about this business. And we
54:18 see good prospect because of this overall investment that we've done
54:22 in this SD-WAN company. Right. Mr. Nath,
54:26 overall, what's the kind of growth that you're looking at in
54:30 terms of FI24 and 25 then with all the levers
54:34 in play? And what's the key milestone that the company wants to achieve?
54:38 I think in terms of milestones, one
54:42 of our major focus of the company has been to become profitable
54:46 or other increasing our profits,
54:50 becoming healthier by balance sheet, reducing our borrowings, etc.,
54:54 which we are achieving. In terms of revenue also,
54:58 while on a YTD basis, we've grown only 3%
55:02 from a 9-month perspective. But the
55:06 important part is that our service revenue within that has grown by 13%.
55:10 So therefore, our service revenue part has been growing. And that is the trend.
55:14 So while I'll not give a specific number for
55:18 what will be at the end of the year, but there will certainly be a double digit growth
55:22 over last year in terms of revenue. And
55:26 profits will be at a similar kind of growth that you've seen
55:30 currently, which is more than 20% either
55:34 sequentially or annually.
55:38 Right. So I think that's a good guidance that one should be working
55:42 with as well. Thank you, Mr. Nath, so much for joining us on the show and speaking
55:46 to us at NDTV Profits. That's the management of
55:50 Nelco. The stock has been slightly under pressure as we speak in today's day of trade.
55:54 But completely out of time. With that, it's a wrap on this edition of the
55:58 Small and Mid-Cap show. Lots more lined up on the other side. Please stay tuned to NDTV Profit.
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