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00:00 Neerav Asher with us this morning, the Head Equity Research Analyst at Latin Manharlal
00:06 Securities. Neerav, very good morning to you. We're also going to be speaking with Aditya Arora,
00:10 Founder and Multi-Asset Research Analyst at Adly Tick.in. Neerav, let's really begin with
00:17 the FMCG pack and there was a mention of that from our FNO expert as well. The question is that,
00:24 can the momentum continue? There is some positive sort of data coming in from Nielsen for the last
00:30 month and what the companies are talking about is an uptick at the end of Q4, positive commentary
00:36 coming in. Do you think there's enough there really to justify the kind of optimism we've seen?
00:42 Yeah, good morning and thank you for having me on your show. Yes, in the case of FMCG companies,
00:50 what has been happening is that the sector has been struggling. After COVID, we've seen a lot
00:57 of issues, inventory related issues, demand related issues and recently off late of course,
01:03 they've been struggling with a subdued rural demand and volume growth has been quite subdued
01:10 and what has been happening is that the sector as a whole has been saying that volume growth
01:18 has been evasive and I think the realization growth has also been kind of exhausted.
01:24 So I think it was a tough situation for the FMCG sector but hopefully now,
01:31 last, if one were to see the results and the commentary which has been coming in from
01:37 companies like Darbar, Merico, Britannia etc. then I think most of these companies seem to be
01:44 confident that the worst seems to be over, their raw material prices have stabilized and we are
01:52 seeing the rural demand making a comeback. So green shoots of recovery are definitely visible
01:58 as far as the rural economy is concerned. So I think whatever happens, of course,
02:05 will still depend on how things play out post the elections and of course, the outcome of the
02:13 monsoons. Monsoon this year is expected to be quite normal and I think the kind of heat wave
02:20 conditions which we have seen definitely point out that we are going to have a normal monsoon.
02:26 So I think, would be tempted to believe that the worst is over and fortunately, what has happened
02:36 is that most of these FMCG companies, they've used this lean period to ramp up their distribution
02:42 structure in the rural areas etc. So as Darbar rightly pointed out that ahead of the curve
02:48 investments will help these companies to perform better in the times to come. So I think definitely
02:56 we can expect some recovery to happen from Q1. We also have with us Aditya Arora joining in with
03:06 a technical view on the markets. Aditya, what about you? Any long trades on the FMCG pack
03:13 after yesterday's sharp move? A very good morning to you and very good morning to everyone.
03:19 Absolutely, I think the steam is still left in FMCG basket. After all, it's running after a very
03:27 long time. So we have seen underperformance across the board for a very long time. I think
03:33 it has been two years since FMCG is underperforming. Now this is the first day of the rally
03:38 as per the charts and I think there's a long way to go. So I would like to go with Marico.
03:44 The momentum is good, the chart structure is good, derivatives data is good. Marico could
03:51 be bought at 583.50, stop loss must be 559 and target would be 605. Aditya, good morning. Just
04:01 wanted to know your top picks. So my top pick was Marico itself. So I would suggest... Even now,
04:09 after the 89% run up yesterday? Absolutely, as I said this is the starting of the rally
04:16 in FMCG basket. So there's a long way to go. Okay. What about Dr. Reddy's? Aditya, just quickly want
04:24 to get your take on Dr. Reddy's, the numbers out and of course we'll get an assessment from Nirav
04:30 on how he sees the numbers. But on the charts, do you see any potential for a breakout here or is
04:35 it going to have a down day? As per the ADR, it was down about 4% yesterday. So probably 6000 could
04:43 be a good level to accumulate the stock. Although after election stock could behave erratically. So
04:50 one must wait for the stock to stabilize. But going by the level, 6000 is a good level to
04:57 accumulate. And if that happens, so then we can see 1 to 200 points of bounce there. Nirav, your
05:04 take on Dr. Reddy's? Concerns about the amount of spending on R&D, concerns about what happens post
05:13 FY27. How do you look at the numbers? I think spending on R&D is always a positive aspect.
05:21 Of course, some people might read it as being over aggressive. But I think overall,
05:28 if one wants to look at Dr. Reddy's or even other pharma companies, I think their India-centric
05:34 performance has been pretty good. I think it's the overseas performance which has been a lag
05:39 negat. So I think overall still feel that in the short term, there is going to be some bearishness
05:48 as far as the pharma sector is concerned. Lots of other stocks which are in news this morning.
05:53 We mentioned some of them, PB Fintech, there is of course, Naveen Fluorine as well.
05:58 And Nirav, coming on speciality chemicals, but particularly these two stocks,
06:03 did you get a chance to look at the SRF numbers, the stock was down yesterday?
06:08 And did you get a chance to look at the Naveen Fluorine numbers which came out post market hours
06:12 yesterday? Yeah, so definitely with respect to SRF, there was an expectation that the chemicals
06:20 business is likely to perform better. There's going to be an improvement in the chemicals business.
06:25 As we all know, they have three divisions. So one is specialty chemicals, the second is packaging
06:31 for them. And the third is technical textiles. Now, unfortunately, all these divisions have been
06:37 down under the weather. And we have not seen very good performances. We have seen the bottom line
06:43 under pressure, revenues have declined. But there was a hope that specialty chemicals might turn the
06:50 corner in this particular quarter, but this has not happened. We have seen some excess capacities
06:56 in China, and they have put a lot of pressure on prices. There has been a lot of dumping related
07:03 issues. So I think the performance of the chemicals division has disappointed. Secondly,
07:10 of course, in BOPP Phenols and BOPET, also we've seen some amount of over capacity. And I think,
07:20 again, the Chinese dumping has impacted over there. Technical textiles also has been under
07:28 some sort of pressure. So overall, I think still a disappointment written all over as far as the
07:33 results are concerned. I think we'll have to wait for another couple of quarters before we see some
07:38 meaningful recovery in essence. Just one quick follow up. What about
07:42 Naveen Florin very quickly, Neeraj? I think a similar kind of scenario would
07:48 be there in Naveen Florin too, because I think chemical space still, I think,
07:53 we will be still not out of the woods. So I think there will be some pressure on the stock as well.
08:00 Let's extend that conversation into two more stocks. Archean Chemicals, because I believe
08:07 that business seems a lot more exciting than the other chemical specialty chemical names and Arte
08:12 Industries. If you can just give me a view on those two, because those are the standout guys
08:17 in the chemical business. I have not seen Archean, but Arte Industries is definitely looking good. I
08:25 think trying to make a recovery. So I think, of course, one can have a positive view as far as
08:32 Arte Industries is concerned. And we've also seen Deepak Nitride also. So I think that is
08:37 also looking quite good. So one has to be very selective in this space.
08:43 Aditya, very quickly, any sort of bounce back across the banking names? Would you consider an
08:48 intraday long trade for banks today? I wouldn't go long on banking names today, although there
08:57 could be little retracement. But overall, the trend seems weak for this week. So I would avoid
09:05 longs in banking space. But on contrary, IT looks strong. So one could consider IT for going long.
09:13 Nirav, any auto or auto ancillary names today Bharat Forge reports and post what they did the
09:19 last quarter, I think all eyes will be out on the commentary that they have to give about what
09:26 happens in the year ahead. But anything in the auto ancillary space that has stood out in terms
09:31 of results for you? So as far as the numbers are concerned, I think we've had pretty decent numbers
09:40 and I think we've seen very strong performance coming in from the two-dealer pack. So one thing
09:45 should get reflected in the quarterly results also. As we await a few quarterly results
09:53 for the two-dealer pack, I think this space should particularly do quite well.
09:59 And as far as the auto ancillary is concerned, I think it's going to be an exciting year for
10:04 Bharat Forge as the company is going to get, it's going to be a very important year because
10:10 of the focus on various sectors like defence, aerospace, etc. And the kind of commentary which
10:18 they are going to give with respect to all these verticals is going to be very important.
10:22 Nirav, can you hear me? I want to ask you, I heard you say that Bharat Forge could have an
10:26 exciting year. In the quarter gone by, they have come out and said that they believe that the
10:32 revenues and the prospects are looking very bleak. So why do you think that it's going to be exciting
10:39 for them? Because they've done a lot of work as far as this aerospace industry is concerned or
10:47 the defence space is concerned. So I think their order book position should pick up from here.
10:55 And they have said very specifically that this is going to be an important year as the company is
11:00 going to graduate from tonnage to technology. And of course, they've been working quite a lot
11:07 on these areas. So I think things should begin to look up from here.
11:13 Aditya Arora and Nirav Ashar, with us. Aditya, quick last calls after the pre-open rates have
11:19 closed. You're looking at a weaker sort of opening, at least as far as pre-open is concerned.
11:26 Just wanted to get your take on, let's go back to your BPCLs and HPCLs. You had a pretty good
11:34 uptick in the last couple of trading sessions on the hope of bonus share.
11:38 9th May is their meeting. Is that something that you'd bet on right now, Aditya?
11:43 You're on mute.
11:50 Yes, I think petroleum oil and gas space is buzzing since a while and even yesterday's
11:57 downfall we saw performance of oil and gas space. So HPCL is a good candidate right now,
12:02 currently trading at 519 with pre-opening rate. This could be accumulated at current levels
12:09 and stop loss must be 510 and target would be 530 to 540.
12:16 Well, you know, the pre-open rates are looking wobbly for a lot of stocks which are reacting
12:21 to results or news developments. Now, I don't know why IPCA is down, I've missed the news piece
12:27 there, but Sonata Software is down 13% post the numbers. And remember on the Trade Center,
12:32 we spoke about these numbers being way lower than what the Bloomberg estimates were. So clearly one
12:37 stock that is standing out. No, I'm talking about Sonata Software. Yes. So keep that in mind. And
12:42 Voltas is the other one, 7.5% lower post its numbers. Nirav, either of these two stocks,
12:48 were you able to look at the numbers? Yeah, I think Voltas, we saw an uptick on the
12:57 revenue side, but I think on the bottom line there has been a miss. But overall, I think still the
13:04 commentary was quite good as far as the unitary products sale is concerned. So I think we should
13:11 see some recovery in the stock going forward because the outlook seems to be quite strong
13:17 going forward for this piece. But 8% lower today on that earnings miss for Voltas. So keep that
13:26 one in mind. And Sonata Software down 13% as well. By the way, Pharma is the other one. Even Dr.
13:31 Reddy is 2.5%. And IPCA, and Torrent Pharma, and AstraZeneca. Look at HCL Tech, let's just pull up
13:37 HCL Tech very quickly and see if it's held up after the first pre-open burst. No, can't see
13:44 anything much there, but it was doing fairly well. They have a tie up with IBM. They're going to set
13:49 up AI excellence centers in India. Even LTI Mindtree has mentioned this.
13:54 Even LTI Mindtree? LTI Mindtree has mentioned that they are setting up an excellence center with IBM.
13:59 Maybe this is a new sort of a, whatever, everyone wants to get in on the AI bandwagon. But I was
14:04 looking at IT also because IT has had a couple of decent days of a run. And will that really
14:12 continue is the big question. You're seeing a bit of selling pressure here. I want to quickly just
14:16 pull up all of your FMCG packets. So a bit of selling pressure, at least in pre-open session
14:20 in Britannia, Americo. Let's look at HUL and ITC and see what they are doing this morning. And you
14:30 might see a bit of pressure coming in there as well. Aditya, last calls, just about two minutes
14:35 to go to pre-open. Anything that you would look at this morning? Are you still sticking with Americo,
14:39 adding anything to that list? I think Americo definitely looks good. It's not going anywhere.
14:47 No deductions over there in the opening. I think Gale is also a good candidate. Oil and gas space
14:55 could outperform today. So one can add Gale today at 195. Stop loss must be 190 and target would be
15:03 200 to 205. Okay. So that's the view on gas authority of India. Viewers, keep in mind for
15:16 all the pharma names, actually, just before we go to market open, maybe just one quick wall,
15:20 because call on the pharma stocks, because all of them have started off low. Aditya, between
15:24 an IPCA, AstraZeneca, Dr. Reddy's and multiple others which have started off low, which one
15:32 looks weak on the charts for a fresh trade? On the short side, I think AstraZeneca was showing
15:42 good downside that is about 8% in the open. So that is a clear avoid right now. And on future
15:50 space, I think one shouldn't go short straight away because the charts of Nifty Pharma Index
15:58 is isn't so bearish. So I would actually wait for the opening and look for buying opportunity
16:04 in F&O counters. And I would avoid AstraZeneca for going long right now.
16:10 Nirav, let's come in on that point UBL. Samia pointed it out, the results and a bit of a miss
16:18 there. What did you make of these numbers? And do they enthuse you or is the EBITDA miss a sore point?
16:23 I think the revenue growth was quite impressive. So I think we'll go with that. The EBITDA miss,
16:33 definitely I think going forward, we will see an improvement in the bottom line also. But I think
16:39 I will go with the revenue growth. It was quite impressive in this quarter.
16:45 So UBL, they're looking weak. I just want to quickly, Nirav, with you address the question
16:51 on real estate. And we're going to have a more detailed chat in just a few minutes right now.
16:55 On the whole run up in real estate and whether there are now concerns coming in on the
17:00 profitability of the business, which of course has a long gestation period. Look at a Prestige
17:06 this morning, look at a Phoenix Mills, 2.5% down just a day after a Night Frank report about ghost
17:12 malls coming up. Nirav, just would you say that it's been an overbought kind of a sector right now
17:21 and you expect cool off for a bit? Some amount of profit booking is natural,
17:27 but I think the best is yet to come. So I think the prospects look very, very strong. If one were
17:34 to just look at the balance sheets of all these real estate companies, the kind of response which
17:39 they have been getting in their new projects, the kind of deleveraging with what they've been
17:44 achieving on that balance sheet. I think the next couple of years look quite interesting as far as
17:51 the reality is concerned. You looked at JSW Energy, is it showing some signs of a breakout? The stock
17:59 is up 6% as I see it at the day's high point. Volumes are also looking quite healthy here, 5%
18:05 now. Looking very exciting. I think as we pointed out that power stocks continue to be in the
18:14 limelight because the demand continues to be very, very strong. So not only JSW Energy, but I think
18:21 even Adani Power is looking quite strong. Did you look at credit access, Grameen numbers? I
18:27 know it's a small player, but numbers were good for, you've got this big smile on your face and
18:32 I'm assuming that's a clear no on credit access, Grameen. The stock is great, markets I guess it's
18:38 a micro cap to say the least, but the street is getting excited. 40% growth on top line on
18:44 back of business expansion is what is keeping it up and about. IGL is also a 4.5%. REC, PFC,
18:51 Aditya, are you expecting this bounce back to continue on both those counters? Could be an
18:55 opportune trade for a short pullback? Yeah, I think now the downside and the bad news is
19:04 properly priced in and now stocks are poised, all these electricity counters are poised for a good
19:10 rebound. So yes, one should go long in REC, currently trading at 518.20 and stop loss must
19:18 be maintained at 480 and target would be 530 to 550. And I would also like to bring to your
19:27 notice, Gale, which was our opening trade is up about 1%, so one could trail the stop loss to 195
19:35 now. Okay. Well, Gas Authority of India up 2.5% as well. FMCG starting to inch up a little bit,
19:44 so that pocket to kept in mind. And today, one of the dailies in the open mentioned about how
19:53 the government will be re-evaluating the norms that the RBI put out on PFC, REC a couple of days
19:58 ago because of which the stocks have taken a big beating. I think we've just seen that uptick today,
20:03 PFC is up 3%, REC, there's a con call going on as well, but REC too. I reckon this is not because
20:09 of the con call, but because of the fact that those norms might be relooked and if they are
20:12 relooked, that earnings hit that was due to come will not come, which is why both these stocks
20:18 are starting off well today. Fundamentally, Nirav Akshar, if indeed, some of these norms that the
20:24 RBI had suggested are diluted or taken off, the growth story in power seems strong, would REC,
20:30 PFC become stocks that you could look at afresh? Definitely, yes, because I think the power story
20:41 I think it's a long drawn story and we are seeing so much thrust on renewables at this point in
20:48 time. If one were to look at the thermal mix, it is around 57% of the capacity and 42% is
20:54 renewables. Going forward by 2032, it is expected that the same will reverse and we'll have a share
21:02 of 66% of the power flow coming in from the renewable space. So one can imagine the kind
21:09 of investments which are going to go into the renewable space and all this is going to be funded
21:13 by the likes of REC Power Finance Corporation. So it's going to be a very, very exciting scenario
21:20 going forward and plus the Prime Minister's statements on Vikasid Bharat, especially with
21:25 respect to renewable energy, I think they hold a lot of promise and potential.
21:31 Point on REC and PFC, a lot of clarity coming in from the CON call, that's probably helping.
21:39 Just let's pull up the chart so far, not too much on that chart, but see how it's responding.
21:44 Just the point that you were making, Neeraj, the fact is that these were first of all proposed
21:49 guidelines. The procedure is that whenever the RBI proposes something, it first now opens it up
21:55 to all stakeholders, including government, other banks, REC, PFC, etc., public, everyone can come
22:00 in with their views. So the new story this morning that the government will look at it is something
22:06 they would have done in any case. Do you think that after perhaps a beating down on the basis of
22:13 draft guidelines, which weren't really real, now the fact that those draft guidelines may be looked
22:19 at, which they would have anyway, the market is now overcompensating? Yeah, because the market
22:26 in its wisdom decided that these draft guidelines mean that the earnings will get hit and punish the
22:30 stocks if those draft guidelines are getting diluted, if you will, because the story suggests
22:36 that the government might actually, that there is opposition to these, and these might not come in
22:40 the same shape and form. And if indeed the market believes that, okay, what was going out to be a
22:45 possible punishment is not going to be, then therefore the reaction should be… My point is
22:49 a draft is a draft is a draft. But the markets took the stocks down, so the markets are taking
22:54 the stock up. Yeah. So it's neither here nor… actually nothing happened. Actually nothing
22:59 happened either way. But the fall still has a long way to go to recoup those losses. And I think
23:02 IFL securities put out a report saying for REC, PFC and IREDA, they expect no impact on return
23:11 on equity, which is the ROE, but expect only their tier one ratio to be hit by 200 pips to 300 pips,
23:16 and potentially that could weigh on valuation multiples if this becomes reality. So there was
23:20 a Bernstein report, there was a CLSA report, all having different, different sets of figures. We
23:25 spoke to IREDA yesterday who said that no, you know, skin off our nose here. It is just unfortunate
23:29 that after REC reported such a stellar set of numbers, of course, these valuations talk about
23:34 20-30 years ahead in terms of pricing. Exactly. But one other stock, and Aditi, you come in on
23:40 this one, because I know before these big, the big fall of the nervousness set into the markets,
23:45 Tata Motors was a unanimous buy call on the charts. It was going through a breakout, the stock had
23:51 been an underperformer. There was every and any reason given to why Tata Motors would have done
23:56 well in the next few weeks. Contrary to that, the stock is sub-1000 and it's been declining sharply.
24:02 Now, does it still look good on the charts is what I want to understand, because I'm assuming a lot
24:06 of short term traders would have got stuck on Tata Motors in the last few days.
24:12 As you rightly pointed out, it was in consensus buy and even on the derivatives front,
24:18 a lot of call writers were active at 1000 strike, which are still active and also at 1100 strike.
24:26 So I think 1000 to 1100 is the supply zone for the stock. And no doubt that stock has seen stellar
24:34 rally from almost 60-70 levels to almost 1100. Now, probably a lot of smart investors are taking
24:41 chip off the table, which I could see on the charts, a lot of volumes are seen on the declines.
24:47 So a lot of people are taking chips off the table at these elevated levels. So as per the chart,
24:53 I think now the candidate has turned to sell on rise and there could be instances where
24:58 stock could dip towards levels like 950 and 900. Okay, that's the story on Tata Motors. I just
25:08 want to revisit one of our top losers this morning in Dr. Reddy's and look at what's happening there,
25:15 not just Dr. Reddy's, Divi's as well, not doing too well. Let me pull up Lupin, Ipca Labs,
25:22 a bit of pain point in the pharma sector, which was seeing a defensive and rotational play.
25:27 Nirav, anything that you would bet on over here or look at as a possible medium term bet?
25:35 Well, at this point of time, I would like to stay away from pharma.
25:38 It's an avoid coming in on pharma. Nirav, what was your view on Tata Motors? I didn't get a
25:45 chance to ask you that. On the charts, of course, it's got a lot of traders on the wrong side.
25:49 But fundamentally, a good stock to buy at these levels at 988, what does it look like?
25:54 I think I'll wait for some more correction, maybe near 950 levels.
25:59 So 950 at Tata Motors, some more pressure can be rolled out. The stock is really looking flat,
26:04 as we see it right now. At its day's high point, but that's not much to cheer about,
26:08 at least as we see it. Another thing, Nirav, that was the big talking point on the street
26:13 was some of these defensive names, which was seeing heavy buying across the month of March
26:20 and April. Some were calling it election buying, some were just simply calling it a multi-year
26:24 growth story. But the last couple of days could have given investors an opportunity to go in.
26:30 So an HAL, a BDL, Cochin Shipyard, Garden Reach have all corrected sharply. Do you think the
26:36 time is right? Those valuations are a little more compelling today than they were maybe a few weeks
26:40 ago. I think the market has been oscillating from extreme confidence, supreme confidence,
26:47 to now a kind of a pre-election jitters. So that has been reflected in all these stocks. So I think
26:55 we expect that there's going to be some more correction in these stocks. One has to wait
27:00 for some more time, because I think this nervousness is likely to persist
27:06 in these defensive names also. Aditya and Nirav, thank you so much for speaking with us today.