Ask Profit | Maruti Suzuki In Focus | NDTV Profit
#MarutiSuzuki in focus following first quarter results. What's next for the stock?
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #NDTVProfitLive
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #NDTVProfitLive
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00:00Let us take a look at where the markets are and there was quite a bit of cheer earlier
00:04in the session.
00:05In fact, at the start when we crossed that 25,000 mark on the Nifty 50, we have more
00:10or less stayed range bound through the session, currently with gains of about a third of a
00:16percent.
00:17It has been an incredible journey.
00:18It has taken about 11 months to gain about 5,000 points on the Nifty 50 and the last
00:231,000 points have come in just 25 days, which is quite significant.
00:28The broader markets are also looking sanguine at this juncture, but off the high point of
00:33the day, I should say.
00:35You have the mid-cap index that is up about or in fact, both of them are off significantly
00:42and you have the small cap index that is up just about 0.1 percent or thereabouts.
00:47Let us talk about some of the key outperformers in trade today and what is contributing.
00:52We are going to be focusing on Maruti Suzuki and it is one of the outperformers in trade
00:57today, but among the key contributors in terms of points, you have HDFC Bank right
01:02on top of the list, as well as Power Grid Corporation of India, Reliance Industries
01:06making some contributions.
01:08On the losing end, you have Mahindra and Mahindra, which is losing as well as Infosys and Sun
01:13Pharma as well as ITC and Kotak Mahindra Bank.
01:16A lot of news to talk about, but we are focused in on Maruti Suzuki at the start because it
01:23had a stellar Q1.
01:25It is off the high point of the day.
01:27It was up as much as 4 percent earlier on or rather 3 percent earlier on in the session.
01:32It has lost some ground.
01:34The net profit has more than doubled on a year-on-year basis and stood at very close
01:39to 3,400 crore rupees.
01:41The margin has seen considerable improvement on a year-on-year basis as well.
01:47The volume mix proving to be favorable for this company, 12.7 percent is what it stood
01:52at in the first quarter.
01:54A couple of brokerage notes have come through on Maruti Suzuki.
01:57MK has maintained its reduce on Maruti Suzuki with a target of 12,000 rupees and that is
02:04significantly below the current market price.
02:07And you have Bernstein that has maintained its outperformance and has a target of 14,400,
02:14which is pointing to a considerable upside from this point.
02:16So divergent views.
02:19Bernstein for one is saying that the Q1 results were impressive and saw significant margin
02:24gains.
02:25The benefits from the SUV and the CNG mix, as I was pointing out, that volume mix improving
02:30has panned out on the earnings front.
02:33The increasing CNG mix from 28 percent to 33 percent has likely helped margins is what
02:38Bernstein has said.
02:40And finally, inventory levels at 37 days, which is much lower than the 62 days for the
02:46industry is also something that is positive.
02:49We've got, I believe, Lancelot Dekuna, who is the CIO of ValueX Wealth Connect, joining
02:56in.
02:57And we also will have Kush Bhora, who is the founder of kushbhora.com, later on the show
03:03as well.
03:04Lancelot, a quick view on Maruti Suzuki.
03:07As I was pointing out, divergent views.
03:09One is a reduce in the price target that's significantly lower than the current market
03:13price.
03:14The other has got a considerable upside.
03:16What do you think?
03:17Well, I am in the camp of the upside at the moment, Alex.
03:21And the reasons are, you know, very clear that Maruti basically has been a dominant
03:25force in the passenger vehicle segment, almost having a market share of close to 50 percent.
03:33And we see this particular dominance continuing because Maruti has always introduced products
03:39that have been able to meet the requirements of the customers.
03:45So now, whereas many people have gone into the electric vehicle space, they have come
03:49out with hybrids, they are focusing on, you know, people are focused mainly on the other
03:54customer, people are focused on the SUV space.
03:57They have come out with vehicles in that space, as well as, you know, the multi-use vehicles.
04:07So they've tried to find the sweet spot for the Indian consumer, and I think that has
04:13helped them.
04:15And on the other front, we are seeing that they've been able to reduce their overall
04:18cost.
04:20And that is commendable, given that, you know, we have seen an inflationary spiral over the
04:26last 12 months, and almost all input costs have gone up, whether it is commodities, whether
04:32it is, you know, steel, et cetera, all prices have gone up.
04:35Yet Maruti has managed to improve margins, which is a good sign going forward that this
04:40will continue and with demand going to come back into the economy a little better.
04:47You should see growth expand significantly from here, and Maruti will continue its dominance
04:53in this space.
04:56So it's a positive view on Maruti Suzuki from Lancelot.
05:00We've got Kush joining in as well.
05:01Gentlemen, we start the questions because we've got quite a few that have piled up,
05:05and the first one is from Srivardhan Reddy.
05:09And he's asking if this is the right time to invest in Vedanta.
05:12I will come back to you, Lancelot, on this because there's quite a lot that is happening
05:17in this company in terms of the restructuring of the business as well.
05:22Would you say that it's a good time to invest in Vedanta?
05:26I think so, because, you know, the business is being restructured and we have seen, you
05:31know, the restructuring is going to be positive because it will add in terms of valuation,
05:38you know, to the investors.
05:40So at the same time, you know, the commodity cycle is at its highs.
05:47And ideally, one should not invest in commodity companies when the market cycle is at its
05:52peak because whenever there is a correction, these commodity prices will come off significantly.
05:59And along with that, commodity stocks will also see, you know, a downward move.
06:05So while the business fundamentals or the case for, you know, the restructuring makes
06:11a case out for an improved valuation from an upside perspective, there's also the heightened
06:17risk that, you know, you might see commodity cycles turn and thereafter, one would see
06:24a significant downside once the commodities prices move down.
06:28Okay, that's a fair point.
06:31We've got a question on ITC, and this is PBS Narasaya's question.
06:37This one's for you, Kush.
06:38He's bought 1000 shares at a price of 495.56, which is very close to the current market
06:46price.
06:47He's asking whether to hold for potential upside or should he sell?
06:51Hi, Alex.
06:52Hello, Nansal.
06:54Well, ITC is one stock that you should have in your portfolio.
06:58You know, not only from, you know, a growth or a gains perspective, also from a margin
07:04of safety perspective.
07:05You know, that's what I've maintained for a while now.
07:06You know, it's a great thing that, you know, off-plate the stock actually seen quite a
07:10stellar run up, you know, from those 400 levels all the way up to 500.
07:13You might see some consolidation going forward.
07:16But I think on the whole, the trajectory is, you know, pointing north.
07:20And as I said, you know, from the idea of, you know, the margin of safety, it's a good
07:23stock to hold in a portfolio.
07:25Continue to hold.
07:26If you're looking for a stop loss, then from a near-term perspective, I think 470 is a
07:29number to watch for.
07:30I'm coming back to you, Khush, on this next one.
07:35And this is from Satish.
07:36He's asking about Hindustan Aeronautics, which he's bought at levels of 4550 rupees apiece.
07:43He's got 25 shares.
07:45He's in the green.
07:46He's wondering whether to hold or should he sell?
07:50My suggestion on this one would be to sell.
07:53The stock's actually attempted a rebound and faced resistance at the 50-day moving
07:58average, which comes to 5100.
08:01I think whatever a near-term story was, you know, in these stocks have been played out.
08:07You know, if you get any kind of fresh triggers, then perhaps it would move higher.
08:11But I think for the time being, you know, the volumes are shrinking, the stock's gone
08:14into a consolidation mode with a negative bias.
08:17Plus, you know, despite the sharp profit booking, as you said, he's still in the green.
08:21Not a bad idea to take the money off the table at the moment.
08:24Okay.
08:25Lancelot, I'm coming to you for a view on New India Assurance for a period of 12 to 18 months.
08:31This is a question from Gautam.
08:34He's writing in from Mumbai itself.
08:36And he's asking whether it is late to buy this company at the price of 293.
08:43Well, actually, you know, this company has benefited from the entire PSU run-up that
08:48we've seen.
08:50So in terms of valuations had risen.
08:53But at the same time, if you look at its business, you know, profits have improved.
08:57And given that economy is also going to grow, the demand for general insurance is going
09:03to rise.
09:04And New India being one of the premier general insurance companies will stand to benefit
09:09from the increased activity that is going forward.
09:13And if you look at its underwriting losses, this time underwriting losses have also reduced.
09:17So that is a positive for the company.
09:20And if you take a two-year perspective, one would look at, you know, maybe investing,
09:28but wait for some correction would be a better option to invest rather than buying at this
09:33price.
09:34Okay, fair point.
09:34That's a view on New India Assurance.
09:36HDFC Bank, as I pointed out, it's contributing the most to the points gain on the Nifty 50.
09:42It is up about a percent or so.
09:44And in fact, so we've got Harish asking about this.
09:48He's short sold HDFC Bank at 1632.
09:55Kush, he's looking for an intraday view on this one.
09:58It's bounced from the low point today.
10:00It's doing reasonably well.
10:02What would you say about this transaction?
10:06Alex, of all the queries that I've had on HDFC Bank, this is the first time that I'm
10:10getting a short sell query.
10:12So that's a new one, right?
10:15The selling price you said was about 1635, right?
10:211632.
10:231632.
10:23Fairly close, but on an intraday basis, the stock's actually gaining some ground.
10:28So, you know, it'll be prudent to keep your stop losses close to 1645 zone.
10:33If that is taken out, the stock could perhaps, you know, end closer to the high point of
10:38the day.
10:39My suggestion, if you've short sold, keep a stop loss at 1645.
10:43At the moment, the stock's actually turned around.
10:45For intraday, you could perhaps see some sort of a reversal.
10:47And by that, I mean on the upside.
10:49So 1640, 1645 are the zones to watch for.
10:52All right.
10:53Jubilant Food is the next counter that we're talking about.
10:56And this is a question from Ankit.
10:57He's riding in from Ahmedabad.
10:59And he's asking for a view on the stock.
11:02Lancelot, do you view the company and its menu favorably?
11:07So I think, you know, the stock has risen considerably, you know.
11:11And while the results were, which they announced, were pretty reassuring, I think going forward,
11:16managing the food inflation is going to be a challenge for the company.
11:21So from this perspective, stock seems to be fairly valued.
11:26And, you know, one can either look at making profits if you're in profit or wait for a
11:32correction, you know, to buy into the stock.
11:35Because from here onwards, very unlikely that you're going to see significant profit growth.
11:41And flat profits means either there'll be a period of consolidation or you could even
11:46have a downside if there's a negative quarter.
11:51I asked about your view on the menu.
11:52So I can take from your silence that you're not too much of a fan of the pizza.
11:59That's true.
12:00That's true.
12:01All right.
12:01That's true.
12:02All right.
12:03The next question we're taking is on Greaves Cotton and Orchid Pharma.
12:08And we've got a question from Neha from Bengaluru.
12:11She's got a one to three month view on this.
12:14And she's holding on with gains of 30 percent in both of those stocks.
12:20Kush is what she's saying.
12:22Greaves is down in trade today.
12:24Would you hold on to this or would you sell at this juncture?
12:27Well, first of all, congratulations on the 30 percent gains and especially on both the
12:33trades.
12:33Now, both of them look excellent on the charts from here on as well.
12:37My suggestion would be to lock in your profits using a trailing stop loss.
12:42While Greaves is down today, there isn't too much in terms of a worry except for the fact
12:47that the stock is fairly volatile.
12:49So you would want to lock in those profits.
12:51Now, where do those levels come in for Greaves Cotton?
12:53It is at 167.
12:55It's where you want to place your trailing stop loss.
12:57And as far as Orchid Pharma goes, it's a little lower, closer to 1340, 1350 kind of zones.
13:04So my suggestion, continue holding on to both of them.
13:06We've seen a good uptick in the price and the volume action as well.
13:10So hold both of these with tight trailing stop losses now.
13:14OK, I'm trying to pull up Infibeam, which is trading at 31 rupees per share.
13:19And we've got Sahil, who's bought at levels of 39.
13:23He's asking whether he should hold or sell.
13:25He hasn't really given us a time frame.
13:27So Kush, I'll just go to you on the technicals of Infibeam.
13:30What would you suggest that he do?
13:35Alex, this is one share that we normally don't suggest getting into in the first place.
13:41Hasn't really done too much for investors except for those sharp spikes that you get
13:46every now and then.
13:47But then it makes it a little difficult to sustain around those levels.
13:50The first thing is to avoid these kind of shares.
13:53Now that he's already into it and still staring at a loss.
13:56My suggestion is exit.
13:58The stock's dearly trying to hold on to those 30-31 levels where some of the key averages,
14:02near-term averages converge.
14:04But otherwise, there isn't too much on the chart.
14:06Just saying that a turnaround is on the corner or anything of that sort.
14:10For me, Infibeam is a very clear exit.
14:13All right.
14:13That's a very clear statement from Kush.
14:16Kush, as well as Lancelot, do stay with us.
14:18Viewers, we'll be back after this very quick break to take more of your questions.
14:21So do stay tuned.
16:51Welcome back.
17:06You're watching Ask Profit.
17:08And Lancelot, I asked you early on in the session whether you liked pizzas and you said no.
17:13Do you like burgers instead?
17:15Because this is a question coming in from Marut.
17:17He's asking about restaurant brands, Asia, and he's asking about Devyani International,
17:22both of which he's bought at $111 and $153.
17:25He's wondering whether QSR results are better.
17:29You suggested that inflation pressure is something that they're contending with.
17:32Is that something that extends to these two companies as well?
17:36Yes, I think in addition, Devyani also has the issue about there are recently some
17:43problems about the cheese, whether it is to be called cheese or not cheese.
17:48And there are various issues relating to the food and drug administration approvals on that.
17:57So I think given that they are moving into, let's say, a place where people are focusing
18:07on healthier foods, it is becoming a challenge to increase sales purely on the basis of
18:13for burgers and pizzas as well.
18:18So at the same time, the number of outlets available also increasing will improve sales.
18:25So I don't think on one front, you will see a little bit of pressure, especially on same store
18:31sales in areas which had these stores for many years.
18:36And the new stores would generate fresh sales.
18:39So that may average out and you may still see some growth, but it is
18:42going to become challenging to maintain margins as well as with costs going up.
18:47Profitability could be muted.
18:50It's a fair point because it's not just an India phenomenon.
18:54I was reading a headline earlier today that talked about McDonald's in the US,
18:59which is only seeing sales go up or tick up because they've introduced a $5 meal, which is lower.
19:04And so therefore, one would assume, yes, of course, that's going to hurt margins going forward.
19:09Hopefully, that answers the question that Marut had.
19:11IOCL is the next counter that we're talking about.
19:13And this one's for you, Kush.
19:15He's bought 1,500 shares at a level of 165.
19:23So he's still in the green.
19:24He's asking whether to hold or sell at this juncture.
19:29Alexis, quickly, while on the subject of food, do you have a question on a cafe coffee day
19:33or something?
19:34Might as well complete the menu, right?
19:37Sure, sure.
19:39You know, I'm going to go and get a coffee.
19:40We have great coffee in the office.
19:42I don't spend on coffee.
19:44I can vouch for that.
19:46So just coming back to IOCL, Alex.
19:49Well, you know, my view is that, you know, these stocks, they have their phases and,
19:52you know, there is this momentum spurt that comes about.
19:55These are not stocks that you'd want to hold on for, you know, three to six months,
19:58keep rolling over your position.
20:01They've seen a spurt, but also a round of profit booking has come about quite sharply.
20:05My suggestion, since he's got about a neat, you know, 10-13 rupees kind of a profit at
20:11the moment, book out.
20:13It's a range play.
20:14Once again, if you get it back, you know, around those 160-165 levels, you might want
20:18to consider a re-entry.
20:20But now would be a good time to, you know, take some money off the table, book profits
20:24in IOCL.
20:25Okay, I'm coming back to you.
20:27Hopefully, you have a view on this one.
20:30And it's the Northeastern Carrying Corporation, KUSH.
20:35And maybe, hopefully, you can pull up the chart.
20:38The stock is currently trading at 37.25.
20:41It's only a market capitalization as I look at the screen of 350 crore rupees.
20:45We've got Khurshid, who's riding in from Srinagar and Kashmir and asking about this.
20:49He's bought at levels of 33.
20:51He's in the green right now, just barely so.
20:54Should he hold on to this?
20:57First off, I'm so glad, you know, we've got viewers from Kashmir as well.
21:00So heartening.
21:02Also, in all honesty, I have not heard of this company before.
21:06So it's only a quick glance that I'm looking, you know, I'm making on this stock at the
21:11moment, you know, as I see, there are early signs of topping out.
21:15The stock actually done quite well in the last 12 to 24 months.
21:18But at the moment, you know, there are signs of topping out.
21:21So if I have any kind of position, I would perhaps look to exit partly, if not completely.
21:26And 35 is a key support zone.
21:28If that is taken out, the stock could perhaps slip to lower levels.
21:31So book partly, hold the rest with levels of 35 as your trading stop loss.
21:35OK, that's a fair point.
21:37OK, so there are a lot of short term queries coming through.
21:41This one's also for you, Khursh.
21:42ISMT is the name of the counter.
21:44And Lavish from Indore is specifically asking this of you.
21:47He's got 500 shares at levels of 140.
21:51The stock is currently trading at 132, down about 2% in trade.
21:55What's the one year time frame view?
21:58I'm glad that, you know, the time frame on this one is one year because, you know,
22:01the stock for the last two, three years has been actually a rank out performer from the
22:06levels of 12.
22:07It's gone all the way to, you know, 120, 150 as well.
22:10Plus, it's had its fair share of volatility.
22:13So excellent, you know, idea holding this one for the long term.
22:17For about 12 months out, I wouldn't be surprised to see this stock move close to 180,
22:21perhaps even 195 kind of zones.
22:24So continue holding on.
22:26But as I said, you know, because you've been invested in this for a while, I'm assuming
22:30that, you know, you know that this stock also has its fair share of volatility.
22:33So be a little mindful of that.
22:34Don't panic when it, you know, perhaps comes a little lower.
22:37Positional basis, there's a strong support zone at 110 levels.
22:41If that is broken, no matter what, you might be better off exiting.
22:45But from a 12 month perspective, you're looking at a 180 kind of economy.
22:48Okay.
22:49Actually, you know, we spoke about restaurant brands, Asia and Divyani earlier.
22:53Can you also give us a quick technical view on these?
22:56We've got restaurant brands, Asia bought at levels of 111 and Divyani bought at 153.
23:03Would you hold on to these?
23:10Yeah, this is Marut's question, which we had discussed earlier.
23:13Restaurant brands, Asia bought at levels of 111 and Divyani at 153.
23:17Would you hold on, Kush?
23:20RBA, I would hold on.
23:22And there are, you know, some of the key averages converging around the 110 levels.
23:26If it's a trading position, I would continue to hold on with a top loss just under that.
23:30So 108 is perhaps the level that you want to watch out for and continue holding on.
23:35Divyani also on a weekly setup is making a higher high formation.
23:39So here too, you could continue to hold, top loss being 168.
23:44Fair point.
23:45I'm coming to you on NCC Limited.
23:49Lancelot, do you have a view?
23:50And we've got Manoj who's asking whether it can be bought at the current level, 353 of their baths.
23:57So NCC actually is a good company in the sense that it's been into the contracting business
24:03for a while and has generated good profits because of some orders that it has gained.
24:10But in the last boom of the infrastructure, you know,
24:14when everybody started buying infrastructure, I think valuations have gone up considerably.
24:19And given that the stock is looking, you know, fairly priced,
24:25one would not want to buy into this company at this point in time.
24:30Adani Energy Solutions up about 7% in trade today, outperformer.
24:35And we've got Mukesh asking about it.
24:37He's bought at levels of 977.
24:39He had a swing trade outlook on this and he's wondering whether to hold on or exit.
24:44Kush, of course, the stock is in focus on account of the QIP as well.
24:47What would you suggest that he do with this?
24:51Well, you know, if money is not really a concern at the moment,
24:55my suggestion is to continue to hold this one.
24:59There are, you know, near-term resistances that the stock could hit,
25:03perhaps close to those 1250 zones.
25:05But once that is taken out, you're looking at a big swing towards 1450,
25:09where the 200-day moving average lies.
25:11So one, congratulations on the trade and holding on to this one with,
25:15you know, a stellar near-term profit, at least.
25:19For now, you could continue to hold.
25:21Just watch for the 1250 mark.
25:23You know, if it does take resistance and book partially,
25:25if it gets taken out, then you're in, as I said, for a 1400-1450 kind of move as well.
25:30Okay, just a standard disclaimer, this is NDTV Profit,
25:34which is part of the NDTV Group, and it is owned by Adani Group.
25:38Unfortunately, we're drawing to a close on this conversation.
25:42We have to end a little earlier because we've
25:44lined up a conversation with Maruti Suzuki at 12 o'clock.
25:47So you should watch out for that.
25:49Lancelot, as well as Kush, thanks so much for joining in
25:51and for answering all the questions that you did answer.
25:54We will try and take more of your questions when we are back tomorrow.
25:58Do stay tuned.
25:58This is NDTV Profit.