Ask Profit | Sugar Stocks In Focus | NDTV Profit
-Cap on #Sugar diversion for #ethanol removed to address #UttarPradesh #cane dues
-#Nifty #Sensex trade near life high
Get all your stock-related queries answered by our technical and fundamental guests with Hersh Sayta and Anushi Vakharia on Ask Profit. #ndtvprofitlive
-#Nifty #Sensex trade near life high
Get all your stock-related queries answered by our technical and fundamental guests with Hersh Sayta and Anushi Vakharia on Ask Profit. #ndtvprofitlive
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00:00higher. Devis Labs also seeing good traction, 2% higher. Cipla, so some bit of pharma coming
00:07in along with Powergrid, M&M as well as NTPC. So energy, pharma is what is dominating markets
00:15at least as we speak. Let's quickly move on to the small and mid cap space. Well, the
00:21small cap, 250 indexes up around two thirds of a percent, there about the mid cap up around
00:27three fourths of a percent. Let's look at the breadth of the market as well. The advance
00:31decline likely strongly in favor of the advances. There you go. We have 1300 advances to around
00:38700 declines, nearly two is to one in terms of that ratio. So the breadth of the market
00:43definitely positive. Let's pull up the Nifty Bank because that's one sector or one index
00:50which will largely pull the Nifty 50 as well. But the Nifty Bank is up around a third of
00:55a percent. There you go. 0.4% higher. The Nifty Auto too, balancing that good line in
01:02terms of positivity around 0.4% of gains on the Nifty Auto as well. Right. So those are
01:12two sectors which are in focus. The Nifty IT though, let's pull that up intraday and
01:18it's up around half a percent thereabouts. So the Nifty IT index also doing fairly well
01:23in trade, even though it wasn't at the start of trade, as you can well see. So those are
01:28some sectors which are a buzz, contributing well. The Nifty Metal and the Nifty Pharma.
01:33The Nifty Pharma is up 1.6%. The top sectoral gainer for the day is the Nifty Pharma. The
01:39Nifty Realty also seeing good traction. That's broadly how currently we are seeing markets.
01:47So clear positivity across the board where markets are concerned. But sugar stocks in
01:53focus. We're seeing sugar stocks do very, very well in trade today. And there's been
02:00a new rule which will allow sugar mills to use cane juice or syrup for ethanol production
02:06rather than diverting it towards sugar. Let me bring in Varsha with some more perspective
02:12and how this can aid sugar stocks even going forward. Varsha.
02:18Sugar stocks that are buzzing today, so starting with Dhalmia Bharat to Hindustan Sugar, Bajaj
02:24Hindustan Sugar, then Triveni Engineering, Benari Aman Sugar, all these stocks actually
02:28have hit an intraday high of more than 10%. Let's see why this buzz. So government has
02:33put no cap on sugar diversion for ethanol. Earlier, this cap was 24.12 lakh metric ton
02:40in ethanol supplier 23-24. Now, this simply means that government has removed the limit
02:47on how much sugar can be used to make ethanol for 24-25 ethanol supplier. Through this,
02:53company will be able to generate more revenue and margins because more ethanol now can be
02:58produced without any cap. Now, government has a target of taking ethanol blending to
03:0320% in next two years from 13% currently. And government has additionally permitted
03:09distilleries to buy up to 2.3 million metric tons of rice from Food Corporation of India
03:14exclusively for ethanol production. Now, also to prevent the disruption in domestic sugar
03:20availability, the Department of Food and Public Distribution and the Ministry of Petroleum
03:25and Natural Gas will work together to monitor and review the diversion of sugar for ethanol
03:31production. Now, this all policy change is a part of government's ongoing effort to increase
03:36ethanol production and to promote sustainable energy practices.
03:39Well, thanks for that Varsha. But let me take this across to our guest for today joining
03:44us on Ask Profit. Gaurang Shah, Head Investment Strategist from GOG Financial Services and
03:51Rajat Bose from SEPI Registered Research Analysts join in. Hello and welcome to Ask Profit.
03:56Gaurang, let me take it across to you first. What does the new develop mean for the sugar
04:01stocks and overall outlook for the whole sector in general?
04:04Well, thank you very much and good morning to all of you. Thank you for having me on the show.
04:12Government's policy is very clear when they replaced naphtha with ethanol some years back.
04:21The unfortunate part was that the blending capacity with oil marketing companies with
04:29respect to ethanol getting blended with petrol and diesel was at a very low scale. Over the years,
04:37they have managed to ramp up their blending capacity and more and more demand for ethanol
04:45is likely to be there as we go into the future. Along with that, every year or so,
04:52we have seen government revise the ethanol prices upwards. What it was 1 or 2 years back
04:59and what it is currently, there is a huge difference. So, this turns out to be a very
05:04good revenue generator for these companies which are associated with the sugar sector.
05:12And there was a little bit of constraint for these companies because government had put a cap
05:20in terms of how much you can divert towards ethanol and how much sugarcane juice and molasses
05:26could be diverted towards manufacturing of sugar. Now, with this cap being removed,
05:32I think there is going to be a very strong focus of all these companies into manufacturing of
05:38ethanol at a larger scale. The only point remain is the oil marketing company's capability and
05:44capacity to blend more and more ethanol with petrol and diesel and its other by-products,
05:50crude oil by-products. So, the sector looks very interesting. Unfortunately,
05:55the only thing as an overhang is the debt on the balance sheet of some of the sugar
06:00manufacturing companies, given the price gap between the sugarcane and the sugar that is
06:06manufactured. But I think with ethanol becoming a focus, this debt burden could get reduced to a
06:11greater extent. Right, Gaurang, sorry, but two more quick questions on sugar. One is with regard
06:18to regulation. Do you believe a more stable regulation helps? And along with it, if I can
06:28couple the price question, do you believe that a higher price is something that one can expect
06:34both on ethanol as well as sugar? And third, is there a preference in terms of stocks?
06:39So, I'll ask you your last question first. We had coverage on Balrampur Chinni a while back,
06:46but the stock has overshot our target price by almost about 50 to 100%. So,
06:53we have given out a book profit advisory on Balrampur Chinni and then we have not
06:57covered Balrampur Chinni or any other stock specific idea in the sugar stroke ethanol
07:04sector. With respect to your first question, regulation, I hope that there is a concrete
07:13base in place in terms of policies because very often we have seen two and four kinds of news
07:19flows coming in from the government as far as the sector is concerned and then the sector and the
07:24respective companies get impacted depending upon which way the news flow is either positive or
07:29negative. In terms of the price disparity between sugarcane, sugar and ethanol, I think
07:36the MSP module is in place for this particular crop that is sugarcane. And as and when the need
07:43arises, I think the government will take appropriate steps to stabilize the variation as
07:50far as sugarcane, sugar and ethanol is concerned. Unfortunately, last year we had a deficit more
07:56and three states which are the largest producer of sugarcane, that is Uttar Pradesh, Maharashtra
08:01and Karnataka, suffered a deficit rainfall and the crop production was not up to the mark.
08:07And that is why you had a little bit of disturbance in terms of earnings also. But this year,
08:12rain gods have been kind enough. Let us hope by the time we say goodbye to the rain gods,
08:18we have a stable situation in terms of sugar as a crop being produced.
08:23Right. Rajat, I know we have not taken your views, but I am going to quickly go to queries
08:29first. And coincidentally, Gaurang, we have got a fundamental query first and a very fascinating
08:35one. We have Mohit from Ludhiana. 2000 shares of Trident at Rs 3.9 per share is what he has
08:45bought it at. He has another two years in terms of time horizon. This has been a nine-bagger for
08:51him, nine-and-a-half-bagger for him. Rs 66,000 in profit, what should he do?
08:57Well, I hope I could answer it straight away. Unfortunately, I do not have a coverage,
09:01but you are absolutely right. The stock has been a flyer. And it has been one of those lower
09:07double-digit kind of stocks and some kind of an underperformance for a pretty long period of time.
09:11But I think over the last maybe about a year or two, there has been some stability in terms of
09:17earnings. And these kinds of stocks, you need to be extremely careful in case if you are having a
09:22long-term time horizon, most importantly, with respect to the earnings getting reported.
09:27Do you see any kind of variation on the negative side with the earnings? I think these kinds of
09:31stocks take a knock on the chin, and then the investors do not get an exit route because of
09:37the price fall. So right now, things are good, but I would request the investor to keep a very
09:42close eye on the earnings. And in case if there are some alarm bells ringing, then take appropriate
09:48steps. Okay. So that was the view on Trident now. Now, I will come to you, Rajat, for the next
09:53query. Now, this is from Subramaniam from Chennai. He wants to understand the short-term outlook on
09:58Lemon Tree Hotels. He bought it at an average price of about 100 and 400 shares that he had
10:04bought. What is the medium-term outlook on this? Shall he book profits early or switch over to some
10:10other stock? Now, the stock has been under pressure in the last one month and six months.
10:14Rajat, what's your view on Lemon Tree? Its uptrend has been broken because so far it was
10:24for the last, say, fairly long period of time, say three years or so, a 50-week moving average or 200
10:33exponential moving average was not broken. But now it has been broken decisively and
10:39there is an attempt to reclaim that average. But what I would say is that if you find that
10:46it was on a tear for a long period of time, so if one is holding on to a large amount of profit,
10:53then one can always book at least partly. Otherwise, put a stop-loss below 120. If it
10:59were to fall below 120, definitely one should seek an exit from this. No phrase buying is recommended.
11:06Right, Rajat. Gaurang, let me come back to you. We have Kapil from Ajmer,
11:13who holds 300 shares of Macrotech Developers at Rs. 1410 apiece. Currently, the stock
11:21lower, of course, Rs. 1258 is the current price. So my guess is he's making quite a bit of a loss.
11:28There you go, Rs. 45,000. Your sense, what should he do? Because the realty cycle is on fire.
11:38Absolutely on fire. And I think the government policy is very loud and clear.
11:43We've heard the Honourable Finance Minister speak on this particular sector very clearly.
11:50Affordable housing, housing for all. And then the Honourable Prime Minister,
12:00first day of the office, he had signed creating 3 crores houses for rural India,
12:07semi-urban and rural India. So the sector looks promising, absolutely no doubt about it.
12:12And I think more importantly, with the kind of regulation change and policy change that has
12:16happened in Maharashtra, especially in Mumbai, because in Mumbai, it's an island city and there
12:21is a lot of dirt of availability of space. So there has been redevelopment, cluster redevelopment
12:28and redevelopment of huge societies, which has created a big opportunity for players like
12:32Macrotech, that is Loda, and players like Godrej Properties, Oberoi Reality, which are Mumbai
12:38centric companies. We like the sector. Unfortunately, we don't have coverage on
12:43Macrotech, so I won't be able to comment directly. But there was an issue with this
12:46company with respect to the debt on the balance sheet and certain projects coming in terms of
12:54execution delays, etc. So the sector looks promising. The price point where this investor
13:00has got invested is very, very elevated. I have no idea what is the time horizon,
13:04but you need to be careful because real estate sector, despite RERA and all the policy changes
13:09coming in, it still remains to be a high beta sector. Okay, switching focus from the reality
13:15to the defence space now. The next query, Vijendra is asking on whether he should continue to hold
13:2115 shares of HAL, that is Hindustan Aeronautics, that he bought at a price of Rs 4,900, currently
13:28sitting at Rs 45,000. So, Rajat, I want to come to you on this one. What's your outlook on HAL?
13:34HAL is now consolidating. I mean, it did post a high around Rs 5,600 a couple of months back,
13:41but now it is struggling to take out, say, Rs 4,800 supply zone. But so long as it doesn't fall
13:50below its 200 exponential moving average, which is close to around, say, Rs 4,000 mark, it won't
13:56be bearish. But if one wants to book profits, then one can always do that. And if you are
14:02planning to buy this stock, then at least wait for some time, say, if it comes down to something
14:09like Rs 4,500 or, say, Rs 4,300, around those levels, you can buy and put a stop-loss below
14:15Rs 4,000 or, say, Rs 3,950. That would be a good thing. But then, currently, one should not be
14:21getting out, neither one should buy at current levels. Right. Gaurang, let me take it across
14:31to you. We have Sathya, a viewer. She wants to understand your views with regard to NBFCs,
14:39one-year time horizon is what she has. M&M Financial or Poonawalla,
14:45or a split among both of these? What's your viewpoint?
14:51Let me give a disclosure. We have fundamental coverage on M&M Financial services.
14:56Poonawalla, FinCorp, there is no coverage. So according to the regulations, I won't be able
15:00to comment on that. And if I were to look at business-centric focus, then M&M Financial,
15:06the reason why we like this particular company is that, first of all, they have got a very decent
15:11management, very strong pedigree in terms of capabilities and capacity of the management.
15:18Focus of M&M Finance is largely, of course, they are in tier-2, tier-3 cities, but
15:23large focus is on semi-urban and rural India. And over there, I think the kind of back-end
15:29support that this company gets from M&M, which is the flagship company of the M&M Group,
15:36that's very, very interesting. So if I have to put my money from a long-term point of view,
15:42my choice would be M&M Financial. Okay. Rajat, for the next query,
15:47I'll come to you. Now, this is from Yash Jain from Nagpur, Maharashtra. He holds shares of
15:53Solar Industries at a level from 9000. Wants to understand the medium-term outlook on this one.
15:59What's your view on Solar Industries? Regarding Solar Industries, what I would say is that
16:08it is showing some kind of a positive activity in today's session. Otherwise, it was
16:16pretty flat and range-bound for the whole month of August. Once it moves beyond, say,
16:27the 10,000 mark, then probably you will see further upswing happening.
16:34Okay. That's Rajat on Solar Industries. Rajat, let me stick with you. She'll be from Kerala.
16:41Wants your view with regard to Fortis Healthcare from a short-term perspective.
16:46See, regarding Fortis Healthcare, what I would say is that it is in a trending mode.
16:54And the trend is clearly an uptrend since the nine-day exponential moving average is hardly
17:00ever broken. And even if it is broken, it doesn't stay below that for more than two sessions. So
17:07I would put a stop-loss around, say, 520, and I would suggest that he continues with it.
17:13Chances are that 585 to about 598 would be the short-term target. And so long as, I mean,
17:21it's very easy to see today the nine-day exponential moving average. Unless it falls
17:27below that moving average for two sessions, one need not get out, even if it is a short-term trend.
17:34Okay. So, Gaurang, let me come back to you on this one. Now, Harish from Chennai wants to
17:40understand your view on Bharat Electronics for the next two to three years. He currently holds
17:44about 1,000 shares and this is at an average price of 48, currently at a profit of about 2,500.
17:50What's your perspective in terms of Bharat Electronics? How are the valuations stacking
17:54up in this one? And what's your outlook for the next two, three years?
17:58Before commenting on the valuation and the outlook, I think I must congratulate him.
18:02The level at what he's bought it is a fantastic... I mean, he identified an
18:08fantastic level from a long-term point of view. As far as the outlook on BEL is concerned,
18:15a disclosure again from my part, prudent to give that. We have fundamental buy-call on
18:21BEL from a long-term point of view, Bharat Electronics Limited. And we are, as a brokerage
18:26house, extremely excited on the entire defense space, whether it is... I mean, I'm just giving
18:32you names in terms of which are those strong, fundamentally strong companies. This is not a
18:36direct recommendation other than, of course, BEL, where we have a recommendation.
18:40So we were discussing Hindustan Aeronautics, Bharat Dynamics, Cochin Shipyard, Mazgaon Docks,
18:45Garden Reach Shipbuilders, likewise BEML. These are all strong, fundamental companies. And not
18:51to forget, these companies have rallied almost about 100, 150, 200% or more in the last maybe
18:56about a year, year and a half. So from those levels, even if these stocks have to correct
19:0015%, 20%, 30%, 40% from a short-term point of view, I don't think anybody should have a reason
19:06to complain. The outlook remains extremely positive for the defense sector given the
19:11order flow that these companies have spoken about in the very recent management interviews that we
19:18have listened into and heard into. And the commentary in terms of the next 3 to 5 years
19:22in terms of order intake is very, very strong. So if you're going to have these kind of strong
19:26order books and if you have the capability and capacity and experience and the technology to
19:30execute that order book, I think those executions are going to translate into top line and
19:35profitability. So instead of looking at short-term investment or trading ideas into defense stocks,
19:42I think you should have at least 3 to 5-year kind of a time.
19:45Right, 3 to 5-year time horizon. But let's switch focus, Rajat, with regard to KRBL,
19:53we have Anil Kumar who holds KRBL at Rs. 337 apiece.
20:00Your targets is what he wants to understand. Anil from Kerala.
20:06The immediate target, first of all, the stop-loss should be placed below Rs. 265,
20:14that should be the stop-loss and immediate target Rs. 341 and thereafter it would be Rs. 361.
20:20If Rs. 361 is taken out, then expect some further upswing. Otherwise,
20:25it would remain a bit range-bound.
20:29Rajat, I'll stay with you for the next one as well. Now, Darshan from Surat, Gujarat,
20:33is looking to invest for the right time in JK Tyres and Apollo
20:38Tyres. Wants to understand from you, is this the right time to enter in these two counters?
20:43If it was JK Tyres, I would say that had it been testing its 200-day exponential moving average for
20:50the first time, I would have said that one can attempt to buy. But it has been testing that
20:57moving average for the fourth time now. And if it were to fall below, say, 395,
21:04there could be further fall and it could go down to 360. Currently, this is not a buy and
21:11only when it crosses 425, it can become a buy regarding JK Tyre. And what was the other tyre
21:19company? He was repeating about JK Tyres and Apollo Tyres. Only JK Tyre?
21:30JK and Apollo Tyres. Both of these counters.
21:34Apollo Tyres is also range bound and it is also doing the same thing. And Apollo Tyres in the
21:41last several months, I mean, say from May this year, it has tested the 200-day exponential moving
21:47average almost on four occasions. Again, it is testing even yesterday, it came very close to that
21:57So what I would say is that there is no point being in this unless you are actually holding
22:03it for a long time or whatever. But this will become a buy only if it crosses 510.
22:11And if it fails to take out 510 again, then one should better get out of it if one has a position.
22:19If it fails to take out 510 again, then one should better get out of it if one has a position.
22:26And if you ask me, should one buy this? No. I mean, none of the two tyre stocks I just reviewed,
22:34I would say there is no buy call from my side. Okay, no buy call on tyres. But let us switch
22:41focus. Zomato. We have Ram from Mumbai, Gaurang, who has bought 6000 shares of Zomato at Rs 66
22:50apiece. We have seen two to three fabulous retail compounding stories just on the show today alone.
22:57Of course, we have been seeing it all week. But today in particular, we have seen three.
23:02And this is one of those. What would you do, Gaurang, at this point with regard to Zomato?
23:07He is making a profit of 11 lakh rupees.
23:12Well, congratulations to him. And I hope this is not the only investment,
23:16because overexposure to any particular sector and stock is also on the fundamental side,
23:20not advisable. One of the most important thing of this particular investment is the…
23:27Gaurang, I am sorry, I am going to have to cut you off there because we are getting live coverage
23:32from the Global Fintech Fest where the Prime Minister is addressing all the participants
23:38there. Listen in. …on our collective consciousness. As we gather here, let us reflect on
23:45the transformative journey that India has embarked upon under Prime Minister Modiji's guidance.
23:52From economic reforms to digital empowerment, from Swachh Bharat Abhiyan to Make in India,
23:59his initiatives have touched every corner of a vast and diverse country. India today
24:07is the fastest growing large economy. He is on track to become a $10 trillion economy in the
24:14next 10 years. And a $30 trillion economy by 2047, achieving the goal of big Swachh Bharat.
24:35Prime Minister Modiji's vision extends beyond borders. His diplomatic acumen has strengthened
24:41India's position on the global stage. Whether it's fostering strategic partnerships or championing
24:48climate action or bringing peace to conflict regions, he leads with conviction and foresight.
24:56Today, we celebrate not just a leader but a beacon of hope, a man who believes in the power
25:02of unity, innovation and progress. Sir, GFF 2024 is probably the world's largest annual Fintech
25:14conference. GFF brings together luminaries, policymakers, regulators and Fintech founders
25:28for insightful discussions, groundbreaking technologies and networking opportunities.
25:35The theme for this year's event is Blueprint for the Next Decade of Finance, Responsible AI,
25:42Inclusive and Resilient, and features over 1,000 speakers and 300-plus sessions.
25:49Before I invite Honorable PM to speak, I would like to invite RBI Governor
25:56Shri Shaktikant Dasji to address you. RBI has been very key in partnering with GFF.
26:19Honorable Prime Minister, Shri Kris Gopalakrishnan, industry leaders,
26:32esteemed participants, members of the media, ladies and gentlemen, the Global Fintech Fest
26:40GFF has emerged as a flagship event showcasing innovations, technological transformation
26:47and the spirit of collaboration in the Indian Fintech sector. Started in 2020 with 12,000
26:56participants, GFF 2024 has so far seen 80,000 participants.
27:07This demonstrates not only the growing stature of this event but also the growing prominence of
27:15India in the technology-driven financial innovation. The presence of the Honorable
27:21Prime Minister in GFF 2024 inspires all of us to put in our best efforts to build a Fintech ecosystem
27:31that is truly future ready. In this endeavor, our priority should be to build an environment where
27:38financial services are seemly integrated into the lives of our 1.4 billion people.
27:46India now stands on the cusp of a transformation where technology will be the engine to meet
27:53aspirations of every citizen. From mobile banking to digital payments, AI-driven lending,
28:01blockchain innovations, the Fintech ecosystem is constantly evolving to meet the diverse
28:07needs of our growing economy. Digital technologies have been instrumental in expanding
28:13financial inclusion, improving efficiency and enabling real-time services across the country.
28:21Today, India stands as a global leader in digital payments, a feat achieved by combining
28:28proactive policymaking with innovation and technological advancements. Collaboration
28:34between policymakers, regulators and innovators is a defining element of India's Fintech journey.
28:42The success stories in our Fintech space like Aadhaar, UPI and the DigiLocker are results of
28:50such collaborative efforts. Initiatives like Account Aggregator Framework, Unified Lending
28:57Interface that is ULI, Open Credit Enabled Network that is OCEN and several others are
29:04expected to redefine credit access, particularly for small businesses and individuals. The Reserve
29:11Bank's regulatory frameworks have facilitated new and innovative businesses to grow in an orderly
29:18manner. These regulatory initiatives reflect our commitment to support innovation with prudence.
29:26Our collaborative approach is visible in the fact that we have held a large number of
29:32interactions over the last one year with the Fintech sector players. For example,
29:38the various departments and officials of the Reserve Bank have held about 750 bilateral
29:45interactions and held about 50 structured meetings with the Fintech players. As we
29:51march towards India at 100 in the year 2047, I urge every participant at this GFF and others
30:01who could not attend and hopefully and I'm sure they will attend the future editions of GFF
30:08event. I would urge each one of you to continue dreaming, innovating and pushing boundaries.
30:16Thank you. Namaskar.