-#GujaratStatePetronet to restructure into #GujaratGas and #GSPL transmission
-#Nifty #Sensex trade higher
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #ndtvprofitlive
-#Nifty #Sensex trade higher
Get all your stock-related queries answered by our technical and fundamental guests with Alex Mathew on Ask Profit. #ndtvprofitlive
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TVTranscript
01:30Hi, thanks so much for joining in.
01:51You're watching NDTV Profit.
01:52My name is Alex Mathieu and this is Ask Profit.
01:55Like the name suggests, this show is geared towards answering all of your stock-related
01:59questions and to that end, the number that you see at the bottom of your screen, that's
02:04where you send your questions to us.
02:06Do remember if you're writing in for the first time to tell us your name and where you're
02:10tuning in from, it'll help you identify when we take your questions up.
02:14Before we get to that though, let's take a look at how the markets are faring right now
02:18and as I look at my screen, it's narrow gains and that seems to have been the trend over
02:23the course of the last couple of weeks.
02:25It's another day of gains and if we do hold on to gains today, it will in fact be the
02:3013th straight session of gains for the Nifty 50.
02:35It has slowly and steadily moved upwards.
02:38It has gained over a thousand points over the last 14 days or so and it is now trading
02:44very comfortably above 25,300 having hit an all-time high yet again in trade today.
02:51The broader markets are not doing too much at this juncture and in fact, you have the
02:55mid-cap index that is down about a third of a percent or so and you have the small
02:59cap index that's up just about a tenth of a percent.
03:04I was looking at the advance decline ratio and that is also pointing to a bit of a mixed
03:08bag.
03:09In fact, it's even Stevens in terms of advances and declines, more declines at this juncture
03:15just about at this point compared with the advances.
03:19In terms of the sectors that are currently moving, you have the key outperformers in
03:24the form of FMCG as well as the finance pack which is gaining in trade today, not too much
03:30to speak of though, gains of about 0.4% for the IT space as well and that has been a sector
03:36that has been in focus.
03:39The losers are the metal index which is down about 0.6%.
03:44You have auto that's down about 0.6% as well and auto has been a talking point.
03:49In fact, a number of these stocks have been in focus.
03:53The likes of Tata Motors losing ground among the top underperformers on the Nifty 50.
03:59You have Mahindra and Mahindra which was better than expected in terms of volumes but by and
04:04large you had the auto pack that have underperformed in terms of the volume picture for the month
04:10of August and you have Tata Motors, Ashok Leyland, Mahindra and Mahindra, Bosch, all
04:17of them indicating that bit of negativity when it comes to the sales that have come through.
04:23Now, one of the big talking points in corporate India at the start of the new trading week
04:28is in fact the story about Gujarat Gas.
04:32The boards of Gujarat Gas and Gujarat State Petronet have announced a scheme of arrangement
04:36that will consolidate the government of Gujarat's energy business held via various companies.
04:43This will result in two entities post the transaction.
04:46In fact, both of these entities, particularly Gujarat Gas has been buzzing on the back of it.
04:51This is in order to create value for shareholders and in order to simplify the structure.
04:57What is the structure about and what are the implications, we are talking about that at
05:01the start today.
05:02Meeka is joining in to tell you more.
05:03Meeka, first the structure and then we will talk about valuations.
05:06Let's talk about the scheme of arrangement in focus.
05:09Now, first part of it is Gujarat State Petroleum Corporation, Gujarat State Petronet and JSPC
05:16Energy will merge into Gujarat Gas and then the transmission business will be carved out
05:21and listed separately.
05:22So, thereby two companies have to be resultant or Gujarat Gas will then carry out the city
05:27gas distribution business, the gas trading business and exploration production while
05:31the JSPL transmission business will hand out the transmission side of things.
05:35In terms of this share exchange ratio, the merger of JSPC into Gujarat Gas, 10 shares
05:40of Gujarat Gas will be issued for every 305 shares held.
05:43For JSPL, Gujarat Gas will issue 10 shares for every 13 shares held.
05:49And for the demerge of the transmission business, one share of the new entity will be given
05:53for every three shares held in Gujarat Gas.
05:56So in total, Gujarat Gas will issue 78.66 crore shares.
06:00But out of this, over 53 crore shares will be extinguished because all of these companies
06:04have stakes in each other and the timeline is expected to be completed by July to August
06:10of 2025.
06:11Okay.
06:12Megha, the big question that shareholders are asking and some of them have gotten that
06:16answer since morning, what is the valuation suggesting and does it in fact actually unlock
06:22value?
06:23Yeah.
06:24The valuations are fairly priced.
06:26Now, Gujarat State Petronets company is valued around 26,000 crores, but the core business
06:31is only valued at 3,500 crores and the rest is in investments.
06:36For Gujarat State Petroleum, the company is valued around 21,000 crores and the implied
06:40EV to EBITDA multiple is at 6.8 times, which is lower than the industry average actually.
06:46In terms of brokerages, they are fairly mixed.
06:48Now, Jefferies, which still maintains an underperformed rating, says that the integration of the gas
06:52trading businesses will improve Gujarat Gas's margin profile, but it also increases the
06:57company for earnings volatility.
06:59MK also has a reduced rating on the stock, but they do see value for Gujarat State Petronets
07:05shareholders as they see a 5% upside and they also expect the merger to imply 50% of EPS
07:10accretion for Gujarat Gas.
07:12Fair point.
07:13All right.
07:14Thanks, Amika, for getting us those details.
07:15Let's talk about this at the start.
07:17In fact, let me get the experts on board.
07:20We have got Sameer Zalal of Netforlal and Suns Stockbrokers as well as Rajesh Palviya,
07:24who is the Senior Vice President, Technical and Derivatives Research at Access Securities.
07:28Gentlemen, thanks so much for taking the time.
07:30Sameer, I'll start with you.
07:31What do you make of the deal?
07:32And in fact, you've already seen a big run-up in Gujarat Gas.
07:35Is it still a buy at this point?
07:38So honestly, we don't have coverage on GSB, but Gujarat Gas, we do have coverage and we're
07:41very bullish on the city gas distributors across the board, be it MGL, IGL, Gujarat
07:46Gas, for the simple reason that we believe that over time, you're going to see more acceleration
07:51of city gas distribution.
07:53You're going to see the CNG variants, as CNG scooters like Bajaj has launched and the
08:00cars keep continuing to see traction, I think the demand from there will also keep growing.
08:04So the profitability as the volumes grow, you see operating leverage come through and
08:08you see profitability continuing to grow and ROEs remaining healthy.
08:12So we were quite positive on that.
08:14Now, I haven't studied exactly the details of the mergers, so it's very difficult for
08:18me to tell.
08:20We did believe that Gujarat Gas was fairly priced for the near term, but over a long
08:24term, there was a good opportunity.
08:26So this run-up obviously reduces the upside over the longer term.
08:29But yes, any correction in Gujarat Gas would be something interesting to buy at.
08:33But like I said, I haven't studied the details of the merger.
08:35So I don't know how the merger is going to play out and how it's going to impact the
08:39overall situation.
08:40Okay, fair point.
08:41It's time to jump into the queries and we've got quite a few that have already come through.
08:45I would like to reiterate, if you're tuning in right now, the number that you see at the
08:49bottom of your screen, that's where you send all of your questions to us.
08:52And if you are writing in for the first time, do remember to tell us your name as well as
08:56the location that you're tuning in from.
08:58The first question we're taking today is from Narendra.
09:01He's writing in from Hyderabad and he's asking about Tata Technologies, which he's bought
09:04in an average price of Rs. 1,000 per share, and he's looking at accumulating this more
09:11going forward.
09:12He's wondering what the long term outlook is for the stock.
09:16Is it in a profit right now, about Rs. 6,000 or thereabouts?
09:20The question I will take to you, Rajesh, based on how you're seeing it on the technicals,
09:26would you accumulate at this price?
09:28What is a good level to start accumulating at?
09:31Post listing, we have seen that Tata Tech was under profit taking mode and continuously
09:39stock was in downtrend.
09:42And if you analyze on a weekly chart also, stock was moving in a falling channel.
09:48But since last couple of weeks, we have seen there is a reversal and stock managed to break
09:54out of this falling channel.
09:56Looking at the near term short term structure, there is a sign of reversal on the stock prices,
10:01but still 11.25 is the immediate supply zone for the stock.
10:06If at all the stock manages to cross above 11.25, then a possible up move we can see
10:12towards 1200 to 1250 on a positional perspective.
10:16So some sign of reversal is there on the stock prices.
10:20Stock is now trading about a 20 day, 50 day moving average.
10:22So that clearly showing us that near term structure is showing strength.
10:28So I think if he's holding the position, can continue to hold.
10:32If he's willing to hold it for some more time, stock loss is now placed at around 1020.
10:39And just in disclosure, this is stock I am also holding in my personal portfolio.
10:43Tata Tech.
10:44All right.
10:45The next counter that we're talking about is Izhek.
10:47And let's pull that up.
10:48We're talking about Izhek Heavy Engineering Limited, which is currently trading at 1379
10:54or thereabouts.
10:55And we've got Jigna, who is writing in from Mumbai and who has bought this at a level
11:02of 1520.
11:03He is incurring a loss at this juncture and is wondering whether to hold on to this.
11:08I will come back to you, Rajesh, on the technicals.
11:10Would you hold at this level?
11:12Because he's bought at levels of 1520, slightly elevated.
11:15So Alex, there is a profit taking is happening in this stock.
11:22That stock is almost now trading at 50 day moving average support area.
11:27Long term structure is bullish.
11:30Some profit taking on the near term structure.
11:32But I think if he can give some more time, there is a possibility that the stock may
11:37again start recovering from the current level.
11:401340 is the immediate time important support area at this juncture.
11:44If it breaks below 1340, then he may look for, you know, change the stock.
11:51But I think till 1340, I think he may hold on the position.
11:56On the higher side, once the stock crosses above 1430, I think there could be a fresh
12:01round of buying.
12:02We may see in this stock and then 1600 to 1650 would be the next target.
12:07Okay.
12:08All right.
12:09Harish from Chennai has got this next question and it's an interesting one.
12:11I will come to you on this one, Sameer.
12:13He's talking about BEL Bharat Electronics, which he's bought at an attractive price of
12:1948 rupees.
12:20That's the average buy price.
12:24The stock is currently trading at 297 or thereabouts.
12:27It's down about 0.7 percent, but it's gained quite handsomely since Harish bought it.
12:34He's holding 1000 shares and he's wondering what the prospects are over the next two to
12:39three years.
12:40What do you think?
12:41So the business prospects are very good, right?
12:43So there's a differentiation in business and whether we should stay invested.
12:47So we believe that the business prospects for BEL are quite strong.
12:50We believe that they will continue to see good traction and order inflow.
12:54They're getting into drones making and all of those kind of products, which the defense
12:57industry is going to have a good amount of demand.
13:00Apart from that, what they currently are doing also, you see order book is continuously increasing
13:05and because of which the top line and the profitability is increasing, the operating
13:08leverages are playing out.
13:10But the problem we have with BEL at the current point of time is simply the valuation multiples.
13:16Across the board, including BEL, valuations have deteriorated quite significantly.
13:22The earnings we don't deny will come through over the next two to three years.
13:25But you've got to realize that we've always said this, that, you know, these defense projects
13:30are long gestation projects and the products that they sell also, it's difficult to predict
13:37what the profitability for these margins are going to be because they're kind of fixed
13:41in price nature.
13:43So if raw material prices for them move up, then the profitability can get affected, the
13:48operations can get affected.
13:49So given that, I mean, it's better than most of the others, but it's still a bit on the
13:54expensive side.
13:56So I would think it makes sense to take some profit right now.
13:59If it comes below the 200 level, we would suggest, or closer to the 200, we would suggest
14:03getting back into the stock, but at these valuations, we're not after.
14:07Fair point.
14:08Valuation, certainly a concern for a lot of defense companies, including BEL.
14:12Let's talk about Eswar, who's writing in from Nandyal, and he's asking about VMS Industries.
14:18This one's for you, Rajesh.
14:19And he's asking about a stock that he's bought at levels of 56 rupees a share.
14:24He's wondering whether to hold or exit.
14:25The current loss stands at as much as 1,700 rupees.
14:28Thankfully, it's not 1,700 crores.
14:32I'm so used to talking about crores.
14:34Rajesh, 1,700 rupees of losses in VMS, would you hold on?
14:40So the stock is only listed in the BSE.
14:45Looking at the chart structure, the stock is struggling to cross 70.
14:50That's the major supply zone for the stock on the near-term to short-term perspective.
14:55Looking at the near-term, short-term structure, I think some corrective move has taken place
14:59in this stock, and now the stock is trading near to its important support area of 51.
15:04That's the immediate support area for the stock.
15:07If it's able to hold 51, then some reversal we can see in the near-term basis, and on
15:13the higher side, 65 is the first major supply zone.
15:17If at all the stock crosses above 65, then maybe we can see a target towards 74 to 78.
15:24But at this juncture, I would suggest to keep a stop-loss of 51 if you are holding the position.
15:29All right.
15:30Pragya Chakravarti has got the next question.
15:32She's writing in from Bangalore, and she's asking about HDFC Bank.
15:37She's asking a question I think that a lot of investors of HDFC Bank have been asking.
15:42What is the outlook?
15:44Because there has been a lot of talk about the stock, and a lot of people have suggested
15:49buying into the stock, but it has not moved up very substantially.
15:53In fact, as you can see on the screen, the year so far, it has not really done too much.
15:59It's down about 4.5 percent.
16:01It has recovered, of course, from the low points.
16:04The question that she's asking is, she's bought at levels of 1,443, which is actually quite
16:09an attractive level.
16:10A lot of people were screaming buy at that point.
16:13I think you had said the same thing, if I remember correctly.
16:17What would you do with this, though?
16:20We continue to stream buy even at this point.
16:22So yes, we were positive on HDFC Bank around 1,400, 1,500 levels.
16:26We continue to remain positive.
16:28And I'm not denying the fact that in the near term, you might see some pressure because
16:32you see, bank deposits are not coming cheap, they're coming expensive, which is leading
16:37to some amount of NIM compression.
16:39And that NIM compression for some time could probably be something that stays.
16:43So we may not see something great happening in the next six months.
16:47But if somebody has another two-year horizon, we believe that without the banking industry,
16:52and especially without the largest private sector player who has priority access to the
16:56cheapest cost of funds, it's going to be difficult for the Indian economy to continue to juggle
17:01on.
17:02So as the demand for funding picks up, and as HDFC Bank starts seeing more traction on
17:08the loan growth side with higher margins, and NIM start to stabilize and start moving
17:12up over six months to a year's period, I think the stock will start performing.
17:16Valuation comfort is finally there.
17:18I mean, HDFC is always one of the stocks that used to trade at four times price to book.
17:23You're getting it at 2.2 times price to book, which is very attractive on its own historical
17:28basis.
17:29But even when you compare it to the likes of ICICI and Axis, I think the valuations
17:33are now, the differential in the valuations have compressed quite significantly.
17:37So I'm not saying that they will expand again drastically to go higher, but given the quality
17:42that HDFC persists and the management quality and everything that exists, we believe HDFC
17:47will re-rate over time, we'll see a good uptick, be patient, hold on to what you have, and
17:53if you can on any correction, please add up.
17:55All right, that's the view on HDFC Bank.
17:58Current power is the next counter that we're talking about, and this is a question from
18:02Thomas George.
18:03He's writing in from Cochin in Kerala, and he's bought at levels of Rs.1,700.
18:07He bought in August of this year.
18:09He's saying that he can hold for a period of two years.
18:12What should the targets be?
18:14Relatively long term, Rajesh, and the capability of holding for a long period, what target
18:20would you give for a stock that has already gained 80 plus percent?
18:25So a stock looking bullish across all time frames.
18:28Some profit taking at high level, but still, if you analyse on the long term chart, the
18:32stock is clearly moving in an upsloping channel on the monthly as well as on the yearly chart.
18:36That clearly shows that this momentum can extend further.
18:40Possible target on the higher side, we can see towards 2,400 to 2,500 if he is willing
18:46to hold it for another two years.
18:49So I think, by all depths, the strategy in this stock, until the stock not breaks below
18:5415-60 level, I think trend is likely to remain on the bullish side and possible upside we
19:00can see towards 2,400 to 2,500 also.
19:02All right.
19:03Prasanna has got this next question, and it is a question for you, Sameer.
19:08On the target, on the long term target that you would ascribe to Suzlon Energy, and a
19:14lot of people have spoken about the kind of run that it's had, 73 or thereabouts.
19:19Even if you don't have a target, would you suggest an entry into this?
19:23And if so, what is the kind of duration that you would have to be willing to hold for you
19:28to see a substantial upside from this level?
19:31From the current level to see an upside, I think the minimum someone would have to wait
19:35would be a three year period.
19:37So I am very, very positive on the business prospects of Suzlon once again.
19:43The kind of traction that they're going to get, the kind of order flow that's going to
19:46happen over the next couple of years is going to be magnificent.
19:49They've been working at about 20 to 30% capacity utilization, which can scale up all the way
19:56to 70 to 80 over the next few years as the order inflows come through.
20:00And why we believe the order inflows are going to come through is that, look, India requires
20:03a huge amount of power capacity to be put up, given the kind of growth we're expecting.
20:08For the first time, we are actually in peak hours running at a small deficit.
20:13And as the requirement for power goes up, the easiest way to put up and quickest way
20:18to put up power is the renewable space, be it solar or be it wind.
20:21So we believe that Suzlon with its new hire, the wind turbines that they have that go higher
20:28with bigger wind spans, will be something that will generate good ROEs and there will
20:32be good demand for it.
20:34So we continue to remain positive on that front.
20:36Again, similar story to what we discussed in the other stock, valuation discomfort.
20:41So everyone's already priced in the kind of growth that's going to come to the order book.
20:46And that is reflective of the price at the moment.
20:49So for this price to be justified, I think it needs the company to work at closer to
20:5460% to 70% utilization, which will take a good two to three years to happen.
20:59So the new capacity that they're putting in will also start trickling in.
21:01But really, the benefits of that will start coming maybe three years down the line.
21:05That's why I'm saying that if you want to make money from the current levels, you've
21:09got to wait for three years.
21:10But if you get corrections closer to the 50-55 levels, one can add on.
21:15Before 50-55 levels, I'm not recommending a buy.
21:18Let me add on.
21:18I have held the stock and we have sold some amount of stock at 80-82 bucks.
21:24And we're not looking to add that back to 50, if anything.
21:28And if it keeps running up, we'll probably sell the entire lot because we're uncomfortable
21:32with the value.
21:33Yeah, that's a fair point.
21:34And thanks so much for that clarification, Sameer.
21:37We've got a question coming in from, well, Ravi Kumar is writing, and he's asking about
21:43Natco Pharma, which he's bought at levels of Rs 1,350 per share.
21:48It's currently trading above that price, comfortably so, at about Rs 1,500 or thereabouts,
21:54Rs 1,540.
21:56What should you do about this?
21:57Rajesh, would you hold based on what you're seeing on the charts?
22:00Definitely, I think one should hold this Natco Pharma.
22:04Overall, its structure is bullish.
22:05Its stock is moving in an up-sloping channel on a monthly chart.
22:08That clearly shows that sustained buying action is taking place in this stock.
22:12This is the third consecutive month where the stock has formed a higher-high-low formation.
22:17And the whole pharma space is also looking bullish at this juncture.
22:21The buying flow is continuously there in most of the pharma stocks.
22:24So we believe, yes, Natco Pharma, he can hold on the position.
22:281470 is the stop-loss and possible upside target for short-term is around 1650 to 1700.
22:34Okay.
22:35That's the view on Natco Pharma.
22:37By the way, we try and take one query per viewer.
22:42So do restrict your question to one stock.
22:45And the next one is from Darshan, who's writing in from Surat in Gujarat.
22:50He's got 20,000 JK Tire and Apollo Tire shares because he's got a lot of shares.
22:57Because it's the same sector, I'm going to take both.
23:00He hasn't really given us a buy price or...
23:03Okay.
23:04Apologies.
23:05I think he wants to invest 20,000 rupees into both of these counters.
23:10And he's wondering whether this is the right price to get in.
23:13Sameer, how do tire companies look?
23:16And from the pack, would you suggest JK as well as Apollo or would you pick one of the two?
23:22If you had to have a pick at the moment, given the valuation front and given the
23:26prospects that lie forward, I think JK Cement makes a better buying opportunity than an Apollo
23:31Tire.
23:32Though Apollo has a bigger market share and better penetration, we believe that, look,
23:36the tire industry to a large extent is commoditized.
23:41They do have branding, but very few people go to the market and say,
23:44no, I want the exact same tire and I want it for this company.
23:49What they do look at is what is the pricing for a particular tire?
23:53I mean, what the width is, what the radial is and all of those kind of...
23:57What they compare.
23:59JK, I think, can probably capture some amount of market share.
24:03Apollo is a great company, also going to do well.
24:06We believe the tire industry for the next many years is going to do well because,
24:09let's put it at this, if there's a shift happening in the electric vehicle space,
24:13the tire is one product that is not affected whether there's a shift in the
24:17engine to electric, to CNG, to...
24:20It's agnostic.
24:21So as the demand for cars in the country increase, as the replacement demand continues to increase,
24:26which is continually happening, the number of cars flying on the road are higher,
24:31so the replacements happen more often.
24:33We believe the growth opportunity for the tire industry is very strong,
24:36but valuations across the board, be it MRF, be it Apollo, are very, very expensive.
24:40JK is trading at a better valuation, but like I said, it's a smaller player.
24:45So it's a question of whether you want to stick with one of the leaders or you want
24:48to stick with a better valuation.
24:50For me, I'd rather have better valuations given where the market is.
24:53So I would pick a JK over Apollo.
24:56Yeah, you know, till the time we come up with flying vehicles, Sameer,
25:01I would think that the one thing that you would not have to reinvent is the wheel.
25:05Let's talk about Zomato.
25:07And this next question is coming from Nikhil.
25:09He's riding in from Delhi and he's got Zomato at a level of 267.
25:16He's wondering whether he should buy or sell at this juncture.
25:19The stock is currently trading at 245.
25:22Rajesh, what's your view on the charts?
25:25So this is the third consecutive week stock is showing some profit taking from recent high.
25:31But if you analyze on the short to medium term perspective,
25:35still stock is holding the bullish ground.
25:38And we believe that 240 is the immediate support area for the stock in this correction.
25:44If it's able to hold out to 240, I think we may see some pullback action from those levels.
25:50And in the pullback, if the stock crosses about 265,
25:54then really can extend to 285, even 300 kind of zone also for Zomato.
25:58So the time horizon is a little longer.
26:01If he wishes to hold it for the next three, four months,
26:04I think he can hold on the position with stop loss of 238.
26:09I'm coming back to you, Rajesh, on this next one.
26:11Wari Renewable Technology is the name of the counter.
26:14Lavanya from Tamil Nadu is asking about this.
26:16Borrowed levels of 1670.
26:19Is it better to hold or would you sell?
26:22And she is currently incurring a narrow loss.
26:26So she's asking whether to sell at a loss.
26:31You're talking about Wari?
26:32Wari, yeah.
26:34Okay, I think she can hold on the position.
26:38Some correction is happening in the stock prices.
26:42Looking at the near-term short-term structure,
26:441440 is the immediate and important critical support area
26:49for the stock on the downside.
26:51If it's not break below 1440,
26:53I think some pullback action we can see in the stock.
26:55And then possible momentum can extend to 1620.
27:00That's the immediate supply zone for the stock.
27:03Once the stock crosses above 1620,
27:06then further upside target towards 1750, 1800, we could see.
27:11Though the stock has corrected significantly from its recent high,
27:16but after this correction,
27:18I think some support buying action has been taken place
27:22in the stock from the lower level.
27:23The 1440 should be the stop-loss to hold the position at this juncture.
27:28Okay, quick view, Sameer, on Madasan Sumi wiring India.
27:32We've got a question coming in from Shashank Vedula,
27:35who's writing in from Visakhapatnam.
27:36He's holding a level of 68,
27:38which is very close to the current market price.
27:40He's looking in the next two to three years.
27:41Should he hold on?
27:44So honestly, we don't have detailed coverage
27:46on the wiring part of the business,
27:48but the other one, Madasan, we do.
27:50And we feel valuations have moved up.
27:52But this one, I don't have coverage.
27:54Okay, fair point.
27:55I know that it's a spinoff.
27:57And therefore, I don't know how much data you're going to have, Rajesh.
27:59But would you hold on to Madasan wiring?
28:04So data is limited, but looking at the limited data,
28:08yes, I think hold the position
28:11as stock is almost trading near to the support area of 68, 67.
28:15So I think if it's not break below 67,
28:18there is a possibility that stock may attempt to break out
28:21of its immediate supply zone of 74, 75.
28:24And if it's happened, then 82 would be the next target.
28:27Point.
28:28Gentlemen, thank you so much for joining in,
28:30for answering all the questions that you did.
28:32Always a pleasure having you on the program.
28:35We're completely out of time.
28:36Hopefully, the questions that we got answered for you today
28:38have benefited you, even if you didn't ask them.
28:41We've got lots lined up over the course of the day.
28:43Do stay tuned.
28:44This is NDTV Profit.
31:36Hello and welcome.
31:42This is Hot Money.
31:43I'm Agam Akhil.
31:43And in this show, we take you through all the stocks
31:46which are buzzing and have been the flavor of the season.
31:50But for now, a quick look at how markets are faring
31:53and they are currently at life highs.
31:57We have made 25,300 on the Nifty.
32:02And well, it's just short of that at the moment.
32:04And the Bank Nifty has given up some of the gains.
32:09So it's now marginally in the red.
32:11We've seen a little bit of an underperformance
32:13when it comes to the broader markets.
32:14Let's see whether or not that still holds.
32:17And it does.
32:17So the mid cap is down by around 0.4%.
32:20And the small cap index is marginally in the red too.
32:24Now, overall, if you consider the advanced decline ratio,
32:27at least in the first couple of hours of trade,
32:29it was fairly evenly poised between the two.
32:32And it still is, though there has been a widening
32:35in terms of the number of advances against decline.
32:38So currently at around, well, I would say about
32:42three gainers for four losers
32:45in the current market circumstances.
32:48But moving on, even in terms of the broader markets,
32:52if you consider some of your big movers,
32:53they will naturally have a big, big up move
32:56for something like a Gujarat Gas.
32:57That's up around 9.6%.
32:59And besides that, we continue to see strength
33:02in name like Brigade Enterprises.
33:05That one is up and about as well.
33:06We have gains in Aegis Logistics, well, Sona,
33:10BLW also advances for something like a Chalet Hotel
33:15and Pfizer.
33:16Those are a handful of names which are in fact doing well.
33:19Well, PTM is down around 5%.
33:22So that's a little bit problematic too out here.
33:25And we're looking at Dixon Tech now
33:28wilting under quite a bit of pressure, to be honest.
33:31Indus Tower, Granules, Vodafone Idea also,
33:34well, in the red for now,
33:36with cuts of anywhere between 3.9 to 4.5%,
33:40along with Archein Chemicals and Symphony
33:42also looking at some amount of declines coming through.
33:45So that's as far as your overall market is concerned.
33:48Now, well, not the most encouraging start
33:51to the trading week,
33:52save for, of course, that the Nifty
33:54is making a new life high.
33:56And that said, we're still looking at a lot of writing
33:59around, you know, 25,500 calls in there about.
34:04Remember that the range has shifted slightly higher,
34:08but we still continue to see
34:10that kind of pressure coming through.
34:12So, well, besides that,
34:14even in terms of sectoral movers,
34:17if we can very quickly pull up how
34:20and which are those sectors
34:21which are actually doing well.
34:22So the Nifty IT Index continues to advance today.
34:25And as is the case for FMCG
34:28and the oil and gas space also is buzzing
34:30for now up around half a percent.
34:32But what's also under pressure is Nifty Auto Index.
34:35It does seem like the volumes are
34:37just a tad bit disappointing
34:39when it comes to the month gone by.
34:40But don't forget, we have a very long festive season
34:44coming up ahead.
34:45And that will, in fact, start off,
34:47you know, end of September
34:49and the beginning of October.
34:50And from there on, of course,
34:52we tend to see a little bit of a climb
34:54as far as your auto sales are concerned.
34:56Nifty Metals is also down around 8.8 percent, pardon me.
35:00But with that, let's talk about all the stocks
35:02that we are going to take up today.
35:04And actually, we are going to talk about
35:05Bajaj Finance on the back of,
35:07well, details coming through
35:08from its housing finance IPO.
35:12Gujarat Gas and GSPL on account
35:14of the big restructuring that's coming through.
35:16We talk about auto sales as well.
35:18Cummins India on the back of a broking note.
35:21NHPC and SJVN being given Navratna status
35:25and the whole oil and gas space as well in general,
35:29but perhaps specifically upstream companies today.
35:33But to talk to us about all these names,
35:37we have Sharmila Joshi of sharmilajoshi.com joining us.
35:40Sharmila, good afternoon.
35:42Thank you so much for joining in.
35:44Well, as usual, before I come to you,
35:46I'm going to take up the first topic.
35:48And that is, of course, the restructuring
35:50that is underway when it comes to Gujarat Gas
35:54and GSPL, of course, also looking at an up move today.
35:58Let's get in my colleague, Mihika,
35:59to tell us about what's come through over the weekend.
36:02Mihika, over to you.
36:05Let's talk about, you know,
36:06the scheme of arrangement and focus.
36:07Now, first part of it is
36:09Gujarat State Petroleum Corporation,
36:11Gujarat State Petronet and GSPC Energy
36:14will emerge into Gujarat Gas.
36:17And then the transmission business
36:18will be carved out and listed separately.
36:20So thereby, two companies have to be resultant.
36:23Gujarat Gas will then carry out
36:25the city gas distribution business,
36:26the gas trading business and exploration production,
36:29while the GSPL transmission business
36:31will hand out the transmission side of things.
36:33In terms of this share exchange ratio,
36:35the merger of GSPC into Gujarat Gas,
36:38or 10 shares of Gujarat Gas
36:39will be issued for every 305 shares held.
36:42For GSPL, Gujarat Gas will issue 10 shares
36:45for every 13 shares held.
36:47And for the demerge of the transmission business,
36:49one share of the new entity will be given
36:51for every three shares held in Gujarat Gas.
36:54So in total, Gujarat Gas will issue 78.66 crore shares.
36:58But out of this, over 53 crore shares will be extinguished
37:01because all of these companies have stakes in each other.
37:04And the timeline is expected to be,
37:06you know, completed by July to August of 2025.
37:10Right, Mihika.
37:11But you've spoken largely about
37:13how this restructuring will take place.
37:16What can you tell us about valuations going forward?
37:21The valuations are fairly priced.
37:23Now, Gujarat State Petronet's company
37:25is valued around 26,000 crores,
37:27but the core business is only valued at 3,500 crores,
37:30and the rest is in investments.
37:32For Gujarat State Petroleum,
37:34the company is valued around 21,000 crores,
37:36and the implied EV to EBITDA multiple
37:39is at 6.8 times,
37:40which is lower than the industry average, actually.
37:42In terms of brokerages, they're fairly mixed.
37:45Jefferies, which still maintains an underperformed rating,
37:47says that the integration of the gas trading businesses
37:50will improve Gujarat Gas's margin profile,
37:52but it also increases the company for earnings volatility.
37:56MK also has a reduced rating on the stock.
37:59But they do see value for Gujarat State Petronet shareholders,
38:02as we see a 5% upside.
38:04And they also expect the merger to imply
38:0650% of EPS accretion for Gujarat Gas.
38:09Okay, Mihika.
38:10Thank you so much for getting us all those details
38:12on that upcoming merger.
38:14And then subsequent de-merger there.
38:17Sharmila, welcome to the show.
38:18What are you making of this whole restructuring exercise?
38:22And how would you be placed
38:24on any of these stocks going forward?
38:26I think I would be placed positively.
38:28Because I'm taking a very macro view of the situation.
38:31I'm not really getting into the nitty-gritty
38:34of each and every company and their value, etc.
38:38But I think that broadly,
38:39I'm very positive on gas as a business.
38:44I think there is increased...
38:46The data that we have seems to show
38:47that the shift towards gas is gradual,
38:50but it is sort of a steady shift.
38:52And apart from weaker shifting to gas,
38:55we also have a lot of industry,
38:57especially in the state of Gujarat,
38:59which are now increasingly using gas.
39:02So that's one bit I'm positive on.
39:04And I do think that everything that I've read
39:07seems to suggest that the synergies will work better
39:10for Gujarat Gas going forward.
39:12Because they are already, I think,
39:13the second largest gas-trading company.
39:15And when they merge these bits with themselves,
39:18and they remove the transmission business from themselves,
39:22I think the structure will be simpler
39:24and the synergies will be better.
39:26So just going by that,
39:27I think you need to take a slightly longer-term view of that.
39:29I'm not looking at how it will be immediately.
39:32Though I think immediately does seem to suggest
39:34that the GSPL market seems to think
39:37that that is benefiting.
39:39But overall, I think it's a good move.
39:41And there had been a little bit of bad news
39:43for gas as a business,
39:45when we had those kind of tapes coming
39:49that from the state of Delhi
39:50that they will shift their state transport
39:54increasingly to electric vehicles, et cetera.
39:57So we had seen gas companies take a bit of a backseat.
40:00But I think that going forward,
40:02it would be sort of a sector
40:05that I would continue to be positive on.
40:06All right, well, there you have it.
40:08That's a view coming in on those set of companies.
40:11But from there on, let's talk about Bajaj Finance.
40:14Now, a handful of updates coming here
40:17when it comes to Bajaj Finance.
40:18First, of course, is an update
40:22when it comes to credit growth.
40:23And again, it's not been the best.
40:26There's been a little bit of slowdown,
40:28but that's not a key concern at the moment.
40:31And it's still not like the street is looking at it
40:35with any concern at the moment.
40:38Perhaps the bigger update
40:39is that we finally now have details
40:42of the Bajaj Housing Finance IPO.
40:46And for that, we have Harsh,
40:47who's joining us to give us more on that one.
40:50Harsh, over to you.
40:53Well, so Bajaj Housing Finance,
40:54it's a 6,560 crore rupee IPO,
40:58of which 3,000 crore is a pure offer for sale
41:02by Bajaj Finance itself.
41:03So they'll get cash worth 3,000 crore
41:07in their books on the back of this IPO.
41:10The size of Bajaj Housing
41:13is around 97,000 crore in terms of AUM.
41:18It's one of the largest
41:20in terms of housing finance NBFCs in the country,
41:23behind just LIC Housing.
41:25There's no other housing finance here
41:27which is this large.
41:29And the growth in this company
41:31is what really stands out.
41:3372% is the compounded growth
41:36that Bajaj Finance has clocked
41:38in terms of its AUM
41:40over the last seven years up to FY24.
41:43So you've seen very strong growth
41:45that Bajaj Finance has seen
41:48on a low base and now on a higher base.
41:50Currently, it's growing at 30 plus percent.
41:53So 31% growth year-on-year
41:55clocked in Q1 of FY25.
41:58That's one thing that really stands out for investors.
42:00The other thing is with regard to asset quality.
42:03For any lender, very, very critical.
42:05Your GNPA ratio is at 0.28%.
42:08Your net NPA ratio is 0.1%.
42:11The lowest in the industry likely,
42:13especially with the kind of size
42:15that Bajaj Housing has.
42:17And therefore, a very interesting play
42:19even from that perspective.
42:21What will really hold the key
42:23will be valuations.
42:25Bajaj Finance trades at
42:27five and a half times price to book.
42:30The current book value per share
42:32of Bajaj Housing finance is 19 rupees.
42:35And therefore, if one were to take
42:38a correlation of five times price to book,
42:40you can take a guess as to where
42:42the IPO or the IPO price will be.
42:45But we'll have to wait and watch for that.
42:48Likely an expensive IPO
42:50is the expectation at least.
42:52And in terms of where Bajaj Finance stands,
42:55the current book of Bajaj Finance
42:56is at three and a half lakh crore consolidated.
42:59Now with this demerger,
43:00it will stand at two and a half lakh crore.
43:02So around 30% of Bajaj Finance's
43:05current consolidated book
43:07will now get listed separately.
43:09Maybe some amount of holding company
43:11discount may start to creep into
43:13the Bajaj Finance stock as a result of that.
43:15Wait and watch because the Bajaj Finance
43:17stock moved 7% in trade last week.
43:21Fair enough. Interesting, Harsh.
43:22Thank you so much for getting us that update
43:24on Bajaj Finance, of course,
43:28which has had a positive effect
43:30for now at least with respect to
43:33that particular impending IPO,
43:35which is imminent.
43:36But Shamila, your view on the Bajaj Fin twins now,
43:40how would you go about them?
43:42Once again, I'm positive on both the stocks.
43:44But I think here the only concerns
43:46that I sometimes have is that
43:48the moves in them are sort of,
43:51you know, very like now you'll suddenly have
43:53a 7% up move,
43:55you'll have some days of downward move, etc.
43:58So if you're a long-term investor,
43:59then it's okay.
44:00But I think if you're a trader,
44:01then you should be cautious.
44:03And given the fact that the way Bajaj Finance,
44:06for instance, has grown its book
44:08and the fact that now going forward for them,
44:12a good monsoon will mean that,
44:13you know, because a part of the stress
44:15on the stock was also the fact that
44:17the rural bit wasn't performing as well as,
44:20you know, the last couple of years
44:21have been a little slow there.
44:23But going forward, I think that we can expect
44:26on the back of these good monsoons
44:27that things will pick up there as well.
44:29So overall, I think if you're a longer-term investor,
44:31this is definitely a stock,
44:33both the stocks, in fact, as you said,
44:34both the Bajaj twins should be,
44:36one of them should be definitely part of your portfolio.
44:40Okay. All right.
44:41Well, let's move on and talk about Cummins India then.
44:43And we have a broken note here
44:45when it comes to Cummins India.
44:47It's currently trending mildly positive.
44:50But let's get in Anushi to tell us more about this one.
44:53Anushi, over to you.
44:55Hey, Agam.
44:56So an interesting note from Modilal Oswal
44:58on Cummins India.
44:59This is after the management meet which took place.
45:02They reiterate their buy rating
45:04and this is at a target price of about 4,300,
45:06implying about a 15% upside from the current levels.
45:10Again, the topic of discussion was mainly
45:14on the CBV, CB4 plus norms,
45:16which are the norms required for the diesel gen sets.
45:19So there has been a revision from the 2 plus to 4 plus
45:22as we are looking at.
45:23So again, the brokerage believes
45:27that they are well positioned
45:28to continue on to this trajectory over here
45:30with strong demand coming in,
45:32despite the 15 to 20% of price hikes
45:34which have taken place.
45:36Another key factor which should be considered
45:38is the export cycle.
45:39Now, exports have been under pressure now,
45:42but according to the management commentary,
45:44the exports have bottomed out
45:46and they expect an improvement in the coming quarter.
45:48So that remains on a watch out for as the margin,
45:51especially on the margin side of how that would react to.
45:54Distribution segment remains on the stronger side
45:57with about 25% of a compounded growth
45:59expected over FY24 to 27 period.
46:02And the brokerage has retained their revenue
46:05and bad CAGR, that is the compounded growth rates
46:08of 18% to 21% over FY24 to 27%.
46:13Just to reiterate on the numbers,
46:14some of the numbers in Q1,
46:154% of revenue growth that the company had reported,
46:18but the EBITDA margins were on the stronger side
46:20with about 20% margins as compared to 15%
46:23and net profit seeing about a 31% of a growth.
46:26So this is the note that we are seeing,
46:2815% upside, the stock is currently not reacting much to it.
46:31Right, fair enough.
46:32Anushi, thank you for getting us
46:34that broking note on Cummins India.
46:36I do remember that when it comes to Cummins India,
46:37if you consider the last 12-month chart
46:41or for that matter, even the last six-month chart,
46:43it seems like it's been consolidating now.
46:47Of course, these are the returns
46:48and on a last 12-month basis,
46:50the stock has more than doubled.
46:52It's given you a return of 121 odd percent,
46:54but it's not really moved since May.
46:58In fact, it's been very, very range bound.
47:01Even though it may have gone
47:02above the mark of 4,200 rupees per share,
47:05it tends to, well, come back down
47:07and remain within that range.
47:10So it's been a little bit of a struggle,
47:12at least since the month of May,
47:13in terms of giving you the kind of returns
47:15that the rest of the broader markets have given you,
47:19specifically in this particular period.
47:22But Sharmila, what's your view on Cummins India?
47:24How are you assessing the stock?
47:27I was precisely looking at the same data
47:29that you were looking at,
47:30because I think my memory serves right.
47:33Possibly market was not too happy
47:34with the kind of numbers that they had delivered,
47:37which is why I think my key takeaway would be,
47:39if the management is sort of giving you a sense
47:42that the concerns that they saw in exports,
47:45those have bottomed out
47:46and things will improve from here,
47:48then we can sort of really build on that.
47:51Because once again,
47:52I think this is a very good quality stock.
47:54And if you're a long-term investor,
47:56there should be no concern.
47:58In fact, you should have...