Uncategorized

11 Dec

This Week in a nutshell (5th Dec to 9th Dec)

Technical talks

NIFTY opened the week on 5th December at 18,720 and closed on 9th December at 18,497. The index made a weekly loss of 1.1%. The 10WMA of 18,034 may act as a key support level, while 18,721 may act as key resistance for the index.

Among the sectoral indices, PSU BANK (+4.8%), FMCG (+2.2%), and BANK (+1.2%) led the gainers, whereas IT (-6.0%), REALTY (-3.4%), and ENERGY (-2.4%) led the losers.

Weekly highlights

  • US market: Stocks faced a lot of instability as the market believes that the Federal Reserve won’t reduce the pace of hiking the interest rates. US central bankers have signaled a slowdown in the pace of rate hikes though the borrowing costs will keep rising and remain restrictive for some time to beat inflation.
  • Reserve Bank of India (RBI) hiked the repo rate by 35 bps to 6.25%. The RBI also lowered its GDP growth forecast to 6.8% from the earlier 7%. The repo rate hike was made for the fifth time in a row.
  • HDFC Asset Management Company (AMC) promoter abrdn Investment Management intends to sell its entire 10.2% stake in the company. Following the stake sale, abrdn will cease to be a co-sponsor of HDFC Mutual Fund.
  • Royal Enfield’s new assembly facility in Brazil has commenced its operations. It’s a CKD (completely knocked down) plant with an assembly capacity of more than 15,000 units per year. It’s located in Manaus, Brazil, and will cater to the growing demand for the company’s products in Brazil.
  • The Insurance Regulatory and Development Authority of India (IRDAI) has floated a draft on Long-Term Motor Products covering both Motor Third Party Insurance and Own Damage Insurance. The draft proposes to permit all general insurers to offer a 3-year insurance policy in respect of private cars and a 5-year for two-wheelers with motor third-party liability cover.
  • Crude developments: Brent crude prices declined by 10% and closed at USD 77/barrel and later as the world remains concerned about the economic outlook due to curbs in China and concerns over disruptions in US crude flows.
  • Hindustan Unilever Limited (HUL) has announced the acquisition of a 51% stake in Zywie Ventures Private Ltd, which owns the brand OZiva for Rs 2,643 mn, making its entry into the health and wellbeing segment. It has also announced the acquisition of a 19.8% stake in Nutritionalab Pvt Ltd (Wellbeing Nutrition) for Rs 700 mn.
  • The BJP won 156 of 182 total seats in the Gujarat State assembly which led to its election win in Gujarat. It has been the party’s best-ever performance in the state of Gujarat.
  • FII (Foreign Institutional Investors) turned net sellers this week, selling shares worth Rs 43,059 mn.
  • DII (Domestic Institutional Investors) were net buyers, buying shares worth Rs 37,120 mn.

Things to watch out for next week

  • The market movement will continue to be determined by the flow of country-wide as well as global news. The US Fed rate-setting meeting in mid-December is the immediate trigger that will decide the sentiment of investors in the near future.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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27 Sep

Common Characteristics of Successful Private Investors

Many successful investors around the world follow different strategies to generate meaningful returns from their investments. But there are few similarities in things that they do.

Here, we speak of such characteristics commonly seen among private investors that turn them into successful individuals. Following are these habits:

  • Future time perspective: We tend to see our experiences through a past, present, or future time perspective. Eg- People with a present-time perspective may want to earn a big salary now and spend it. Whereas, successful investors start investing early. They seek uncertain future gains from the compound interest on their capital. They take a calculated risk today for earning gains in the future. They inculcate the habit of viewing opportunities through a future time perspective.
  • Investing for Freedom: Most successful investors can show off their money if they want to. But they instead choose to live a not-so-flashy life. Many investors start small and they earn money the slow way. They patiently build wealth by spending less and investing it over a long duration. They know that having more money than they need will result in freedom. Having more money frees up their time to use it for activities that they want to do.
  • Avoid borrowing to invest: Using debt in volatile markets works until the market turns down. It may erase all the gains and the capital with it. One can lose more than one started if one uses borrowed money to invest. Successful investors invest their own money after conducting research and then wait patiently. They know that once invested; they should let the compound interest work for them. This is how they generate meaningful returns on their investments without borrowing money.
  • Not team players: Investing requires one to not be part of the herd. Most successful investors are not team players when it comes to investing. They may take help from other people for research or may work with a team for a few activities. But when it comes to taking an investment decision, they understand that it’s to be done individually. There are many variables within investing which differ from person to person. Investment goal, time horizon, sector preferences, etc. This makes it a job to be done on one’s own.
  • They enjoy investing: Successful investors can put the money in passive portfolios and use their time for doing something else. But they choose to be active in markets. Some do it because they believe that they can generate good returns using their skills. Some do it because they enjoy it. Many actively traded portfolio investors keep on working despite having more money than they will need.

Some of these characteristics are simply natural to an investor. But other characteristics can be learned over years. Even a novice investor with few months of experience in the market can read, observe and learn to benefit by inculcating these characteristics in oneself.

 

Source: https://monevator.com/habits-of-successful-private-investors/

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their research and analysis and should consult their investment advisors to determine the merit, risks, and suitability of the information provided.”

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16 Jul

This week in a nutshell (11th July- 15th July)

Technical talks

NIFTY opened the week on 11th July at 16,136 and closed on 15th July at 16,049. It made a loss of 0.5% during the week. The index is trading above the 10DMA level of 16,020 which might act as a support. On the upside, the 20DMA level of 16,557 might act as a resistance. The RSI (45), and MACD turning downward suggests a further possible downside.

Among the sectoral indices, ENERGY (+2.5%), Pharma (+2.3%), and REALTY (+2.2%) led the gainers, whereas IT (-6.3%), BANK (-1.3%), and FINANCIAL SERVICES (-0.9%) led the losers during the week.

Weekly highlights

  • The US indices closed the week in the red as investors worried that inflation and rising interest rates may adversely affect the overall demand and performance of businesses. The S&P 500 was down by 0.9%, Nasdaq 100 by 1.2%, and Dow Jones by 0.2%.
  • Israel will sell Haifa Port, a major trade hub on its Mediterranean coast, to winning bidders Adani Ports of India and local chemicals and logistics group Gadot for USD 1.2 bn. Gadot and Adani made it to the end of a two-year tender process. Adani will hold a majority 70% stake and Gadot will hold the remaining 30%.
  • The government has offered 10 blocks for finding and producing oil and gas under its Open Acreage Licensing Programme (OALP). ONGC, Oil India, and GAIL won a total of 6 blocks out of the 10 blocks by the 7th round of OALP. The government expects an investment of USD 600-700 mn in the 10 blocks.
  • The Murugappa Group will launch an electric three-wheeler brand called Montra by September and invest Rs 2,000 mn in the segment. The company will manufacture Montra three-wheelers at its Ambattur facility in Chennai. The initial capacity for three-wheelers will be around 75,000 units per year and the company will have distributions at around 40 locations.
  • Exports in June were up by 23.5% to USD 40.1 bn while the trade deficit increased to a record high of USD 26.2 bn, both YoY, mainly due to a jump in gold and crude oil imports. Crude oil, coal, and coke imports doubled to USD 21.3 bn, and USD 6.76 bn on a YoY basis. Gold imports too were up YoY by about 183% to USD 2.74 bn.
  • Exports of finished steel from India more than halved in June on a YoY to 0.64 mn tonnes following the levy of a 15% duty on all outbound shipments by the government in its efforts to increase domestic supplies and curb inflation.
  • The inflation in the US was up 9.1% YoY in June, which was the highest increase in 41 years, whereas India’s WPI inflation eased down to 15.2% from 15.9% on a YoY.
  • FII (Foreign Institutional Investors) were net sellers of shares worth Rs 59,160 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 21,730 mn this week.

Things to watch out for next week

  • With results season picking up, quarterly numbers are to be watched out for. IT companies like TCS, Mindtree, LTI, and LTTS have already reported earnings that were a mixed bag. Kotak Mahindra Bank and ICICI Bank are set to report earnings next week. While the provisions are not expected to be a big surprise, there could be an impact of MTM losses on banks’ earnings. Commentary from HUL would help understand the impact of inflation on margins and rural-urban demand.
  • We expect the markets to remain volatile as investors show sentiments of fear guided by news related to the macro-economic aspects like supply-related constraints, and rising inflation.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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07 May

This Week in a nutshell (May 2nd to May 6th)

                                                                                       Technical talks

NIFTY opened the week on 2nd May at 16,924 and closed on 6th May at 16,411. During the week, NIFTY was down 1.63%. The index has breached the 50-week moving average on the weekly chart with RSI at 42. Immediate support for the index stands at 16,269 and resistance at 16,763.

Nifty Realty (-8.0%), Nifty Media (-6.0%), and Auto (-5.0%) were the top losers and there were no sectoral gainers during the week.

                                                                                     Weekly highlights

  • Wall Street had a very volatile week. At the start of the week, the stocks were trading higher on the back of news that the European Union is working on new sanctions against Russia for waging war on Ukraine that will target Moscow’s oil industry.
  • The rally continued after the Federal Reserve delivered a widely expected interest-rate hike of half a percentage point with another half-percentage-point rate hike expected at the upcoming policy meetings in June and July.
  • Bureau of Labor Statistics released data revealing a tight labor market that has emboldened millions of Americans to seek better-paying jobs, while also contributing to the biggest inflation surge in four decades.
  • Later in the week, US stocks ended sharply lower amid a broad sell-off, as investor sentiment cratered in the face of concerns that the Federal Reserve’s interest rate hike would not be enough to tame surging inflation. All three main Wall Street benchmarks erased gains made in the earlier rally.
  • The downward journey continued as stronger-than-expected jobs data amplified investor concerns over bigger interest rate hikes by the U.S. Federal Reserve to tame surging prices.
  • Indian markets also followed the lead and were no less volatile. Entirely unexpected – the Reserve Bank of India (RBI) on May 4 increased the repo rate by 40 basis points to 4.4 percent for the first time in almost two years since the start of the pandemic in 2020. This comes when inflation has been rising to an 18-month high amidst a rebound in domestic economic activity.
  • RBI Governor stated that India’s foreign exchange reserves are “sizeable” and the outlook for the country’s overall external sector is bright. Potential market opportunities have opened up due to geopolitical conditions and the recent trade agreements.
  • LIC launched its IPO on 4th May 2022. Through this IPO, the government of India will be liquidating its 3.5 percent stake in the corporation. The offer has garnered bids of 223.4 mn equity shares against the offered size of 162 mn shares, subscribing 1.38 times on Friday.
  • International Monetary Fund released data saying India’s GDP to hit USD 5 tn in FY29E and the Rupee at 94 a Dollar.
  • Oil prices dipped as worries about an economic downturn that could dampen demand for crude vied with concerns over new sanctions from the European Union against Russia, including an embargo on crude oil.
  • Larsen and Toubro Infotech (LTI) board approved amalgamation with Mindtree, creating a USD 3.5 bn IT service provider named LTIMindtree.
  • Axis AMC suspended two fund managers pending investigation of potential irregularities after conducting a suo moto investigation over the last two months and used reputed external advisors to aid the investigation.
  • Foreign institutional investors (FIIs) continued to be sellers, selling equities worth Rs 1,27,335 mn. Domestic institutional investors (DIIs) continued to be buyers and bought equities worth Rs 85,333 mn.

                                                                       Things to watch out for next week

  • The 4QFY22 earnings season so far has not succeeded to uplift the market sentiments. The commentary so far from companies on rising pressure on their margins and muted demand environment has tempered the enthusiasm of investors.
  • We expect volatility to remain high in the coming days as surging global inflation is forcing investors to reconsider their assumptions of strong earnings growth. Fear of further up move in the US 10-year bond yield, geopolitical concerns, fluctuations in oil prices, and earnings season will keep the investors on their toes.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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28 Apr

Mutual fund to contribute 75% of the revenues in coming years – Nippon AMC

Update on the Indian Equity Market:

On Thursday, NIFTY ended at 17,245 (+1.2%) as it closed above the day’s opening level of 17,190. Among the sectoral indices, FMCG (+2.2%), OIL&GAS (+1.2%), and Bank (+1.1%) led the gainers, whereas MEDIA (-3.2%) was the only loser. Among the stocks, HDFCLIFE (+4.3%), HINDUNILVR (+4.3%), and SBILIFE (+3.7%) led the gainers, while BAJAJ-AUTO (-2.0%), BHARTIARTL (-0.9%), and HINDALCO (-0.8%) led the losers.

Excerpts of an interview with Mr. Prateek Jain, CFO of Nippon Life India Asset Management (NAM-INDIA) with The Economic Times on 27th April 2022:

  • The company’s mutual fund AUM market share has gone up from 7.1% in FY21 to ~7.4% in FY22, with a growth of 26 bps.
  • Its 8-10 equity schemes are in the top quartiles and 10-14 fixed income schemes are in the top two quartiles. The management expects higher growth to come from these schemes in the upcoming quarters.
  • In FY22, the company saw the addition of almost 32 mn folio in the industry. The company added around 7 mn folios.
  • Jain believes that the company has created a moat in terms of its physical and digital presence which attracts retail clients. Due to this, he believes that one in every three people invest with Nippon India Mutual Fund.
  • People have started investing through mutual funds once they started going back to work, post lockdown. This is happening as more people are opting for direct investment.
  • With increased digital penetration and investors systematically investing in mutual funds, new investors will get added and equity assets through retail participation will keep increasing.
  • In the last 10 years, the industry has grown from AUM Rs 6,600 bn in 2012 to around Rs 38,000 bn. Mr. Jain believes that the industry is still underpenetrated with AUM to GDP ratio of 18%, whereas in matured markets, AUM to GDP ratio is around 80. He believes that the industry may see 5 times AUM growth in the coming decade.
  • Considering SIP as one of the measurement scales for the industry growth, the SIP was about Rs 70,000 mn 2 years ago during the covid lockdown. It has increased to Rs 120,000 mn today.
  • The company expects the alternatives, ETF, and other advisory opportunity businesses together to contribute to 25% of the revenue. Rest 75% of revenue will come from the mutual fund business.
  • The company saw 58% of its purchases happening digitally and it has well-placed digital assets and has partnered with all the key aggregators and market players.

 

Asset Multiplier Comments

  • Nippon AMC has been steadily gaining market share on the back of expansion of ETF and SIP segments, its penetration in B-30 Cities gives it an edge over its competitors as major expansion is expected to be driven from non-Metro cities.
  • The SIP segment is sticky, because the inflows are impacted the least and major outflows don’t happen due to the discipline of investors, rising share of SIP AUM bodes well for the company as it insulates the company from sudden market corrections and shocks.

Consensus Estimate: (Source: market screener website)

  • The closing price of Nippon AMC was ₹ 321/- as of 28-Apr-2022. It traded at 23x/22x the consensus earnings estimate of ₹ 14/15 for FY23E/FY24E respectively.
  • The consensus target price of ₹ 427/- implies a P/E Multiple of 28x on the FY24E EPS estimate of ₹ 15/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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21 Apr

Time to reimagine supply chain strategies to be future-ready– Tata Motors

Update on the Indian Equity Market:

On Thursday, NIFTY ended 256 points in the green and closed at 17,392. AUTO (+2.2%), FINANCIAL SERVICES (+1.5%), and PRIVATE BANK (+1.5%) were the gainers, whereas, MEDIA (-0.1) was the only loser. Among the stocks, EICHERMOT (+4.4%), COALINDIA (+4%), and M&M (+3.2%) were the top gainers, and CIPLA (-1.2%), HINDALCO (-0.8%), and ONGC (-0.6%) were the top losers.

Excerpts of an interview with Mr. Rajesh Khatri, Vice President-PV Operations, Tata Motors with CNBC TV-18 on the 18th of April 2022:

  • Covid-19 has affected global supply networks all across the world, particularly in the auto industry, which is currently recovering from a supply chain shock. The worldwide chip scarcity is still wreaking havoc on the automotive industry in particular. Lockdowns in Shanghai hampered supply, and consignments are now lying at airports. Geopolitical threats, on the other hand, have yet to be felt on the ground. The effects of the war on the automobile industry are yet unknown.
  • The company feels it is time to reconsider its strategic goals. Previously, supply chains were centered on cost optimization, with the goal of sourcing items at the lowest feasible price as quickly as possible. To be future-ready, the company believes that it needs a more agile, productive, robust, digital, and sustainable supply chain.
  • The company believes that adopting a digitally integrated value chain in conjunction with a collaborative approach will be more effective, whereas proactive risk management will prepare organizations for any uncertainties that demand a total supply chain transformation.
  • The company is attempting to increase visibility across the entire value chain to identify any potential risks. As a result, the firm has mapped all of its suppliers and locations to build a Supplier Grid, which is monitored to better analyze risk and take preventative steps.
  • In addition, the firm is diversifying its supplier risks rather than depending on a single supplier, which will assist the company to gain flexibility, dependability, and reliability within the supply chain.
  • To address the chip availability issue, the company is designing electronic components with catalog chips and developing alternate architecture with next-generation chips.
  • The company is utilizing AI (Artificial Intelligence) to create a digital control tower for simulating supply scenarios to predict supply chain risks.
  • No big investments are needed for the supply chain measures.

Asset Multiplier Comments:

  • The semiconductor shortage is likely to persist at least for a few months which will create a hindrance for most automobile companies. We believe, the company’s supply-side issues and commodity headwinds stabilize gradually. The company continues to address the supply chain bottlenecks via a strategic approach which will augur well for the company in the future.
  • We expect the company to benefit from the improving consumer demand for Passenger vehicles and Electric vehicles with the receding Omicron effect, the launch of new products.

Consensus Estimate: (Source: Marketscreener website)

  • The closing price of TATAMOTORS was ₹ 440 /- as of 21-Apr-2022. It traded at 20x/11x the consensus earnings estimate of ₹ 22/41 for FY23E/FY24E respectively.
  • The consensus target price of ₹ 547 /- implies a P/E Multiple of 13x on the FY24E EPS estimate of ₹ 41/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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25 Dec

This week in a nutshell (20th-24th December)

Technical talks

NIFTY opened the week on 20th December at 16,824 and closed on 24th December at 17,004. It gained  1.1% during the week. The index is trading below its 10DMA of 17,057 which might act as a resistance. On the downside, the 16,971 level might act as a support. The RSI (44), and MACD turning downward suggests a possible decline.

Weekly highlights

  • The US indices closed the week in green as investors speculated that the spreading Covid Omicron variant may not adversely affect human health, businesses and lockdown-like situations might not arise, and hence the stock buying picked up. S&P 500 was up by 2.3%, Nasdaq 100 by 3.2%, and Dow Jones by 1.7%.
  • The Turkish currency lira tumbled to a record low after its President Recep Tayyip Erdogan pledged to continue cutting interest rates, referring to the Islamic ban of high-interest rates as a basis of his policy. The president feels that Turkey can free itself from reliance on foreign capital flows by abandoning policies that prioritized higher interest rates and strong inflows.
  • The Indian government reduced the import tax on refined palm oil to 12.5%, from earlier 17.5%, in an effort to cool near-record high vegetable oil prices. This would make refined palm oil more attractive than crude palm oil for Indian buyers.
  • Sebi suspended futures and options trading for one year in chana, mustard seed, crude palm oil, moong, paddy (basmati), wheat and soybean and its derivatives. This has not only led to a fall in prices of these commodities, but also to scaling back of inventories by traders, who say the flow of imports will slow down since they do not have a hedging platform.
  • Zee Entertainment Enterprises (Zee) and Sony Pictures Networks India (SPNI) signed a definitive agreement that will let the two merge their networks, digital assets, production operations and programme libraries. The merged entity will have a 27% market share of the general entertainment space. After the completion of the deal, Sony Sony Pictures Entertainment will hold a 50.86% stake in the combined entity, the promoters of Zee will hold a 3.99% stake and the remaining shareholders of Zee will hold a 45.15% in the merged entity.
  • Tata Motors has incorporated Tata Passenger Electric Mobility Limited (TPEML), a wholly-owned subsidiary that is involved in the manufacturing of electric motor vehicles, with an initial capital of Rs 7000 mn.
  • FII (Foreign Institutional Investors) were net sellers of shares worth Rs 65890 mn and DII (Domestic Institutional Investors) were net buyers of shares worth Rs 69156 mn this week.

 

Things to watch out for next week

  • As investors around the world seem to be cautious about the Fed’s announcement of three 25 bps increase in interest rates in CY 2022, we may see a further sell-off in Indian stocks next week by the FIIs.We may see a reduction in the level of activity as most investors in the US and Europe are away on holidays. 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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23 Dec

Focus and future is on digital platform: Zee Entertainment and Sony Group

Update on the Indian Equity Market:

On Thursday, the benchmark index NIFTY 50 closed at 17,072 (+0.7%), 117 points higher. Among the sectoral indices, REALTY (+2.3%), PSU BANK (+1.6%), and FMCG (+1.3%) led the gainers. MEDIA (-1.1%) and METAL (-0.2%) were among the losers. Among the NIFTY50 components, POWERGRID (+3.7%), IOC (+3.0%), and ONGC (+2.7%) were the top gainers while DIVISLAB (-1.8%), JSWSTEEL (-1.7%), and BHARTIARTL (-0.8%) led the laggards.

Excerpts of an interview with Mr. Puneet Goenka, CEO and MD, Zee Entertainment (ZEEL), Mr. Ravi Ahuja, Chairman of Global television and corporate development, Sony Pictures Entertainment and Mr. N P Singh, MD and CEO of Sony Pictures Networks India with Business Standard on 22nd December 2021:

  • The deal ensued when Sony saw an opportunity in the high growth Indian media Industry when they bought Ten sports from Zee Entertainment in FY18.
  • Zee Entertainment and Sony both have a foothold in the digital OTT market with Zee5 and Sonyliv, respectively. As the firm has not received any regulatory clearances from the Competition Commission of India, the management does not have any precise operational plans, yet.
  • Invesco had reservations as the existing ZEEL promoters were given an option to increase stake in the merged company to 20%. Management has clarified the promoters will have to buy from the open market and there will not be any preferential allotment. As the matter between ZEEL and Invesco is still sub-judice the management has not shared further details.
  • Management is considering market share, growth possibilities, and profitability to provide strong value to shareholders and customers. The management anticipates the merged business to be in a position of leadership and powerful enough to compete with global competitors by FY25E.
  • The merged entity will be an Indian asset on the portfolio of Sony Pictures Entertainment, and given the size of the Indian market, the entity will be a significant revenue contributor to the multinational media company.
  • Even though digital and OTT platforms are experiencing increase in viewership and broadcasting is under immense pressure, the management believes that it still has a role to play in the dynamic entertainment business. The digital business needs scale. The merged company will have a capital of $ 15.7 mn. This arrangement gives the company advantages which the individual companies would not have.
  • Linear TV will continue for the foreseeable future. The future focus is on the digital as both old and new subscriber base is increasing. The company would invest in content, technology and distribution in this direction.

Asset Multiplier Comments

  • The merger plan would need shareholder approval as well as clearance from regulatory bodies such as SEBI and the Competition Commission of India (CCI). The merger approval is awaited, as is information on the status of the EGM sought by Invesco. If the approvals are not received, the merger will be scrapped.
  • The merger is projected to be beneficial in terms of market consolidation and revenue synergy. As the market leader, the merged company would have pricing power in terms of earning ad revenues. The resolution of channel overlap and OTT platforms would be key areas to monitor.

Consensus Estimate: (Source: market screener website)

  • The closing price of Zee Entertainment was ₹ 338/- as of 23-December-2021. It traded at 25x/21x/17x the EPS estimates of ₹ 13.5/16.5/19.1/- for FY22E/FY23E/FY24E respectively.
  • The consensus target price of ₹ 366/- implies a P/E Multiple of 21 on FY23 EPS estimate of ₹ 17.4/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

 

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09 Dec

Back on construction targets, to complete 50 restaurants this year – Burger King India

Update on the Indian Equity Market:

On Thursday, NIFTY ended at 17,517 (+0.3%) as it closed near the opening level of 17,524. Among the sectoral indices, MEDIA (+3.7%), FMCG (+1.4%), and OIL&GAS (+1.0%) ended higher, whereas BANK (-0.5%), FINANCIAL SERVICES (-0.5%), and PRIVATE BANK (-0.4%) led the losers. Among the stocks, ITC (+4.9%), L&T (+3.0%), and ASIANPAINT (+2.2%) led the gainers while HDFCBANK (-1.8%), TITAN (-1.4%), and NESTLEIND (-1.1%) led the losers.

Excerpts of an interview with Mr. Rajeev Varman, CEO of Burger King India (BURGERKING) with CNBC TV18 on 7th December 2021:

  • The company is back on its construction targets with over 20 restaurants under construction, and 38 restaurants in the pipe line. The company plans to complete the construction of around 50 restaurants this year. Its target is to build 70 restaurants in next year, and keep on building in the similar manner in upcoming years.
  • Company’s target is to build 700 restaurants which it will complete by December 2027.
  • Burger King India (BKI) has launched its café in 4 of its restaurants, 10 cafés in construction, and plans to build more cafés along with building new restaurants. The company plans to build 75 cafés by the end of 2022.
  • The Company is going to launch new products specifically for its cafés. It plans to serve opportunities that it will receive at lunch and dinner peak time, and the time in between. It calls its coffee products as ‘Coffee Uncomplicated’, and provides a product named coffee shots for which it has received good reviews.
  • In the 2QFY22, the company reported 65% growth over its pre-covid numbers through delivery. The company has recovered 65% of it’s dine-in orders in 2QFY22.
  • The company has over 1.5 million app downloads which it believes will gradually grow. It has made available its stunner menu on the app, which it considers as entry level point for its consumers and is available only through app.
  • The CEO feels that BKI’s upcoming acquisition of BK Indonesia will bring synergies as BKI will add 200 restaurants in 1 day. The company will also experience synergies in terms of Capex, as it plans to build 35 new restaurants every year in Indonesia after completing the acquisition.

 

Asset Multiplier Comments

  • The company is likely to remain non-profitable for few more quarters as it is currently undergoing organic and inorganic expansion.
  • Currently within the QSR companies, Westlife Development and Jubilant Foodworks have a higher scale of operations, and have started generating positive free cash flow in the last 2 years.
  • As the world is concerned with fear of Omicron Covid-19 variant spread, it may lead to stricter sanitation rules within the country, and may also result in lockdowns if the conditions worsen. This may delay the planned execution of building new restaurants.

Consensus Estimate: (Source: market screener website)

  • The closing price of BURGERKING was ₹ 162/- as on 9-Dec-2021.  Its consensus earnings estimates are -2.0/0.01/0.94 for FY22E/FY23E/FY24E respectively. As the earnings are close to zero, we don’t arrive at a meaningful PE multiple.
  • The consensus target price is ₹ 198/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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30 Oct

This Week in a nutshell (25th Oct to 29th Oct)

Technical talks

NIFTY opened the week on 25th October at 18,299 and closed on 29th October at 17671 during the week, the index lost 2.5%. Nifty is trading at an RSI of 43, with support at 17,565 and resistance at 18,158.

Among sectors top losers were Nifty Private bank (-3.6%), BANK (-3.0%), and IT (-2.8%). PSU Bank (+0.1%) was the only sectoral gainer in the week.

Weekly highlights

  • This week was a tumultuous one for stock prices as they reacted to this week’s results.
  • China’s Evergrande Group has stated plans to prioritise the expansion of its electric car sector over the main real estate businesses. Evergrande chairman Hui Ka Yan stated that the company’s new electric car initiative will be its major business, rather than real estate, during the next ten years.
  • The third-quarter earnings season resumed with results from US IT behemoths Apple, Tesla, Amazon, Facebook, Microsoft, and Google. Companies are indicating increased labor costs and operational disruptions impacting earnings.
  • The US budget deficit for 2021 totaled USD 2.77 trillion, the second biggest on record but a decrease from the all-time high of USD 3.13 trillion in 2020. Both years’ deficits represent trillions of dollars in government expenditure to mitigate the terrible effects of a worldwide epidemic.
  • Profits at China’s industrial firms rose at a faster pace in September even as surging raw material prices and supply bottlenecks squeezed margins and weighed on factory activity.
  • According to a CRISIL Ratings analysis of India’s top three PV original equipment makers (OEMs or vehicle makers) with a combined market share of 71%, a global shortage of semiconductors will moderate India’s passenger vehicle (PV) sales to 11-13 percent this fiscal, around 400-600 basis points (bps) lower than what could have been without the scarcity.
  • Last week, the number of Americans asking for unemployment benefits fell to a pandemic low of 281,000, indicating that the labour market and economy are still recovering from last year’s coronavirus slump.
  • Indian equities were downgraded this week by major foreign brokerages- Morgan Stanley, UBS, Nomura.
  • The foreign institutional investors (FII) continued selling Indian equities and sold shares worth Rs 1,57,023 mn. Domestic institutional investors (DIIs) turned buyers this week and bought equities worth of Rs 94,272mn.

 

Things to watch out for next week:

  • US Fed tapering expected, with an increase in interest rates. The central bank is largely anticipated to declare that it will begin unwinding its $120 bn monthly bond purchases, with the scheme expected to end entirely by the middle of FY23.
  • Several earnings reports are expected next week  including those from pharmaceutical giants such as Pfizer and Moderna in the US. In India, companies such as HDFC, Tata Motors, and Sun Pharma are set to announce earnings.
  • The next week will be a truncated one for Indian equity markets due to Diwali. 

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

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