November 25, 2022

Nifty: Soooo Close To New ATH!

Tale of the Tape

Heya guys. The weekend is here! 😄

Markets closed higher on a weekly basis for the fifth time in the past six weeks! PS – Nifty missed hitting a new all-time high by less than 0.5%. Midcaps (+1%) and Smallcaps (+1.1%) also witnessed healthy gains. Nearly two stocks rose for every gainer. ✌️

The majority of the sectors closed in the green. Real Estate (+1.2%) and Autos (+0.9%) topped the charts. Banks (-0.2%) saw profit booking. 💸

Axis Bank (+1%) closed up for a third straight day as investors cheered the private lender’s long-term growth vision. More details below. 🔥

Paytm (+5%) snapped its four-day losing streak. PS – Citi expects the stock to more than double from current levels. 👀

PNB (+5%) hit a fresh 52-week high after receiving the GOI approval to sell its entire stake in UTI AMC. ✅

Indiabulls Housing Finance rallied +12% after 26 lakh shares (0.6% equity) changed hands in a block deal. 🤝

KIOCL rallied +5% after starting production at its Mangalore factory. 🏭

Dharmaj Crop Guard IPO will open for subscription on Monday. Read more below. 💰

Cryptos were back in the red. Bitcoin and Ethereum fell 1%-2%. Ripple rose +8%. 🚀

Here are the closing prints:

Nifty	18,512	+0.2%
Sensex	62,293	+0.1%
Bank Nifty	42,983	-0.2%

Firing On All Cylinders

Axis Bank (+1%) is not screwing around. The private lender unveiled its future plans at its 2022 Analyst Day. Here are the top takeaways: 💯

– Bharat Banking is one of the key focus areas for Axis. They are expanding their presence in the rural and semi-urban markets with plans to double the balance sheet in the next 3-4 years. 📈

– Axis Bank under the leadership of MD and CEO Amitabh Chaudhury has invested heavily on technology (+2.5x in the last 3 years) as it aims to become a digital consumer-lending powerhouse. There is less focus on loan growth and more focus on delivering a better customer experience. Experts believe the payoff of such a strategy would be slow but long-lasting. 👨‍💻

– Axis Bank reiterated that its current internal capital generation is higher than consumption and is in no rush to raise capital. The Citi merger is also moving as per plan and should be completed by FY23 end. 👍

– Experts believe Axis’s strong credit growth outlook, improving portfolio mix and lower bad loans may drive consistent earnings growth. Going forward, Axis is hopeful of maintaining an 18% ROE, which is a positive. 💰

Axis Bank closed up for a third straight day. Global brokerage firm UBS sees a +16% upside from current levels. 🔥

IPO Update

Dharmaj Crop Guard IPO opens for subscription on Monday. The company seeks to raise Rs 251 cr from the markets. The price band is fixed at Rs 216-237 per share. 💸

Founded in 2015, Dharmaj Crop Guard (DCG) manufactures and sells a wide range of insecticides, fungicides and antibiotics to B2B and B2C customers. The Ahmedabad-based agrochemical maker mainly operates in the western markets of Gujarat, Rajasthan, and MP. They have one manufacturing unit in Gujarat with a 25,500 metric ton annual capacity. 🏭

DCG also has a solid export business catering to over 60 customers globally in Latin America, the Middle East and North Africa region. PS – they have a total of 464 registrations out of which 195 are exclusively for exports. Atul Ltd, Heranba Ltd, and Bharat Rasayan are some of its key customers. 💪

The IPO is a mix of fresh issue and sale by existing investors. They will use the IPO proceeds (Rs 216 cr) mainly to fund their expansion plans and repay debt. 💯

Financial Snapshot: (FY22)

Revenue: Rs 394 cr; +31% YoY
EBITDA: Rs 46 cr; +44% YoY
EBITDA Margin: 11.7% vs 10.6% YoY
PAT: Rs 29 cr; +38% YoY

Bottomline – Dharmaj Crop Guard’s strong financial track record, focus on new launches, huge export opportunity and reasonable valuations are key positives. But, volatility in raw material prices and high dependence on monsoon are top concerns. FWIW, the stock may list at a 16% premium to its issue price, according to grey market data. 🤑

Movers and Shakers

Here’s a look at this week’s top Nifty 500 movers. Easy Trip Planners took the pole position after rallying +42%. 🥇 RCF (+22%) had the best week since Feb 2021. Paytm (-15%) hit a new all-time low. Adani Transmission (-12%) closed down for a third straight week. 📉 Check out their charts below: