September 25, 2023

Volatile Monday

Tale of the Tape

Good evening ladies and gentlemen. Markets were volatile AF! 🎢

Nifty and Sensex seesaw-ed in a range to eventually end flat. Weakness in heavyweight Reliance Industries and large-cap IT stocks + muted global cues kept investors on their toes. Midcaps (+0.7%) and Smallcaps (+0.1%) traded mixed. The advance-decline ratio was split evenly. ✌️

Most sectors ended in the green but the gains were limited. Real Estate (+1.5%) stocks had a strong start to the week. IT (-0.8%) dragged markets lower. 📉

This smallcap railway PSU stock can give +25% returns from current levels. More details below. 🚀

Bajaj Finance (+4%) was the top gainer on Nifty. On the other hand, Delta Corp tanked -20% to hit the lowest level since April 2021. Read more below. 🔍

Maruti (+1%) hit a new all-time high of Rs 10,669 p/sh. 💯

Religare Enterprises dropped -7% intraday. The Burman family (Dabur founders) announced that they will buy a 26% stake in the company for Rs 2,116 cr. 💰

MCX rallied +9% on reports of going live on the TCS platform from October 1. ✅

Godrej Properties jumped +4% after its Noida residential project sold 670 flats totalling Rs 2,000 cr. 💸

Berger Paints slipped -8.5% after turning ex-bonus. Shareholders will receive 1 bonus share for every 5 shares held. 👍

Here are the closing prints:

Nifty	19,674	– Unchanged
Sensex	66,023	+0.1%
Bank Nifty	44,766	+0.4%

Portfolio Worthy

Ircon International is on a hot streak! The stock is up a WHOPPING 269% over the past year, easily beating the Nifty Smallcap 100 Index’s 30% gain in the same period. I know what you’re thinking: what the hell is going on here? 🤔

IRCON is a state-run EPC contractor that offers a range of infra-construction services. That said, it primarily operates in the railway sector. As of June 2023, its order book stood at Rs 32,468 cr, which is 3x its FY23 revenue. Also, +70% of the order book came just from railway projects. 📊

What have been triggers for the stock over the past year? Two major factors. For starters, the Indian Railways moved away from a cost-plus model to competitive bidding. This helped improve margins across the board. Secondly, the Indian Railways’ capex has grown a lot since FY20. From FY15- FY’20, aggregate railway expenditure was Rs 8.5 lakh cr. How much has that gone up? Well in FY24, rail budget capex is expected to clock in at Rs 2.9 lakh cr alone! It’s no shocker that IRCON’s revenue and profit were up 42% YoY and 29% YoY in FY23. 👏

Looking ahead, the only relevant question: how much more juice is left in the stock? A lot of it depends on how its strategy pans out. IRCON is currently staying away from low-ticket contacts like say station redevelopment projects because they require huge manpower + tight timelines. It’s also cast an eye on international biz, specifically the upcoming Middle East-India-UAE corridor. Also, over the next five years, the company hopes to foray into high-speed rail, solar & road projects and grow its order book to Rs 1.2 lakh cr. 🤑

FWIW – brokerage firm Antique Stock Broking has a target price of Rs 176 p/sh; +25% from current levels! 😇

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Bullets For The Day

🔥 Bajaj Finance was the top Nifty gainer, surging 4% intraday! Why? The company announced that it would consider a fundraising plan in its board meeting on Oct 5. FYI – media reports indicate that the NBFC giant could raise up to $1 billion via QIP. This money is likely to be used for growth capital and strengthening the company’s balance sheet.

Yes, the fundraise will probably lead to an equity dilution of 2%. But, experts are bullish because they believe Bajaj is readying its war chest for how the competitive landscape will evolve. ICYMI – the 900-pound gorilla in the room is Reliance’s Jio Financial Services. While the market is still awaiting details, there are some indications that Jio has started consumer lending pilots. It’s also likely that Bajaj will use the money to expand into new product lines.

FYI – foreign brokerage CLSA has raised its target price on Bajaj Finance to Rs 9,500; a 27% potential upside from current prices.

🚨 Delta Corp COLLAPSED 20% intraday after it received tax notices worth Rs 16,882 cr from the GOI. The tax demand is for the period between July 2017-March 2022. To put just how INSANE the tax notice is, Delta Corp’s FY23 revenue was just Rs 1,021 cr. With today’s drop, the stock is currently at a nearly 3-year-low! FYI – the first tax notice for Rs 11,140 cr has been raised directly against Delta Corp.

ICYMI – the tax issue stems from the controversy over whether the GOI should levy duties on a customer’s ‘gross bet value’ or ‘gross gaming value’. In its defence, Delta Corp claims that the GST demand is based on the former. This would imply Delta has to ask customers to cough up money for past bets, a borderline impossible task. Finally, another trigger has been a major block deal, where 6.1% equity changed hands.

Stocktwits Spotlight

To the moon! Bajaj Healthcare hit a new all-time high. Huge shoutout to TheChartMaven for catching the move early (as always). Follow them for more awesome trade ideas and add $BAJAJHCARE.NSE to your watchlist and track its performance. Here’s the link:

Bajaj Heathcare Setup

Disclaimer: The Chart Maven is not a SEBI registered advisor and you should not construe any information discussed herein to constitute investment advice. Consult your financial advisor prior to making any actual investment or trading decisions.