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PSUs Are Lit!

Tale of the Tape 

Howdy folks. Markets were back in the green. 📈

Nifty and Sensex reversed sharply after opening lower as investors bought the morning dip. Midcaps (-0.1%) and Smallcaps (+0.3%) traded mixed. Nearly 3 stocks for 2 gainers on the NSE500. ⚔️

Most sectors ended in the green. Real Estate (+1.1%), IT (+0.7%) and Autos (+0.7%) supported the markets. State-owned Banks (-0.6%) and NBFCs (-0.3%) saw profit booking. 💸

This smallcap multibagger +4x between 2020 and 2021. After a quiet last couple of years, is it gearing up for a major re-rating? Check out our top story below. 💯

Move over BAAP stocks. There’s a whole new category of stocks which are in super high demand on Dalal Street. Check out their charts below. 🚀

Paytm was volatile AF after founder Vijay Shekhar Sharma announced that he was stepping down from the Board of Directors of Paytm Payments Bank. 👋

Havells India hit a new 52-week high after a double upgrade by Goldman Sachs. The global brokerage firm sees an additional +!5% upside from current levels. 🔥 

ICICI Lombard (+5%) hit a new all-time high after 70 lakh shares (1.4% equity) changed hands in a block deal. ICICI Bank is the rumoured buyer. CMS Info Systems saw 4.2 cr shares (27% equity) change hands in multiple blocks. Reports indicate that promoter Sion Investments sold their entire holding. 🤝

Canara Bank approved a 1:5 stock split. Grauer & Weil India approved a 1:1 bonus issue. ✅

Westlife Foodworld slipped -5% intraday after the Maharashtra Govt said that they will inspect all fast food chain units in the aftermath of the “fake cheese” row. 🍔

Happiest Minds jumped +5% after approving a mega restructuring plan. ⏩

Hind Rectifiers was locked in a 10% upper circuit after winning a Rs 200 cr from the Indian Railways. 🚉

NMDC dropped -5% after trading ex-dividend. FYI – the company approved an interim dividend of Rs 5.75 p/sh. 💰

Here are the closing prints: 

Nifty 22,198 +0.3%
Sensex 73,095 +0.4%
Bank Nifty 46,588 +0.1%

Future Multibagger?

Is IndiaMART InterMESH set for a fresh rerating? The stock had an explosive Covid phase: rallying +4x between 2020 and 2021. Since then, it has seen steady but slower growth. FYI – it was up 14% over the last year, underperforming the Nifty Midcap 100 index. That said, here’s what a potential bull case looks like for the company. 😎

About Company: IndiaMART is the biggest online B2B classified marketplace platform. Put simply: it helps buyers discover products and then matches them to suppliers. It is primarily meant for small and medium businesses (MSMEs). FYI – the firm currently has a ~60% market share. As of Dec 2023, it had 187 million registered buyers, out of which 38 million were ‘active’ and ~8 million suppliers. 🛒

What’s popping? There are two key positive triggers at play. The first is what experts call ‘network effects’. India has over 60 million MSMEs, out of which only 7.8 million firms are suppliers on IndiaMART’s network. But analysts point out that the company doesn’t need to get all 60 million. What it needs to do is build up to a critical point, say 20 million. After this, it’s the Big Boss and everyone will need to use its service to thrive.  🥇

Secondly, the firm has stopped discounts on its key subscription offerings, which will hopefully prop up its average revenue per user (ARPU). FYI – IndiaMART makes money by offering sellers ways to boost their visibility on the platform. Despite stopping discounts, its churn hasn’t increased too much, which is GREAT. 💯

COVID benefited IndiaMART as MSME suppliers & buyers needed to find new supply chains. Since then, growth slowed down due to rising interest rates & inflation. The good news is that 2024 will see both lower rates & lower inflation. 👍

TL;DR: IndiaMART is potentially poised for a new wave of growth. It may take some time, but it’s getting there. FYI – Philip Capital has a target price of Rs 3,600 p/sh; +33% from current levels! 🤑

Stocktwits Specials

In this week’s video, we will walk through the Top 3 stocks to buy under Rs 300 recommended SEBI RAs on Stocktwits.

In the video, we’ll break down the recommendations by SEBI RAs, covering both fundamental and technical analysis.

Watch Now

PAAP = PSUs.At.Any.Price 

If there’s one thing the 2023 bull run DESTROYED, it was the market’s notion of BAAP (buy at any price) stocks. For BAAP bhakts, high valuations don’t matter as long as it is a fundamentally high-quality company. But the poster boys of BAAP stocks like Asian Paints, Bajaj Finance and HDFC Bank have seen a massive underperformance in recent years. 📉

So, what’s changed? In place of BAAP, we now have ‘PAAP’ or ‘PSU at any price’, as veteran investor Samir Arora pointed out recently. Indeed, PSU stocks have exploded, far past any reasonable valuation. This has been helped by the GOI’s INSANE capex push and dirt-cheap valuations. Fun fact: it comes after years of wealth destruction. 🤯

There are way too many to pick. But here’s a look at the charts of some crazy PSU multi-baggers — REC, BHEL and Hindustan Petroleum: 🚀

Stocktwits Spotlight

Here’s an interesting chart setup on Data Patterns by Saurabh Nandi. Follow him for more awesome trading insights and add $DATAPATTNS.NSE to your watchlist and track the latest from our community. 

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Disclaimer: Saurabh Nandi 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.