Share Market Archives - Page 2 of 4 - Stocksbaazigar
Stocksbaazigar - The Ultimate Wealth Creator

Share Market

Fear of Missing Out

by

‘Fear of Missing Out’ (FOMO) factor in the Stock Market is driving so much liquidity in Market that every bearish move is being negated by Buyers immediately. On Wednesday when a bearish engulfing pattern was seen in the Nifty Chart, Bears tried to short Market immediately after it opened gap down on Thursday. But Buyers were ready with their cash to invest on every dip, and Nifty managed to close near 10300. On Friday 26th March again Nifty closed above 10300. Nifty is holding 10300 from the last three sessions which clearly shows that it can move towards 10600 again. When Nifty made a bottom at 7511 in the March month many Investors didn’t invest in the market as they were fearing further fall in the Market. Analysts who come on Business Channels talked about 6500, 6100 then. Those who invested at those levels are sitting on 30-35% profits now as most of the stocks gave good rally in the last 3 months. Some even made 52 weeks high. Traders started booking profits since 10,000 levels on Nifty. Still Nifty continued to move towards 10600 thanks to FOMO factor in the Market. Stocksbaazigar won’t be surprised if Nifty attains much bigger targets like 10800, 11000 in the coming days due to this strength in the Index. Nifty will fall again to 7377 again from where it started rallying in a rising wedge pattern. The only question is WHEN? Dow Jones showed good correction on Friday. It has closed near its major support level. But a similar situation of FOMO is prevailing in the US Markets. Fed infused liquidity in the market, provided with stimulus packages, and ensured that Markets won’t crash beyond certain levels. From the experience of the 2008 financial crisis, they learned their lessons and were quick to understand that only ‘Liquidity infusion’ can boost the confidence of Investors in falling Market. Trump Govt started buying Bonds, made some policy changes in lending, and also focussed on reducing China-US Trade war tensions to save their economy. Every accusation on China for spreading Coronavirus fuelled the Trade war between the USA and China in the April-May months. From June, we have seen that President Trump has stopped tweeting about China as he understood that it can affect markets again. FAANG stocks (Facebook, Amazon, Apple, Netflix, Google) are performing well. Foreign Portfolio Investors are searching for cheaper investing avenues like emerging markets to park their money again. They are ready to take Risk-On trades again which is helping Indian stock markets. FIIs are net buyers in Indian Equities in the last 3 months. In India, RBI and Govt of India too ensured that there won’t be any liquidity crunch in the Market. Banks and NBFCs are no more in panic mode. Moratorium related mandates are given by honorable Supreme Court, so there is no confusion anymore. Investors are doing ‘delivery based buying’ in stocks like Bajaj Finance, HDFC Ltd, etc. which shows that they are ready to go against the verdict of Brokerage firms which reduced ratings of these stocks. After Franklin Templeton’s Credit Funds issue, investors redeemed their money from Credit Funds but they continued to do their SIPs in Equity Mutual Funds even during Lockdowns. Many new investors joined the investors club of India. A record number of Demat accounts were opened by brokerage companies in the last 3 months and many investors started the first SIP of their lives during this pandemic. This liquidity in Market increased strength of Market and reduced fear considerably. It attracted investors who were sitting on cash. They were waiting for Market Crash after the second wave of CoronaVirus but Nifty didn’t give up. It took support at 9500 levels and gave a rally of 1000 points in no time. If Nifty remains above 10300 for some more time and keeps achieving higher targets like 10600, 10800; fear of missing out factor will increase further which will take Nifty to 11000 or even 11200 before December 2020 Nifty is trading at 26 PE which seems highly expensive if we consider the earnings of companies in Q1 of FY 2020-21. RSI level is also showing that Nifty is in overbought territory. More than 1 Crore people in the world are infected by Coronavirus now, still Capitalist Market is not seeing it as a NEGATIVE trigger for bringing Indices down. In such a situation, every correction in the Market will only act as a buying opportunity. The V-shaped recovery in the Market has increased greed on Investors. Retail investors will get bull-trapped by big traders very soon. But the question remains the same – WHEN? Sometimes, we fear that it is the Traders Market, as fundamentals don’t support the current levels. But on the other hand, we understand that the market is forward-looking. It has already discounted the effect of a pandemic on economics for the FY 2020-21 and it is rationalizing itself for the Next financial year from right now. Traders with good trading skills don’t fear uncertainty. In fact, they love volatility as it helps them gain more. Only Investors are in a dilemma whether they should wait with Cash in hand or should invest (due to FOMO factor)? Stocksbaazigar suggests you to stop timing the market. You can never catch the bottom. All you can do is analyze the charts and speculate based on it. Investors kept waiting for right levels and Nifty ran by 3000 points, if they had invested it earlier they might have gained good capital gains so far. I hope they won’t regret after Nifty reaches 11,000. If they start investing in small quantities now and keep on adding more in every market fall, they will still remain in the Game. So it’s always better to stay invested rather than feeling left out. Create a watchlist of good fundamental stocks where you want to invest and add small quantities at every dip in the stock prices. Keep your positions light and well-diversified. If you will follow … Read more

Jet Airways Crisis worsens

by

Stocksbaazigar discussed Jet Airways Crisis in detail in November 2018 in the post Jet Airways Crisis explained. It was predicted then that deal with Tata Group won’t materialize as the Founder Naresh Goyal wasn’t ready to cease his control over the aviation company which he started in 1993. Jet Airways has the second largest Market share in India after Indigo in the Aviation sector. Naresh Goyal is a pioneer of Private Aviation industry in India. In 1992 when the Government of India accepted the Liberalization, Privatization and Globalization reforms under P. V. Narasimha Rao Government, he was the first to take a leap of faith with the incorporation of Jet Airways in 1993 which became fully functional airlines in 1995. Jet Airways served 26 years to Indian and Foreign Customers before all its flights getting grounded recently. We have already discussed all the reasons for this Financial crisis in the above-mentioned post. Now, let’s analyze the current situation of Jet Airways. Naresh Goyal and his wife stepped down Founder Naresh Goyal has 51% stake in Jet Airways which he founded in 1993. He and his wife Anita Goyal agreed to step down from the board of Jet Airways after their board meeting on 25th March. Etihad Airways which owns a 24% stake in the company also decided to step down. Employees of Jet Airways and all the experts in the Aviation industry blamed Naresh Goyal for not taking timely actions and made him cease the Chairmanship of the company. Jet Airways grounded all its flights The Interim Management set up to monitor the situation decided to halt its all operations and grounded all its flights after unpleasant situations like Strike by Pilots, Protests by Employees, etc. after intervention by Government. It is clear that Government has a soft-corner for Jet Airways which is saddled with more than $ 1 bn debt and may face the fate of Kingfisher Airlines very soon. But they won’t take any action now thanks to the Loksabha Elections 2019. Supreme Court questioning the forceful control of Jet Airways by lenders to find new Buyers for it as per the Revival Plan has also created the panic in the market. Jet Airways Shareholders are worried Kingfisher Airlines has a similar script like Jet Airways. KFA acquired Air Deccan and its problems started. Jet Airways took over Air Sahara and its problem started. The debts started increasing thanks to increasing ATF. This lead to erosion of the valuation of Jet Airways significantly. We saw stock price touching 158 last weak which is a big concern for all the 1,58,000 Retail shareholders who are stuck in it. Only five Mutual Funds has some exposure in Jet Airways but they were smart enough to reduce their exposure significantly over the quarters. Indigo and SpiceJet were preferred over Jet Airways by them which saved them. Vijay Mallya took a dig at Government Kingfisher Airlines Ltd and Jet Airways Ltd both served premium clients and had healthy rivalry before former Airline went bankrupt and willful defaulter Vijay Mallya ran away from India. When the ‘Revival plan’ of Jet Airways came out, Mallya couldn’t stop himself from showing his anger on Government. In a series of tweets, he targeted both Government and Jet Airways. He claimed that he could have saved KingFisher Airlines easily if Government had bailed out it the way they are planning to bail out Jet Airways. He may be right about the partiality Government is doing in this case but people are aware that Vijay Mallya is ‘Bhagoda’ while Naresh Goyal did not run away from the situation. Goyal neither diluted his stake in JetAirways nor stopped his attempts to find a Buyer who can save Jet Airways. He was ready to reduce his stake from 51% to 15% in the possibility of Win-Win deal with potential buyers. Customers react to JetAirways Crisis Frequent travelers of Jet Airways are really upset to see the ongoing development in Jet Airways Ltd. They showed solidarity to the employees of Jet Airways who served them for so many years. They are really optimistic about the survival of Jet Airways. Not all customers are that loyal. Many customers of Jet Airways faced inconvenience when flights were canceled on last minutes and they didn’t get refunds of the same. They showed their anger on Social Media. Travelers who pre-booked seats in Jet Airways for their summer vacation went to Andheri office for their refunds but they were requested to cancel the tickets through the platform they booked the tickets. It is said that those who booked tickets directly using Website and App of JetAirways will get a refund within 7 days. But those who booked tickets through agents have to wait for an indefinite time. Jet Airways stopped its operations on 17th April 2019 which created a great vacuum in the sector. The airfare tickets are skyrocketing by almost twice the price. Low fare No-frills airlines are getting benefited by Jet Airways Crisis. Unfortunately, premium clients who travel by Jet Airways rather than low-cost airlines only for the good experience of traveling are missing Jet Airways the most. Jet Airways Employees seek President’s intervention for salary dues. Jet Airways Pilots didn’t receive their salary for 3 months. Other staff didn’t get a salary for last month while Executive level employees have not got any salary from last 7 months. Aviation Minister Suresh Prabhu and DGCA Chief both raised their hands by saying that Jet Airways Ltd being Private Airlines, they must seek clarification from the Interim Management of Jet Airways about their Salaries. Govt itself facing problem to run Air India which has more debts than Jet Airways and 76% disinvestment plan in it has been postponed due to some unavoidable reasons. Jet Airways Employees have decided to approach Prime Minister Narendra Modi and President Ram Nath Kovind to seek their intervention for their salary dues. They are desperate now as they don’t have any guarantee of their jobs nor money to … Read more

Fundamental Analysis of JK Paper

by

Company Profile Company Name: J K Paper Ltd Industry: Paper and Paper Products House Name: Singhania (HS) Group Year of Incorporation: 1960 Regd Office: Songadh, Gujrat Website: https://www.jkpaper.com BSE Code: 532162 NSE Code: JKPAPER Market Cap: Rs. 2736.04 Cr Category: Small Cap company About JK Paper Ltd: JK Paper Ltd is one of the leading Paper and Paper Products manufacturing company in India. It is a part of J.K Organization and comes under the Harsh Pati Singhania (HS) Group. It has two large integrated paper manufacturing units in India. The first unit JK Paper Mills was commissioned in 1962 in Rayagada Odisha. JK Paper Ltd. took over Central Pulp Mills of Songadh Gujarat in 1992-1993. Central Pulp Mills, an Integrated Paper and Pulp established in 1966. JK Paper Ltd has recently taken over The Sirpur Paper Mills, an ailing paper mill, located at KagazhNagar of Telangana district by acquiring 76.37% of stake. Sirpur Paper Mills was incorporated in 1938 with a capacity of 1,38,000 tonnes per annum capacity. The combined capacity of JKPM and CPM is around 4,55,000 TPA. The Sirpur Paper Mills will add more capacity to JK Paper when it gets functional after renovation. With the upgradation plans, JK Paper can reach more than 7,00,000 TPA production within the next 2 yrs. Product Portfolio of JK Paper Ltd JK Paper Ltd is one of the leading players in the Indian Paper Industry. It has a large distribution network of 188 wholesalers, 10 depots, 4 regional marketing offices, and more than 4000 dealers through which it sells its products. Office papers- JK Cedar , JK Copier, JK Easy Copier, JK Sparkle ,JK Copier Plus and JK Excel Bond. New brands ‘JK CMax’ and JK Max. Printing & Writing Papers- JK Cote , JK Ledger, JK SHB, JK Evervite, JK Finesse ,JK Elektra, JK Lumina, JK Ultraprint, JK Esay Draw Packaging boards- JK TuffCote, JK Ultima ,JK TuffPac , JK IV Board Speciality Papers- MICR Cheque paper, Parchment , Cedar digital JK Paper Ltd is a leading exporter of branded copier paper in India which exports its copier papers to 35 countries. It is also in top two players in coated Paper and High-End Packaging Boards. Segment wise market share of JK Paper Ltd. JK paper ltd enjoys a 28% market share of the paper Industry in India. It is eyeing for 37% market share in Branded Copier paper segment. Currently, in this segment, they have a 24% market share. In the coated paper they are the second largest manufacturer of India with 12% market share. In the packaging paper segment they are market leader with 11% market share. Paper Industry in India Paper Industry in India is a growing Industry. The digitalization hasn’t affected its growth at all. The demand for paper is currently about 15 million tonnes. The overall paper consumption is estimated to reach 24 million tonnes in 2024-25. This industry consumes about 3% of the wood from Indian forests. Rest it relies on an agroforestry initiative for pulp production. Around 1,25,000 Hectares of land in India is under pulpwood plantations. Paper Industry is a very capital intensive technology. Indian Paper Industry has invested over $ 5 Bn in the capacity increase, technology up-gradation, and acquisitions, etc. Anti-dumping duty on Uncoated copier paper It was observed in the last 2 years that uncoated copier papers from Indonesia, Thailand, and Singapore were imported in India at very low prices than which it was sold globally. On the demand of the domestic Paper Industry, Government fixed an Anti-dumping duty on the uncoated copier papers recently. The recommended import price of this paper is decided at $855 per MT. If the import is done below this price, custom will collect the difference as an anti-dumping duty. Paper Prices Trend in India In the last few months, Pulp prices came down by almost $120 per MT which also affect paper prices. Paper prices were down by $100 per MT in the Global Market. In India as per the ASEAN policy, the duty on paper is Zero. Therefore the prices are benchmarked with the landing prices of the paper. JK Paper used 71% of its Pulp from its own Plantations produced in the vicinity of the Paper Mills and imports very small amount of Paper-Pulp. This gives the company a good pricing power over its competitors. Apart from pulp prices, the fluctuations of the dollar also affect the pricing power of India. When China decided to ban the import of mixed waste, they started buying shooting pulp prices. On the other hand, globally mixed waste prices decreased it helped Indian Paper Industries which used cheap mixed waste for production. This helped the industry in the realization of profits. J K Paper Ltd share price details Closing Price on NSE on 11th April 2019 is 153.30 52 Week Low/High of JK Paper Ltd share price is 97.30/194.20 Face Value is Rs. 10 Book Value of JK Paper Ltd share is 92.49 Company P/E is 6.86 vs Industry P/E 11.90 EPS-TTM 22.36 Returns: 1 yr (6.7%), 3 yrs (225.58%) and 5 yrs (363.99%) Shareholding pattern Financials of JK Paper Ltd. Views of Stocksbaazigar on the JK Paper Ltd. stock JK Paper has given tremendous returns to Investors in last 5 yrs thanks to the growing demand of Paper in India. The globally decreased Pulp Prices may not reach the highs at which they were in the next 3-5 years. So clearly, the Indian Paper Industry will show good performance in the upcoming quarters too. The major advantage of JK Paper is it doesn’t depend much on the import of raw materials. They are integrated Paper Pulp production and Paper Manufacturer. It helps them raise the prices of different paper segments by 1,2,3% thanks to the margin they enjoy. JK Paper Ltd is increasing its capacity and utilizing up to 103% of its capacity. They have a target to increase it up to 110% soon. The effect of GST reduced demand for FMCG products in 2017 which … Read more

Navin Fluorine International Ltd Analysis

by

In the summer the demand for coolers, refrigerators and air-conditioners is very high. You will always see smart money investing in stocks like Symphony Ltd, Bluestar, Voltas etc. Very few investors understand the importance of refrigerants gases manufacturers in share market. It is because they fail to connect the link between these chemical companies with summer. It is important to focus on companies like SRF and Navin Fluorine during summer. The reason behind choosing NFIL over SRF is the consistent performance of NFIL in the last 5 years (return of 985% in 5 yrs) and the possible upside in the year 2019. Before starting the Fundamental Analysis of NFIL let’s see some details about the company. Company Profile Company Name: Navin Fluorine International Ltd Company Website: www.nfil.in House Name: P.Mafatlal Group Industry: Chemicals -Others Year of Incorporation: 1998 Regd Off: Vile Parle, Mumbai Market Capital: Rs. 3647.96 Cr Date of Listing: 30th Sept 2003 Sectors: Fine and Speciality Chemicals, Crop Sciences, Refrigerants, and Life Sciences etc. Fundamental Analysis of Navine Fluorine International Ltd. As the name suggests company focusses on Fluorine Chemistry which is an essential part of the Refrigeration industry. Navin Fluorine has a brand called Mafron under which it manufactures refrigeration gases. It also produces inorganic fluorides which are required in pharma and agro sectors. The inorganic fluorides are also used in other industries like Oil and Gas, Glass, Abrasive and electronics too. The third important business of NFIL is large scale manufacturing of Specialty Fluorochemicals required for Agriculture, Pharmaceutical and Petrochemical Industries. It manufactures fluorine-based intermediaries for the speciality chemical industry. The fourth segment of NFIL is CRAMS. Navin Fluorine International Ltd. offers Contract Research and Manufacturing Services for custom chemical synthesis of fluorinated compounds. Navin Fluorine Share Price Current Market Price on NSE on 07/04/2019 is 735.75 52 Week High/Low of NFIL are 579.70/820 Face value: Rs. 2 Number of Outstanding shares: 4,94,46,885 P/E : 23.96 vs Industry P/E : 22.68 EPS-TTM (Rs): 30.71 Book Value/ Share: 199.2 Returns: 1 yr (-8%), 3 yrs( 121%) and 5 yrs (985%) Shareholding pattern of NFIL Promoters: 31.03% General Public: 28.17% NBFC and Mutual Funds: 16.46% Foreign Institutions: 16.08% Others: 7.21% Financial Institutions: 1.06% Key financials of Navin Fluorine Comment: Over the years Navin Fluorine has become highly Cash-rich company with No-debt on it. It has good Assets over liabilities and good cash reserves. Comment: Navin Fluorine is a profitable entity and performing really good. The company has become a Midcap company from a Small Cap company now due to its consistent performance. Comment: NFIL is paying good dividend to its investors. On the completion of its 50 yrs it also announced special dividend. Stocksbaazigar on Navin Fluorine International Ltd. After listening to the Con call of Navin Fluorine on YouTube, I can fairly say that Management of company is confident about the growth from their core business and expecting 30-32% year on year growth. After the laws on Carbon Footprints, organized players like Navin Fluorine International Ltd which was dominant player in Refrigerant gases well-diversified within the Fluoro-chemical businesses which has increased its Product line for better. The acquisition of Manchester Organics Ltd added a portfolio of over 27000 compounds and 3000 IPs to the NFIL. In Dewas, Madhya Pradesh NFIL made strategic investments in cGMP pilot and Multi-purpose plant. As this stock has performed really well in last decade, investors should buy it only on dips and hold them with strict stop losses. Chart of NFIL is really good too. From January to April there is a good delivery-based buying in it. Navin Fluorine International Ltd. company is fundamentally really strong and looks attractive on Technical parameters too. All the 4 BUs of Navin Fluorine will show good growth in the future. A stock of NFIL is a good buy with Stop loss at 698 for the 1-year Target Price of 850. I won’t be surprised to see if the stock over-performs and touches 890 till Dec 2019. Disclaimer: Please note, Stocksbaazigar Mr. Deepak Doddamani is not a SEBI Registered Advisor. He is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional Level – 4. Do not consider this post as Recommendation. Stocksbaazigar won’t be responsible for your Profit/Loss. This is an Educational post and should be treated like one. Thank You. Navin Fluorine International Ltd fundamentals explained by Stocksbaazigar

Fundamental Analysis of Arvind Fashions Ltd

by

Company profile of Arvind Fashions Ltd: Company Name: Arvind Fashions Ltd. Industry: Textiles – Readymade Apparels House: Lalbhai Group Year of Establishment: 2016 CompanyWebsite:https://www.arvind-fashions.com Head office: Ahmedabad, Gujarat Listed on: 8th March 2019 Face value at listing: 4 Premium and Super-premium segments of Arvind Fashions Ltd: Arvind Fashions Ltd. is the number 1 player of denim/casuals in India. One out of every five casual wear bought in branded premium men’s casual/denim Market if from Arvind’s Portfolio. Total sales of premium brands like Tommy Hilfiger, Calvin Klein, Arrow, U.S. Polo Assn., GAP, Flying Machine and Aeropostale etc is around Rs. 40 Billion. Arvind Fashions Ltd has a really strong portfolio which is delivering significant growth over the years. Value Segment of Arvind Fashions Ltd: Arvind Fashions Ltd. is growing in the value-sensitive market with its ‘Unlimited’ segment. The branded Value fashion market is growing at 24% est. to become $ 12 Bn by 2020. The ‘Unlimited’ segment is built on unique differentiators. It is growing at 6-7% EBITDA FY22 ‘Unlimited’ includes strong brands in its portfolio. Ruggers, Newport, Cherokee, Karigari, Excalibur, Anahi and Elle to name a few. Arvind Fashions sells premium products like Boomerang Jeans at value prices thanks to its product superiority leveraging fiber by Arvind Ltd. Other leading categories Other categories of Arvind Fashions ltd which can either become number 1 or 2 soon are Premium Innerwear, Premium Kidswear, and Prestige Beauty. Fast growing premium innerwear market is estimated to be $2.8 Bn by 2022. Arvind Fashions Ltd has a portfolio of Premium Innerwear which covers all the price segments in the premium market. U.S. Polo Assn., Calvin Klein and Hanes etc. Apart from that Arvind Fashions Ltd. has an exclusive license to sell Kidswear from established international brands like the US. Polo Assn., GAP kids, The children’s place, Tommy Hilfiger (Childrenswear), Flying Machine Boyzone etc. Premium Kidswear Market is estimated to be $ 5.1 Bn by 2022. The Prestige beauty market which is estimated to be $1.5 Bn by 2022 is also served by Arvind Fashions Ltd through ‘Sephora’. Strengths of Arvind Fashions Ltd Arvind Fashions Ltd has more than 250+ designers and merchants. Company’s marketing team studies Consumer buying behavior so well that it has a track record of creating best India-specific designs for International brands. Responsible denim, Stitchless shirts etc.are some examples of how AFL promotes innovation in the company. Men, Women, Kid and Innerwear Arvind Fashions Ltd has Multi-category expertise in product designing. Arvind Fashions Ltd has a strong supply change management system and Automated replenishment system which gives it strong internal capabilities to increase its productivity. AFL uses updated technology like Artificial Intelligence design optimization and Customer-centric store assortment which are analytically driven to cater customer needs properly. Technology is used everywhere from designing to buying to selling which makes Arvind Fashions Ltd ahead of its competitors. The Nnnow.com e-commerce-website, Arvind Stores, the vendor/supplier relationship, etc. are the key value drivers of this segment of AFL. It has 189 dedicated Lifestyle stores in the top 25 Malls in India. AFL is present in more than 140 second and third-tier cities Growth Opportunities for Arvind Fashions Ltd. In power brands like U.S.polo Assn., Flying Machine, Arrow and Tommy Hilfiger company is growing 18% of CAGR growth it has tremendous opportunity to multiply the revenue in these brands from 1.6 (TH) times to 4 times (FM). Up to 45% CAGR is possible by 2022. In tier 2 cities potential to achieve growth is 20% CAGR and in tier 3 cities it can deliver a whopping 35% CAGR by 2022. Replication of Sephora.com model has huge potential upside as it became profitable in its very 2nd year of launching thanks to customer loyalty. Arvind Fashions Ltd started domestic production under GAP brand which is increasing its Gross Margin. The opening of more shop in shop, Online, Kids Franchisee, Stores can contribute to growth and profitability further. Unlimited has expanded stores network to 200 stores. It has great potential to give 25% CAGR in the specialty retail segment due to the differentiation of products it offers. Emerging brands like Aeropostale, The children’s Place, Ed Hardy, Calvin Klein can give 7% CAGR by 2022. Updates on Arvind Fashions Share Price on 20th March 2019 In this post on the Fundamental Analysis of Arvind Fashions Ltd. I already mentioned that this stock will give a Multibagger return to Investor who buy it immediately after listing date. From 590.95 to 916.50 Arvind Fashions Ltd share has given 55% returns to the investors in just 10 trading days. That is a tremendous returns. Arvind Fashions Ltd stock is moving upwards circuit to circuit. After it crosses 1000 we might see some profit booking in the stock. Stocksbaazigar gave short term target of 950 and mid-term target of 1200 in this stock. Arvind Fashions Ltd is a portfolio stock and the share price will reach to a premium which will match to the premium of Aditya Birla Fashions Retail Ltd. very soon. Stay invested. Fundamental Analysis of Arvind Fashions Ltd by Stocksbaazigar

Arvind Fashions Ltd

by

Arvind Fashions Ltd Listed Arvind Ltd, India’s leading textile company got demerged on 26th November 2018 into Arvind Ltd (demerged entity), Anup Engineering and Arvind Fashions Ltd. On the 27th November, Arvind Ltd share was trading at 311 Rs per share. On 28th Nov after ex-date, the stock opened at 91 Rs per share and since then we are seeing a gradual decrease in the share price of Arvind Ltd. as most of the debts are now with this parent company. On the other hand, Investors who wanted to get benefited by the corporate action are highly disappointed to see a listing of Arvind Fashions Ltd at the half of the estimated price. Listing fiasco of Arvind Fashions Ltd Analysts suggested that Arvind Fashions Ltd should list between Rs 1200 to 1400 per share. But on 8th March 2019, it listed on Rs. 591.75 per share. For every five shares of Arvind Ltd. investors got 1 share of Arvind Fashions Ltd. formerly known as Arvind lifestyles ltd. So ideally, the base price should have been (311*5) around 1500. Instead, it was taken as 311.5, a share price before the demerger date. Anup Engineering listed at the proper price but Arvind Fashions Ltd disappointed the Investors. The stock closed on the upper circuit of 621.3 by 10 a.m. on listing day i.e. 8th March 2019. Investors are aware of this listing fiasco. Some expert thinks that Price Discovery mechanism happens only once and therefore on Monday 11th March, stock prices won’t get adjusted to 1200+ range. But there are few exceptions who believes that Stock Exchanges will re-adjust the price so that Investors won’t feel cheated. It is important to understand that stock has demerged into 3 different companies now and not in 2. Hence, it may not be a listing fiasco, as some of the Investors are claiming. One thing is confirmed that Arvind Fashions Ltd share will move upwards from here circuit to circuit till it reaches its True price/ Intrinsic price. What should Investors do now? Retail Investors who aren’t aware of this may sell the stocks in a loss in a day or two after listing. It is an opportunity for others to take Fresh positions in the Arvind Fashions Ltd shares. The trick to buy stocks which opens at the upper circuit is very simple. On the trading day (T-day) you have to place an order at 4.99% from the closing price of (T-1) previous trading day during Pre-open session i.e. 9:00 a.m. to 9:07 a.m. to take a chance. If you are lucky, you will get an entry in the stock. But one has to be very careful about newly listed stocks as they are very volatile and can show irregular fluctuations in the share price. History of Arvind Ltd Arvind Fashions Ltd is the fastest growing company of Lalbhai Group. Arvind Ltd (founded as Arvind Mills) is India’s largest Denim Maker established by Padma Bhushan Kasturbhai Lalbhai in Gujarat during British Raj. This group has diversified businesses in different sectors wiz. Textiles, Chemicals, Retail, Engineering, Real estate, Beauty Products etc. Arvind Ltd. took great benefit of Swadeshi Movement during the Independence struggle and became one of the largest Khadi, Dhoti, Saree maker in India. Kasturbhai started with one textile company inherited from his Father in 1917 and then went ahead to buy 12 more textile mills from his competitors (mostly relatives) till 1931. His involvement in freedom struggle and friendship with Gandhiji helped him gain good political and social stand in the Society which indirectly helped his Lalbhai Group. Kasturbhai believed in giving back to Society. Ahmedabad University, IIM Ahmadabad etc. are standing on the lands donated by the Trust of Kasturbhai Lalbhai. There was a phase in Kasturbhai’ s life when Arvind Ltd was under tremendous debt and faced allegations of tax evasion and misappropriation in accounts. He got a clean chit after few years but lost his energy and his health during the legal battle. He retired from business in 1977. In January 1980, he died at the age of 85 in Ahemadabad. Second Innings of Arvind Ltd. The second Inning of Arvind Ltd was started by a new Generation of Lalbhai family. India’s first ever home-grown denim brand Flying Machine was born in 1980. In years to come, Arvind Ltd became the fourth largest manufacturer of Denim Clothes in the World. In 1993, Arvind Ltd introduced International brand ‘Arrow’ to India by opening their flagship stores. By 1995 they introduced Mass Market concept to India through their MegaMart. The year 1995 was a landmark year in the company history thanks to the launching of Ruf n Tuf jeans which was an instant hit in the 90s. Akshay Kumar was the brand ambassador of Ruf n Tuf brand. Arvind Ltd brought brand Excalibur and Wrangler to India in 1997 and 1999 respectively (which are now part of ‘Unlimited’). The association with Globally branded apparells kept increasing in New Millenium too. Arvind Ltd brought Tommy Hilfiger (2004), GANT sportswear (2006), Cherokee (2007), US Polo Association (2009), Nautica, Elle (2012), Ed Hardy, Hanes Innerwear (2013), Calvin Klein (2014), The children’s place, GAP (2015) etc. to India through exclusive licencing and joint ventures. Arvind Ltd. brought Shoe brands like Arrow, USPA, Flying Machine (2015) and Aeropostale (2017) to India. It also launched its own Men’s wear brands like Creyate (2014) and True Blue (2016) in this decade. In the 2016 company entered Online retailing through its e-commerce website nnnow.com On the 8th March 2019, the demerged entities of Arvind Ltd wiz Arvind Fashions Ltd and Anup Engineering listed on the stock exchanges. Shareholder of Arvind Ltd were allotted One share of Anup Engineering (formerly Anveshan Heavy Engineering) for every 27 shares of Arvind Ltd while One share of Arvind Fashions Ltd for every 5 shares of Arvind Ltd.

Bandhan bank acquires Gruh Finance

by

What is the Bandhan-Gruh deal? In an all-shares swap deal, Bandhan bank acquires Gruh Finance, a subsidiary of HDFC Ltd. Shareholders of Gruh Finance will receive 568 shares of Bandhan Bank for every 1000 shares of Gruh Finance. The deal valued Gruh Finance at 7% discount and on the Market Price of 4th January 2019. The share of Gruh Finance closed at 305 on 7th January 2019. Though in a long-term deal is really good for Bandhan Bank, in short-term it seems to be a very expensive one. Hence the Share price of Bandhan Bank also fell and closed at 495.55 on 7th January. Reaction of Brokerage Firms on Bandhan-Gruh merger: As per Anil Singhvi of Zee Business, both Bandhan Bank and Gruh Finance can correct by more 10-15% in coming days. Macquarie has reduced target of Bandhan Bank to 540 and JP Morgan reduced it to 525. On the face value, this merger looks Win-WIn deal for both the Bandhan Bank and Gruh Finance but the real winner of this deal is HDFC Ltd who has traded off Gruh Finance which was overlapping with their own customer base for getting 14.96% in the merged entity. Credit Suisse increased target of HDFC Ltd to 2150 after this deal. The effective date of this merger will be 1st January 2019 (retrospectively) subject to approvals from regulators, shareholders etc. After signing the merger co-operation agreement they took joint press conference in which they tried to explain synergies between Bandhan Bank and Gruh Finance and how they can complement each other in making the merged entity a diversified one. Let’s try to understand the deal for the perspective of all the three entities involved in it How Bandhan Bank will get benefited by this deal? Bandhan Bank Ltd is the youngest bank in India which started its banking business in 2015. Bandhan which started its business as a micro-finance company in 2001, received a banking licence from RBI in 2014. It is headquartered in Kolkata in West Bengal and has total 974 branches. Founded by Chandra Shekhar Ghosh this bank has managed to command a market value of around Rs. 63000 Crore currently. RBI’s banking licence ownership norm required Promoters of Bandhan Bank to reduce their stake from 82.3% to 40% within three years of starting the business. The deadline to do this was 23rd August 2018. On Bandhan Bank’s failure to meet the rule, RBI froze the bank expansion and remuneration of CEO and MD Chandra Shekhar Ghosh. This deal will reduce the Promoter’s stake to 61% now. It will have to take more steps to further cut it down and bring it to 40% soon. From Bandhan Bank’s perspective the swap ratio of the deal is 2.84: 5 which is actually better than what market speculated. Ghosh seized this opportunity to diversify the business portfolio by reducing the concentration risk. Acquisition of Gruh Finance will help Bandhan Bank acquire a low-ticket housing finance portfolio. It will also help them grow inorganically. Bank has a great presence in Eastern and Northeastern India. 80% of the business of Bandhan comes from 37% of rural customers and 35% of semi-urban customers. It completely makes sense to them to acquire Gruh Finance which serves the same segment of income groups wiz ESW and LIG. 46% of outstanding loans of Gruh comes from centres which have a population less than 50000. The acquisition of Gruh will add a huge portfolio of secured loans to Bandhan Bank’s book reducing its heavy unsecured loans portfolio. Bandhan typically gives loans of short terms while Gruh gives loans of Long-term too. This will give a good combination to the merged entity. Gruh Finance has a good presence in Western India. 83% of its business comes from Gujarat and Maharashtra. This merger will give the merged entity presence and penetration from East to West. It is good from the point of view of Financial Inclusion as well as serving well to the bottom of the pyramid. HDFC Ltd in clear winner in the deal Gruh Finance is a subsidiary of HDFC Ltd. Gruh has a good presence in rural areas of Western India. HDFC owns 57.8% in the company. After the merger, HDFC will own 14.96% in the merged entity. As per the rule HDFC Ltd. needs to bring down it’s holding in merged entity below 10% soon. HDFC will sell its stake at Premium valuations either in the secondary market or to Public Institutional Investors. HDFC Ltd will now get the best of both the worlds affordable housing finance as well as Microfinance businesses by the entry in the merged entity. Earlier it was overlapping the market of its own subsidiary Gruh in affordable housing segment. Gruh has a network of 195 branches spread across 11 states. This merger will give them access to the distribution network in Eastern part of the country where it has low to no penetration. Bandhan Bank is growing faster and HDFC Ltd. sees great opportunity in it. With this merger, HDFC Ltd has traded off Gruh Finance in exchange of pie in the fast-growing Bandhan bank which has great experience and expertise in Bottom of Pyramid markets of India. This way HDFC Ltd has emerged as a clear winner in Bandhan-Gruh merger. (Disclaimer: This is an Educational post. Stocksbaazigar Deepak Doddamani is not a SEBI registered Advisor. He is NSE’s certified investment analysis professional and NSE’s certified Marketing profession level- 4. Stocksbaazigar is not responsible for any of your profit or losses. Please consult your financial advisor before taking any Investment decision. Thank you.)

Analysis of Ashok Leyland Dec 2018 Sales numbers

by

Ashok Leyland  Founded: 7th Sept 1948 Founder: Raghunandan Saran Parent: Hinduja Group (51% stake) HeadQuarters: Chennai, TamilNadu India Key Financials of Ashok Leyland Financials of Ashok Leyland Ltd: December 2018 Auto Numbers of Ashok Leyland December 2018 Auto Numbers of Ashok Leyland YoY Comparision: PEERS of Ashok Leyland: December 2018 Auto Sales Numbers are given in the table below The stock of Ashok Leyland Ltd performed really well in the last decade. It is one of the best portfolio stock in recent times which rose from Rs 14 to Rs 168 in just four years. The share traded in 75 to 100 range for an almost very long time before it jumped above 100 level in July 2017. Since then we saw further buying in Ashok Leyland as brokerages firms started giving targets like 140, 180 and so on. This stock has given more than 1100+ % returns in a 10-yr period, so it was obvious to see some profit booking after the bad December Auto Sales Number. When the stock corrected from 168 to 140, no one could predict further fall as there was always a buying interest in this stock. But the changing fundamental of the company has brought it below 100 today. The stock has corrected by almost 22% in the last 6 months. Before we discuss why the stock is falling so fast, let’s discuss why it was in so much demand in last few years. Positives about Investments in Ashok Leyland Ltd. shares Ashok Leyland is the second largest commercial vehicle manufacturer in India. It is the fourth largest manufacturers of buses in the world and 12th largest truck manufacturer in India. The commercial vehicles business in India is growing with 18% growth rate Defense Foray: In August 2017 Ashok Leyland Defence Systems (ALDS), Russia’s Rosoboronexports and ELCOM group have signed a cooperation agreement in defense business to provide tracked vehicles to Indian Armed Forces. Ashok Leyland holds 26% stake in ALDS. ALDS has supplied over 60000 of its Stallion vehicles to Indian Army so far. Competitive Advantage in Technology Ashok Leyland is a pioneer in Technology and Services in Commercial Vehicles segment in India. It was the first to introduce multi-axles trucks, full air brakes and innovations like rear engines and articulated buses. His patented fuel injection system and iEGR technology were the decent technologies which made it Transporters favorite vehicle. It is estimated that due to iGER (intelligent Exhaust Gas Recirculation) technology the number of electronic items and sensors in trucks has decreased so much that it is possible for Mechanics to easily maintain it. Also, this engine doesn’t need AdBlue or Urea which saves a lot of costs (almost 20000 Rs per truck in fuel per 5000 km journey). It has power trasnmission of 400 Hp ServiceMandi App Ashok Leyland has a Mobile Application called Service Mandi. It helps customer maintain data of all the Maintainance services of all their vehicles in one place. If a truck breakdown and truck driver contacts Customer Care of Ashok Leyland through this app, Ashok Leyland Mechanic/ Automobile Engineers reach that spot within 4 hrs and solve that problem within 48 hrs maximum. Innovation: The Driver cabin is spacious, Gears work so good that Drivers can take longer roads without feeling much fatigue. Transporters don’t have to pay penalties to RTOs thanks to low emission BS 4 Standard engines. Ashok Leyland was the first to introduce India’s first indigenous made Electric Bus called Circuit in 2016. The bus is Zero-Emission bus which can run 120 Km distance in the single charge. Under the National Electric Mobility Plan of India, it was decided to add 20% hybrid vehicles by 2020. Ashok Leyland has good scope in this segment. But Now Analysts are saying that Ashok Leyland will face many challenges ahead. One year target has been reduced to 115-125 from earlier 140-160. Let’s see what are the various reasons for this shift in perception: Negatives of Investment in Ashok Leyland Ltd. shares In July, Government increased the permissible capacity of load carrying by 25% for heavy commercial vehicles which can reduce the demand of the additional trucks On 13th November 2018 CEO and MD of Ashok Leyland Vinod Dasari announced that he will retire on 31st March 2019. Till the new Leadership gets announced stock will not perform now. On 17th December, NCLT ordered Ashok Leyland amalgamation of its three arms wiz Developing, Manufacturing and Selling of LCVs up to 7.5 tonnes, Power Trains for LCVs, and their Spare parts in foreign countries. Due to implementation of BS – VI emission standard on commercial vehicles, prices will rise upto 8% demand of new Trucks will increase which will affect current operating performance. Transformation needs some time. Management fear of bad 2021 and already started to avoid that possibility of tepid growth. What to do in the Ashok Leyland Share now? Recommended Action in Ashok Leyland Ltd Share Ashok Leyland is trading below 100 level now. After the bad December Auto Sales number, some more downside in share price can not be ruled out. Stock has first major Support at 84 levels and second best support at 75. On upper side Stock can go up to 115 where we can see high selling emerging as many investors are stuck in this stock. One year target in this stock can be as low as 135 now. (Disclaimer: Please note this post is for an Educational purpose. Consult your Financial Adviser before taking any investment decision. Stocksbaazigar is not responsible for any gain/loss of an Investor. Thank You.)

Wealth Creator Stocks of 2018

by

      Wealth Creator Stocks of Calendar year 2018     Last Calender year 2017 was really good for the Indian Share Market thanks to GST and other major economic reforms Government took after Economy recovered from the effect of the biggest fiasco of Demonetization in 2016. Analysts predicted that it will be very difficult to earn good returns in the calendar year 2018 and unfortunately their prediction is turning out to be correct. This year many indices gave single digit to negative returns. The market recovered when the tension between the USA and North Korea resolved for some period but it could not sustain at the top thanks to the USA-China trade war. In 2018, we saw Crude oil prices and Rupee mostly affected the sentiments of Investors. From 3rd of Oct, fortunately, things are in favor of Market and Nifty is showing great rally since then. The Assembly Elections Results of 5 states in December are already factored in in the Nifty level and right now we are witnessing a Santa-Rally. Before FIIs book their profits and go for their Christmas vacation, let us discuss how Indian Markets performed in the Calendar year 2018. This year some Bluechip stocks really performed well.  Let’s see which Nifty 50 stocks gave really good returns in the Calendar year of 2018 in the following table. This year Private sector banks like Kotak Bank, ICICI Bank and Axis Banks gave good returns to investors. The IL & FS Crisis affected NBFCs and HFCs really badly. Money from these sectors shifted to Private Sector banking stocks. That’s why Nifty Bank index could give 7% returns even in such a bad year. Financial Sector stocks like Bajaj Financial Services (22.39%) and Bajaj Finance (48.90%) too performed really well. The year 2018 was really good for IT sector stocks thanks to depreciation of Rupee for most of the year. Stocks like NIIT Technology (80.88%), MindTree (45.14%) and Tech Mahindra (40.95%) gave tremendous returns. The implementation of GST definitely helped some FMCG stocks which gave double-digit returns to their investors. Dabur (31.90%), UBL (33.58%), Marico (27.31%), Colpal (24.07%), GSKCons (22.63%) etc. stocks helped Nifty FMCG give 17.12% returns in 2018. Thanks to HUL (38.78%) which lead this pack. HUL-GSK deal announcement will definitely take HUL further up at new 52-w High level. Some Pharma sector stocks wiz. DivisLab (44.51%), Glenmark Pharma (26.92%) and Biocon (22.92%) managed to recover the Nifty Pharma index from the year lows. This index gave -4.24% return in last 365 days. NSE Auto Index traded in red for most of the year 2018. It gave 18% negative returns in 2018. Still, stocks like ExideIndustry managed to give 27.31% positive returns thanks to the decrease in raw material prices. US-China Trade war affected Nifty Metal sector really bad in 2018.  This index gave -13.65% return in 1 year. Surprisingly JSW Steel (22.19%) made to top 10 performers list of Nifty 50 stock this year. Apart from these stocks, there are many such stocks who created wealth for the Investors. wiz. V-Mart Retail, HEG, Vinati Organics Ltd, L & T Infotech, L & T tech Serve, VIP Industries, Bata, Jubilant Food etc. After the heavy selling of 40-60% in Midcaps and SmallCaps in last year, we can clearly see that Investors prefered to Invest in Large Cap and BlueChip stocks to avoid risk. We saw more buying in highly liquid stocks and front-runners in Market who are always favourites of leading Analysts.  Let’s see how these Wealth Creators of Calendar year 2018 performs till 31st March 2019. If you have followed my Facebook Live videos you will realize that I gave positional calls in most of these stocks at very correct levels wiz. HUL @ 1200 Axis Bank @ 460 Kotak Mahindra Bank @ 1050 Jubiliant Foods @ 900 LT @ 1100 and so on. (Disclaimer: Please note, this post is for educational purpose only. Stocksbaazigar does not take any responsibility of profits/losses of the reader. Please consult your financial Advisor before taking any Investment decision. Mr Deepak Doddamani is NSE’s Certified Investment Analysis Professional and NSE’s Certified Marketing Professional Level -4, but he isn’t SEBI registered Financial Advisor.)

Stocksbaazigar Footer