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Bajaj Finance reports 22% AUM growth but margins and asset quality yet to return to normalcy

by 5paisa Research Team 29/10/2021

Bajaj Finance reported AUM growth of 22% YoY and 5% QoQ, 7-12% QoQ growth in consumer durables, personal loans, SME and rural segments, operating costs increased 76% YoY and 48% QoQ led by higher collection costs, increased manpower and branch additions, restructuring book in Q2FY22 stood at Rs. 4.26bn and provisions against restructuring stood at Rs. 2.89bn (19.1% PCR). The cost-to-income ratio is expected to decline to 33-34% by 4QFY22 from 38% in 2QFY22 as collection costs subside.
    
Going forward, the company is increasing its focus on sourcing loans through its various digital channels and expects to source 500,000 EMI card customers digitally from 3QFY22 onwards and generate 500,000 loans/quarter from its EMI store in the next one year. To increase its growth potential and diversify its loan book, the company is creating advances in North and East India.
 
The company expects loan loss provisioning to normalize to Rs. 7-8bn quarterly run rate from 3QFY22 onwards however, the FY22e credit cost guidance remains unchanged at Rs. 46bn. The One-Time Restructuring book increased to Rs. 15.12bn as on September 2021 from Rs. 12.87bn as of end of June 2021. The stage 2 and 3 assets are likely to decline to Rs. 78-80bn from Rs. 100.65bn (as on end of September 2021. Asset quality is expected to normalize by March 2022 and gross stage 3 to reduce to between 1.7-1.8% and net stage 3 to between 0.7-0.8%. The company expects the margins to normalize from Q3FY22 in the range Rs. 1.8-2bn.
 
With its future outlook of +20% loan book growth, one can expect , +4.5% RoA and 45% EPS CAGR estimate over FY22-24e places its operating metrics and profitability distinctly above its set of peers.
The potential key drivers that could lead to higher growth could be successful digital transformation and augmentation of fintech capabilities, stronger customer acquisition and cross-selling of products. The company is dipping its toes in the Fintech space with their new consumer app and merchant app which may be introduced in December 2021 and February 2022 respectively.
 
On the flip side, moderation in growth and high competitive pressure on yields could prove to be challenges the company needs to overcome in the near future.

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Cipla Q2 results | 9.6% growth in revenue and PAT rises to Rs. 711 Cr

by 5paisa Research Team 29/10/2021


India sales increased 15.6% YoY at Rs. 24.2bn on core therapies growth but decreased 10.8% QoQ on account of lower COVID-19 sales. Cipla believes the broader Indian pharmaceuticals market (IPM) can sustain 10-12% annual sales growth without any obstacles in the way. The Indian market sales grew on account of demand in core therapies portfolio (e.g. respiratory, urology, cardiac, etc.), it expects to continue outperformance for its Rx sales (~85% of sales) growth vs the market. Over the next 2 to 3 years, the company expects to increase CHC sales to 12% of total company sales from the current ~7% level.
 
US sales grew 0.7% YoY and QoQ at USD $142mn were steady with traction in key respiratory launches (gProventil and gBrovana) balancing the deterioration of base portfolio. It has garnered ~16% volume share in the US albuterol inhalers market and has room for higher volumes but its main focus remains on the consistency of supplies in a highly complex supply chain. US sales are expected to be in the USD $140-150mn range for the rest of FY22, supported by the scale-up in respiratory sales, improving reach in institutional channels and new launches. The company is dealing with formalities for gAdvair and is waiting for final FDA approval for gAbraxane and clearance for its Goa facility for manufacturing. 

The company reported 8% YoY increase (Rs. 9.9bn) from the SAGA segment. South African private market region alone accounted for 20% YoY revenue growth in constant currency terms. Even the emerging markets saw a strong recovery after slump in supply in the previous quarter.

On 25 August 2021, Cipla expanded its operations by entering into a joint venture (JV) agreement with Kemwell Biopharma Private Limited, a leading biopharmaceutical Contract Development and Manufacturing Organisation (CDMO), to develop, manufacture and commercialise biosimilars for global markets. 

Cipla spent Rs. 2.7bn for research and development in 2QFY22. The company expects R&D to be capped at ~7% of sales. The trajectory depends on the progress in clinical trials for its pipeline assets, and it earmarked capex of Rs. 8-9bn for FY22. The company’s focus remains on measured investments towards respiratory products, specialty portfolio, debt reduction and strategic inorganic growth opportunities. 

Cipla maintained a net cash position as of 2QFY22. Delays in the resolution of pending cGMP issues at its Goa plant can delay approval and launch of gAbraxane in the US, delays in key launches and poor execution in the US, Indian formulations growth slowdown and higher and longer R&D slowing down the pace of operating margin improvements could be the few of the things in the list of risks that may hinder Cipla’s future prospects.
 

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Shree Cement beats Q2 sales, earnings estimate but higher fuel costs weigh

by 5paisa Research Team 29/10/2021

Shree Cement, the third-largest cement company in India, posted better-than-expected numbers for the second quarter ended September with both revenue and profit coming ahead of what analysts had forecast.

The company’s standalone net profit rose 6% to Rs 577 crore from Rs 547.25 crore a year earlier. However, profit declined 12.8% from Rs 662 crore in the first quarter through June.

Net sales rose 5% to Rs 3,206 crore year-on-year, though it declined from Rs 3,450 crore in the first quarter.

The second quarter is typically a low-demand quarter due to the monsoon season in much of the country that affects construction activity.

Analysts had expected revenue to come in the region of Rs 3,100-3,200 crore while net profit was projected to be around Rs 500 crore.

The company’s EBITDA also came ahead of expectations despite the impact of higher fuel cost.

Power and fuel costs rose 29% to Rs 628 crore from Rs 486 crore a year earlier while raw material costs moved up around 7% in the same period. This was much higher than what UltraTech experienced last quarter and marginally ahead of ACC in the same period.

Earlier this month, UltraTech had said its cost structure saw a spike as coal and pet coke prices nearly doubled in the quarter resulting in energy costs shooting up 17% year-on-year. Ultratech’s consolidated net profit was almost flat at Rs 1,313 crore year-on-year and declined 22.8% sequentially due to the impact of higher fuel and logistics costs during the quarter.

Shree Cement’s share price rose 1.66% to end the day at 28,659.4 apiece in a weak Mumbai market on Friday. The shares are up almost 38% from their one-year low.

The company also said that it had raised Rs 2,383 crore through a qualified institutional placement two years ago and has used a little over a third of the amount as of September 30, 2021.

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Chart Busters: Top trading set-ups to watch out for Monday

Chart Busters: Top trading set-ups to watch out for Monday
by 5paisa Research Team 01/11/2021

The benchmark index Nifty has lost 443 points or 2.44% in the last five trading sessions. The price action formed a sizeable bearish candle carrying lower high-lower low on the weekly chart. The weekly RSI has given bearish crossover and it is in falling mode. The next support for the index is placed at the 50-day EMA level, which is currently placed at the 17547.50 level.

Here are the top trading set-ups to watch out for Monday.

Ujjivan Financial Services: Considering the daily chart, the stock has given a 32-days consolidation breakout. This breakout was accompanied by a robust volume. The 50-days average volume was 15.88 lakh while today the stock has registered a total volume of 1.11 crore. Along with this consolidation breakout, the stock has also managed to close above its 20-day EMA and 50-day EMA. The 20 and 50-day EMA has started edging higher. The 100-day EMA has started losing its downward slope and started to flatten out. This portrays an encouraging picture.

The momentum indicators and oscillators are also supporting the overall bullish picture. The leading indicator, 14-period daily RSI has taken support near the 40 zone and surged above the 60 mark. This indicates a bullish range shift as per the RSI range shift rules. The weekly RSI has also given positive crossover and it is in rising mode.

Going ahead, in case the stock has sustains above the 100-day EMA level, then we may witness a sharp upside. The 200-day EMA will act as resistance for the stock, which is currently placed at Rs 200.90 level. On the downside, the 50-day EMA level will act as immediate support for the stock.

InterGlobe Aviation: The stock has formed a Dark Cloud Cover candlestick pattern as of September 22, 2021, and thereafter witnessed correction. On Friday, in the first 15-minutes, the stock has corrected sharply. During this correction, the stock has taken support near the prior breakout level and it coincides with the 100-day EMA level. From the days low, the stock has gained 17.57%. The price action has formed a sizeable bullish candle with a long lower shadow. The long lower shadow indicates buying interest at lower levels. The reversal from the support is confirmed by the above 50-day average volumes.

The stock has also surged above its 20-day EMA level. The 20-day EMA is in a rising trajectory. The leading indicator, 14-period daily RSI surged above the 60 mark for the first time after 22 trading sessions. The MACD histogram is suggesting a pickup in upside momentum. Moreover, a positive divergence is clearly visible between the daily RSI, daily stochastic and the stock price movement, which suggests a limited downside. Positive divergence occurs when the price is making a lower low, while the indicator forms a higher low.

Considering the robust technical structure of the stock we believe it is likely to touch new highs. On the upside, the prior swing high of Rs 2307 will act as resistance for the stock. While on the downside, the 50-day EMA will act as support for the stock. The 50-day EMA is currently placed at Rs 1969.30 level.

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F&O Cues: Key support & resistance levels for Nifty 50

F&O Cues: Key support & resistance levels for Nifty 50
by 5paisa Research Team 01/11/2021

17,500 will act as key support while 18,000 will be strong resistance.

Last week was one of the worst in recent times in terms of performance for the Indian equity market. Nifty 50 posted its worst weekly performance in the last eight months. It lost 2.45% last week. What led to such bad performance was relentless selling by FIIs. After a volatile session on October 29, Nifty fell once again and at the close was down 1.04% or 185.6 points to 17671.6.

Activity on the F&O market for the weekly expiry on November 3, 2021, shows 18,000 will act as strong resistance now. Call open interest for weekly expiry stood at this strike (18,000) the highest. This is followed by 19,000 where total open interest stood at 1,10,703. In terms of the highest addition of open interest on the Friday trading session 83,375 was added at the strike price of 18,000.

In terms of put activity that will give a sense of support, the highest put writing was seen at a strike price of 16000 (22,017 contracts added on October 29), followed by 16,500 (19,522 contracts added on October 29), while there was put unwinding at strike price 18100 (8372 contracts shed), followed by 18,300 (6771 contracts shed).

Highest total put open interest (44,769) stood at a strike price of 17,000. This is followed by a strike price of 17,500, which saw a total put option of 43,786 contracts, while a strike price of 17,800 has 33,430 contracts in open interest. 

Following table shows the difference between call and put option at strike price near to max pain of 18000.

Strike Price  

Open Interest (Call option)  

Open Interest (Put option)  

Diff(Put – Call)  

17,400.00  

837  

27301  

26464  

17,500.00  

5578  

43786  

38208  

17,600.00  

10249  

30160  

19911  

17700  

26954  

32045  

5091  

17,800.00  

53439  

33430  

-20009  

17,900.00  

48025  

19069  

-28956  

18,000.00  

143674  

31006  

-112668  

The Nifty 50 put call ratio (PCR) closed at 0.47. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.

Following table shows the participant wise action of key players on the index options front.

   

Index Put Options  

Client Type  

Change of OI*  

% Change of OI*  

Oct 29 2021  

Oct 28 2021  

Oct 27 2021  

Client  

-22026  

7.03%  

-335526  

-313500  

-346093  

Pro  

10323  

13.94%  

84353  

74030  

5695  

DII  

280  

0.76%  

37014  

36734  

64790  

FII  

11423  

5.63%  

214159  

202736  

275607  

*Change from Previous Day  

   

   

   

   

   

 

   

Index Call Options  

Client Type  

Change of OI*  

% Change of OI*  

Oct 29 2021  

Oct 28 2021  

Oct 27 2021  

Client  

47906  

43.56%  

157890  

109984  

186695  

Pro  

-47831  

34.09%  

-188121  

-140290  

-274052  

DII  

0  

0.00%  

401  

401  

401  

FII  

-75  

-0.25%  

29830  

29905  

86956  

*Change from Previous Day  

   

   

   

   

   

  

   

Net Change in Open Interest  

Client Type  

Change of OI*  

% Change of OI*  

Oct 29 2021  

Oct 28 2021  

Oct 27 2021  

Client  

69932  

16.51%  

493416  

423484  

532788  

Pro  

-58154  

27.13%  

-272474  

-214320  

-279747  

DII  

-280  

0.77%  

-36613  

-36333  

-64389  

FII  

-11498  

6.65%  

-184329  

-172831  

-188651  

*Change from Previous Day  

   

   

   

   

   

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Ace investors Ramesh Damani and Mukul Agarwal hold this multibagger stock

Ace investors Ramesh Damani and Mukul Agarwal hold this multibagger stock
by 5paisa Research Team 01/11/2021

Goldiam International Ltd has given multibagger returns of 547% in one year and an astounding 1278% returns in five years.

The multibagger stock of 2021 has risen from Rs 151.95 to Rs 977.80 in the last one year, logging around a 547% rise in this period. Likewise in year-to-date time, this multibagger stock has risen from Rs 229.05 levels logging around 330% rise in 2021.

One year ago, an investment of Rs 1 lakh would have fetched an investor Rs 5.47 lakhs approx.

Five years ago, an investment of Rs 1 lakh would be worth Rs 12.78 lakhs approx.

*The above phenomenal returns would have been only possible for investors who would have stayed invested in this multibagger for the said period under consideration.

Goldiam International a public plus private partnership is forging the company ahead on a growth trajectory. The company provides 360-degree services to major retail corporations based in the USA, Europe and other countries. It is located in Mumbai, in India's premier jewellery Manufacturing zone -SEEPZ - specially created by the government of India to encourage Indian industrialists to set up world-class jewellery manufacturing facilities for 100% export. Goldiam is one of the largest exporters of INVISIBLE SET jewellery. Globally. 70% of its annual production is exported to the American market.

The manufacturer and exporter of studded gold and silver jewellery adorn the portfolio of celebrated investors like Ramesh Damani who is known for his acumen for stock picking. Ramesh Damani holds a 1.57% stake in the company for 3,49,000 shares. Interestingly, it is the only listed stock in his current portfolio as per the latest quarter ended in September 2021. Mukul Agarwal has added a 2.82% stake for 6,25,000shares in the company in the latest quarter.

The stock is currently trading at a TTM PE of 49.35 with a Market Cap of Rs 2174.92 crore. It recently touched its 52-week high of Rs 1142.60 on October 28 which is also its all-time high. It has delivered a strong first quarter where the sales grew by 808% and net profit by 3037% on a YoY basis.

Goldiam International is currently trading at Rs 977.80 at 12.04 pm.

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