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Castrol India- 16% potential upside with 3 fold increase in PAT

by 5paisa Research Team 12/11/2021

Castrol follows a January- December financial year, making the July-September quarter, their third. Castrol India witnessed a three fold increase in PAT, standing at Rs.570 crore in Q3 CY21 from Rs.186 crore in Q3 CY20. Revenue from operations also increased from Rs.1,073 crore in Q3 CY20 to Rs.3,101 crore in Q3 CY21.

Due a sharp rise in input costs seen all over the market, the Cost of Goods Sold was a challenge that was handled very ingeniously by monitoring the price hikes very carefully along with timely increases in market and advertisement spending to increase the customer base. This in turn also helped in a 6% rise in volume growth in Q3 CY21. The EPS standing at Rs.1.88 was down by 9% YoY but up by 33% QoQ.

Castrol launched a new product for cars and commercial vehicles using the newest BS-VI technology available. Even then, there is a downside risk of low sales volumes. This is overshadowed by the potential upside of 16% due to the price hikes, along with a BUY call by analysts, with a price target of Rs.160.

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Britannia Q2- Rising prices of Palm oil caused 23% decline in Net profit?

by 5paisa Research Team 12/11/2021

Britannia's Q2 FY22 revenue witnessed an increase of 5% YoY, as estimated. The first half of the financial year saw the company gaining more market share with primary focus on increasing their rural coverage.

The gross margin decreased by 520bps mainly due to the high input cost inflation of palm oil(54%), industrial fuel (35%) and packaging material (30%) and a total inflation of approximately 14% this quarter. Rise in input costs were mitigated to a certain extent due to the forward covers taken on commodities as well as price increases across the entire portfolio. The operating margin also witnessed a decrease of 430bps YoY to 15.5%. The employee costs increased by 14% YoY whereas the EBITDA fell by 17% YoY.

PAT decreased by 23% mainly due to lower income and higher tax and also the increased prices of the raw materials as mentioned above. The cost of materials of the company increased by 8% YoY from Rs.1,768 crore in Q2 FY21 to Rs.1,915 crore in Q2 FY22.

The major sales rose by 6% in this quarter to Rs.3,554 crore. On a 24 month basis, the company reported a growth in sales and net profit by 21% and 18% respectively. Biscuits and high protein food compose of 70% of the total sales mix of Britannia.

The long term investments of the company, mainly in market securities have decreased to Rs.9.8 billion in 2nd half of FY22.

According to the management, the commercial paper proceeds are being used for buying future covers for wheat and sugar and this in turn has led to an increase in the inventories by Rs.2.3 billion.

A price target of Rs.4000, with an estimated upside of 7.6% and a BUY call has been reported by analysts.

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Eicher Motors- Q2 profits beats the estimates| 9% increase in PAT

by 5paisa Research Team 12/11/2021

Founded in 1948,Eicher motors is a company that manufactures motorcycles and commercial vehicles worldwide.

The company reported a 9% YoY increase in profit, currently standing at Rs.373.2 crore for Q2 FY22. This increase can be attributed to the fact that the commercial vehicle sales have increased substantially whereas the Royal Enfield sales have dipped due to the ongoing semi conductor shortage. Revenue from operations increased from Rs.2,134 crore in Q2 FY21 to Rs.2,250 crore in Q2 FY22.

During Q2, Royal Enfield sold around 1,23,515 motorcycles. This is 17.2% less than the amount sold in the same quarter last year. The exports for motorcycles grew by 130% YoY this quarter. Exports are expected to be higher next quarter as shipping to cold countries starts next quarter. The company also launched a new range of motorcycles called Classic 350, which has received a positive response from the customers. There has been a minimal level of cannibalization between Meteor and Classic 350.

In contrast, the commercial vehicle segment’s joint venture with Volvo reaped a sales volume growth of a whopping 85%, from 8167 units in Q2 FY21 to 15,134 units in Q2 FY22. The company was able to grasp 34% of the market share in the LMD segment in Q2 FY22. The VECV’s revenue was up by 80% YoY, from Rs.1,753 crore in Q2 FY21 to Rs.3,153 crore in Q2 FY22. Last year a loss of Rs.7.2 crore was realized but this year it turned into a profit of Rs.18 crore.

According to the management, the current demand is much more than the available supply but price hikes are not expected as of yet. There were two price hikes in July and September 2021. The accessory sales of bikes have gone up 2 times due to high sales on the MIY app.

The EBITDA predicted for FY22 remains at 23.9%. Analysts increased the target price from Rs.2,374 to Rs.2,526 with a Neutral call.

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These stocks see huge volume burst in the last leg of the trading session!

These stocks see huge volume burst in the last leg of the trading session!
by 5paisa Research Team 12/11/2021

Dilip Buildcon, Cholamandalam Investment and Finance Company and Finolex Cables have witnessed volume burst in the last 75 minutes of the trade.

As the saying goes, the first and the last hour of each trading session is the most important and active in terms of price and volume. More so, the activity in the last hour is said to be of utmost importance because most of the pro traders and institutions are active at this time. Hence, when a stock sees a good spike in volume in the last leg of trade along with price rise it is said to be the pro and institutions have a keen interest in the stock. Market participants should keep a close watch on these stocks as they can witness good momentum in the short-medium term.

So, based on this principle we have shortlisted three stocks, which have witnessed volume burst in the last leg of trade along with price rise.

Dilip Buildcon: The stock of Dilip Buildcon was going through a massive correction phase correcting as much as 22% from its recent high before rising 7.62% today. It took the support of its 50-DMA before bouncing back. The stock traded firmly in green throughout the day. But what’s interesting to note is that the volume witnessed during the last 75 minutes was approximately 67% of the total daily volume. The stock’s daily volume was much greater than the 10-day and 30-day average volume. Traders shouldn’t miss an opportunity in this stock.

Cholamandalam Investment and Finance Company:  The NBFC stock gained 3.58% in the trading session that ended Friday. The stock is going strong for the last few days and closed at its record high. Most of today’s action came in the last one hour where it shot up around 2%. Above-average volumes have been recorded in the past few trading sessions. We suggest you keep this stock on your radar.

Finolex Cables: Finolex cables rose a decent 1.63% today owing to the bulls that supported the stock at lower levels during the last hour. The stock, as a matter of fact, was trading in red in the latter half of the session but then it shot up as much as 2% in the last 75 minutes. It is currently trading near a stiff resistance level of 510-515 which is tested multiple times. The volumes have increased in the past two trading sessions indicating more participation from the market participants. The stock can be an attractive trade for days to come.

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Endurance Technologies forms bearish engulfing candle, signals a possible trend reversal

Endurance Technologies forms bearish engulfing candle, signals a possible trend reversal
by 5paisa Research Team 12/11/2021

The stock of Endurance Technologies has formed an inverted hammer candlestick pattern as on the weekend of April 09, 2020, and thereafter marked the sequence of higher tops and higher bottoms. The stock has witnessed over 250% upside from the low of Rs 564.50, which was registered on the weekend of April 20, 2021. The stock has gained nearly 35% from year to date.

However, on the weekly chart, the stock has formed a Bearish Engulfing candlestick pattern, which suggests a pause in the uptrend. The bearish engulfing candlestick pattern is considered to be a bearish reversal pattern, usually occurring at the top of an uptrend or near a potential resistance zone. This pattern consists of two real bodies of opposite colours. The second candle’s body completely engulfs the previous day's body.

Along with this bearish formation, the stock has slipped below its weekly pivot and short-term moving averages, i.e. 8-day EMA and 13-day EMA levels. Among the momentum indicators, the 14-period daily RSI has cooled off after touching the 65-66 zone and, at present, its reading is 52.83. The RSI is trading below its 9-day average and it is in falling mode, which indicates further downside momentum. The weekly RSI has also given a bearish crossover. On the weekly chart, the fast stochastic is trading below its slow stochastic line.

It has also given the sell signal in Martin Pring’s long-term KST set-up. Moreover, a negative divergence was also spotted at the daily and weekly time frame on the 14-period RSI. A negative divergence occurs when the price is making a higher high, while the RSI forms a lower high.

These abovementioned facts create doubt about the continuity of the current uptrend and the possibility of short-term correction cannot be ruled out. In case, the stock sustains below the current week low of Rs 1810 and trades convincingly below this level then, there is a high probability of the current week high point of Rs 1989 becoming a temporary top for the stock.

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

F&O Cues: Key support and resistance levels for Nifty 50
by 5paisa Research Team 12/11/2021

Today the Nifty F&O action for November 18 expiry shows resistance has not moved up to 18,500.

Nifty fifty reclaimed the 18,100 mark on the trade of November 12. After falling for three days in a row, the Indian equity market finally saw the strength and closed in green. Nifty 50 gained as much as 1.28% or 229 points in today’s trade and remained one of the top performers in the Asian market. Nonetheless, the broader market under-performed getting reflected in the advance-decline ratio, which was almost one to one.

Activity in the F&O market for the weekly expiry on November 18, 2021, shows that after today’s trade resistance has moved by from 18,000 to 18,500 now. The highest call option open interest (83,240) for Nifty 50 stood at a strike price of 18,500. In terms of the highest addition of open interest in the call options front, it was at 18,500 in the last trading session. A total of 51,631 open interest was added at this strike price. The next highest call option open interest stands at 19,000 where total open interest stood at 58,546.

In terms of put activity, the highest put writing was seen at a strike price of 18000 (93,953 open interest added on November 12), followed by 17,900 (41,639 open interest added on November 12). There was hardly and any put unwinding happened in today’s F&O activity.

Highest total put open interest (109399) stood at a strike price of 18,000. This is followed by a strike price of 17,000, which saw a total put option open interest of 65,082 contracts.

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)  

17,800.00  

9794  

58672  

48878  

17,900.00  

20651  

63274  

42623  

18,000.00  

57253  

109399  

52146  

18100  

53994  

31084  

-22910  

18,200.00  

50193  

9013  

-41180  

18,300.00  

57356  

4423  

-52933  

18,400.00  

54801  

1045  

-53756  

The Nifty 50 put call ratio (PCR) closed at 1.05 compared to 0.64 in the previous trading session. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.

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