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Interview with Deep Industries Ltd.

Interview with Deep Industries Ltd.
by 5paisa Research Team 17/11/2021

We are developing processing capabilities in terms of different applications for various industries to have a larger incremental share of the overall market.

In conversation with Paras Savla, Chairman and Managing Director, Deep Industries Ltd.

What are your top three strategic priorities as of now?

Firstly, there is a great push from the Government of India in terms of making India a Natural Gas production and consumption hub and already significant progress has been made in terms of broader vision as well as specific policy push measures. So obviously we are also forming and pursuing our strategic priorities there. We are already having a good meaningful presence in Natural Gas Processing via Natural Gas Compression and Natural Gas Dehydration both being very critical before the Natural Gas gets put into any kind of usage. We are also enhancing our processing capabilities in terms of different applications for different industries to have a larger incremental share of the overall market and be ready with our service offerings to tap the newer opportunities in the Natural Gas industry. I believe this puts us in a stronger and better position over the medium to long term.

Secondly, we believe that not just the industrial demand but also the retail consumption is coming up in a huge way for natural gas in India. As you see CNG has already started becoming the new preference among the consumers in a big way due to it being a relatively cheaper and cleaner energy source. India has abundant reserves of natural gas and this again makes it a strong contender as fuel among industrial and retail consumers. As a part of the huge CGD Network expansion initiative, as many as 23000 booster CNG Compression stations and 6600 online CNG Compression stations are expected to come up during the next 7-8 years. This makes up a very compulsive and strong demand scenario for booster compressor packages which our subsidiary RAAS Equipment manufactures. We expect multi-fold growth at RAAS over the next decade.

 Thirdly we have started working on reciprocating compressors which run on biogas as a fuel. The space has got remarkable growth potential in the backdrop of large rural energy requirements and relatively weaker energy networks there. We believe that biogas will play a larger role in the overall energy mix in the coming years.

What are your growth drivers?

The above stated strategic initiatives and priorities should be largely driving the growth going forward. The Indian Government is already aggressively pushing for a “Gas Based Economy’ and this allows us to further our push in that direction. Gas application, be it for industrial or domestic usage, now holds the potential for multi-fold expansion in India in the backdrop of clear and aggressive policy push by the Government. Apart from the booster of CNG compressors, we are also looking in for the gas generating sets, because around two or three years down the line, we can expect a paradigm shift from a diesel economy to a gas economy. We strongly believe these endeavours will augur well for our business and help us contribute to the growth of the energy sector.

What are the challenges faced by Deep Industries to achieve its strategic goals?

Adapting technology on time, ensuring efficient execution with precision and staying relevant by way of having services offering to tap new opportunities are key to fulfilling these strategic goals. We look forward to exploiting our rich experience and execution capabilities and are confident of mastering these challenges.

What steps have been taken to increase your market share?

Deep Industries Ltd works around a robust strategy and hence our strategic initiatives are directly tied towards enhancing our services portfolio and specific deliverables for every different application. This helps us to increase our market presence and share and that too in a sustainable fashion. So, the goal is to have a sustainable increase in market share.

Also, we believe that from here on the markets would be growing at quite a good pace but will also be ever-changing and hence the key is to adopt upcoming technologies to address upcoming changes in the markets. I believe our strategic initiatives are well-aimed at enhancing our market share.

Our recent foray into the manufacturing of booster compressors is the step in this direction – to increase our presence across the value chain.

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Is Voltamp Transformers a momentum buy? Find out here

Is Voltamp Transformers a momentum buy? Find out here
by 5paisa Research Team 17/11/2021

Voltamp Transformers Limited is engaged in the manufacturing of electrical transformers and equipment. It is a smallcap company with a market cap of Rs 2,948 crore. The company has reported higher than industry average growth over the last five years while its market share has also increased to 2.35% from 1% over the same period. This certainly shows that the management is committed to capturing market share at a brisk pace, which is appreciated by the market participants and testimony of this is the strong up-move witnessed in the stock price.

The stock has performed exceptionally well by delivering returns of 62.24% YTD. On a YoY basis, the stock has jumped 80.77% and it has also gained 39.49% in a 3-months’ time frame. This shows that the stock is performing strongly not only for the longer term but also for a short duration and at the same time it is seen outperforming the Nifty500 index. The company recently announced its quarterly results which were good and the company management expects better performance in times to come.

The stock was into the consolidation phase in the last few months before rallying in November. Good volume has been recorded in the past few trading sessions and the stock has gone on to touch fresh all-time highs and has taken out its all-time high. It is in an extreme bullish mood as all the key moving averages are trending up and the stock price is above the key moving averages. The RSI at 77 suggests the strong momentum of the stock. The positive directional movement (+DMI) crossed the -DMI a few days back and currently it is well above it. This shows strong strength and true potential in the stock.

Considering the performance Voltamp Transformers has shown, we can expect the stock to continue its momentum on the higher side. The stock looks technically strong as traders can expect some good returns for the short term.

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Stocks attracting Fund Managers in October 2021

Stocks attracting Fund Managers in October 2021
by 5paisa Research Team 17/11/2021

Everyone is eager to know what the mutual fund managers bought and sold. But most importantly you want to know what they actually bought. So, let’s know which stocks attracted fund managers in October 2021.

In the month of October 2021, the financial sector and Information Technology ruled the roost when it comes to investment from mutual funds. These two sectors were on the top of the fund managers’ buying list.

Top 10 Companies among Large-Cap where MFs were Net Buyers in October 2021

Stock Name  

Sector  

Net Qty Bought  

Approx. Buy Value(In Rs. cr) *  

HCL Technologies Ltd.  

Technology  

25889145  

3136.86  

Tata Consultancy Services Ltd.  

Technology  

5380247  

1929.71  

ICICI Lombard General Insurance Company Ltd.  

Financials  

12288356  

1886.91  

Infosys Ltd.  

Technology  

9689951  

1619.7  

Axis Bank Ltd.  

Financials  

20024671  

1510.43  

ICICI Bank Ltd.  

Financials  

19896058  

1495.1  

HDFC Bank Ltd.  

Financials  

7557497  

1200.81  

Bharti Airtel Ltd.  

Media and Communications  

15695133  

1056.62  

FSN E-Commerce Ventures Ltd.  

Retail and Other Services  

6552513  

737.16  

Ultratech Cement Ltd.  

Construction  

923372  

694  

The above table shows that in the month of October 2021, among large-cap, mutual funds preferred the financial sector including banks. In the top ten, three are banks and one is an insurance company. The total approximate buying done in the financial sector in large-cap is Rs 8010 crore in the month of October 2021.

The trend is not different for Mid-cap stocks. Even mid-cap financials remain the favourite of mutual funds.

Top 10 Companies among Mid-Cap where MFs were Net Buyers in October 2021

Stock Name  

Sector  

Net Qty Bought  

Approx. Buy Value(In Rs. cr) *  

Zee Entertainment Enterprises Ltd.  

Media and Communications  

20488934  

618.92  

Aditya Birla Sun Life AMC Ltd.  

Financials  

6120242  

416.51  

Max Financial Services Ltd.  

Financials  

3849119  

382.58  

Bank Of Baroda  

Financials  

34033013  

305.02  

Emami Ltd.  

FMCG  

4293653  

237.28  

Manappuram Finance Ltd.  

Financials  

11886437  

224.03  

Indian Bank  

Financials  

14319582  

223.71  

Escorts Ltd.  

Automobile and Ancillaries  

1340334  

204.37  

ABB India Ltd.  

Capital Goods  

985858  

196.7  

The Federal Bank Ltd.  

Financials  

21167059  

192.36  

Top 10 Companies among Small-Cap where MFs were Net Buyers in October 2021

Stock Name  

Sector  

Net Qty Bought  

Approx. Buy Value(In Rs. cr) *  

Delta Corp Ltd.  

Miscellaneous  

8571074  

223.71  

Fino Payments Bank Ltd.  

Financials  

3646425  

210.4  

Gokaldas Exports Ltd.  

Textile  

10023606  

205.61  

City Union Bank Ltd.  

Financials  

11931202  

194.36  

Prince Pipes and Fittings Ltd.  

Consumer Durables  

2194894  

155.97  

The India Cements Ltd.  

Construction  

6405040  

130.15  

RBL Bank Ltd.  

Financials  

6649689  

123.5  

Sheela Foam Ltd.  

FMCG  

482470  

116.02  

Multi Commodity Exchange Of India Ltd.  

Financials  

548652  

92.24  

PCBL Ltd.  

Chemicals  

3161759  

76.99  

The intention of the above analysis is only to understand the activity of mutual funds and gauge the fund managers’ approach and it is by no means, a recommendation to buy or sell. It is always advisable to have a financial plan in place, which must be followed with discipline and investments in mutual funds being made to be based on your risk assessment.

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Explained: What are new SEBI proposals on IPO fundraising, anchor investors?

by 5paisa Research Team 17/11/2021

As India’s primary markets activity reaches unprecedented levels in terms of fundraising, the Securities and Exchange Board of India has proposed certain tweaks to existing regulations related to initial public offerings.

Before proposing these tweaks, the Primary Market Advisory Committee (PMAC) of SEBI had discussed these measures. The capital markets regulator is now seeking public comments on these proposals by the end of November. Here’s a quick look at the proposals.

What is the percentage limit on use of proceeds towards acquisitions?

SEBI has proposed that companies earmark a maximum 35% combined limit (including a 25% fund allocation for general corporate purposes) for companies looking to deploy the proceeds towards unidentified future acquisitions.

The regulator said it lately observed many companies, especially new-age technology companies, proposing their IPOs where an undisclosed sum was reserved for future mergers and acquisitions (M&A) without identifying them.

However, such a practice may lead to uncertainty and ambiguity. In other words, it may dilute the company’s real objective for going public. The regulator views these uncertainties increasing in nature where a major portion of capital in an IPO is utilised in fresh capital raising, it said in a consultation paper.

SEBI clarified that such limits may not be applicable where a company has identified a target company for an acquisition, and the objects are disclosed in IPO proposals.

The regulator says new-age technology companies are mostly asset-light organizations and may not require funds traditionally required by the companies for objectives such as investment for fixed assets or capital expenditure.

“The growth in such businesses comes from expanding into new micro-markets and adding or acquiring new customers, companies, technology etc. Accordingly, for primary issuance i.e. for funds raised through fresh issues, such new-age technology companies disclose objects in their offer documents under such heads as ‘Funding of Inorganic Growth Initiatives’, so as to cater to their needs,” SEBI said.

Is there a need to increase the lock-in period for anchor investors?

The regulator wants to review the duration of the lock-in period for anchor investors. It says that a longer lock-in will provide more confidence to other investors.

SEBI does not wish to introduce a strict lock-in duration. Instead, it has proposed that at least half the shares due for allotment in the anchor book be allotted to investors who agree to remain locked-in for at least 90 days.

At present, SEBI regulations have a 30-day lock-in for anchor investors from the allotment date.

“The concept of anchor investors was introduced to inspire confidence in the issue especially when such investors commit moneys upfront and thus provide an indication of price as well as improve the price discovery during IPO. Other investors may take cue based on the investment decisions of anchor investors,” SEBI said.

Should proceeds earmarked under general corporate purposes be monitored?

SEBI proposed that the issue proceeds earmarked under general corporate purposes may also be brought under monitoring. Further, the utilisation of proceeds towards such corporate initiatives may need to be disclosed in the quarterly monitoring agency report.

Under current regulations, a maximum of 25% of the fresh net proceeds from a public offering can be used for general corporate purposes. Also, there are no clear regulations that require any disclosures relating to deployment of funds earmarked for general corporate purposes.

SEBI said that companies are coming up with issues which are very large in size. With larger issue size, general corporate purpose amount also becomes very substantial. For instance, in a Rs 10,000 crore fresh issue, a company can have Rs 2,500 crore earmarked under general corporate purpose.

“Given the large size of IPOs, there is a need to provide adequate information about the utilisation and monitoring of such a large portion of issue proceeds, earmarked under general corporate purposes,” SEBI said.

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Top trading ideas from the Chemical sector

Top trading ideas from the Chemical sector
by 5paisa Research Team 17/11/2021

The chemical sector includes a variety of businesses like Agrochemicals, Pesticides and Fertilizers, Specialty chemicals, etc.

The chemical sector stocks came into the limelight since the beginning of the pandemic. Many stocks have more than doubled from their respectively lower levels and the sector had witnessed nothing less than a fairy tale kind of story.

The chemical sector includes a variety of businesses like Agrochemicals, Pesticides and Fertilizers, Specialty chemicals, etc.

In this article, we shall analyze the performance of the sector leaders from a short to medium-term perspective. We have included United Phosphorous Limited (UPL), SRF Limited and Aarti industries for the analysis for the same.

First, let’s compare the performance of these stocks.

UPL: 63.8% YTD and 0.43% 3-month performance (CMP- 761.65)

SRF: 94.12% YTD and 18.72% 3-month performance (CMP- 2164.80)

Aarti Industries: 59.76% YTD and 3.63% 3-month performance (CMP- 985.15)

We observe that SRF has been the top performer for the medium term as well as for the short term. These chemical stocks were going through the correction phase after hitting their respective all-time high. UPL is down by 11%, SRF is down by 14.2% while Aarti Industries is down 15.2% from its all-time high. Since then, the stocks look for bottoming out and are on a verge of starting their fresh upward journey. Surely, these stocks have a lot to catch up on.

The stocks are trading at value-buy price and one can also think about investing in such high-quality stocks.

On November 17, UPL is currently down by almost 3% and SRF is down by 1.17% while Aarti Industries is up by 2.85%.

UPL and SRF are currently taking support of its 50 and 20-DMA while Aarti industries look to test its short-term resistance of 20-DMA. The RSI of UPL, SRF and Aarti industries is at 56,49, and 51 respectively. Decent volumes have been witnessed in these stocks since a few trading sessions. The stocks look for fresh triggers as they look to continue their upward journey. We do not see any signs of huge downfall and one can expect good returns percentage for the short to medium term. Market participants should closely keep an eye on these stocks as they look to find the momentum.

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Technical analysis: Prince Pipes breaks out from consolidation

Technical analysis: Prince Pipes breaks out from consolidation
by 5paisa Research Team 17/11/2021

Prince Pipes breaks out from a multi-week consolidation. Read on to find out more.  

Prince Pipes & Fittings Limited is a multi polymer manufacturer and provides integrated piping solutions. It came into existence in 1987 and in the initial stages used to only manufacture PVC products. However, it eventually began manufacturing polymer piping solutions, and now mainly manufactures four types of polymers namely CPVC, UPVC, HDPE and PPR. 

In December 2019, Prince Pipes came out with an Initial Public Offering (IPO) and raised Rs 500 crore of which 50% was Offer for Sale (OFS) and 50% was a fresh issue. The offer price was Rs 178 per equity share but failed to provide any listing gains to its investors, as on the listing day, it made a high of 174.3 and closed at 163.5. However, over the period it has had a spectacular journey as the stock is currently trading at 847. 

Having said that, the stock began to rally from June 2020 and finally took a breather in May 2021 after making a high of 790.4. Since then, the stock has been moving into consolidation. In fact, it also made a low of 592.25 in August 2021. However, the stock gave a breakout on weekly charts last week. On lower time frames, the stock did give a pullback and again began to move in a consolidation. The immediate support for the stock is placed at 825.6 and resistance at 866.45 followed by 895.05. 

The Relative Strength Index (RSI) is trading in the overbought zone at 74.47, whereas it is still above its 9-Day Exponential Moving Average (EMA). Moving Average Convergence Divergence (MACD) is showing positive signs as it gave a positive crossover on the breakout in the positive territory. Bollinger band, on the other hand, is showing signs of a possible pullback as the price is currently trading above its upper band. 

At the time of writing, the stock was trading at 848.6 levels. 

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