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Schaeffler India rallies 4% on strong Q2FY22 results and significant corporate actions

Schaeffler India rallies 4% on strong Q2FY22 results and significant corporate actions
by 5paisa Research Team 29/10/2021

Leading industrial and automotive supplier, Schaeffler India announced that its board has approved results for the quarter ending on September 30, 2021. The board also approved a stock split and target dividend payout ratio.

Total revenue from operations for Q2FY22 was Rs 1,487.6 crore, higher by 32.7% than the corresponding quarter of the previous year and 20.7% higher than the preceding quarter. Profit before tax (before exceptional items) for the quarter was Rs 229.6 crore, which happened to be 50.3% higher than the corresponding quarter of 2020 and 34.6% higher than the preceding quarter. PBT margin for the quarter stood at 15.4%, against 13.6% during the corresponding quarter of 2020. Net Profit for the quarter was Rs 170.8 crore while the margin for the quarter stood at 11.5%.

To quote, Harsha Kadam, Managing Director of Schaeffler India from a filing with the exchange, “This is our fourth consecutive quarter showing a strong performance. The performance demonstrated during the first half of the year further improved in the third quarter, despite significant input cost pressures. Our business divisions – automotive technologies, automotive aftermarket and industrial have delivered resounding performance and further consolidated our position of being the preferred technology partner. However, we do see some headwinds due to the global chip shortage and the resultant supply chain disruptions, which we are monitoring closely. Our continued focus on countermeasures and deeper customer engagements have yielded impressive results.”

The Board of Directors approved a subdivision of each equity share of the face value of Rs 10 per share into five equity shares of the face value of Rs 2 per share, subject to the approval of the shareholders. The 5 for 1 stock split will see existing shareholders issued with five new shares, in lieu of every one share they currently own. The rationale behind the stock split is to encourage wider participation of investors and to improve the liquidity of the equity shares in the stock market.

The Board of Directors also approved the target dividend payout ratio of 30%-50% of the annual standalone profits after tax (PAT) to be announced by the company from time to time, subject to the applicable rules and regulations. The company has adopted a progressive dividend policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash flow generation each year. The company shall endeavour to consider a total dividend payout ratio as indicated above subject to the circumstances and scenarios mentioned in the dividend distribution policy.

Schaeffler India’s share price rallied 4% during early market hours on Friday, 29 October 2021.

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CarTrade tumbles 5%, here’s why!

CarTrade tumbles 5%, here’s why!
by 5paisa Research Team 29/10/2021

Shares of CarTrade Tech plummeted by more than 5% to touch an intra-day low of Rs 1,155 per share on the bourses on Friday, 29 October 2021.

One of India’s largest online auto platforms, CarTrade Tech Limited recently declared its standalone and consolidated financial results for the quarter and half year ended September 30, 2021. Total revenue for Q2FY22 stood at Rs 88 crore, as compared to Rs 63 crore in the same period last year. Adjusted EBITDA in Q2FY22 stood at Rs 24 crore, as compared to Rs 18 crore during H1FY21. The adjusted EBITDA margin for Q2FY22 was 28%.

Total revenue for the half-year ended September 30, 2021, stood at Rs 150.75 crore, showing a growth of 46%, as compared to Rs 103.26 crore in the same period last year. Adjusted EBITDA in H1FY22 stood at Rs 33 crore, showing a growth of 104% as compared to Rs 16.18 crore in the corresponding period. Adjusted EBITDA margin stood at 22% in H1FY22 as compared to 16% in H1FY21.

An exceptional and non-recurring, non-cash adjustment of Rs 93 crore for employee stock options granted in FY21 has been accounted for, resulting in a net loss after tax for H1 FY22 of Rs 81 crore (net loss before tax of Rs 75 crore) for H1FY22 as compared to a net profit after tax of Rs 64 crore (net profit before tax of Rs 0.75 crore) for H1FY21.

CarTrade Tech received over 34 million average monthly unique visitors for Q2FY22, of which 86.68% was organic. This was a growth of over 34% over Q2FY21. The number of vehicles listed for auction were 3,00,671 for Q2FY22. This was a growth of over 73% over Q2FY21. The number of vehicles sold via auction were 63,533 for Q2FY22. This was a growth of over 104% over Q2FY21. In Q2FY22, the company successfully launched CarWale abSure in nine cities. CarWale abSure will deliver a world-class online-offline shopping experience for used car buyers and sellers.

CarTrade Tech Ltd is a multi-channel auto platform with a presence across vehicle types and value-added services. The brand’s platforms operate under several brands: CarWale, CarTrade, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto and AutoBiz. These platforms enable new and used automobile customers, vehicle dealerships, vehicle OEMs and other businesses to buy and sell their vehicles in a simple and efficient manner.

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Interview with Rajratan Global Wire Ltd

Interview with Rajratan Global Wire Ltd
by 5paisa Research Team 29/10/2021

Expanding horizons to gratify customer needs and business development.

Continuing to be the lowest cost manufacturer of bead wire and generating significant operating leverage in the business are some of our growth levers says, Yashovardhan Chordia, Director, Rajratan Thai Wire Co Ltd. The company is based in India as well as Thailand. In Thailand, the company is operating as Rajratan Thai Wire Co. Ltd.

Rajratan Global Wire net sales for Q2FY22 stood at Rs 241.17 crore up 73.5% on a YoY basis. Net profit jumped by 140.7% on an annual basis to Rs 32.6 crore. What factors contributed the most to help you outperform?

Main factors that contributed to the latest results were strong demand from our customers. The operating leverage that we have in India today by having the largest production capacity in one location and our continued efforts to keep control on (and reduce) our conversion costs as well as operating costs. Going forward, once we expand in Thailand, we will have similar volume leverage and it will make us even more competitive in the coming few years. We expect all factors to continue to support our growth in the near future. 

Can you shed some light on Rajratan Global Wire's ongoing capital expansion and capacity addition plans?

Currently we are in the process of expanding our capacity in Thailand from 40,000 TPA to 60,000 TPA, which is slated to come on stream by Q4FY22. This will take our total consolidated bead wire capacity to 120,000 TPA, of which 60,000 TPA is in India and 60,000 TPA will be in Thailand by end of FY22. With this expansion coming on stream, we will have significant capacity on offer for meeting the increasing demand of our customers. 

We have also further announced our plans for a greenfield facility in Chennai, Tamil Nadu for which we have signed an MoU with the state government. This facility will have a capacity of 60,000 TPA at an estimated cost of Rs 300 crore, to be set up over the next 24-36 months, from the groundbreaking activity.

What are your growth levers?

Our key growth levers are the following: 

1)Capacity expansion at our Thailand plant to 60,000 TPA

2)New port-based greenfield facility in India to meet growing domestic and export demand.

3)Continuing to be the lowest cost manufacturer of bead wire.

4)Generating significant operating leverage in our business led by strong control on costs as well as sizeable capacities at all our manufacturing locations.

5)All our future growth plans in bead wire will be funded from internal accruals or low-cost debt.

What are your top 3 strategic priorities?

Our top three strategic priorities today are:

1)Completion of expansion in Thailand and setting up of our greenfield facility at Chennai.

2) Enhancing our efforts on the sustainability front - reducing water consumption to 1/3rd, working on sustainable procurement and reducing all kinds of emissions from our production facilities.

3) Developing our R&D team to work closely with our customers and curating higher quality and new styles of bead wire which will help our customers to meet new government norms. Additionally, we also plan on the digitalization of our shop floor and related activities.

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Suprajit Engineering to acquire Light Duty Cable business unit of Kongsberg Automotive ASA

Suprajit Engineering to acquire Light Duty Cable business unit of Kongsberg Automotive ASA
by 5paisa Research Team 29/10/2021

With this, Suprajit Engineering will emerge as a global leader in control cables in all these segments with a strong global presence.

Suprajit Engineering has announced that it has signed a definitive share and asset purchase agreement to acquire Light Duty Cable (LDC) business unit on October 28, 2021, with Kongsberg Automotive ASA, listed on the Oslo Stock Exchange, Norway.

The LDC business unit of Kongsberg Automotive Group consists of the cable business, supplying to automotive, non-automotive and 2-wheeler segments along with Electro-Mechanical Actuators (EMA). Through this transaction, Suprajit will also add key actuation technologies that can be brought to other customers of the company. EMA will emerge as a new product segment in the future, for the group.

This transaction also involves the transfer of global sales and engineering expertise related to this business to Suprajit Engineering. The transaction is expected to close by end of January 2022. LDC consists of three manufacturing plants located in Matamoros - Mexico, Siofok - Hungary, and Shanghai - China, and a warehouse in Brownsville - USA. LDC’s global business development and engineering teams are at plants and other key geographies including the US, Germany, France, Norway, Sweden and the UK, and will come under the fold of Suprajit Engineering. The total employee strength of LDC is approximately 1300 employees at the end of Q2.

Kongsberg Automotive is a global automotive supplier, headquartered in Zurich. Through this divestment, Kongsberg Automotive will realign its product portfolio and this transaction will provide a strong focus to the cables business as part of Suprajit Engineering.

To quote an excerpt from the company’s filing with the exchange, “The current year sale is expected to be in the range of USD 90 million. Enterprise value of the transaction is pegged at USD 42 million. LDC has marquee global customers in automotive, non-automotive and two-wheeler businesses and is a segment leader in its own right. With this, Suprajit will emerge as a global leader in control cables in all these segments with a strong global presence. LDC will be a very complementary fit in its manufacturing footprint, customer base, product and technology.”

Suprajit Engineering is India’s largest automotive cable and halogen bulb maker with an annual global capacity of 300 million cables and 110 million halogen bulbs. The company’s customer list includes most Indian automotive majors and also exports to many marquee global customers.

Share price of Surajit Engineering soared by roughly 3%, to touch an intra-day high of Rs 366 per share on Friday, 29 October 2021.

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Trade Talk: Is Vaibhav Global, a good opportunity to short?

Trade Talk: Is Vaibhav Global, a good opportunity to short?
by 5paisa Research Team 29/10/2021

Vaibhav Global was in a rally since March 2020 and took a breather in May 2021. So, is this stock a good opportunity to go short? Let’s find out.

Post making a low of 88.15 in March 2020, Vaibhav Global made a high of 1046.85 in May 2021. This is almost 11-fold growth in just a matter of one year. However, in the month of May 2021, the stock plunged almost 21%. Moreover, since then it is moving downwards. This week started October 25, 2021, the stock breached its crucial support level and continued its southward journey.

Vaibhav Global Limited has a distinctive business model as it engages in the global retail space, specifically in the jewellery, accessories and lifestyle product segments in the US and UK.

Since March 2021, it was respecting 714-694 levels which also is the stock’s strong support zone. On October 25, 2021, the stock breached the above-mentioned support zone. Interestingly, it also tried to breach this support turned resistance zone on October 27, 2021, but failed to do so moved back downward.

Therefore, this can create a good opportunity to go short. However, there are some critical things to keep in mind. The stock has immediate resistance placed at 649-681 and short-term resistance being 694-714. If this is breached, then the bearish view fails. More importantly, the stock presently is trading near its crucial Fibonacci level of 50% (567.5). So, there are some chances of stock retracing from this level. If this level is breached then the stock is likely to further move downward.

Having said that, on daily charts, the stock is trading below its 50-Day Moving Average (DMA) as well as its 200-DMA. However, we haven’t seen any negative crossover of these two moving averages. Even the Relative Strength Index (RSI) is trading near the oversold zone. Therefore, it makes complete sense to adhere to strict stop losses while going short on Vaibhav Global.

At the time of writing, the stock of Vaibhav Global was trading at 580.

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Top 5 Large-cap gainers and losers this week!

Top 5 Large-cap gainers and losers this week!
by 5paisa Research Team 29/10/2021

List of top 5 gainers and losers this week in the Large-cap space.

Domestic stock markets came under intense selling pressure this week amid global concerns that recovery from the Covid pandemic will slow down as elevated inflation is likely to force the central bank's to tighten monetary policy. The recent investment pattern of foreign portfolio investors suggests that they have been reducing their holdings. Over the last six trading sessions, FPIs have sold domestic equities worth Rs 12,866 crore. Meanwhile, stocks like JSW Energy, Adani Ports and Special Economic Zone, Adani Enterprises, Indus Towers, and Adani Power succumbed to selling pressure and corrected sharply.

In the period from Friday i.e. October 22 to October 28, the Nifty 50 index fell 1.42% from 18,114.90 to 17,857.25. Similarly, the BSE Sensex registered a decline of 1.38% from 60,821.62 to 59,984.7.

Let us have a look at the top gainers and losers in the large-cap space during this period.

Top 5 Gainers 

Return (%) 

Sona BLW Precision Forgings Ltd. 

8.20 

United Spirits Ltd. 

7.06 

Apollo Hospitals Enterprise Ltd. 

6.57 

ICICI Bank Ltd. 

5.21 

Asian Paints Ltd. 

4.49 

 

Top 5 Losers 

Return (%) 

Adani Power Ltd. 

-11.61 

Indus Towers Ltd. 

-9.78 

Adani Enterprises Ltd. 

-9.70 

Adani Ports and Special Economic Zone Ltd. 

-9.63 

JSW Energy Ltd. 

-8.57 

 

 

Sona BLW Precision Forgings Ltd

Shares of Sona BLW Precision Forgings Limited was the top gainer on the exchanges so far this week, gaining 8.20% this week. The rise came on the back of a strong show put up by the Gurugram-based automotive tech company in Q2FY22. The revenue of the company grew by 52% YoY to Rs 586 crore, with battery electric vehicles contributing 22% to the overall revenue. Consolidated PAT stood at Rs 88 crore, registering a YoY growth of 22% over the same period last year. The net order book of the company stood at Rs 13,600 crore as of September 2021.   

United Spirits Ltd

United Spirits Limited was among the stocks that withstood the selling storm in the market this week and instead rose by 7.06%. The reason behind the stellar show by United Spirits was the management’s commentary given along with the recent Q2 results. United Spirits management indicated that the demand scenario was improving rapidly and highlighted how the premium whiskey segment is benefitting from the enhanced spending ability of high net worth and ultra-high net worth individuals in the country. Meanwhile, the net sales of the Diageo-controlled liquor maker increased 14% YoY, reflecting a strong quarter. The gross margin was 44.2%, up 207 bps on a reported basis and 190 bps on an underlying basis. The net profit of the company more than doubled to Rs 274 crore for the second quarter ended September. The year-ago quarter was impacted badly by the lockdown. 

Apollo Hospitals Enterprise Ltd

Shares of Apollo Hospital Enterprise Limited gained by 6.57% this week. Higher traction amidst the loosening up of lockdowns with increased awareness in terms of health among the public, and a steady rise in the number of people responding to vaccination drives for COVID are the factors that are likely driving the stock price of the healthcare enterprise. The company is yet to report its numbers for Q2FY22 with its board scheduled on November 12, 2021, for the approval of the Financial Results.

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