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Titan Company 2369.25 (-0.72%)
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Wipro 640.75 (-0.94%)

Sensex, Nifty slump but check out the stocks that bucked the bearish trend

by 5paisa Research Team 22/11/2021

Indian stock markets slumped nearly 2% on Monday, pushed down by weak global cues and several local factors including weakness in Reliance Industries and One97 Communications Ltd, which owns Paytm.

The BSE’s 30-stock benchmark Sensex fell 1,170.12 points, or 1.96%, to close at 58,465.89. The NSE’s Nifty 50 dropped 348.25 points, or 1.96%, to 17,416.55. Market breadth was negative with 41 of the Nifty’s 50 stocks and all but three of the Sensex’s 30 stocks losing ground.

Mid-cap indices lost even more, with the BSE Mid-cap Index falling 2.62% while its Nifty Midcap 50 declining 2.96%.

Elsewhere in Asia, stock markets were mixed. While Hong Kong stocks fell, Shanghai markets rose and Japan was flat amid concerns related to inflation and Covid-19, especially after Austria decided to reimpose lockdowns.

In India, all eyes were on heavyweight Reliance Industries after the country’s biggest company scrapped a proposed multi-billion-dollar deal with Saudi Aramco. Reliance slumped 4.42%.

Paytm shares lost 13% after falling as much as 18.7% earlier in the day. The stock had plunged 27% on its debut Friday amid concerns of over-valuation and lack of a path to profitability.

However, some stocks in India bucked the trend and ended higher on Monday. Here’s a quick peek into these stocks.

Large-cap stocks

Mining giant Vedanta Ltd was the biggest large-cap gainer on Monday with its shares jumping 6.12% on the BSE. The stock benefited from news that the Supreme Court had allowed the government to sell its residual stake in Vedanta unit Hindustan Zinc Ltd.

Bharti Airtel was the second-biggest gainer after the telecom operator increased mobile tariffs by 20-25%. Airtel shares touched a record high in intraday trade and ended with a gain of 3.9%.

Indus Towers Ltd, the telecom tower company in which Airtel is the largest shareholder, rose 2.53%.

Other large-cap stocks that rose 1% or more were Asian Paints, JSW Steel and state-run Power Grid Corp. Piramal Enterprises, Havells, Hindalco, Cipla and Grasim were the other large-cap counters that ended in the green.

Mid-cap stocks

Telecom operator Vodafone Idea was the biggest mid-cap gainer, climbing 6.2%, as it also benefitted from positive sentiment toward mobile phone companies after Airtel’s tariff hike.

Emami Ltd, up 2.56%, and Gland Pharma, up 1.9%, were the other prominent mid-cap gainers.

Godrej Industries, JSW Energy, Procter & Gamble Health, Sun TV and IRFC were the other companies that gained in the mid-cap space. Overall, only nine of the 106 stocks that are part of the BSE Midcap managed to stay in the green.

Small-cap stocks

Elecon Engineering stole the limelight in the small-cap segment with its shares rising 6.13%. State-run MTNL came at No.2 with a gain of 5.84%.

ESAB India, Sastasundar, Trident, Brightcom Group, Tata Teleservices (Maharashtra) Ltd, Thermax, Shalimar Paints and HBL Power rose between 4.4% and 5.1%.

Overall, only 90 of the 894 stocks that are part of the BSE Smallcap Index clocked gains on Monday.

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Closing Bell: It's a bloodbath on Dalal Street as Indian markets witness the worst single-day fall in seven months

Closing Bell: It's a bloodbath on Dalal Street as Indian markets witness the worst single-day fall in seven months
by 5paisa Research Team 22/11/2021

Benchmark equity indices fell by almost 2% on Monday amid a sell-off in all the sectoral indices.

Domestic benchmark indices extended losses for a fourth straight session on Monday with Sensex and Nifty dropping the most in seven months, as investor sentiment was shaken after a weak listing of the country's biggest-ever Paytm's IPO. Also, adding to the woes was the rollback of three farm laws along with continuous selling by foreign institutional investors heightened volatility on Dalal Street. During today's trading session, the Sensex fell as much as 2.72% or 1,624 points and the Nifty 50 index briefly dropped below its important psychological level of 17,300.

At the closing bell on Monday, the Sensex was down 1,170.12 points or 1.96% at 58,465.89, and the Nifty was down 348.30 points or 1.96% at 17,416.50. On the market depth, around 842 shares have advanced, 2479 shares declined, and 157 shares remain unchanged.

Among the top Nifty losers on a bleeding day were Bajaj Finance, Bajaj Finserv, ONGC, Tata Motors and Reliance Industries, while top gainers included Bharti Airtel, Asian Paints, JSW Steel, Power Grid and Hindalco Industries.

Today all the sectoral indices ended in the red with realty, healthcare, auto, oil & gas, and the PSU bank indices down 2-4%. In the broader markets, the BSE midcap and smallcap closed down by 2-3%.

Among the trending stock of the day and also the top drag was Reliance Industries which added over 300 points to the fall. Reliance Industries came under selling pressure after the country's largest firm decided to mutually halt a stake sale in its oil-to-chemicals business (O2C) to Saudi Arabia's Aramco and pulled back from a potential spinoff of its most profitable unit. The stock closed 4.4% lower at Rs 2,363.

Paytm was also in the news today as the company's market capitalization or its market value dropped by as much as Rs 56,233 crore after its disastrous market debut on November 18. Paytm shares have crashed as much as 40% from their IPO price to hit a low of ₹ 1,283 in just two trading sessions. Market experts pointed at high valuations as the reason behind the spiralling downfall in the stock price.

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Penny Stock Update: These stocks gained up to 9% on Monday

Penny Stock Update: These stocks gained up to 9% on Monday
by 5paisa Research Team 22/11/2021

On the first trading day of the week, the Indian equity market closed in negative. BSE Telecom index is the top gainer and BSE Realty is the top loser in today’s trade.

After a long weekend, on the first trading day, the Indian equity market has closed on a negative note, as market participants witnessed a bloodbath on Dalal Street.

Today Nifty 50 and BSE Sensex equity indices closed in negative down by 348.25 points i.e., 1.96% and 1170.12 points i.e., 1.96% respectively. Stocks that supported the BSE Sensex and Nifty 50 index were Bharti Airtel, Asian Paints and Power Grid Corp. Whereas, stocks that dragged the BSE Sensex and Nifty 50 down were Bajaj Finance, Bajaj Finserv, HDFC Bank and Reliance Industries. On Monday the BSE Sensex and Nifty 50 index opened up by 0.12% and 0.18% from the previous close but soon dived into the red.

In Monday's trading session the S&P BSE Telecom and S&P BSE Metal were top gainers. BSE Telecom index consisting of stocks such as Vodafone Idea Ltd, Mahanagar Telephone Nigam Ltd, Tata Teleservices (Maharashtra) Ltd and Bharti Airtel Ltd were the top gainers.

In today’s trade, S&P BSE Realty, S&P BSE Consumer Durables, S&P BSE Smallcap Select Index and S&P BSE Auto were top losers. BSE Realty Index consists of stocks such as Phoenix Mills Ltd, Sobha Ltd, Mahindra Lifespace Developers Ltd, Indiabulls Real Estate Ltd and Sunteck Realty Ltd.

Here is the list of penny stock that gained up to 9.00% on a closing basis on Monday, November 22, 2021:

Sr No.                 

Stock                 

LTP                  

Price Gain%                 

1.                 

Vikas Ecotech Ltd  

2.50  

8.70  

2.                 

Sanwaria Consumer Ltd  

0.65  

8.33  

3.                 

JIK Industries Ltd  

0.95  

5.56  

4.                 

Visagar Polytex Ltd  

0.95  

5.56  

5.                 

Orient Green Power Company Ltd  

7.35  

5.00  

6.                 

Punj Lloyd Ltd  

2.10  

5.00  

7.                 

Bartronics India Ltd  

5.30  

4.95  

8.                 

Premier Ltd  

5.30  

4.95  

9.                 

Tantia Constructions Ltd  

9.55  

4.95  

10.                 

Sintex Industries Ltd  

10.65  

4.93  

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Wipro’s cloud business grew 2x average growth and strategizes strategic investment expansion in various key Hyperscalers.

by 5paisa Research Team 22/11/2021

The management in the recent conference meet commented on the sustained growth momentum, with stable margin and a strong and broad based demand environment in all industry verticals. 
Within geographies, the US reportedly continued to grow, while Europe (particularly continental Europe) has witnessed strong acceleration. The company presumes that trends like AI/ML, Big Data, Cloud, mixed reality, meta-verse, and tokenization, coupled with multi-Cloud infrastructure, Cyber Security, and 5G capabilities will support these trends, and drive demand over the next 3-5 years.

The company is now more focused to drive strong growth, with a large investment pipeline in both capability and sales. The company strategizes on reinvesting the margin earned from offshore, fixed price productivity, pricing, utilization, and pyramid in the business. 

The company expects the demand to continue to remain strong with a growing pipeline. The Cloud business has grown at 2x the company’s average growth rate in the past 2 years. Cloud-related pipeline is one-third the total pipeline. Deal TCV was up 80% in the past four quarters. The company has signed mega deals in both Americas and Europe geography, with a potential for both to reach a TCV of USD1b. The management is focusing on sourcing large deals from the market for the betterment of market share expansion upto USD200m and USD300m accounts.

WPRO restated its plan to invest USD1b in building its Fullstride Cloud Service as customers are no longer looking for just system integration, but also business transformation partners. The company plans to continue to invest in other high growth areas, and will continue to make strategic investments in Data, AI, and Cyber Security, and build industry-specific capabilities. Key hyperscaler alliances include AWS, Azure, Google, Salesforce, SAP, and Service Now. Order book in ACV terms is up 80% YoY across the top six partnerships.

The acquisition of Capco has visibly proved to be successful by winning 22 joint go to market deals Wipro. Wipro has been active in the M&A market, and has made six investments over the past one year, its largest ever acquisition being Capco. Combination of Wipro and Capco provides both consulting and domain technology capabilities which have strong demand in the market. This can be confirmed with the robust deal wins. Capco has won 120 deals in the first six months since the transaction’s closure. The management indicated continued appetite for inorganic investments, and said it will also not shy away from large acquisitions if they make business sense.

Investment in the sales channels lateral leadership hires (80% in market facing roles), a large deals team, and strategic partnerships, are expected to power growth. The company expects the supply environment to stay tight, and hence has reoriented its appraisal system to incentivize high performers, along with a large fresher intake (25k in FY23). While it expects employees to return to work, it will operate in a hybrid environment, with greater flexibility. It said its crowdsourcing platform Topcoder will add dynamic workforce capabilities.
 

 

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Cognizant Technology services held an investor meet nearly after 3 years, reported a revenue CAGR of 8-11% with highest attrition rate

by 5paisa Research Team 22/11/2021

Cognizant Technology services recently held their second investor meet after almost 3 years. It reported a revenue CAGR of 8- 11%, cumulative 3-year EBIT margin improvement of ~110bps over 15.4%, FCF being 100% of net income and allocation of 50% of FCF to M&A compared to 28% TTM, implying lower capital return to shareholders. 

In the near term, the digital segment is expected to grow in high-teens or low-twenties while the non-Digital segment is expected to grow at low-mid single digit levels. The company is anticipating growth on the non-Digital side while for the digital segment is expected to contribute 55%-60% to total revenue in 2024 vs the 44% in 3Q2021. CTS strategizes to focus not only on priority service lines, verticals and geographic markets, but also to de-emphasize those that CTS considers non-strategic. The company chalked out a near term action plan around rebranding and repositioning CTS, making CTS more global from delivery, revenue and management composition perspective, accelerating digital through a lot of bite sized M&A transactions and making CTS more relevant to customers by having client facing employees with greater domain knowledge and who are capable of interacting with CXOs beyond CIOs and CTOs and being in a position to suggest business solutions to customers. The dropping of content moderation services and exit from local businesses in Latin America and Africa also served as the company’s growth drivers.

The segments Healthcare, CMT, Products and Resources showed decent momentum, however, the Financial Services segment is lagging. Large global banks have been the trouble-maker for the company since the past 4 years now causing the company to lose out on market share as these clients because could not pivot quickly enough to digital and presumably were more focused on the technology side of things rather than proactively offering solutions to them. Even the lack of adequate automation skills probably did not fare well compared to the Indian peers or with Accenture. There is an expectation that over time these clients will start growing as the pivot towards digital has been quite material with US $2.5bn worth of Digital acquisitions done in 2019, client-facing teams were revamped, significant progress was made in both horizontal and vertical partnerships and automation capabilities were strengthened.

CTS has continued to sustain high attrition with LTM number at 24%, up QoQ from 18%, outperforming its peers in this aspect. The company reports these numbers as combined data factoring in IT and BPO services and trainees. Generally, India heritage peers’ attrition data focuses only on IT services and sometimes excludes trainee data. The company suggested that the attrition data will continue to be higher in the rest of 2022 as the company offers employment 50,000 freshers for 2022 vs ~30,000 in 2021 and higher than 45,000 offers during the 3QCY21 results. The high attrition numbers were achieved with great HR practices witnessed in 2020. 
 

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Ashok Leyland Q2 earnings grew 56% YoY with expectation of higher volumes and expansion in operating margins in near term

by 5paisa Research Team 22/11/2021

In Q2, Ashok Leyland reported a 56% YoY and 50% QoQ jump in net sales at Rs. 44,262mn primarily on account of recovery in volumes and revived economic and industrial activities. In exports, M&HCV volumes grew 63% YoY to 1,526 units, and LCV volumes grew 26% YoY to 701units. In the quarter, M&HCV volumes grew 71% YoY to 13,514 units and LCV volumes, 22% YoY to 14,029 units.

However, the PAT improved from a loss of Rs. 2823 to a loss of Rs. 830, and the PAT margins also saw improvement from -9.6% to -1.9%. The Q2 FY22 gross margin contracted 257bps QoQ due to higher RM prices and high discounts. The EBITDA stood at Rs. 1,347mn, up 67.5% YoY but down 196.1% QoQ. 

With strong economic recovery, in near future it is believed that a strong replacement demand would pick up in tillers and tippers in H2 FY22 and with shift from BS3-BS4 to BS6 technology and an expansion in operating-leverage-led margin supported by expected volume growth and effective cost-cutting efforts. Hence, 5% margin is expected in FY22, and 10% in FY23 An estimated growth in sales stands at 49%, in FY22, and 27% in FY23 and revenue growth of 19% YoY, and the margin to be11%; hence, we expect earnings to grow 44% YoY to Rs18bn and a revenue CAGR of 31% over FY21-24.
 

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