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Superstar stocks for tomorrow!

Superstar stocks for tomorrow!
by 5paisa Research Team 11/11/2021

Looking for stocks that could deliver good returns till tomorrow, here are the superstar stocks for tomorrow selected on a three-factor model.

Many of the time market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be probable superstar stocks for tomorrow.

The superstock stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is the pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters it would flash in our system and as a result, it would help traders to spot the superstar stocks for tomorrow at the right time!

Here are the superstar stocks for tomorrow.

Timken: Timken has soared a massive 7% on a day where the market is red, and as a result, it has outperformed the broader and benchmark indices. The stock has taken out its all-time high with larger volumes and looks extremely strong. Moreover, the price breakout is accompanied by above-average volume, as the volume for the day has already surpassed its 20-day average volume. The RSI is in the bullish territory on the hourly, daily and weekly time frame. The stock has the potential to go even higher in the coming days.

Alembic Ltd: The stock of Alembic Ltd is seen outperforming on Thursday as it gained a decent 1.25% on a day where there is blood on the street. The stock witnessed buying at lower levels and gained about 4% from its lows. The demand from the bulls is evident from the fact the stock has witnessed above average volumes. Running strong since a few trading sessions, it is expected that the stock will continue to perform on the upper side.

Pidilite: The stock has witnessed good volumes after a very long time and has formed a strong green candle. The RSI is in the bullish territory on the hourly, daily and weekly time frame. The stock could see levels of Rs 2550-2600 very soon.

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Godrej Consumer meets street estimates as Q2 sales grow 9%, profit rises 5%

by 5paisa Research Team 11/11/2021

Fast-moving consumer goods (FMCG) major Godrej Consumer Products Ltd came up with its financial numbers for the second quarter ended September 30 that were almost in line with what the analysts had expected.

Consolidated net profit rose 5% year-on-year to Rs 479 crore from Rs 458 crore in the second quarter last year. This was just marginally shy of around Rs 490 crore that analysts were expecting.

Consolidated sales, too, matched street expectations after rising 9% to Rs 3,144 crore.

The company’s share price declined 2.75% to Rs 950.25 apiece on the BSE in a weak Mumbai market. Most of the decline happened even before it declared its financials as part of bearish sentiment in the market on Thursday.

The company recently hired Sudhir Sitapati as Managing Director and Chief Executive Officer. Sitapati took over the reins in mid-October.

Godrej Consumer Q2: Other Highlights

1) Sales growth was led by India and Africa with 10% and 15% (16% in constant currency) rise, respectively.

2) Latin America sales declined 3% but rose 11% in constant currency; Indonesia business was largely flat.

3) India home care products grew 7% while personal care sales were up 12%.

4) India unbranded products sales and exports rose 21%.

5) Consolidated EBITDA margins was 21.6%, down 100 basis points from a year earlier.

6) EBITDA margins in India at 24.6%, a fall of 330 bps year-on-year.

7) India gross margins fell 830 bps because of a lag between increase in input cost and consumer price increases.

8) Margin decline mitigated partly through fall in employee benefit expenses (160 bps), advertisement and publicity (250 bps) and other expenses (100 bps).

9) EBITDA margins in international business at 17.2%, a decrease of about 40 bps year-on-year, driven by a decline in Latin America and SAARC margins.

Godrej Consumer management commentary

Nisaba Godrej, executive chairperson of GCPL, said the company delivered steady sales growth in the second quarter. “We continued our growth momentum and delivered another quarter of double-digit two-year CAGR of 10%. We saw steady sales growth in the home care and personal care categories,” she said.

Godrej also said that GCPL will continue to focus its efforts where the demand is in home care and personal care categories—in household insecticides, personal wash and hygiene, and hair care.

“We remain focused on expanding our total addressable market. We have a robust pipeline of consumer-centric innovations and are building out full portfolios across price points. To support this, we are strengthening our supply chain operations and ramping up new capabilities and channels in digital, e-commerce and chemists,” she added.

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Interview with Gateway Distriparks Ltd

Interview with Gateway Distriparks Ltd
by 5paisa Research Team 11/11/2021

"Domestic demand for good quality warehousing has gone up"

In conversation with Samvid Gupta, Joint Managing Director, Gateway Rail Freight Ltd (Subsidiary of Gateway Distriparks Ltd. GRFL).

What is your outlook on the Indian logistics sector?

The logistics sector in India has bounced back throughout 2021 at a fast pace, as the demand has shot up tremendously with economic activity resuming after the second wave of COVID. Manufacturing activity has continued to increase, resulting in higher volumes for both import and export. Domestic demand for good quality warehousing has also gone up and is expected to rise exponentially. We are seeing a surge in demand for temperature-controlled warehousing of high-value products, for example from the pharmaceutical and industrial products segments. With the National Logistics Policy in its final drafting stages, the cost of logistics in India is expected to reduce substantially and further investments are expected to come in for infrastructure development in this industry.

In Q2FY22, Gateway Distriparks sales rose by 27.89% to Rs 335.74 crore as against Rs 262.52 crore in Q2FY21. Net profit zoomed to Rs 46.91 crore in Q2FY22 as against Rs 3.42 crore in Q2FY21. Which factors have contributed the most to help you outperform?

The main reason for the growth in profits was the increase in business volume and revenue and reduction of costs, especially in the rail segment. We were able to increase our market share due to our service levels and dedicated block train services, and as we have the fastest transit times from our terminals in NCR to maritime ports. The overall market size has grown as well. In addition, the cost of operations has also been lowered due to reduction of imbalance in import and export containers, and lower underframe and empty running costs. Further, the company has also been consistently reducing its debt and prepaying it ahead of time leading to a reduction in interest outflow.

What are your growth levers?

The main growth lever for us will be the Western Dedicated Freight Corridor (DFC), which will allow us to operate faster, heavier and longer trains. This will allow us to have better utilization of our assets and higher double stacking of our rail business which will improve productivity and margins. The DFC will also lead to a shift from road to rail which will help improve our volumes. This along with macroeconomic factors of the overall trade of India and the growth in containerization of cargo will be important for our growth. Going forward, when the Quadrilateral Dedicated Freight Corridors will be operational across India, it will be viable to handle domestic containers as well, and we will then be a full-service rail logistics provider in India.

In addition, under Snowman Logistics we are seeing a very large increase in demand for temperature-controlled warehousing and we plan to double our capacity in the next three to four years.

What are your top three strategic objectives?

1. To establish a large network of container handling facilities across India, to maximize our efficiency using double stack and hub and spoke. This will provide an end to end integrated logistics solution to our customers, from ship to factory and vice versa within India.

2. To continuously innovate in terms of technology to increase operational efficiencies. For example, we were the first container train operator in India to facilitate shipping lines through blockchain technology by TradeLens enabling Electronic Data Exchange and availability of information for importers/exporters. Through initiatives like these, we can reduce costs of operation for our customers.

3. To reduce our impact on the environment and surroundings, by using carbon-friendly alternatives in our areas of operation.

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M&M earnings revenues stood at 15% YoY, on strong bookings seen for SUVs and price hike

by 5paisa Research Team 11/11/2021

M&M reported 2QFY22 net revenue of Rs. 133bn, up 15%, YoY, EBITDA margins grew at 12.5%, and PAT stood at Rs. 17bn which was impacted due to an impairment of Rs. 2.5bn. M&M reported a loss of c32K units of SUV volumes owing to the semiconductor shortage in 2Q FY22 and expects the shortage to ease from Q3 onwards and would help ramp up production.

The company has overall bookings of 160K+ units for SUVs and sees strong bookings for its new launches. The average selling price for the automobile business was up 12% QoQ, supported by price hikes and better mix. Thar has received 50% bookings for the auto transmission while the XUV 700 had nearly three fourths of the bookings for the top variants. Tractor ASP was up 6% YoY largely led by ~8% increase in prices over the last year. The international farm business profitability remains intact.  
The tractor demand in the festive period failed to support the growth. The company still expects festive sales to continue through November, however, expects domestic industry growth to be flat for the rest of the year.

In the quarter, Porter now holds a valuation of cUSD500m (up nearly 4x in less than 24 months). M&M aspires to achieve a 15-20% revenue CAGR by 2025, grow farm revenues by 10x by 2027, become the leader in the target SUV segment as well as the e-SUV segment, generate a ROCE of more than 18%; and reduce material costs and fixed costs by c300bp YoY over the medium term. 

The company has provided visibility on product launches across the farm with 15 new products, SUV with 13 new products and pick-up with 17 new product segments over the next 4-6 years. Electric powertrains will be a key focus across SUVs (eight new products), LCVs (eight new) as well as 3Ws – and aim to be the largest player in each segment. M&M, in competition with its peers, also plans to seek a new partner or on-board an investor to accelerate its EV business plans.

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Kenneth Andrade: Analyzing the stock-picking strategy and philosophy of this market expert

Kenneth Andrade: Analyzing the stock-picking strategy and philosophy of this market expert
by 5paisa Research Team 11/11/2021

Andrade has a disciplined approach and the ability to nurture a stock and allow it to grow - a rare ability in fund managers.

Kenneth Andrade is currently the CIO of Old Bridge Capital Management, an India-based registered PMS. He manages the investment process and leads investment ideation. Along with over 27 years of experience in Indian Capital Markets, he has a published track record of managing Mutual Fund schemes for the last 13 years.

His experience in portfolio management includes the 10 years at IDFC Asset Management Company, which was ranked amongst the top 8 in the Mutual Fund industry in India, the Year 2005 - 2015.

Before he moved to IDFC, Andrade was managing the Kotak MNC and Kotak Midcap Fund of the Kotak Mahindra Group.

Coming to his investment style, Kenneth Andrade follows a simple thumb rule of investing and is known to have a disciplined approach while planning his portfolio. When he enters a new space, he likes to invest in all the leading stocks in that space and then keeps a watch on the performance of these companies. He uses the data put out by all companies in the sector to decide and evaluate how he will fine-tune his holdings. After it becomes clear which company are likely to race ahead, Andrade gradually moves out of other stocks and focuses entirely on that company.

When it comes to cyclical industries, Kenneth Andrade believes that smart capital allocation can make all the difference when it comes to a successful company and an also-ran company. He believes that debt is an albatross on a companies growth margin and so, irrespective of market capitalization, he chooses debt-free companies. Finally, he is not hesitant about paying a premium for companies that operate as virtual monopolies and has a strong fondness for such companies.

In his words, “Equities are all about buying efficient capital delivered by underlying business.” And so, Andrade looks for companies that respect capital. A good example is Shree Renuka Sugars. In 2006, the company had a market capitalization of Rs 3600 crore as compared to the then market leader – Bajaj Hindusthan at Rs 7,058 crore. The promoters of Renuka Sugars were baffled by the higher market capitalisation of Bajaj Hindusthan and felt that they should be on par as Renuka Sugars was strong on all financial parameters.

Most investors made a beeline for Bajaj Hindusthan. But not Andrade. He liked Renuka Sugars because it had set up capacities at low costs and had a scalable model for bigger capacities at half the capital cost. This idea came to fruition after the sugar industry hit a low point in 2009. Bajaj Hindusthan borrowed heavily to survive, it was saddled with Rs 4,500 crore debt and its market capitalization fell to Rs 1,500 crore. However, Renuka Sugars emerged from the downcycle with a market capitalization of Rs. 4,000 crore.

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Buzzing Stock: Thermax rises 14% on robust order inflows in Q2FY22

Buzzing Stock: Thermax rises 14% on robust order inflows in Q2FY22
by 5paisa Research Team 11/11/2021

Thermax's order inflows rose 67% YoY to Rs 1,860 crore - its highest order booking in the last eight quarters.

Energy and environment solutions company, Thermax Limited was the top gainer on the BSE 500 today and was seen trading up by 14.47% after reporting an exceptional set of Q2FY22 numbers.

A key positive which has driven the stock price up today is the company's robust order inflows. Thermax's order inflows increased by 67% YoY to Rs 1,860 crore and the company’s order book improved 26% YoY to Rs 6,520 crore. According to the company's management, this is the highest order booking in the last eight quarters. The company received Rs 293 crore worth of orders for a refinery and petrochemical complex in India and the enquiry pipeline from refinery, cement and metal sectors continues to be strong.

Another highlight of its Q2FY22 earnings was its in-line operating performance. Strong operating leverage led to around a 43.73% rise in operating profit with operating margins at 7.49%, up 54 bps YoY. As for other earnings parameters, revenue at Rs 1,469.32 crore, up 28.75% y-o-y, largely met the street’s expectations. The company reported a 181.43% YoY rise in PAT at Rs 87.92 crore for the quarter ended September 30, 2021.

Regarding the demand outlook, the management said industrial sectors such as food, pharma, oil & gas refinery and chemical continues to perform well. On the other hand, the management noted that the commodity prices stayed high and remain a key concern for the industry. Steel prices continued to remain high thus increasing input costs. Also, raw material costs, including those of chemicals, have remained high.

Headquartered in Pune, Thermax Ltd engages in the provision of engineering solutions to the energy and environment sectors. It operates through the segments of Energy, Environment and Chemicals. The Energy segment comprises Process Heating, Absorption Cooling and Heating, Boiler and Heater and Power businesses and related services. The Environment segment consists of air pollution control and water and waste solutions. The Chemical segment comprises boiler and water chemicals, resins, performance chemicals, construction chemicals and oil field chemicals.

At 3.40 pm on Thursday, the stock is trading at Rs 1536, up by 14.47% or Rs 194.15 per share on BSE. The 52-week high of the scrip is recorded at Rs 1,569.70 and the 52-week low at Rs 765.70 on the BSE.

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