Nifty 17196.7 (-1.18%)
Sensex 57696.46 (-1.31%)
Nifty Bank 36197.15 (-0.85%)
Nifty IT 35848.05 (-0.86%)
Nifty Financial Services 17779.5 (-1.13%)
Adani Ports 737.45 (-0.22%)
Asian Paints 3110.45 (-2.21%)
Axis Bank 673.00 (-0.46%)
B P C L 385.90 (1.86%)
Bajaj Auto 3287.85 (-1.22%)
Bajaj Finance 7069.25 (-1.55%)
Bajaj Finserv 17488.70 (-1.52%)
Bharti Airtel 718.35 (-1.94%)
Britannia Inds. 3553.75 (-0.69%)
Cipla 912.05 (-1.00%)
Coal India 159.75 (0.28%)
Divis Lab. 4757.05 (-0.42%)
Dr Reddys Labs 4596.50 (-1.42%)
Eicher Motors 2455.55 (0.16%)
Grasim Inds 1703.90 (-1.16%)
H D F C 2771.65 (-1.29%)
HCL Technologies 1171.40 (-1.12%)
HDFC Bank 1513.55 (-0.80%)
HDFC Life Insur. 690.95 (-2.03%)
Hero Motocorp 2462.45 (-0.41%)
Hind. Unilever 2343.65 (-1.66%)
Hindalco Inds. 424.65 (-1.72%)
I O C L 122.20 (1.28%)
ICICI Bank 716.30 (-0.84%)
IndusInd Bank 951.15 (0.59%)
Infosys 1735.55 (-0.73%)
ITC 221.65 (-1.69%)
JSW Steel 644.55 (-0.34%)
Kotak Mah. Bank 1914.20 (-2.55%)
Larsen & Toubro 1801.25 (0.67%)
M & M 836.95 (-1.48%)
Maruti Suzuki 7208.70 (-1.59%)
Nestle India 19321.35 (-0.93%)
NTPC 127.00 (-1.32%)
O N G C 145.90 (1.32%)
Power Grid Corpn 206.10 (-3.92%)
Reliance Industr 2408.25 (-3.00%)
SBI Life Insuran 1165.95 (-1.86%)
Shree Cement 25914.05 (-1.43%)
St Bk of India 473.15 (-0.81%)
Sun Pharma.Inds. 751.80 (-1.89%)
Tata Consumer 774.30 (0.14%)
Tata Motors 480.10 (0.21%)
Tata Steel 1118.00 (0.50%)
TCS 3640.45 (-0.07%)
Tech Mahindra 1593.30 (-2.23%)
Titan Company 2369.25 (-0.72%)
UltraTech Cem. 7332.45 (0.13%)
UPL 712.75 (2.08%)
Wipro 640.75 (-0.94%)

Top 10 Midcap Losers

Top 10 Midcap Losers
by 5paisa Research Team 21/10/2021

Mid-caps have attracted a lot of investors especially post the first leg of the rally in July and August 2021. This rally was more rewarding for those who consistently remained invested during the fall. The fall that we are referring to here is not the March 2020 fall.

Nifty Midcap 100 index was declining and underperforming Nifty 50 ever since January 2018. The wealth that it eroded from January 2018 to March 2020 was close to 11,000 points or 51%. However, since then it has surged almost 22,000 points or 209%. However, the index plunged close to 2,000 points from its all-time high of 33,243.5 in a matter of two days.

Is this fall due to uncomfortable valuations? If we look at the current Price to Earnings (P/E) of Nifty Midcap 100, then it stands at 33.86 which is quite near to its 10-year average P/E of 34.65. However, its 10-year median P/E stands at 22.32. Therefore, valuations don’t seem that stretched. However, we have curated a list of the top 10 stocks that were hit badly in this two-day fall.

 

Company Name 

High 

Low 

Last Price 

Previous Close 

Change 

Loss (per cent) 

Mindtree 

4,778.00 

4,305.05 

4,458.00 

4,779.95 

-321.95 

-6.74 

Oil India 

234.05 

214.75 

215.7 

228.35 

-12.65 

-5.54 

COFORGE LTD. 

5,849.30 

5,452.00 

5,524.00 

5,820.40 

-296.4 

-5.09 

L&T Finance 

89.9 

86.3 

86.85 

91.35 

-4.5 

-4.93 

L&T Technology 

5,052.00 

4,575.00 

4,740.00 

4,953.30 

-213.3 

-4.31 

Laurus Labs 

603.8 

568.6 

574.45 

599.45 

-25 

-4.17 

Voltas 

1,239.80 

1,161.20 

1,200.10 

1,247.60 

-47.5 

-3.81 

Navin Fluorine 

3,632.95 

3,325.10 

3,377.95 

3,502.40 

-124.45 

-3.55 

Prestige Estate 

444.35 

418 

420.1 

433.6 

-13.5 

-3.11 

Tata Elxsi 

6,259.90 

5,931.00 

6,000.00 

6,178.85 

-178.85 

-2.89 

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Only buying witnessed in Rajratan Global Wire after the company posts impressive results

Only buying witnessed in Rajratan Global Wire after the company posts impressive results.
by 5paisa Research Team 21/10/2021

The shares of multibagger Rajratan Global Wire jumped higher by 5% on Thursday to lock itself in the upper circuit when the broader markets and the frontline indices are seen correcting.

BSE Sensex has tumbled by more than 600 points in the Thursday trading session, while BSE Smallcap and BSE Midcap index are seen trading with losses of over 0.6% each.

The outstanding set of numbers is what is helping Rajratan Global Wire outperform on the bourses in today's trade.

Key performance highlights for the quarter Q2FY22 (Consolidated):* 

- Net sales for the quarter stood at Rs 2411.7 million up 73.5% YoY.

- EBITDA for the quarter stood at Rs 506.8 million up 96.9% YoY.

- EBITDA margin for the quarter stood at 21.01% up 250 bps vs 18.52% in Q2FY21.

- Net Profit stood at Rs 326 million up 140.7% YoY.

- EPS stood at Rs 32.1 up 140.7% YoY vs Rs 13.33 in Q2FY22.

Commenting on the performance Sunil Chordia, Chairman and Managing Director said, “We have continued to build up further on the momentum set in the last 18 months since having completed our expansion in India. The company has delivered its highest-ever revenue, EBITDA and PAT during the quarter, led by strong demand for bead wire in domestic and export markets. More and more customers are looking to increase their engagement with Rajratan, which has pushed us to set up dedicated teams to engage periodically with customers to ensure timely deliveries. We continue to focus on our vision to become the leading and most preferred bead wire manufacturer and supplies to tyre companies in India and globally. We continue to “Outperform” and work as a team in the current challenging times to deliver value to our shareholders.” 

The shares of Rajratan Global Wire are up by 426% in 2021 alone. In one year, the stock is up by 573%. In one month, the stock is up by more than 15%.

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Closing Bell: Sensex and Nifty close in red, market extends losses for the third session in a row

Closing Bell: Sensex and Nifty close in red, market extends losses for the third session in a row
by 5paisa Research Team 21/10/2021

Sell-off continued in the Indian market for the third trading session in a row owing to bearish global cues and profit booking in metal and IT stocks.

Domestic equity benchmarks Sensex and Nifty 50 gave up early gains and took a U-turn on Thursday. Losses were seen in index heavyweights like Reliance Industries, while index majors TCS and Infosys dragged the indices lower. However, buying in select oil and gas and financial services stocks gave some support. On the broader markets both, the BSE Midcap and Nifty Smallcap closed in the red.

IT and metal stocks dragged the indices in today's trade and witnessed selling pressure.

At the closing bell on Thursday, the Sensex was down 336.46 points or 0.55% at 60,923.50, and the Nifty slipped by 88.50 points or 0.48% at 18,178.10. On the advance-decline, around 1580 shares have advanced, 1627 shares declined, and 130 shares were unchanged.

Tip losers of the day were Asian Paints (down by 5%), Hindalco Industries, Reliance Industries, Infosys and Dr Reddys Labs, while top gainers on a bearding session were Kotak Mahindra Bank (up by 6%), NTPC, HDFC, SBI and ICICI Bank.

On the sectoral front, PSU Bank, auto, oil & gas and power indices ended in the green, while metal, IT, energy and FMCG indices closed in red.

On the stock-specific front, IT shares were at the receiving end of selling fury, with HCL Tech, Tech Mahindra, TCS and Infosys shedding 1-2% each on the BSE. Reliance Industries lost 2% ahead of its Q2 results scheduled post market hours on Friday.

However, banking and financial stocks saw buying interest. Kotak Mahindra Bank surged to Rs 2,151, while ICICI Bank, HDFC and Axis Bank gained around 1-2% on the bourses today.

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Paytm walks into stock market-IPO alert

by 5paisa Research Team 21/10/2021

One 97 communications Ltd. Which is popularly known as Paytm was started as a payment provider is becoming a financial intermediary. Paytm had 50mn monthly transacting users (MTU), 6mn active merchants, and gross merchandise value (GMV - P2M) of INR4tn for FY21. Recent partnerships to distribute financial services, instead of fees, aims to diversify revenue and earning streams. Valuation of Paytm envisages (USD20-25bn). The user base of 333mn (CAGR 13% over FY19-21), of which 50mn (15%) were monthly active users. The company has onboarded 21mn merchants, 37% CAGR over FY19-21, of which 6mn are active merchants and again of which 51% (3mn) used Paytm's business App in the month of Mar-21. GMV (merchant) was INR4tn for FY21, a CAGR of 33% and 5.9bn merchant transactions took place through its platform. 

Current revenue mix tilt towards payments

Paytm's reported FY21 consolidated revenue of INR28bn, down 15% YoY. Payments and financial services revenue (~75% by mix) grew 11% YoY in FY21, of which revenue from financial services was marginal. Commerce & Cloud business revenue declined 38% YoY in FY21 as high exposure to COVID impacted segments viz. travel & entertainment led to lower GMV (-70% YoY) - nevertheless the decline was non-linear due to better performance of other streams viz. advertising etc. 

Payment spreads improved

Paytm's payments net spread (take rate (Revenue divided by GMV) less processing charges divided by GMV) were negative 25bps/13bps in FY19/20. While the downward trajectory of taking rate continued in FY21 (50bps). Thereafter, a sharp cut in marketing expenses to 6bps of GMV vs. 1.2% in FY19 helped Paytm to report a contribution profit of INR3.6bn for FY21. The spread at which Paytm works is still suboptimal and take rates are low at 50bps for FY21 (reported 64bps for 4QFY21, including from Postpaid). 10bps improvement in non-UPI can boost revenue by 10-12% and net spreads by 6-7bps. The performance here is key to Paytm's valuation. 

IPO offer details  

Issue Size: INR166bn, 2.5x of FY21 Net-worth 
Fresh Issue: INR83bn 
Offer for sale: INR83bn 
Order of subscription: In case of under-subscription first 90% of the proceeds will go 
towards fresh equity, followed by a reduction in stake of Ant Financial to 24.9%, other selling shareholders, and finally towards the remaining 10% of fresh equity. 
Pricing may be in the range of USD20-25bn, based on media reports as compared to 
USD15bn (INR1.1tn) based on the last deal in Feb-20 to DG-PTM (institutional investor). 

Utilization of funds

Fresh raise of money would be utilized to strengthen the financial business and invest in new business/ acquisitions to expand the bouquet of product offerings and other corporate purposes. The company has acquired various other companies for value-added propositions (acquisitions like Little Internet Pvt Ltd, etc.) and expansion of product bouquet (acquisitions like Orbgen Technologies Pvt Ltd, etc.). Also, the company has scaled/commenced various business initiatives including insurance subsidiary, wealth management, etc. 

IPO proceeds to help innovate and invest

Based on its capital history, the company has so far raised INR190bn+, with its FY21 net-worth of INR65bn, implying investments/cash burn of INR128bn of which INR105bn were reported losses over FY18-21. The current proceeds from a fresh issue of INR83bn would provide Paytm capital to augment ammunition to invest/innovate/acquire (INR20bn) and to scale up the profitable revenue drivers.

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Buzzing Stock: Tata Power zoomed 71.4% in the last month. What’s driving the rally?

Buzzing Stock: Tata Power zoomed 71.4% in the last month. What’s driving the rally?
by 5paisa Research Team 21/10/2021

Tata Power shares have been on the upsurge given visible change in big focus from traditional areas to bet on green energy.

Shares of Tata Power Company has given stellar returns to investors in the past month with a gain of 71.4%. The share price stood at Rs 134.45 on September 20, 2021, and from then the stock has gone on to hit its 52-week high on the BSE of 269.70 on October 19, 2021, before closing at Rs 230.45 on October 20, 2021.

The Tata group stocks such as Tata Motors, Tata Power and Tata Chemical are proving to be major beneficiaries of the EV theme as it is getting the benefit of early mover and strategic asset allocation. Tata Power could well go on to be the leader in EV infrastructure in the country given recent events and this has been reflected in the stock price which has seen buying by investors betting on clean energy going forward.

A key trigger for recent movement in the stock price was the deal with Tata Motors to develop electric vehicle charging infrastructure. Tata Power partnered with Tata Motors, Morris Garages India Limited and JLR for developing EV charging infrastructure for their customers and dealers, including those for e-buses used by multiple state transport utilities.

Moreover, Tata Power's wholly-owned subsidiary Tata Power Solar Systems recently bagged Rs 538 crore contracts to build 100 MW of distributed ground-mounted solar projects for EESL. With this win, the Utility-Scale EPC order book of Tata Power Solar now stands at around 4 GW (DC) capacity with an approximate value of Rs 9,264 crore (without GST), thereby strengthening its position as India’s leading Solar EPC player.

There is also the buzz surrounding the company with regards to fund raising for the initial public offering (IPO) of its renewable energy unit. According to reports, Tata Power is in talks with a large pension and sovereign asset managers, including Canada Pension Plan Invest Board (CPPIB) and Government of Singapore Investment (GIC), to raise at least USD 500 million ahead of the proposed IPO for its renewable energy unit.

At 2.55 pm on Thursday, the stock of Tata Power Company Limited was trading at Rs 224.90, down by 2.41% or Rs 5.55 per share on BSE. The 52-week high of the scrip is recorded at Rs 269.70 and the 52-week low at Rs 51.65 on the BSE.

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Changing trends in the software industry

by 5paisa Research Team 21/10/2021

Software, they say, is absorbing the world: As business processes get automated, more and more software needs to be created, updated, and maintained. Therefore, as a dominant provider of software services, India is at the center of the action.

Indian software industry during the pandemic

The value of India’s IT services exports grew 2 percent last year which is the slowest in two decades. Growth in effort accelerated measured in person-hours. Revenue growth slowed due to business disruptions for customers and onsite work falling sharply. Onsite work where engineers travel abroad to work in the offices of their customers' yields more than thrice the revenue per hour of offshore work but also incur higher costs as employees get paid in line with their much higher local cost of living and have lower profit margins. Offshore work is a win-win scenario where both customers and service providers are benefited. Customers pay less and service providers to see healthier margins. But all services cannot be delivered from offshore. After a sharp fall till around a decade ago, the onsite/offshore mix had stabilized at one-third. The limit has been redefined by changes forced by the pandemic, as growth in offshore business last year was the strongest in many years. For some firms more than three-fourths of work was done offshore. This would not be sustained completely but a part of it may remain. A higher offshore share of work brings down the average cost of services making Indian IT services more competitive.

Retaining industry growth post-pandemic

As the customers’ businesses of the software companies stabilize, and digitization accelerates, Indian IT Services firms’ revenues may grow for a few years stronger than the pre-pandemic levels. Firms were unprepared for this acceleration in business and many are having to let go of business due to a lack of spare staff (“bench”) to handle the rush of new work. To address this shortage and to re-build the bench, they are hiring more. The top five IT Services firms have announced 1,20,000 new hires. Several other types of firms are also expanding their hiring of IT staff at the same time. Tech-focused Indian start-ups have raised more than $40 billion over the past year, of which 10-15 percent may be spent on hiring developers to write software (the rest spent on advertising, discounts, acquisitions, technology capacity, or physical capacity like warehouses). Software-as-a-Service (SaaS) firms are also flush with funds, and will mostly use them to hire engineers. SaaS companies are also generally profitable and are seeing strong growth in revenues, facilitating more hiring.

Hike in hiring after the pandemic

Global software and SaaS firms are also increasing their presence in India, with some of them now offering salaries that appear to be benchmarked to dollar-based compensation in the US. Conventional Indian businesses are spending more on technology, with spending on software growing more than 15 percent last year despite the pandemic-related uncertainty. For the economy, one-third of investment is on intangibles, which is mostly software. This is growing faster than conventional investments in machinery and buildings and has accounted for more than 40 percent of incremental investments in the economy over the past three years.The community of software developers in India which is 4.5 million may expand by nearly 10 percent this year. Over the past five years, 1,60,000 people have been added. The net hiring this year may reach around 4,00,000. Job openings on various portals are soaring, and human resources managers are as worried about retaining their staff as they are about hiring for the growth of their companies.

Wages for the growing employee strength

India produces 3 million engineers a year. Therefore, hiring 5,00,000 should not be a challenge. However, much of the estimated $12-13 billion increase in the industry’s wage bill is likely to be for experienced software engineers, particularly for those in the 5-12-year experience. As the size of this group cannot be expanded quickly, this means substantial wage hikes for these engineers.As positive as this trend is for the Indian economy, adding substantially to India’s balance-of-payments and overall gross domestic product, this also throws up new challenges, both for companies and policymakers. Policymakers must help to keep the industry’s costs low so that more work comes India’s way and also must work on the ability of cities to handle the influx. Around three-fourths of India’s software engineers are based in just four cities: Bengaluru, Chennai, Hyderabad, and Pune. Most of the new openings are also in these cities. To avoid congestion and to tap a larger talent pool that may not want to move to these cities, the industry has tried to develop alternative centers, which have not succeeded. The number of engineers with the right skillsets must grow otherwise India may quickly become uncompetitive. Students shell out lakhs of rupees for an engineering degree, after which the hiring firm put them into a 6-12 month retraining course. The need for skills like Artificial Intelligence or Machine Learning may be too dispersed across firms for them to solve the problem themselves and they may end up hiring abroad. This becomes a public good which the government can plan for and facilitate.

The challenging task of sustaining the hired talent

Apart from the challenge of attracting/retaining talent, larger firms must also collaborate to enable an ecosystem that sustains the inflow of quality manpower with cost-efficiency. For larger IT services firms staff costs grew 16 percent in the June quarter and may rise further. As they compete with MNCs which are well-funded than start-ups and SaaS firms which generate much more revenue per employee. They may need to innovate the software development process again like they did while scaling up in the years after Y2K.

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