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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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Kajaria Ceramics’ strong volume led the growth in Q2FY22

by 5paisa Research Team 29/10/2021

Kajaria’s upbeat performance was led by strong volume, capacity utilization at 100% and comfortable transfer of steep gas cost. 
The company reported a revenue growth of 37% YoY (Rs. 9.7bn) and 20% in H2FY22, volume growth of 25% YoY and 15% in H2FY22, realisation growth of 8% YoY, total sales volume clocked at 24.8msm (which includes 12.6msm from own, 5.7msm from JV and 6.5msm from outsourcing), and EBITDA marginally grew 18.5% (contracting 163bps) due to increase in gas prices.  The net cash balance stood at Rs. 4.7bn as on September 2021 vs Rs. 3.5bn in March 2021. Net working capital slipped from 50 days in March 2021 to 56days in September 2021 caused by higher inventory.

Company witnessed a 20% revenue growth in tiles, revenue for sanitaryware/faucetware stood at Rs. 3bn and revenue for ply stood at Rs. 0.8bn for FY22. The company plans on indigenous production of some high value products that will be imported which will help improve the revenue and bring down imports gradually. 

Another gas price hike of Rs. 10-15/scm in next 15days is expected from Morbi. The gas prices for Kajaria are lower by Rs. 10-12/scm compared to Morbi players. Gas prices in North India stand at Rs. 38/scm, while in South India at Rs. 60/scm. Kajaria hiked prices gradually in YTDFY22; in April by 2-3%, July by 3%: and October by 4%. 

The company chalked out three brownfield projects at Gailpur; 4.2msm at Rs. 600mn, 3.8msm at Rs. 1.1bn and 4.4msm at Rs. 800mn. The total capex value would stand between Rs. 2.5-2.7bn for FY22E and at peak utilization, it would generate value worth Rs. 5bn. They are set to be operational in Q4FY22. 

Moving ahead, Kajaria has increased its dividend payout policy from 15-20% to 40-50% payout. Company has also announced an interim dividend of Rs. 8/share. It will continue to gain market share on the strong base of its industry leadership, strong brand recall, and healthy profitability matrix.

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Tejas Networks is all set to capitalize on the 5G wave, climbs 380% in one year!

Tejas Networks is all set to capitalize on the 5G wave, climbs 380% in one year!
by 5paisa Research Team 29/10/2021

Backed by Tata Sons, Tejas Networks is all set to expand and benefit from the 5G wave.

The stock price of Tejas Networks Ltd hit a 52-week high of Rs 570.2 on 5 October 2021. In the last one year, the stock moved from Rs 89.80 on 30 October 2020 to Rs 431.40 as of 28 October 2021, delivering returns of 380%!

Incorporated in 2000, Tejas Networks is an optical, broadband and data networking products company. It is engaged in designing, developing and sales of high-performance and cost-competitive products, which are used for building high-speed communication networks to carry voice, data and video traffic from fixed-line, mobile and broadband networks over optical fibre. The company’s clientele includes telecommunications service providers, internet service providers, utility companies, defence companies and government entities in more than 60 countries.

In Q2FY22, on a consolidated basis, the company reported total revenue of Rs 172.78 crore, which was an increase of 57% YoY. The PBIDT and PAT came in at Rs 18.34 crore and Rs 3.66 crore respectively.

Industry dynamics

  • As per a study done by Market Research Future (MRFR), the global telecom equipment market size is projected to grow at an 11.23% CAGR by the year 2025.

  • Increasing number of cellular stations, increased data consumption, need for next-generation ready network equipment for 5G networks and fibre-based broadband networks have driven a new capex cycle across the globe.

  • On the domestic front, the government policies favour the telecom sector. The government has designed a Rs 12,195-crore production linked incentive (PLI) scheme for the sector. This scheme aims to boost local production of telecom equipment, reduce dependency on imports and provide an opportunity for domestic manufacturers to focus on exports as well.

Tata Son’s investment in the company

On 29 July 2021, the company announced that it executed definitive agreements with Panatone Finvest Ltd, which is a subsidiary of Tata Sons Pvt Ltd. Tata Sons bought a 43.35% stake in the company for Rs 1,884 crore in a multi-step deal that involved the sale of shares worth Rs 500 crore and warrants worth Rs 1,350 crore. Moreover, Tata Sons made an open offer to acquire up to a 26% stake at Rs 258 per share, following SEBI regulations.

The company (Tejas Networks) shall use these proceeds to invest organically as well as inorganically for expansion of product portfolio and R&D, investment in sales, marketing and additional people. Furthermore, it shall use the funds for enhancing manufacturing and operational capabilities including working capital expansion and for other general corporate purposes.

This transaction provides an opportunity for Tejas Networks for leveraging synergies with Tata Group with access to wider global relationships. Moreover, the capital infusion strengthens the company’s balance sheet, which enables it to invest for growth and expand its product portfolio.

At 1.47 pm, the share price of Tejas Networks Ltd was trading at Rs 435.1 as against the previous day’s closing price of Rs 431.40 on BSE.

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International Funds are dominating the returns chart!

International Funds are dominating the returns chart!
by 5paisa Research Team 29/10/2021

In the last one week, the Indian equity market remained the worst-performing market globally. Hence, the funds dedicated to the international market remained the best performing funds.

The Indian equity market represented by Nifty 50, after touching a recent high of 18,604 on October 19, has come down by almost 4%. In last one week, it is down by 1.5%. This is also being reflected in the performance of equity dedicated funds. In the same period equity dedicated fund is down by on an average 1.4%.

In the same period, however, the fund dedicated to the international fund has generated returns in excess of 2%. This is especially true for funds dedicated to tech-heavy Nasdaq 100. Even the categories such as commodities and real estate that are the direct beneficiary of rising inflation have appeared in the top-performing funds.

Following is the list of the top 10 funds that performed best in the last one week.

Fund Name  

Point to Point Returns (%)  

Category  

Expense Ratio (%)  

Net Assets (Cr)  

Kotak Nasdaq 100 FOF - Direct Plan  

2.21  

EQ-INTL  

0.27  

582.00  

HSBC Global Equity Climate Change FoF - Direct Plan  

2.10  

EQ-INTL  

1.33  

594.00  

Mirae Asset S&P 500 Top 50 ETF  

1.88  

EQ-INTL  

0.46  

286.00  

Motilal Oswal Nasdaq 100 FOF - Direct Plan  

1.80  

EQ-INTL  

0.10  

3,623  

Nippon India Japan Equity Fund - Direct Plan  

1.64  

EQ-INTL  

1.33  

228.00  

DSP World Gold Fund - Direct Plan  

1.59  

EQ-INTL  

1.75  

807.00  

Motilal Oswal NASDAQ 100 Exchange Traded Fund  

1.53  

EQ-INTL  

0.56  

5,152  

PGIM India Global Equity Opportunities Fund - Direct Plan  

1.27  

EQ-INTL  

1.40  

1,518  

SBI International Access - US Equity FoF - Direct Plan  

1.21  

EQ-INTL  

0.76  

968.00  

Kotak International REIT FOF - Direct Plan  

1.09  

EQ-INTL  

0.40  

193.00  

This does not mean that you should increase exposure towards international funds. They should be essentially used for diversifying your investments.

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These small-cap stocks of Porinju Veliyath gave above 100% returns in 2021. Do you own them?

These small-cap stocks of Porinju Veliyath gave above 100% returns in 2021. Do you own them?
by 5paisa Research Team 29/10/2021

While S&P BSE small-cap index is 55% up year to date, Porinju Veliyath top holdings had outperformed Sensex with astronomical returns of above 100% from his two small-cap picks.

With astonishing returns of 200% from one of his small-cap picks, Porinju Veliyath is surely catching the attention of investors.

2021 Portfolio outperformers of Porinju Veliyath:

1. Porinju Veliyath has a stake of 1.6% in this small-cap business of branding, marketing, sales, distribution, trading etc of various building products  Somany Home Innovation Ltd. The portfolio worth is Rs 52.8 crore, quantity held is 11,81,000 shares. The stock has surged from Rs 159.6 to Rs 437 in 2021, which in 10 months registered a 174% return. This is the top holding of his portfolio, where he decreased 0.5% stake in the September quarter.

2. The second outperformer is RPSG Ventures Ltd, he had a stake of 1.7% till June-2021. Porinju Viliyath has booked profit of entire shareholdings in September quarter with a portfolio value of Rs 34.2 crore, quantity held was 4,60,000 shares. The stock has surged from Rs 296 to Rs 960, it registered a return of 200% in a similar time horizon.

3. Third outperformer is Orient Bell Ltd which is engaged in the business of manufacturing, trading and selling ceramic and floor tiles, he has a stake of around 4.8%. The portfolio worth is Rs 24.7 crore, quantity held is 6,94,512 shares. The stock has surged from Rs 194 to Rs 360 in 2021 which is in a period of 10 months, registered 83% return. He has increased 1% stake in the September quarter. 

Background

Born in a lower-middle-class family in a village near Kochi, Porinju Veliyath started his career in Mumbai as a floor trader with Kotak securities in 1990. Later he joined Parag Parikh Securities in 1994 where he worked as a research analyst and fund manager until 1999 when he moved back to Kochi. In 2002 he founded Equity Intelligence, a fund management firm focused on value investing in Indian equities.

He has been called a small-cap czar by Economic times.

As per the latest corporate shareholdings filed, Porinju Veliyath publicly holds 19 stocks with a net worth of over Rs. 204.3 Cr

Currently, he is quite bullish in diversified consumer services, and software and services, 40% of his portfolio is invested in these sectors.

Do you own any stocks in these sectors?

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