Month: January 2024

Shares of railway-related companies were on a roll and rallied up to 18 percent on the BSE in Friday’s intra-day trade on heavy volumes amid expectation of higher budgetary allocation for Indian Railways in 2024-25 (FY24-25).

An outlay of Rs 2.4 trillion for the financial year 2023-24 (FY23-24) was made by Finance Minister Nirmala Sitharaman for the railways. According to reports, the interim budget FY24-25 will likely allocate Rs 2.8-3 trillion for the railways to keep its capex momentum intact. Rail Vikas Nigam (RVNL), Indian Railway Finance Corporation (IRFC), IRCON International, NBCC (India), RailTel Corporation of India, and Texmaco Rail & Engineering were up in the range of 5 percent to 18 percent. In comparison, the S&P BSE Sensex was up 0.65 percent at 71,653 at 11:59 AM.

Among individual stocks, RVNL zoomed 18 percent to Rs 288.65 on the back of a two-fold jump in trading volumes. A combined 126 million equity shares of the company changed hands on the NSE and BSE. RVNL was incorporated to bridge the infrastructure deficit on Indian Railways. RVNL generally works on a turnkey basis and undertakes the full cycle of project development from conceptualization to commissioning including stages of design, preparation of estimates, calling and award of contracts, project and contract management, etc. IRFC hit a new high of Rs 160.34, as it rallied 10 percent in intra-day trade today. In the past six trading days, the stock price of state-owned financial institutions has zoomed 50 percent. While, in the past six months, it skyrocketed 389 percent.

A sharp rally in the stock price of the company has seen the market capitalization (market cap) of IRFC cross the Rs 2 trillion mark for the first time ever. Currently, IRFC’s market cap stands at Rs 2.10 trillion; the BSE data shows. IRFC was set up as the dedicated funding arm of the Indian Railways (IR) for mobilizing funds from domestic as well as overseas Capital Markets. IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay. It aims to be one of the leading Financial Service Companies in the country, for raising funds from the capital market at a competitive cost for Railway infrastructure augmentation, duly ensuring that the Corporation makes optimum profits from its operations.

Indian Railways are now poised to take a transformational leap in the Amrit Kaal of the post-Independence period and fulfill the vision of ‘Viksit Bharat’ which includes modern, faster, available on-demand passenger services and facilities, a substantial share in freight cargo with ancillary services in logistics parks and domestic industry driven rail infrastructure of highest standards. A record capex target of Rs 2.60 trillion in 2023-24, up 65.6 percent when compared to 2022-23, is targeted to initiate the necessary changes for this vision, across the entire network. Achieving India’s commitment of net zero carbon by 2070 will rest in part on more rail-bound passenger and cargo movement, IRFC said in its FY23 annual report.

Over the years, IRFC’s contributions to the Indian Railway sector have been substantial, with cumulative funding surpassing the significant milestone of Rs 5.5 trillion. This remarkable achievement is further bolstered by an impressive Asset Under Management (AUM) figure of Rs 4.66 trillion as of March 31, 2023. With a focused approach aimed at supporting the expansion and modernization of Indian Railways, IRFC remains committed to making the railway network future-ready. IRFC’s role in augmenting the annual plan outlay of Indian Railways by mobilizing funds from diverse financial sources, forming part of Extra Budgetary Resources (EBR) funding, has been commendable. With its robust financial position, unwavering commitment, and strategic vision, IRFC is well-positioned to drive the future growth and success of the Indian Railways and support infrastructure, ultimately fostering progress and prosperity for the nation, the company said.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Twitter

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Shares of Aarti Industries (AIL) rose 8 percent on BSE to Rs 658.70 in Friday’s intra-day trade amid heavy volumes. 

The average trading volumes on the counter jumped over four-fold. A combined 6.04 million equity shares of the company changed hands on the NSE and BSE.

In the past two days, the stock of the specialty chemicals company has surged 13 percent after it secured a four-year supply contract worth over Rs 6,000 crore with a multinational conglomerate.

At 10:42 am, AIL was up 7 percent at Rs 655.20 as compared to a 0.94 percent rise in the S&P BSE Sensex.

The stock had hit a 52-week high of Rs 661.40 on December 29, 2023. 

AIL has signed a long-term agreement with a multinational conglomerate for the supply of a niche specialty chemical. The contract is expected to generate revenue of over Rs 6,000 crore for the company.

The product has been an integral part of AIL’s long-term growth strategy and its volume has consistently increased over the past 4-5 years, it said. 

AIL’s ongoing capital expenditure programs will meet the contract requirements and hence it does not see any additional capital expenditure for this contract.

Earlier on December 27, AIL announced that it had entered into a long-term supply contract with a global agrochem major for a niche agrochemical intermediate.

The contract offers AIL a revenue potential of nearly Rs 3,000 crore for 9 years with the contract supplies commencing from the current fiscal year, the company said.

This agrochemical intermediate serves as a crucial input component for a widely used herbicide applied in diverse food and cash crops (such as corn, soybean, cotton, sugarcane, and sunflower).

The global market for this herbicide is large and steadily growing, it added.

Meanwhile, the management in the Q2 earnings call said they maintain optimism about potential demand revival in the end-use segments such as agrochemical, polymer additives, and other discretionary applications going forward.

“We expect the worst to be over in H1FY24 and anticipate that it will take a few more quarters for normalized demand across various end segments/product lines. Thus we expect consequentially better performance in H2FY24 and foresee FY25 to be a normalizing year given the current pace of recovery,” it said.

Analysts at Prabhudas Lilladher expect recovery post H2FY24 with higher capacity utilization of its products, increasing contribution from LT- contracts, and volume growth from newer projects.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Twitter

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Indian snacks maker Haldiram’s is in talks to acquire a majority stake in listed rival Prataap Snacks, which is valued at $350 million, to expand its presence in the potato chip market, two people with direct knowledge of the matter said.

The talks are at an early stage and a valuation has not been discussed, though it could be at a premium to Prataap’s stock price. Haldiram’s is eyeing a majority stake of at least 51%, but a final number has not been decided, said the sources, who declined to be named as the discussions are confidential.

Prataap is best known for its Yellow Diamond chips brand and competes with Pepsi’s Lay’s brand and other snack-makers in a market where local, unorganized food sellers still dominate the fried chips segment.  

Venture capital firm Peak XV Partners, formerly known as Sequoia Capital India, owns around 47% of Prataap Snacks and is looking to fully exit its stake in Prataap, the sources added.  

Haldiram’s CEO Krishan Kumar Chutani, Prataap CEO Amit Kumat, and Peak XV declined to comment.  

Prataap made its stock market debut in 2017 and had annual revenues of around $200 million last year. It says it sells over 12 million packets of its salty snacks daily, which are priced as low as 5 rupees (6 U.S. cents).  

However, Haldiram’s, a family-run business founded in 1937, is a much larger manufacturer of packaged snacks with revenue of over $1 billion and runs 150 restaurants across the nation. Last year, Reuters reported the company was seeking a $10 billion valuation in deal talks with conglomerate Tata Group and other strategic investors it wanted to bring on board. Still, the talks didn’t materialize overvaluation concerns.  

“A deal (with Prataap) will help Haldiram’s tap the potato chips segment. Consumers often prefer western flavored snacks over local ones,” said one of the sources.  

Prataap has 14 manufacturing plants across nine Indian states. Though smaller unorganized companies dominate India’s fried snacks landscape, branded products have boomed in recent years as consumers become health-conscious and have higher disposable incomes to spend on packaged goods.  

India’s Moneycontrol news website reported on Dec. 19 that Prataap’s founders and Peak XV were looking to sell a stake to investors and conglomerates, but did not name buyers.  

Local snack makers like Prataap have struggled with inflationary pressures and rising competition in India, a price-conscious market, and its stock price still hovering near its 2017 listing level.  

Prataap in a November earnings report estimated India’s snacks market was worth $5.2 billion, growing 14% each year.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Twitter

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Indian benchmark equity indices rallied over 1 percent in trades on Friday on the back of frenzied buying in IT shares, a day after Infosys and TCS announced their Q3 performance. Shares of PSU banks too perked up in the latter half of the day.  

The S&P BSE Sensex scaled a fresh lifetime high at 72,721 and finally ended with a gain of 847 points at 72,568. The NSE Nifty 50 registered a new summit at 21,928, before signing off the day with a solid 247-point at 21,895.

Since the start of the calendar year, the markets have been trading on a volatile note, with certain sectors of market participants turning skeptical on valuation concerns given the sharp rally from the October lows. Also, rising geopolitical concerns and upcoming general elections in India have kept investor’s sentiments in check.

However, here’s what driving Friday’s rally:

IT stocks: Markets broadly believed that the IT sector would report subdued earnings for the December quarter. While, Infosys and TCS did report subdued numbers, with the former even lowering its growth guidance for the third straight quarter. The silver lining was the total contract value (TCV) signed, which continued to show a healthy momentum. 

This has prompted brokerages to remain optimistic about the future growth prospects. That apart, the Infy ADR on the NYSE had rallied 5 percent post results, which were announced after market hours on Thursday in India.

As a result this morning, Infosys opened with a gap of 4 percent at Rs 1,556 and went on to build gains as the day progressed. The stock so far has touched a high of Rs 1,613 (up 8 percent) and is within striking distance of its 52-week high at Rs 1,620.

TCS too started a trade gap-up at Rs 3,844 and has touched a high of Rs 3,894 so far in the day. The stock quotes 4 percent higher at Rs 3,883.

The buying soon spread across the IT sector, with the likes of Wipro and HCL Technologies also up 4 percent and 3 percent, respectively, ahead of Q3 results today. The BSE IT index was up almost 5 percent at 37,063.

DIIs lend support: After selling shares worth Rs 7,300 crore in the first week of the New Year, the Domestic Institutional Investors turned net buyers this week, and have net purchased stocks to the tune of Rs 3,950 crore so far in the four trading sessions this week.

Technical: Amid the current volatile phase, the Nifty 50 repeatedly tested support around its 20-DMA (Daily Moving Average) which it eventually managed to sustain. Presently, the 20-DMA stands at 21,550. The NSE benchmark is now seen climbing towards the higher end of the Bollinger Bands on the daily chart at 21,900 levels.

Indian Rupee: The Rupee has been steady around the 83-mark in recent trading sessions. The resilience shown by the Indian Rupee against the US dollar will help attract FII flows to India.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Twitter

Call: +91 9624421555 / +91 9624461555

www.eqwires.com

Shares of Nazara Technologies rallied 8 percent on the BSE to hit a 52-week high of Rs 974.80 in Friday’s intra-day trade on the back of a healthy business outlook.

The stock of the digital entertainment company surpassed its 52-week previous high of Rs 927.25 touched on September 6, 2023. It had hit a record high of Rs 1,678 on October 11, 2021.

Nazara is a diversified gaming and sports media platform headquartered in India with a presence in developing and developed global markets such as Africa and North America.

The company’s portfolio includes interactive gaming, eSports, and ad tech ecosystems.

Nazara has several popular IPs within the gaming segment, such as Kiddopia and Animal Jam, which focus on gamified early learning, World Cricket Championship, and Classic Rummy in skill-based real money gaming (RMG).

Within eSports, Nazara has leadership positions through Nodwin, the dominant player in eSports in India and South Asia, and Sportskeeda, a multi-sports content destination catering to sports fans in India and the United States.

For the first half (April to September) of the financial year 2023-24 (H1FY24), Nazara reported 13 percent year-on-year (YoY) growth revenue at Rs 551.7 crore.

Profit after tax climbed 42 percent YoY at Rs 45 crore. The company’s EBITDA margin improved to 11.1 percent compared to 10.6 percent in the comparative period of the previous year.

During the September quarter, Nazara secured fresh capital of Rs 510 crore from investors like Zerodha co-founder Nikhil Kamath and SBI Mutual Fund.

With a consolidated cash position of around Rs 1,300 crore, Nazara said it is exceptionally well-positioned to seize acquisition opportunities and expedite its growth in the years ahead.

The management said Nazara recognizes the substantial ‘Make In India’ potential within the gaming industry, where Indian developers have the opportunity to create top-tier games for both the domestic and international markets.

The company’s newly launched initiative, ‘Nazara Publishing,’ is geared to offer capital and support services to empower developers to deliver high-quality games to the expanding consumer base.

The gaming industry is witnessing rapid expansion worldwide. It appears to be on the cusp of a period of substantial growth, fuelled by the widespread availability of smartphones, the affordability of technology, and rising disposable incomes.

This presents a remarkable opportunity for the industry to contribute significantly to the economy, with incremental penetration into untapped markets driving expansion.

As the number of gamers in India grows, convenient gaming culture is anticipated to emerge, further catalyzing industry growth, Nazara said in its FY23 annual report.

Nazara aims to maintain its market leadership and capitalize on the immense potential for growth in the Indian mobile game industry.

The recent acknowledgment of eSports by the government as a part of a multi-sports event will open a new casement of opportunities.

With the stronghold in the segment through Nodwin and Sportskeeda, Nazara is well-positioned to capitalize on the opportunities in the Indian eSports division and make the most of it, the company said.

Eqwires Research Analyst

Top-notch SEBI registered research analyst

Best SEBI registered Intraday tips provider

info@eqwires.com

Telegram | Facebook | Twitter

Call: +91 9624421555 / +91 9624461555

www.eqwires.com