Day: December 30, 2024

Adani Enterprises Ltd (AEL) announced on Monday its decision to completely exit its 44% stake in Adani Wilmar Ltd (AWL). The stake sale will be executed in two phases: the first involves selling shares to Wilmar International’s subsidiary, Lence Pte Ltd, while the second entails a partial divestment to meet minimum public shareholding requirements.

Adani Enterprises and its wholly-owned subsidiary, Adani Commodities LLP (ACL), have entered into an agreement with Lence Pte Ltd, a fully-owned subsidiary of Wilmar International. Under the agreement, Lence Pte Ltd will acquire up to 31.06% of AWL’s paid-up equity shares through a call or put option mechanism.

Additionally, Adani Enterprises will divest around 13% of its shares in AWL to meet public shareholding norms. Together, these steps will mark Adani Enterprises’ complete exit from its stake in the fast-moving consumer goods (FMCG) business.

As of December 27, 2024, Adani Wilmar had a market capitalisation of Rs 42,785 crore (approximately $5 billion).

Following the announcement, shares of Adani Enterprises surged by 7% to close at Rs 2,585 on Monday. However, Adani Wilmar’s stock declined by 1.81%, settling at Rs 323.25 per share.

In line with the agreement, the nominee directors of Adani Commodities LLP on AWL’s board will step down. Furthermore, the parties have decided to rebrand Adani Wilmar under a new name. Options under consideration include “AWL Limited,” “AWL Agri Business Limited,” or “Fortune Agri Business Limited.” The final name will require approval from the Ministry of Corporate Affairs.

Adani Enterprises has indicated that funds from this stake sale will be channelled into its core business sectors, such as energy, utilities, transport, logistics, and other industrial verticals. This aligns with the company’s strategy to strengthen its position in critical infrastructure areas.

The transaction is subject to regulatory approvals and other customary conditions. Once completed, it will mark a restructuring of the ownership in AWL, which was a joint venture between the Adani Group and Wilmar International.

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The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) benchmark equity indices – the BSE Sensex 30 and the NSE Nifty 50 are all set to the end the calendar year 2024 with notable gains of around 9 per cent each. In the process, the Sensex and the Nifty will be settling with gains for the ninth straight calendar year. 

Historic data shows that the Sensex and the Nifty have been on a winning run since the calendar year 2016. The benchmark indices have trebled during this 9-year period. Way back at the end of the year 2015, the Sensex quoted around 26,000 levels and the Nifty around 7,950 levels. 

In terms of per centage gains, the Sensex and the Nifty delivered their best performance in the years 2017, 2021 and 2023; while the least gains were logged in the year 2016.

Going ahead, what’s in store for the benchmark indices in the calendar year 2025? Will the Sensex and the Nifty extend their winning run to the 10th year in a row? Here’s what the technical charts suggest: 

Nifty Last Close: 23,813 
Upside Potential: 7.9% 
Downside Risk: 15.2% 
Support: 23,570; 23,300; 22,030; 21,515; 21,350 
Resistance: 24,200; 24,300; 24,600 

Off late, the NSE Nifty is seen struggling around its 200-DMA (Daily Moving Average) on the daily chart, which stands at 23,860 levels. The worrying aspect is that the key momentum oscillators are unfavourably placed on the daily and the weekly scale. 

Technically, the Nifty is seen testing support around its 50-WMA (Weekly Moving Average), which stands at 23,570, a key indicator the NSE index has not violated in the last 21 months. As and when, the Nifty breaks down – meaning a weekly close below the 50-WMA; it shall open the doors for further downside. As such, the Nifty may seek support around 23,300 levels; below which a slide towards 22,030; 21,515 and 21,350 levels seems likely. 

In the worst case scenario, the Nifty could slide all the way to 20,200 levels – to fill a run-away gap left between 22,290 – 22,507 levels in early December 2023. This translates into a downside risk of over 15 per cent from present levels.

On the positive front, as long as the Nifty manages to sustain above the 50-WMA on a weekly closing basis, a pull-back from current levels cannot be ruled out. In which case, the Nifty can bounce back to 24,600 levels, with interim resistance visible at 24,200 and 24,300 levels; above which the upside for the NSE benchmark index seems capped around 25,700 levels.

The Nifty will need to trade consistently above 25,700 levels to harbour hopes of the index hitting a new all-time highs in the year 2025. 

Sensex Last Close: 78,700 
Support: 74,500; 72,600; 70,700; 69,000 
Resistance: 82,500; 84,800; 86,700; 88,600 

Even as the BSE Sensex is poised to end the calendar year 2024 near about 9 per cent higher, the BSE benchmark has shaved-off 8.5 per cent from its peak of 85,978. The BSE benchmark was up 19 per cent at its summit in 2024. 

The yearly Fibonacci chart suggests that the Sensex could gyrate in the broad range of 69,000 – 88,600 in the new year 2025. Intermediate support for the BSE Sensex is placed at 74,500, 72,600 and 70,700 levels; whereas, resistance can be expected around 82,500, 84,800 and 86,700 levels. 

In the worst case scenario the Sensex could slide all-the-way to 62,700 levels. On the other hand, break and sustained trade above 88,600 levels; can trigger upside momentum towards 94,700 levels.

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2025 is set to kick off in a couple of sessions and 2024 is likely to deliver about 10 per cent gains for the investors. Domestic brokerage firm Motilal Oswal Financial services believe that 2025 can unfold the tale of two halves with first one signaling market consolidation, while second one for recovery. The brokerage firm has suggested 10 stock picks for the upcoming calendar year.

The brokerage believes that domestic factors like Union Budget, government spending, FIIs trend and rate cut cycle by RBI, along with global triggers including Trump’s economic policy, US rate cut cycle and geopolitical concerns will guide the market, beside earnings and valuations of India Inc. Here are the top picks from Motilal Oswal for 2025 for up to 36 per cent upside:

ICICI Bank | Target Price: Rs 1,550 | Upside Potential: 19%

ICICI Bank is poised for strong growth, driven by healthy loan growth, robust asset quality, and operating leverage. With solid deposit inflows, a favorable CD ratio, and strong underwriting standards, the bank is well-positioned for profitable growth. We project a 15 per cent PPoP CAGR and 12 per cent PAT CAGR over FY25-27E, with RoA/RoE of 2.1 per cent/16.7 per cent by FY27.

HCLTechnologies | Target Price: Rs 2,300 | Upside Potential: 22%

HCLTech revised its FY25 growth guidance to 3.5%-5.0% YoY, supported by strong deal wins and its leading position in data/SAP modernization. Its investments in next-gen platforms position it well for the GenAI revolution and future recovery in client spending, with expected margin improvements to 18.9 per cent by FY26 and an 8.4 per cent CAGR in USD revenue over FY25-27.
 

Larsen & Toubro | Target Price: Rs 4,300 | Upside Potential: 19%

L&T is poised to secure large domestic orders in H2, alongside recent international wins, boosting execution growth and margins. L&T’s strategic initiatives in electrolyzers, semiconductors, data centers, nuclear tech and real estate are expected to drive steady revenue growth and improve RoE in the coming years.

Zomato | Target Price: Rs 330 | Upside Potential: 21%

Zomato raised Rs 8500 crore via QIP to invest in Blinkit for marketing, scaling operations, and expanding its dark store network, targeting 1,000 stores by FY25. While the food delivery business is stable, Blinkit continues to lead the quick commerce market with GOV up 25 per cent QoQ/120 per cent YoY. We expect Zomato to report a PAT margin of 4.7 per cent, 8.6 per cent and 12.9 per cent in FY25, FY26 and FY27, respectively.

Polycab India | Target Price: Rs 8,330 | Upside Potential: 17%

Polycab’s cables & wire segment will benefit from strong demand from power T&D, private capex growth, & real estate sector. It is expanding its Gujarat EHV plant by FY26-end and also secured Rs 5,650 crore BharatNet initiative Phase-III contracts for an initial period of 3 years. We project 15 per cent earnings CAGR over FY24-27.

Godrej Properties| Target Price: Rs 3,725 | Upside Potential: 32%

Godrej Properties (GPL) launches spanned 5.6 msf, with significant sales in MMR, NCR, and Bangalore. GPL invested Rs 1,680 crore in land, ensuring future development potential project pipeline strength. It is expected to achieve Rs 30,000 crore in launches & sustained growth through FY26. GPL is on track to exceed its FY25 pre-sales target of Rs 27,000 crore by H2FY25.

Nippon Life India Asset Management | Target Price: Rs 900 | Upside Potential: 23%

NAM India has improved its equity market share by 60 bps in October 2024 from Apr 2022 through sustained fund performance & focused granular SIP additions from lower-tier towns. Its growth will be driven by incremental AUM from the non-EPFO segment, where NAM is a market leader, and fundraising from large offshore funds in the medium term. We expect 28 per cent PAT CAGR for FY24-27E.

IPCA Laboratories | Target Price: Rs 1,930 | Upside Potential: 18%

IPCA Labs specializes in domestic formulations and exports, with a strong presence in the pharmaceutical industry. The company aims to outperform in domestic formulations and ROW markets, driven by Unichem’s improving performance and new product offerings. We forecast a 26 per cent earnings CAGR over FY25-27.

Lemon Tree Hotels | Target Price: Rs 190 | Upside Potential: 28%

Lemon Tree is set for strong 2H growth, driven by Aurika Mumbai’s stabilization and robust wedding season demand. As of September 30, 2024, the total operational inventory comprised 112 hotels with 10,318 rooms and the pipeline comprised 75 hotels with 5,220 rooms. We estimate Lemon Tree’s PAT to grow at a 33 per cent CAGR over FY24-27.

PN Gadgil | Target Price: Rs 950 | Upside Potential: 36%

PN Gadgil (PNG), the second-largest retailer in Maharashtra, has 48 stores across 21 cities. It aims to expand further within Maharashtra and into other states. The company aims to reach 80 stores by FY27, funded by IPO proceeds for expansion and debt reduction. We project 23 per cent and 36 per cent CAGR for revenue and PAT during FY24-27, respectively.

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