Tag: Top performing PMS in India

Titan Company shares might be a long-term growth story that is likely to march higher with gold prices but at this juncture a leading domestic brokerage firm and an international one are not convinced enough to buy the stock. Titan shares have slipped 2% in the last five days to now trade at Rs 1,130 per share on BSE Sensex. The favourite stock of ace investor Rakesh Jhunjhunwala finds both Jefferies and ICICI Securities agreeing on its long-term growth potential, but both are advising investors to ‘hold’ the stock at the current levels, citing two different issue that in their view could put near-term pressure on the company’s performance.

In a recent note analysts at ICICI Securities said that for them Titan stock is about “when to buy” and not “why to buy”. The brokerage firm is sceptical about Titan’s shift towards fixed price making charge structure from the percentage of gold price model. “Introduction of fixed making charges, even though a small proportion currently, is something that we will watch carefully given that a potential shift to fixed price making charge could significantly reduce operating leverage and limit the business’ gross profit expansion,” ICICI Securities said in a note.

According to the company management, the shift comes in the view of customers not being aware of the percentage of gold price model. “…in many markets, and especially small towns, people are still used to getting a making charge in terms of fixed rupees per gram and they are expecting Rs 400 – Rs 500 per gram. Now suddenly, when the gold price has gone up and they start seeing Rs 1,000 a gram because of the percentage basis, to that extent,” Titan’s management said the earning call post April-June quarter results explaining the shift. The fixed making charges mode, ICICI Securities said, could limit long-term benefits from operating leverage of the company.

Meanwhile, Jefferies’ argument while putting a ‘Hold’ call on the stock is that it is eyeing equal odds for price performance. In a note Jefferies said that Titan structurally remains a growth story, but at this juncture, keeping in mind the coronavirus pandemic, Titan could face headwinds. Jefferies in a note said that the odds are evenly balanced for Titan’s stock price. Being a large organised player Titan is benefiting from the shift towards organised players from the unorganised market, however, lower footfall in the non-jewellery segment could hurt the company.

The surging gold prices help Titan company inch up revenues but Jefferies noted that a esser number of festivals in the current fiscal year will be an issue. Being a non-essential product seller, Titan stores faced a longer lockdown and the resurgence of lockdown to control the virus spread could hit the company further. “In our base case, we forecast 11% annual growth in revenue over FY20-22E with flat Ebitda margins, which factors in a strong double-digit back-ended recovery in FY22 after a steep ~30-35% volume decline across jewellery and watches divisions this fiscal year,” said Jefferies. In the bull case scenario the annual revenue growth climbs up to 15%.

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Gold prices fell on Wednesday as investors awaited minutes from the US Federal Reserve’s last policy meeting. Analysts believe that an intermittent profit booking cannot be ruled out on signs of easing US-China trade tensions and optimism around COVID-19 vaccine. At 10 AM, gold October futures were trading 0.60 per cent or Rs 321 down at Rs 53,250 per 10 gm, while silver September futures dropped 1.62 per cent or Rs 1,128 to rule at Rs 68,377 per kg on MCX in Wednesday’s session. Yesterday, news reports came in that Senate Republicans are planning to introduce a scaled-back coronavirus relief package. The slimmed-down bill will provide a $300 a week in federal unemployment benefits, which supported gold prices. “US lawmakers remain locked in a stalemate over a potential new coronavirus stimulus deal and any breakthrough in reaching another stimulus deal would lead to a decline in precious metals. Any positive development on the vaccine front would also boost risk sentiment and keep the pressure on gold prices,” Bhavik Patel, Senior Technical Research Analyst at Tradebulls Securities, told Financial Express Online.

Patel added that as long as yields stay below 1%, gold prices will remain positioned to the upside. Bouts of volatility and pullbacks in gold prices will occur from time to time. Globally, gold prices were trading firm with spot gold up 0.1 per cent at $2,002.12 per ounce, while US gold futures eased 0.1 per cent to $2,011.60 per ounce. Among other precious metals, silver rose 0.6 per cent to $27.82 per ounce, platinum gained 0.2% to $958.33, and palladium edged 0.1% to $2,190.98. “A direct break of $2020 is required to continue the bullish outlook, else intraday bias is largely on the downside. However, major downside moves are likely only if prices break $1970,” said Hareesh V, Head of Commodity Research at Geojit Financial Services.

Gold to touch Rs 54,500 level in coming week

On August 7, 2020, gold prices hit a record high of Rs 56,191 per 10 grams, while silver touched an all-time high of Rs 77,949 per kg. While, in the following week, gold fell below Rs 50,000 per 10 gram. In today’s session, it is hovering around Rs 53,250 per 10 grams. “After corrective move in recent past gold has taken support near to physiological support level of 50000 and shown buying action and retraced 50% of recent fall from 56190,” Rajesh Palviya, Head Technical & Derivatives, Axis Securities, told Financial Express Online. Palviya added that technically gold is in the bullish zone for the long term time frame. “We expect gold can show furthermore bullishness and it can scale up towards 54000-54500 in the coming week. However on the lower side 51500-51000 are likely to act as a good support area for minor corrective action,” he added.

Bhavik Patel said that the rally in gold and silver this week was helped by a weak US Dollar (lowest since 2018) and 10 year US Treasury yield which was trading around lowest in a week. “$2000 seems to be a strong hurdle for gold and if prices close back to back above $2000 this week then the rally will be enough to test $2089 resistance but if gold fails to close above $2000 this week, we may see another potential decline,” Patel added.

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Petronet LNG share price jumped over 5 per cent to Rs 267.70 apiece on BSE after the company reported a consolidated net profit of Rs 499.79 crore in the April-June quarter. The consolidated net profit, however, declined 11 per cent as the company had reported a profit of Rs 561.94 crore in the corresponding quarter of the year-ago period. With today’s gain, the stock price has rallied over 56 per cent from March lows of Rs 170.75 apiece. “The operations of the company were not materially interrupted during the lockdown due to Covid-19 pandemic. Cost of material consumed has come down from 86.12% to 78.55% in Q1FY21. Overall the company posted a better than expected set of numbers for Q1FY21,” said Yash Gupta, Equity Research Associate, Angel Broking Ltd.

Research and brokerage firm Motilal Oswal Financial Services said that better-than-estimated volumes lead to marginal EBITDA beat. “1QFY21 EBITDA stood at INR 900 crore. The lower interest cost was offset by lower other income,” it added. The brokerage firm has given a buy rating to the stock post quarterly earnings announcement.

At 10.45 AM, Petronet LNG shares were trading 2.12 per cent higher at Rs 259.85 apiece, as compared to a 0.72 per cent rise in the benchmark S&P BSE Sensex. During the financial year 2019-20, the company has achieved a turnover of Rs 35,452 crore as against Rs 38,395 crore in 2018-19. The net profit during the year stood at Rs 2,698 crore as against Rs 2,155 crore in the previous year, according to the company’s annual report 2019-20.

The company reported profit before tax (PBT) at Rs 676.16 crore. Petronet LNG had posted PBT of Rs 839.59 crore in June 2019. The total revenue of the company during the quarter stood at Rs 4,951.95 crore, down 43 per cent against Rs Rs 8,717.85 crore in the corresponding period of the preceding fiscal. Petronet LNG reported the basic earnings per share (EPS) at Rs 3.33 against Rs 3.75 in the year-ago period.

Earlier, the company informed that post lifting of the lockdown, Regasified LNG demand recovered gradually. Since the first week of June 2020, Dahej terminal was operating at 100% capacity and Kochi terminal was operating at 20% capacity.

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Eicher Motors shares dropped 4.5 per cent to Rs 20,686.05 apiece after the company reported a consolidated net loss of Rs 55 crore for the April-June quarter as sales were adversely hit due to COVID-19 pandemic. The company had registered a net profit of Rs 452 crore in the same period a year ago. The company’s management admitted that the previous quarter put forth unprecedented challenges for the industry and for Eicher Motors. However, it still believes that the long term potential for both Royal Enfield and (VE Commercial Vehicles) VECV seems to be very promising. “We believe new products would help expand the addressable markets and drive the next phase of growth for RE. Volume recovery, led by new product launches, would drive margin recovery in FY22,” Motilal Oswal Financial Services said in a report post quarter earnings.

The brokerage firm has maintained a buy rating to the stock with a price target of Rs 24,750, a 24 per cent upside from yesterday’s close. Eicher Motors hit a 52-week low of Rs 12,460 apiece in April this year, since then the stock price has rallied over 66 per cent. The company, however, witnessed an encouraging consumer sentiment which was evident in sales for the month of June. The company expects this trend to continue into this quarter as well.

Analysts at Spark Capital, on the other hand, have a sell rating with a target price of Rs 17,650, a downside of 18 per cent from the previous close. “Our multiples factor in the long-term growth opportunities for RE particularly in exports markets, aided by its expected higher CC launches and increasing presence, while maintaining domestic volume growth at CAGR of 7% through FY20-24E,” it added. The brokerage firm factored in the slow, but steady rise in the contribution of ‘rural heavy’ states, including UP, in the overall volumes, which it believes could impart a degree of cyclicality to volumes.

On a standalone basis, Royal Enfield business reported a profit after tax of Rs 12 crore. The bike maker sold 58,383 motorcycles in the quarter, a decline of 68 per cent from 1,81,966 motorcycles sold over the same period year ago. The management noted that there is pent up demand and the company is optimistic about stronger recovery once supply chain stabilises. “Demand from semi-urban and rural towns has picked up well, and our network of studio stores across the country have been able to cater to this demand,” said Royal Enfield CEO Vinod K Dasari.

VECV, the company’s joint venture with Volvo Group, reported a 72 per cent drop in revenue to Rs 641 crore during the first quarter as against Rs 2,255 crore a year ago. The company has signed an agreement for the integration of Volvo Bus India (VBI) business into VECV.

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Shares were mostly lower in Asia on Wednesday after Wall Street pumped the brakes on its recent rally. Tokyo’s Nikkei 225 index edged higher, while the Shanghai Composite sank 1.6%. Overnight, a late slide in big technology companies left indexes broadly lower, breaking a seven-day winning streak for the S&P 500.

A discouraging lack of progress on talks over more economic aid for the US economy, coupled with worries over the coronavirus pandemic and tensions between the US and China, have prompted investors to sell and lock in profits from recent gains, analysts said.

”When you walk back the market’s expectations of an imminent fiscal deal, it is like poking the balloon with a straight pin as all semblance of near-term optimism gets immediately deflated,” Stephen Innes of AxiCorp said in a commentary.

The Nikkei 225 gained 0.3% to 22,821.28, while Hong Kong’s Hang Seng edged 0.2% lower to 24,841.00. In South Korea, the Kospi slipped 0.1%, to 2,417.12. The Shanghai Composite index lost 53 points to 3,287.13. Australia’s S&P/ASX 200 declined 0.5% to 6,110.70.

Shares fell in Taiwan, India and most of Southeast Asia. Overnight’s reversal left the S&P 500 with a 0.8% loss, at 3,333.69. Drops for big-name technology stocks like Apple and Microsoft, plus losses in health care and communications stocks, outweighed gains in financial, industrial and energy companies.

Tech stocks have far outpaced the rest of the market this year as investors bet they could still thrive in a stay-at-home economy. The pullback ended the S&P 500’s seven-day winning streak. Despite the sell-off, the benchmark index remains within 2% of the all-time high it reached in February, reflecting a stunning turnaround from a nearly 34% tumble in March when the coronavirus pandemic sent stocks into a nosedive.

Investors have grown more confident in recent weeks amid some positive economic data and better-than-expected second-quarter results from companies, suggesting corporate profits could be headed higher in the second half of this year and in 2021.

Unprecedented actions by the Federal Reserve to stabilise markets this spring, including cutting interest rates and ramping up bond purchases, have made stocks attractive relative to other assets and given traders enough confidence to keep snapping up stocks.

Traders are also increasingly optimistic that the many pharmaceutical companies working on ways to treat COVID-19 will deliver a working vaccine in the coming months. The Dow Jones Industrial Average dropped 0.4% to 27,686.91. The Nasdaq composite lost 1.7% to 10,782.82. The Russell 2000 index of small company stocks gave up 0.6%, to 1,575.10.

While talks between Democrats and Republicans on a new economic relief package appear to have stalled, investors are still optimistic both sides will reach an agreement.

The yield on the 10-year Treasury rose to 0.65% from 0.57% late Monday, a big move. The price of gold fell further after breaching $2,000 per ounce earlier last week, giving up $56.20 to $1,890.10. Benchmark US crude oil for September delivery gained 14 cents to $41.75 per barrel in electronic trading on the New York Mercantile Exchange.

It fell 0.8% to settle at $41.61 per barrel on Tuesday. Brent crude oil for October delivery picked up 20 cents to $44.70 per barrel. Overnight, it lost 1.1% to settle at $44.50 per barrel. In currency dealings, the US dollar bought 106.73 Japanese yen, up from 106.51 yen late Tuesday. The euro weakened to $1.1723 from $1.1744.

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