DM Stocks

2022-12-14 12:44:12 CS in Fluorochemicals
We did a round of marketing last week following our China Fluorochemical Initiation. Investors generally agree that refrigerants are bound for an upcycle as Class III refrigerants quota control kicks in in 2023 Open / Comment

2022-12-14 12:22:12 Open / Comment

2022-12-14 12:21:57 INDIA FINANCE MINISTER SAYS INDIA CONSIDERING RUPEES 100B MORE TO RAILWAYS FOR CAPEX Open / Comment

2022-12-13 08:15:47 PL Alpha Call: Buy BSE 585 SL 550 Target 700+

Microsoft Corp. agreed to buy a 4% stake in London Stock Exchange Group Plc in a $2.8 billion cloud-computing deal that pushes big tech further into financial markets. As a part of the agreement, LSEG said it will spend at least that amount on cloud services with Microsoft over the next 10 years. The partnership will speed up the migration of its markets to the cloud and allow it to develop new products and services.

BSE Limited has appointed Mr. Sundararaman Ramamurthy as the New MD & CEO which gives a new lease of light to BSE.

Work Experience: He has ~38 years of experience in financial markets. Worked at Bank of America Securities India as a COO for 8 years. Associated with NSE for 20 years. At NSE, Mr. S Ramamurthy spearheaded various assignments from product development to clearing and settlement of transactions, and his contribution to indices Nifty Bank and Nifty CPSE is well recognized.

BSE Limited’s current market cap is around ~INR 7.8K crs. It has cash & cash equivalents ~INR 2.2K crs. as on Mar’22 and it’s stake in CDSL at current market price valued at ~INR 2.6K crs. So, core exchange business value comes around ~INR 3K crs. which includes many business platforms like Staf MF, India INX, Insurance Broking, Power Exchange, Electronic Gold Receipt etc. over & above traditional businesses of charges from Equity Cash, Equity Derivatives, Currency Derivatives, Listing fees etc. Open / Comment

2022-12-12 08:37:08 PL on OMC
We are upgrading all three Oil marketing companies (OMCs) to ‘BUY’ due to sharp correction in crude oil prices and turnaround in diesel marketing profitability. Crude oil prices have corrected to ~USD76/bbl, down ~40% from Jun-22 highs of USD125/bbl post Russia-Ukraine war. Softening crude prices augur well for OMCs, as at current prices diesel marketing losses turn around to +Rs3.5/ltr from H1FY23 loss of ~Rs13/ltr, while refining margins remain resilient.

We increase our FY24/25E marketing margins on diesel & petrol to Rs3.5/4.0 (Rs2.0/3.5 earlier), reduce operating expense (due to likely lower LNG prices) and increase earnings by 50-130%. We value all the stocks at 7x EV/EBIDTA FY24E. Among OMCs, HPCL is our preferred pick, as its marketing share is double of refining. Open / Comment

2022-12-12 08:36:52 [JMFL] Bharat Forge (BHFC IN): Analyst meet 2022: All Hands, One Goal

We recently attended the Bharat Forge (BHFC) analyst meet at its Pune facility. The company highlighted its efforts on being future ready, showcased technologies/products from defence business, Tork Motorcycle and EV business, apart from an update on the core auto and industrial segment. Under its ‘Vision 2030’, the company targets 12-15% CAGR revenue growth, 20%+ consol. EBITDA margin and 500bps improvement in consol. ROCE over FY23-30. Overall business momentum is expected to remain strong with future growth drivers (Defence, Aerospace, Aluminium Forging, Casting and EV business) in place. The focus continues on strengthening core business by maintaining cost leadership, adding new products, increasing market share and working on future technologies/products. Maintain BUY with Dec’23 TP of INR 960 (25x forward earnings). Slowdown in global autos and weak profitability at international subs remain key risks. Open / Comment

2022-12-12 08:34:42 Divis Nov-22 Exports run-rate improved from $45-55m in last 2 months to $65m in Nov. No Molnu shipments in Nov. Base biz (ex-Molnu) up 10% in Oct+Nov ($110m) vs. Jul+Aug ($98m). Sales note on Divis Open / Comment

2022-12-08 06:52:59 *Gujarat Fluorochemicals - Balance-sheet strengthens as Inox Wind clears bulk of advances* (from our chemicals' desk - Archit)

Gujarat Fluorochemicals has received Rs 6.23bn from Inox Wind Ltd against the advances rolled out to them for setting up wind power.
The total advances rolled out were to the tune of Rs 8.7bn. For which Inox wind was to put up a 20 MW plant (for Rs 1.7-2.0bn) for Gujarat fluorochemicals. Adjusting for the same, current repayment of advances comes to Rs 6.23bn.
Inox Green energy, a subsidiary of Inox Wind recently raised Rs 7.4bn though IPO which will largely be used to repay debt. Debt repayment will pare down corporate guarantees taken by Gujarat fluorochemicals towards Inox Wind energy.
Even though corporate guarantees amount to Rs 22.2 bn, debt repayment can take place through other routes like warrants conversion, sale of certain assets in its subsidiary etc.
Also, the company is in negotiations with the bank to extinguish guarantees against Gujarat fluorochemicals as Inox Winds Balancesheet appears to be strong with the recent debt reduction.
The company has guided to completely clean up guarantees and advances by the end of FY23 and has been walking their talk.
The current development is a significant positive restoring faith in managements guidance.
We are buyers on the stock with a target price of Rs 4,922/share.

Press release - https://www.bseindia.com/xml-data/corpfiling/AttachLive/47c30166-5f83-4faf-b6c0-c509ec7bb94d.pdf Open / Comment

2022-12-02 10:41:16 One app for all your Word, Excel, PowerPoint and PDF needs. Get the Office app: https://aka.ms/officeandroidshareinstall Open / Comment

2022-12-02 10:40:29 Tata Steel – Baby steps of the next bullrun

Chart of the Day

Metals are one of the most capitulated sectors this year. This is well exemplified here with Tata Steel. The MF holdings (green overlay) as a % of the Nifty500 AUMs have plummeted. Investors hit the exit button during the May-June sell-off as well as the subsequent rebound when it stalled.

Early 2021 was a huge milestone in the long-term picture when it could finally muster up enough power to take out the 2008 peak ending a 13-year bear market. In all probability the sell-off into June this year was a bull market correction.

With many global supportive catalysts re-emerging, Tata Steel and metal stocks in general could be seeing the baby steps for the next boom phase here. Important levels on the way are 120 followed by 145. Long-term target could be near 187.

Biju Samuel
Elara Alternate Research
Friday, 2-Dec-2022 Open / Comment