Markets set to hit new lifetime highs this week

By Arun Kejriwal

Markets have been in a topsy-turvy period in all four trading sessions over the past week. While at the end of Thursday it looked like we were going to end with losses, Thursday night’s sharp move in the US saw global markets turn on their heels and post big gains.

On Friday, markets gained almost 1,180 points on BSESENSEX and 320 points on NIFTY. This not only erased the losses, but also helped close the week with gains. BSESENSEX gained 844.68 points or 1.39% to close at 61,795.04 points while NIFTY gained 232.45 points or 1.28% to close at 18,349.70 points.

The broader markets saw BSE100, BSE200 and BSE500 gain 1.04%, 0.87% and 0.77% respectively. BSEMICAP lost 0.71% while BSESMALLCAP lost 0.42%. Friday’s rally was quite skewed and led by a handful of stocks and therefore the same was not reflected across the broader market. Indian markets gained in two out of four sessions and lost in the remaining two sessions.

The Indian rupee performed very well and gained Rs 1.64 or 1.99% to close at Rs 80.80 per US dollar. The Dow Jones had a great week thanks to an encouraging decline in inflation figures. CPI data for October 22 was 7.7% compared to 8.2% for September and 8.3% for August. This gave the US markets great confidence and they gained 1,201 points on Thursday after the announcement. Following this, the Fed Chairman also hinted that now may be the time to pause the strong 75 basis rises made consecutively on the last four occasions.

In primary market news, the IPO rush continues. There was the listing of DCX Systems Limited which had issued shares at Rs 207 on Friday. The uncovered price was Rs 286.25 on BSE and Rs 287 on NSE. The closing price was Rs 308.00, a gain of Rs 101.80 or 49.18%.

The Bikaji Foods International Limited issue, which was entirely a put offer for Rs 881 crore in a price range of Rs 285-300, was oversubscribed 26.93 times. The QIB unit was subscribed 80.63 times, the HNI unit 7.09 times and the Retail unit 4.75 times.

The issue of Global Healthcare Limited, which consisted of a new issue of Rs 500 crore and an offer to sell 507.61 lakh shares in a price range of Rs 319-336, was oversubscribed 9.75 times. The QIB unit was subscribed 29.51 times, the HNI unit was subscribed 4.07 times and Retail was subscribed 0.89 times.

The question from Five Star Business Finance Limited, which had tapped the markets with its sale offer of Rs 1,960 crore in a price range of Rs 450-474, received a lukewarm response. The issue was subscribed 0.73 times in total with the QIB share subscribed 1.87 times. The HNI portion underwrote 0.65x and Retail barely underwrote at only 0.12x. As this issue was entirely an offer-for-sale issue, it met the minimum underwriting standards and would be considered closed, even if not fully subscribed.

The issue of Archean Chemical Industries Limited, which consisted of a new issue of Rs 805 crore and a sell offer of 161.50 lakh shares in a price range of Rs 386 – 407, was oversubscribed. The issue was subscribed 48.58 times by QIB, 15.34 times by HNI and 10.19 times by Retail. The global issue was subscribed 32.53 times.

Two numbers are currently open. The first is from Kaynes Technology India Limited which tapped into the capital markets with its issuance which opened on Thursday 10th November and would close on Monday 14th November. The issue consists of a new issue of Rs 530 crore and a sell offer of 55.84 lakh shares in a price range of Rs 559-587. Kaynes is an end-to-end, IoT-enabled electronics manufacturing player with capabilities across the spectrum of Electronic Systems Design and Manufacturing (ESDM) services. It has an order book of Rs 2,200 crore to run over the next 18 months. This implies that revenue which was Rs 710 crore for the year ended March 22 would double to Rs 1,400 crore or thereabouts, if the backlog were to be completed in 18 months. This doubling would be done with the capacities available with the company.

The company has also been approved under the PLI (Production Linked Incentive Scheme) and is in the process of setting up the new facility under the same scheme. This would help the company achieve a substantial leap from its existing revenues, as new capacity under the PLI program has a high asset turnover rate.

The company reported revenue of Rs 710 crore for the financial year ending March 2022 and profit after tax of Rs 41.67 crore. Revenue for the first quarter ended June 22 rose to Rs 199.97 crore with profit after tax of Rs 10.04 crore. EPS for the year ended March 22 is Rs 9.70 basic and fully diluted at Rs 8.93. For the first quarter of June 22, EPS is Rs 2.11 on a fully diluted basis. The PE band of the show is 62.60 to 65.73. The business is interesting and promising. He offers an appreciation on the list.

The Inox Green Energy Services Limited issue opened on Friday 11 November and will close on Tuesday 15 November. The price range of the issue is Rs 61-65. The issue size is Rs 740 crore with a new component of Rs 370 crore and a sell offer of Rs 370 crore. The company switches to utilities and maintains the wind turbines which are manufactured by Inox Wind. Parent company Inox Wind has an order book of 1,488.7 MW of wind turbines. This becomes a healthy pipeline of future orders. Added to this is the convenience of already serving 2,792 MW of wind turbines. The company has a presence in eight wind-rich states in the country. In terms of manpower and technology, it is fully equipped and also has the support of the parent company for the timely supply of spare parts.

While there are opportunities and work available today, the pipeline in the future would be even stronger as the government is committed to increasing additional wind power and renewable energy generation at the coming. The parent company has successfully developed and launched an efficient 3.3 MW wind turbine, which will help generate more electricity at more affordable rates.

Objects of the new issue include a debenture redemption of Rs 260 crore. This would reduce the debt and, through interest savings, help the company to make a profit on a net level. In terms of revenue, the company reported revenue of Rs 172.16 crore for the financial year ended March 22 and EBITDA of Rs 100.26 crore. In the first quarter to June 22, revenue was Rs 61.78 crore and EBITDA was Rs 18.93 crore. The company did not make a net profit, so there is no EPS or PE ratio.

The company’s prospects are good in the long term. It is entirely possible that as profitability approaches, the stock will be available at a price lower than the issue price. Seek to buy at prices below the issue price for long-term profits.

The latest issue comes from property company Keystone Realtors, known as Rustomjee. The company is tapping the capital markets with its new issue for Rs 560 crore and a sell offer of 75 crore in a price range of Rs 514-541. The issue opens Monday, November 14 and ends Wednesday, November 16. The company has a presence in the MMRDA affluent and opportunity area of ​​Mumbai where it is carrying out new projects and also redevelopment projects.

The company posted revenue of Rs 1,269.36 crore for the financial year ended March 22 and profit after tax of Rs 135.82 crore. The company reported EPS of Rs 13.96 for the year. The PE band is 36.83-38.76. The net asset value for the year ended March 22 is Rs 93.24. The comparison with its peers makes it compliant but more expensive than developers Macrotech and Oberoi Realty and cheaper than Godrej Properties and Suntec. The company has an interesting model and should be looked at for investments.

Coming to the markets, we hit 52-week highs, but not lifetime highs. However, we are very close to them and within easy reach. An attempt to break them would be made next week and the momentum that markets gained last Friday after Thursday’s rally in the US should keep markets in good stead. The note of caution, however, is that the markets were rather skewed last week. It would therefore be important to see that for the markets to sustain these new highs, the markets need to gain momentum and take advantage of last week’s rally. If this does not happen, we can reach new heights and then correct.

The strategy for the week would be to ride the rally and use strong rallies to take profits while the market is biased. If the markets improve their breadth, we might consider going back into the markets. Until then, be nimble and keep your eyes on the ground for the first signs of trouble.

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