IEM Market Buzz – Last week’s performance
|Stock Name||Mention Price||High during the week||Change in %|
|TV 18 BRODCAST||49.75||55.8||12%|
|APL APOLLO TUBES||985.25||1114.55||13%|
|L G BALKRISHNAN||559.35||632.7||13%|
Clean Science & Technology’s IPO came in July this year at Rs 900, subscribed 93.41 per cent and got listed at Rs 1755. It made a high of Rs 2660 on December 6, last closed at Rs 2388. It deals in specialty and fine chemicals. In September quarter sales was up 9 per cent, operating profit was down 2 per cent, whereas net profit was flat at Rs 54 crore. Also in last 6 months its sales and operating profit were up by 18 and 12 per cent. Presently it is trading at 120PE which is not justified considering its last 6 months financials – June’20 sales 113 cr with Rs 42 cr profit; Sep’20 sales 140 cr and profit Rs 54 cr; Dec’20 sales 125 cr with Rs 49 cr PAT; March’21 sales 134 cr with Rs 53 cr profit; June’21 sales 146 cr with Rs 55 cr profit; Sep’21 sales 153 cr with Rs 54 cr profit. It means during last 6 quarters there was hardly any growth and sales and profit were flat. The stock is certainly good for long term and management may employ the IPO money to good use but risk reward ratio at present is not at all comfortable. If market sentiments remain as it is how long market will give it such huge PE?
Sona BLW Precision Forgings’ IPO came in June this year at Rs 291 and subscribed 228 per cent.
It made a high of Rs 840 on December 14, last closed at Rs 756. Now the story floating is that the company is aggressively in expansion mode to cater EVs. EVs is new toast in the market, which sometimes gives a goose bump to older market participants who were cheated on land bank story 12 years back on the same lines. On TTM basis its turnover is Rs 2000 cr, profit Rs 300 cr commanding a marketcap of Rs 44,000 cr. On TTM basis compare it with the sector leader Motherson Sumi Sytems, which is trading at 33PE with profit of Rs 2000 cr and marketcap of Rs 67,000 cr and 2nd position holder Bosch with turnover 11,607 cr, profit Rs 1300 cr and marketcap Rs 47,500 cr. Though stock is good with comfortable growth and aggressive management yet the valuation has gone over the roof at 194PE. Think of profit booking.
MTAR Technologies’ IPO came in March this year at Rs 575, subscribed 201 per cent and got listed at Rs 1050. It made a high of Rs 2475 on December 13, last closed at Rs 2212. It is into the highly growth-oriented defence sector. On TTM basis its sales, operating and net profit is 270 cr, 92 cr and 55 cr. The numbers are good, management has a proven record and sector future is bright. Still trading at 123PE with marketcap of Rs 6810 cr the valuation can’t be justified. During one way market, PE doesn’t matter but the way the market sentiments are, weak-hearted investors should keep it only when they’ve decided not to watch the price for 2-3 years.
Neogen Chemicals’ last 6 months sales and profit were up by 25 and 37 per cent and the growth was satisfactory. On September 6, it was trading at Rs 956, on December 8, it was at Rs 1844 and last closed at Rs1586 cr. But a company which registers a profit of just Rs 35-36 cr annually with a marketcap of Rs 3705 cr is trading at 102PE whereas there are many better performing companies in chemical sector are available between 30-50PE. Neogen has no extra-ordinary growth to command such high PE. Profit booking and shifting to other stock is the best option.
Oberoi Realty made a high of Rs 1052 in November, corrected by more than Rs 220 and trading at Rs 830. The company caters to luxury space in Mumbai where demand is said to be increasing. On further correction it can be a good buy as realty is again coming in full form.
Aptus Value Housing Finance India, even during a bad market conditions last week, closed 4 per cent up on weekly basis. It indicates something is brewing and some good people are active at the counter. In a stable market it can go places and make a new high.
Wipro will be included, tomorrow on Monday, in Sensex in place of Bajaj Auto. Secondly, in largecap IT space the company has been showing fantastic performance last 3-4 quarters especially since the new CEO joined. Compared to TCS and Infosys the stock is still available at cheaper valuation. Two days back it acquired US-based LeanSwift to expand its cloud transformation biz. In October the stock was trading at Rs 740 and after correction available Rs 70 below that level. A good bet in IT sector.
Macrotech Developers, erstwhile Lodhas, has corrected more than 16 per cent last week. Last month the company did a QIP at Rs 1170 and collected Rs 4000 cr. So it’s trading almost at the same level. The management in a guidance note has said that the second half would be the best in its history. Such counters can be kept on radar and a sharp correction provides good opportunity to buy for long term.
MTNL is again buzzing. History shows that PSUs with certain stories perform better from December till the announcement of budget. MTNL is following this dictum word by word. On last Friday it was at 20 per cent Upper circuit when market was crushed badly. In December alone, so far, it is up by 50 per cent on the back of strong rumour that noncore assets will be sold. On technical charts also it looks good indicating till budget a strong momentum.