In the week gone by, global markets looked cautious after comments from Fed Chair Jerome Powell that it was "very premature" to be thinking about pausing its rate hikes, putting a lid on any lingering investor hopes of a near term pivot. Globally investors were worried after the US central bank Federal Reserve continued raising key interest rates in its fight against the multi-decade high inflation. The US Fed hiked rates by 75 bps to a range of 3.75% to 4% which is at its highest level since 2008. Concerns are rising that the Fed, in its efforts to bring down the cost of living, also will pull the economy into recession. On the flip sides Chinese stock markets surged amid signs that authorities are trying harder to ease the impact of its Covid- Zero policy. As expected the Bank of England raised interest rates by 75 bps the most since 1989, but warned a long recession looms.
Back at home, domestic market continued to witness volatile trade amid a negative trend in global markets and weak domestic institutional investors (DIIs) flows. However, FIIs have been buyers in the cash market. MPC in its an unscheduled meeting recently, discussed its failure to keep retail inflation within the 2-6% target band for 3 consecutive quarters. Retail inflation has remained above 6% since January and accelerated in September to a five-month high of 7.41% year-on-year as food prices surged. Driven by the war in Ukraine, with surging inflation on account of supply disruptions of various commodities including food and fuel, the RBI has already hiked the repo rate 4 times this financial year to now rest at 5.9% in order to bring down inflation from its current 7% plus levels. Despite the record GST collections and recent gains in the domestic equity markets the rupee is unable to hold on to its gains. We are in the midst of the Q2FY23 corporate earnings. Results so far have been largely in line with street estimates. Going forward, market will continue to monitor RBI actions in its upcoming monetary policy and its outlook on interest rate trajectory. Geo-political issues and action of global central banks will continue to give the direction of the markets.
On the commodity market front, CRB continued its previous week recovery amid pause in dollar index rally despite interest rate hike. But dollar index still looks positive and set for its biggest weekly gains since Sept. 23. Fed raised interest rates by 75 basis points and Chair Powell vowed to “keep at” their battle to beat down inflation. Bullion prices also posted some recovery and now focus is towards Payrolls data from U.S. The Energy counter also saw an upside on drop in inventories amid unconfirmed news of expectation of opening up of Chinese economy. Natural gas prices also witnessed buying amid a drop in output at the start of the month. With the coming of seasonally cooler weather, Refinitiv projected average U.S. gas demand, including exports, would rise from 98.1 bcfd this week to 100.0 bcfd next week. Upside for cotton looks capped as mixed cue in the market.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
SMC is a SEBIregistered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.
SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.
The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.
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SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.
The bank is well capitalized with adequate liquidity buffers for future growth. Improving asset quality and strong position in Payments and Digital Banking indicate future growth visibility. The acquisition of consumer banking businesses of Citibank India would further enhance the retail customer base for the bank. Thus, it is expected that the stock will see a price target of Rs.1009 in 8 to 10 months’ time frame on two year average P/BV of 2.03x and FY24 BVPS of Rs.496.98.
The company expects strong growth momentum going forward on the back of stronger momentum in core cardio-metabolic business and new launches. It planned 15+ new product launches for FY 23 including 5-6 significant launches. It will be supported by strong field force where it has added 150 field forces in quarter ended June 2022. The company is all set to benefit from pipeline of patent expiration opportunities coming up in the cardiometabolic segment over the next 3-4 years. Thus, it is expected that the stock will see a price target of Rs. 874 in 8 to 10 months’ time frame on target P/BVx of 4.50x and FY24 BVPS of Rs.194.11.
The stock closed at Rs 124.15 on 04th November, 2022. It made a 52-week low at Rs 85.60 on 20th June, 2022 and a 52- week high of Rs. 139.20 on 11th January, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 109.23
Short term, medium term and long term bias are looking positive for the stock as it is trading in higher highs and higher lows on chart which are bullish in nature. Apart from this, the stock has formed a “Continuation Triangle” pattern on chart and has given the pattern breakout along with high volumes and also has managed to close above the same. So follow up buying may witness in the stock in coming days. Therefore, one can buy in the range of 121-122 levels for the upside target of 138-140 levels with SL below 112 levels.
The stock closed at Rs 1800.70 on 04th November, 2022. It made a 52-week low at Rs 1072.72 on 01st July, 2022 and a 52-week high of Rs. 1862.10 on 19th January, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 1537.46
As we can see on chart that the stock is trading in higher highs and higher lows, sort of rising channel which is bullish in nature. Apart from this, it is forming an “Inverse Head and Shoulder” pattern on weekly chart and is likely to give the neckline breakout of pattern along with high volumes so further upside is anticipated from the stock in coming days. Therefore, one can buy in the range of 1770-1785 levels for the upside target of 1890-1930 levels with SL below 1700 levels.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: RELIABLE SOFTWARE
Charts by Reliable software
Trailing to its previous two week gains, Indian markets rallied last week as well and Nifty surged above 18100 mark while Bank nifty ended the week above 41200 levels as investors cheered the news of Fed lowering its hawkish stances and would go easy on future interest rate hikes. Nifty witnessed gains of more than 1.5% during the week while Bank nifty remained laggard and ended with a little change. From the derivative front, hefty put writing was observed at 18000 strike while call writers were seen shifting to higher bands. Implied volatility (IV) of calls closed at 14.77% while that for put options closed at 15.29%. The Nifty VIX for the week closed at 15.94%. PCR OI for the week closed at 1.39. From the technical, front both the indices are maintaining a sustainable run above all important moving averages. We expect momentum to remain continue towards north in upcoming week as well. However any dip into the prices should be considered as buying opportunity till Nifty holds above 18000 mark.
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**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric NCDEX (Dec) futures are likely to trade sideways and may keep bias on negative side due to demand concerns. Supplies have increased at major trading centers as Stockists are releasing their stocks due to active export demand. Turmeric export surged up by 5% Y-o-Y in Aug’22 and increased by 15% Y-o-Y so far in year 2022. Turmeric arrivals in Maharashtra rose up to 6444 tonnes in Oct’22 against the 4179 tonnes of previous year for corresponding period. Going forward, prices are likely to track the crop progress in southern states. Weather condition has improved in second half of Oct’22. Southern region witnessed excess rainfall in Oct’22 that has sparked worries of crop damage in Maharashtra, Telangana and Andhra Pradesh but now weather condition is looking favourable to crop growth. Considering the above fundamentals, prices are likely to honor the resistance of 7800 and will move towards 6800 on downside.
Jeera NCDEX Dec futures is likely to trade on positive note mainly due to supply tightness. Arrivals remained poor in Oct’22 as stockists are still optimistic to further rise in prices. Total arrivals of jeera were reported at 8.67 thousand tonnes in Oct’22 compared to 24.3 thousand tonnes of previous year for corresponding months. Only 7.6 thousand tonnes of arrivals were reported in Gujarat against the 21.6 thousand tonnes of previous year. Stockiest are holding the stocks in wake of lower production amid tighter carryover stocks of previous years that kept total supply lower in year 2022. However, limited buying by marginal traders will cap the gains. Marginal buyers are going for hand to mouth buying due to higher prices as Jeera prices are still ruling much higher compared to previous year. Jeera Dec prices are likely to hold the support of 24000 and will move towards 25200
Dhaniya NCDEX Dec Prices are set to slip further on demand concerns. Buying in dhaniya is likely to be limited in the wake of normal sowing progress. Supplies are adequate at major trading centers due to rising imports that is keeping buyers away from heavy buying. . Marginal traders kept them away from bulk buying due to above normal prices of dhaniya. Ongoing sowing progress will be the major price driver in coming week and any disruption in sowing activities will cap the losses in prices. Dhaniya NCDEX Dec Prices are likely to honor the resistance of 11600 levels and will slip towards 10400 level in near term
Bullion counter are heading for weekly gains as a slight pullback in dollar helped alleviate some pressure from the U.S. Federal Reserve’s hawkish policy. The dollar index poised for its biggest weekly gains in more than a month. The Fed raised interest rates by 75 basis points and Chair Jerome Powell pledged to “keep at” their battle to beat down inflation. Meanwhile, the Bank of England raised interest rates by the most since 1989 but warned investors that the risk of Britain’s longest recession in at least a century means borrowing costs are likely to rise less than they expect. Investors’ focus now shifts to the U.S. non-farm payrolls data, which could offer further cues on the Fed’s rate-hike stance. On payrolls, an upside surprise to data would reinforce Fed’s higher terminal rate posture and keep gold undermined but if we do get a deceleration in job gains, gold may find support. Offering some respite to gold, data showed the U.S. services industry grew at its slowest pace in nearly 2-1/2 years in October, suggesting the Fed’s rate hikes are slowing demand in the overall economy. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.82 percent to 911.59 tonnes from 919.12 tonnes. On technical front, COMEX gold is stuck in the wider range of $1620-$1680 break on either side will define the next trend, whereas COMEX Silver prices taking support near $17.900 and facing resistance near $20.500. Ahead in the week, MCX Gold may continue to trade in the wider range of 49400-51500 where buying near support and sell near resistance would be strategy. MCX Silver may witness huge volatility and the possibly trading range would be 56500-61500.
Crude oil prices jumped, amid reports of the G7 countries agreeing to put a price cap on Russian crude oil exports. The market was also supported by another decline in U.S. oil inventories as refineries picked up activity ahead of the winter heating season. The U.S. Federal Reserve boosted interest rates by 75 basis points, continuing its efforts to bring down inflation, though the central bank signaled that future increases may be in smaller increments after several rate rises. The central bank has raised rates to combat U.S. consumer inflation that has reached a four-decade high. So far its moves have not affected the strong labor market, though the Fed’s actions do operate with a lagged effect. U.S. inventories remain low across most products, worrying analysts who believe that the impending end of releases from U.S. strategic reserves will remove a source of supply that will further tighten markets. Output from the OPEC fell in October for the first time since June, in addition to pumping 1.36 million barrels per day below its targets. China’s zero-COVID policy has been a main factor in keeping a lid on oil prices as repeated lockdowns have slowed growth and pared oil demand. Ahead in the week prices likely to trade with higher volatility where it may take support near 7150 levels and could face resistance near 7700 levels. Natural gas sets for second weekly gains as weather forecasts pointed to a colder-than-normal. Ahead in the week, prices may continue to trade with as long as it stays above 480 levels. The short term support remains at 480 whereas resistance is seen near 560 levels.
Base metals may trade with bullish bias on supply concern and continually tight inventories in the physical markets and on exchanges. However, rising interest rates, strength in the U.S. dollar and continued zero-COVID policy in China are widely expected to keep metal markets subdued in the coming days. China’s health agency reiterated its commitment to the zero-COVID policy, dismissing recent speculation that the country will lift the policy by March 2023. Copper may trade in the range 640-680 levels. Production disruptions in Peru, the world's second-largest copper producer, sparked fresh concerns over supply of the metal against thin inventories. The huge Las Bambas copper mine in Peru, owned by Chinese miner MMG Ltd, has started to reduce operations due to recent blockades, the mine said in a statement. Total copper production in Chile, the world's biggest producer, fell 4.27% in September to 428,300 tonnes, according to the government body Cochilco. Zinc can trade in the range of 245-270 levels. Lead can move in the range of 172-185 levels. ILZSG is forecasting a global lead supply deficit of 83,000 tonnes this year and another 42,000 tonnes in 2023 before smelters catch up with demand. LME lead stocks are super low at 27,625 tonnes, equivalent to less than a day's worth of global consumption. Aluminum may trade in the range of 195-215 levels. China’s zero-Covid policy has seen aluminium demand drop as factories have closed for extended periods and the slowdown in the global economy has further reduced consumption. Steel long is likely to trade in the range of 45800-47200 levels on NCDEX. Cut in global output will limit fall in steel prices.
Cotton MCX Nov prices are expected to trade mix to higher as post Diwali demand is likely to improve. Millers have started showing interest in buying after continuous fall in cotton prices. Lingering fear of yield losses in central part of India emerging after recent heavy rainfall in Maharashtra, Telangana and Gujarat is likely to support firmness in prices. Harvesting activities have been delayed along with the yield losses. At the same time, improved export prospects backed by record depreciation of Indian rupee and rising seasonal demand of cotton are also likely to support recovery in cotton prices in coming week. Seasonal trend of export shows that about 30-40% of total cotton export from India is realized in Oct- Dec. Expected rise in export demand from Bangladesh and other SEA nations will restrict the major losses. Prices are likely to find support 28500 and will move up gradually towards 32500 in near term.
Cotton seed oil cake NCDEX (Dec) futures are likely to trade higher due to emerging buying in domestic market. Apart from that, cotton seed oil cake prices will track the gain in cotton prices and will move accordingly as cotton prices are moving up on emerging fear of crop losses due to recent rainfall in major cotton growing states. Prices are likely to hold the support of 2400 and will move towards 2700 in coming week.
Guar seed Dec futures are likely to trade sideways to higher due to emerging buying in local market that will prompt market participants to cover their short positions at futures platform. Demand for gum and other byproducts like churi and korma is also increasing that will support firmness in prices in near term. However, gains will be limited due to bumper crop outlook. Guar seed prices may hold the support of 4600 and is likely witness recovery towards 5200.
Mentha oil (Nov) is likely to trade on sideways due to limited trade at physical market. Prices are correcting down due to higher stocks estimates wherein buyers are active at every dip in prices. Going forwards losses are looking limited due to lower production estimates. Prices are likely to hold support of 960 and will move gradually towards 1010 in near term
Castor seed (Dec) prices are likely to trade mix to higher due to emerging buying in local market. Lower production estimates and tighter pipeline stocks will support firmness in prices. Going forward, castor seed prices are likely to hold the support of 6950 and will face the resistance of 7500 in near term
It closed at Rs. 50184.00 on 03rd Nov 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 50517.30. On the daily chart, the commodity has Relative Strength Index (14-day) value of 48.577. Based on both indicators, it is giving a sell signal.
One can sell near Rs. 50600 for a target of Rs. 49600 with the stop loss of 51200.
It closed at Rs. 7341.00 on 03rd Nov 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 7205.14. On the daily chart, the commodity has Relative Strength Index (14-day) value of 58.668. Based on both indicators, it is giving a buy signal.
One can buy near Rs. 7350 for a target of Rs. 7700 with the stop loss of 7200.
It closed at Rs. 9391.00 on 03rd Nov 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 9277.66. On the daily chart, the commodity has Relative Strength Index (14-day) value of 59.243. Based on both indicators, it is giving a buy signal.
One can buy near Rs. 9500 for a target of Rs. 9900 with the stop loss of 9300.
NOTE: *M.High / M.Low stands for Monthly High / Monthly Low
CRB continued its previous week recovery on pause in dollar index rally despite interest rate hike. The Federal Reserve raised interest rates by three-quarters of a percentage point as it continued to battle the worst outbreak of inflation in 40 years, but signaled future increases in borrowing costs could be made in smaller steps. The policy decision set the target federal funds rate in a range between 3.75% and 4.00%, the highest since early 2008. The U.S. central bank has raised rates at its last six meetings beginning in March, marking the fastest round of rate increases since former Fed Chair Paul Volcker's fight to control inflation in the 1970s and 1980s. Energy counter saw an upside on drop in inventories amid unconfirmed news of expectation of opening up of Chinese economy. Oil prices rose on optimism that China, the world's secondlargest oil consumer, could reopen from strict COVID curbs. The Brent and WTI benchmarks both registered monthly gains in October, their first since May, after OPEC+ cut their targeted output by 2 million barrels per day (bpd). OPEC raised its forecasts for world oil demand in the medium and longer term, saying that $12.1 trillion of investment is needed to meet this demand. U.S. crude oil inventories unexpectedly dropped, according to the Energy Information Administration. Natural gas prices saw sharp rebound on cooler weather news. Bullion saw limited fall last week as dollar index struggled to breach 12. Bullion prices have fallen sharply from 2022 highs as the Fed began raising interest rates, which drove up the opportunity cost of holding the yellow metal, given that it offers no yields. Base metals prices strengthened by unfounded rumors that China plans to scale back its strict zero-COVID policy, which is at the heart of the country’s economic woes this year.
Cotton prices saw surprise upside on expected Chinese demand amid rising seasonal demand. However, gains were limited due to higher production outlook. Guar prices revived on short covering due to emerging demand at prevailing levels. Short-term firmness is likely to be seen in prices due to emerging demand from stockists. Castor prices rose due to emerging buying amid tighter pipeline stocks. Spices added flavor tracking tightness in supplies at physical market. Production of turmeric is likely to drop in upcoming season due to fall in acreages. Reports of rise in area under coriander are keeping spices makers away from bulk buying. India has imported about 20.2 thousand tonnes of Dhaniya during the time period of Jan’22- Aug’22 compared to 4.5 thousand tonnes of previous year.
Gold has been an essential component in the financial reserves of nations for centuries, and its demand is showing no sign of diminishing, with central banks are net purchasers of gold once again this year.
Love affair of global central banks with gold is amazing
Global gold demand has returned to pre-covid levels, driven by stronger consumer and central bank buying. Almost 400 tons were scooped up by central banks in the third quarter; more than quadruple the amount a year earlier, according to the World Gold Council. It also marks the eighth consecutive quarter of net purchases and lifts the y-t-d total to 673t, higher than any other full year total since 1967. Gold demand in the September quarter was 28% higher year-on-year at 1,181 tones and on year-to-date basis, demand increased 18% vs the same period in 2021, returning to pre-pandemic levels, according to World Gold Council's latest report.
Recent gold-buying activity extends a multi-year trend of central banks adding to their gold reserves. Last year they buy a net 463t, 82 percent more than they acquired in 2020 and the 12th year in a row in which they were net buyers. The WGC reported earlier in the year that central banks hold more than 35,000t of gold, equivalent to around one-fifth of all the gold that has ever been mined, further underlining their insatiable appetite for the yellow metal.
Notably, the central-banks buying have also become geographically more diverse as several new countries adding gold for the first time in decades.
Turkey was the biggest buyer of gold during the quarter, followed by Uzbekistan (26.13 tons) and India (17.46 tons). Not all countries report their gold purchases regularly, so it’s difficult to know how much, for example, China and Russia bought during this same period. Mozambique (2t), the Philippines (2t) and Mongolia (1t) were the other notable buyers during the quarter.
Why Central-Bank Gold Buying Picked Up
The Indian rupee slightly depreciated per US Dollar in last week, approaching the record-low below 83 per USD hit on October 19th as soaring inflation, trade imbalances, and relatively soft monetary tightening by the Reserve Bank of India dented demand for the local currency. The latest data showed that retail prices rose by 7.4% annually, marking the ninth consecutive month where inflation surpassed the central bank’s upper target. Meanwhile, the RBI policy committee is set to hold an extraordinary meeting to draft a report for the Indian central government explaining why inflation has stubbornly remained above the upper target of 6%. Previously, policymakers signaled that the central bank would pause its hiking path in the next meeting, as growth concerns should become the priority. Adding to woes, the rupee’s weakening continued despite over $100 billion being sold from reserves this year. This week The Federal Reserve raised the target range for the federal funds rate by 75bps to 3.75%-4% during its November 2022 meeting. It marks a sixth consecutive rate hike and the fourth straight three-quarter point increase, pushing borrowing costs to a new high since 2008. The Bank of England voted by a majority of 7-2 to raise interest rates by 75 bps to 3% during its November meeting, the largest rate hike since 1989, increasing the cost of borrowing to the highest level since late 2008. Policymakers voiced concerns about stubbornly high inflation. The yield on the 10-year Indian government bond approached the 7.5% mark in early November, hovering at levels last seen since June and tracking a global increase in bond yields amid expectations that the Federal Reserve will continue to raise rates for a prolonged period.
USDINR (NOV)is trading between its major Exponential Moving Average indicating sideways trends for short term view. The Pair has major support placed around 82.10 levels while on higher side resistance is seen around 83.15 levels. The 21-day Exponential Moving Average of the USD/INR is currently around 82.51 Levels. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 55.95.
One can buy at 82.30 for the target of 83.30 with the stop loss of 81.80.
GBPINR (NOV)is trading below its major Exponential Moving Average indicating downward trends for short term view. The pair has major support placed around 91.88 levels while on higher side resistance is seen around 94.99 levels. The 21-day Exponential Moving Average of the GBP/INR is currently around 93.49. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 47.14.
One can sell at 93.00 for the target of 92.00 with the stop loss of 93.50.
EURINR (NOV) is trading below its major Exponential Moving Average indicating downward trends for short term view. The pair has major support placed around 80.22 levels while on higher side resistance is seen around 81.95 levels. The 21-day Exponential Moving Average of the EUR/INR is currently around 81.31. On the daily chart, the EUR/INR has Relative Strength Index (14-day) value of 48.40.
One can sell at 81.20 for the target of 80.20 with the stop loss of 81.70.
JPYINR (NOV) is trading between its major Exponential Moving Average indicating sideways trends for short term view. The pair has major support placed around 55.45 levels while on higher side resistance is seen around 57.00 levels. The 21-day Exponential Moving Average of the JPY/INR is currently around 56.18. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 48.05.
One can buy at 56.00 for the target of 57.00 with the stop loss of 55.50.
(2.5/5)
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The Selling Shareholders will be entitled to their respective portion of the proceeds of the Offer for Sale.
The company proposes to utilise the Net Proceeds of the Fresh Issue towards funding the following objects:
Considering the P/E valuation on the upper end of the price band of Rs. 407, the stock is priced at pre issue P/E of 22.29x on its FY22 EPS of Rs. 18.26. Post issue, the stock is priced at a P/E of 26.56x on its EPS of Rs. 15.33. Looking at the P/B ratio at Rs. 407 the stock is priced at P/B ratio of 16.10x on the pre issue book value of Rs.25.28 and on the post issue book value of Rs. 90.12 the P/B comes out to 4.52x.
On the lower end of the price band of Rs.386 the stock is priced at pre issue P/E of 21.14x on its FY22 EPS of Rs. 18.26.Post issue, the stock is priced at a P/E of 25.19x on its EPS of Rs. 15.33. Looking at the P/B ratio at Rs.386, the stock is priced at P/B ratio of 15.27x on the pre issue book value of Rs. 25.28 and on the post issue book value of Rs. 90.12, the P/B comes out to 4.28x.
Archean Chemical Industries Limited is India's largest exporter of bromine and industrial salt in Fiscal 2021. Archean Chemical Industries markets the products to 18 global customers in 13 countries and to 24 domestic customers. The company was the largest exporter of industrial salt in India with exports of 2.7 million MT in Fiscal 2021. The company has an integrated production facility for the bromine, industrial salt, and sulphate of potash operations, located at Hajipir, Gujarat, located on the northern edge of the Rann of Kutch brine fields.
Leading market position, expansion and growth in bromine and industrial salt: The company is a leading specialty marine chemical manufacturer in India since 2013. The company attributes its strong market position to factors such as its long-standing relationship with global customers, its established infrastructure and access to brine reserves at the Rann of Kutch, its manufacturing facility close proximity to the captive Jakhau Jetty and Mundra Port and its consistent delivery of high-quality products.
High entry barriers in the speciality marine chemicals industry: The specialty marine chemicals industry in which it operates has high entry barriers, which include the high cost and intricacy of product development, manufacture, and investment in salt beds, the limited availability of raw materials necessary for production, the limited number of locations with a suitable climate and access to reserves, and the lead time and expenditure required for research and development and building customer confidence and relationships, which can only be achieved through a long gestation period.
Established infrastructure and integrated production with cost efficiencies: It has an integrated production facility for its bromine, industrial salt, and sulphate of potash operations, located at Hajipir, Gujarat, which is located on the northern edge of the Rann of Kutch brine fields. Its facility and its surrounding salt fields and brine reservoirs span approximately 240 sq.km. As of June 30, 2022, its manufacturing facility had an installed capacity of 28,500 MT per annum of bromine, 3,000,000 MT per annum of industrial salt and 130,000 MT per annum of sulphate of potash.
Largest Indian exporter of bromine and industrial salt with a global customer base: As of June 30, 2022, it has 18 global customers and 24 domestic customers. Its major customers include, for industrial salt, Sojitz Corporation (which is also a shareholder in the Company), Wanhau Chemicals and Qatar Vinyl Company Limited; and for bromine, Shandong Tianyi Chemical Corporation and Unibrom Corporation. In the three months ended June 30, 2022 and in Fiscal 2022, Fiscal 2021 and Fiscal 2020, its largest customer, Sojitz Corporation, contributed 19.29%, 20.56%, 30.51% and 31.94%, respectively, of its revenue from operations; its top 10 customers contributed 60.69% , 61.99%, 75.70% and 77.14%, respectively, of its revenue from operations; and its top 20 customers contributed 81.75%, 80.94%, 88.66% and 92.05%, respectively, of its revenue from operations.
Strong and consistent financial performance: it has built its business organically and has demonstrated consistent growth in terms of revenues and profitability. In Fiscal 2021, it was the largest exporter of bromine and industrial salt by volume in India and has one of the lowest cost of production globally in both bromine and industrial salt. Its revenue from operations has increased at a CAGR of 36.34% from Rs. 608.10 Crore in Fiscal 2020 to Rs.1130.43 Crore in Fiscal 2022. Its revenue from operations was Rs. 400 Crore in the three months ended June 30, 2022. Its revenue from exports has grown at a CAGR of 29.11% from Rs. 476.85 Crore in Fiscal 2020 to Rs.794.90 Crore in Fiscal 2022. It has benefited from its fixed sales contracts with agreed pricing and volumes of approximately 12 months duration with its bromine customers of approximately 24 months duration with its industrial salt customers.
Expand into downstream bromine derivative performance products:The company Plans to expand its product line into bromine derivative performance products in the next two-to-three years, in particular brominated flame retardants, clear brine fluids and bromine catalysts used for the synthesis of PTA.
Expand its bromine and industrial salt capacities: It intends to, and is in the process of, increasing its manufacturing capacity for bromine production. To achieve the expansion of its bromine capacity, it added in Fiscal 2021 a feed enrichment section at its site in Hajipir, Gujarat which will improve bromine recovery from its sea bittern. This expansion added 18,000 metric tons per annum to its bromine capacity.
Archean Chemical Industries Ltd (“Archean”) is a leading specialty marine chemical manufacturer in India. Archean attributes its strong market position to factors such as its long-standing relationship with global customers, its established infrastructure and access to brine reserves at the Rann of Kutch, its manufacturing facility, and its consistent delivery of high-quality products. It has built its business organically and has demonstrated consistent growth in terms of revenues and profitability. A long term investor may opt the issue.
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Debt funds focused on investing in fixed-income securities witnessed an outflow of Rs 65,372 crore in September amid increasing interest rate cycle and redemptions by corporates to pay advance tax. This comes following a net inflow of Rs 49,164 crore in August and Rs 4,930 crore in July, data available with Association of Mutual Funds in India (Amfi) showed. Prior to that, investors pulled out over Rs 70,000 crore from debt mutual funds in April-June due to high inflation and increasing rate cycle. Out of the 16 fixed-income or debt fund categories, 12 witnessed net outflows during the month under review. The heavy withdrawal was seen from segments such as liquid, money market and ultrashort-term duration funds. The only categories that witnessed inflows were overnight funds, long duration, gilt funds and gilt fund with 10-year constant duration.
JM Financial Mutual Fund has launched JM Midcap Fund, an open-ended equity scheme predominantly investing in mid cap stocks. The NFO will open for subscription on October 31 and will close on November 14. According to the press release, the scheme aims to invest in high growth companies benefiting from demographic and structural trends and will have a process driven stock selection and portfolio construction. The fund house said that they will focus on softer aspects like corporate governance, management quality and their execution. “India with approximate $2k per capita income may see sustainable growth in the consumption story and related sectors. We have seen this trend in both China and South Korea which have demonstrated rapid growth for a decade after crossing the per capita income of $2k. Indian Midcaps offer a wider variety of sector allocation in a more balanced manner compared to Nifty. Nifty’s concentration around 2-3 sectors makes it less diversified compared to the Midcap Index,” says Satish Ramanathan, CIO – Equity, JM Financial Asset Management.
Edelweiss Asset Management has launched a new Target Maturity Index Fund- Edelweiss CRISIL IBX 50:50 Gilt Plus SDL September 2028 Index Fund. This fund will invest in a mix of Indian Government Bonds and State Development Loans. The Edelweiss CRISIL IBX 50:50 Gilt Plus SDL September 2028 Index Fund will be open for subscription between 1st to 7th November 2022. The scheme is an open-ended target maturity Index Fund investing in the constituents of CRISIL IBX 50:50 Gilt Plus SDL Index – Sep 2028. The minimum investment amount in the fund is Rs 5000. The fund will have a defined maturity date of Edelweiss CRISIL IBX 50:50 Gilt Plus SDL September 2028 Index Fund. According to the fund house, the scheme will follow a Buy & Hold investment strategy in which existing bonds will be held until maturity unless sold for meeting redemptions, dividend payment rebalancing requirements or optimizing the portfolio construction process.
Manish Gunwani has quit Nippon India Mutual Fund after a stint of five years. Gunwani was the CIO-equity at Nippon and led a team of 28 plus investment professionals at Nippon India MF. Gunwani was managing many popular schemes like Nippon India Flexi Cap Fund, Nippon India Growth Fund and Nippon India Balanced Advantage Fund. The fund house has elevated Sailesh Raj Bhan as its new CIO –Equity. Bhan will take charge as the new CIO from 1st January 2023. Bhan has been with the organization since 2004 and has been acting as Deputy CIO – Equity, since 2014. He comes with over 25 years of investment experience. He has been managing multiple flagship funds namely, Nippon India Large Cap, Nippon India Multi Cap & Nippon India Pharma Fund for over 15 years.
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