Market wrap with Pankaj Pandey.

追加: 2026-05-24

[00:00:10]Hello and welcome everyone. Welcome to this episode of the weekly market trap.

[00:00:14]I have with me Mr. Pankage Pande and this was indeed a good week. Uh we gained almost 1% and have closed at 23800 a level that we have been seeing again and again and again. Uh what is the outlook from here on sir?

[00:00:28]>> Yeah. Hi, good evening Vishu. Uh so like you said Nifty has done well in this particular week. Uh but if I look at it in the last two months the Nifty has gone nowhere. It's been boxed in a certain range and largely to do with the overall issue with Iran conflict still not getting resolved. But meanwhile what we have clearly seen is that the broader market especially the midcaps and small caps have done very well. Even in this week also midcaps have relatively outperformed with a gain of about one odd percent. And one more aspect to that is uh on the earning side which I'll sort of cover uh in sometime later but the earnings for the broader markets have been lot more better compared to nifty and which is why the broader market continues to do well and I think till the time reserve season continues overall we will continue to see stock specific movement in the market and uh I think any resolution of this Iran conflict has the potential to sort of take nifty towards 24,4 400 kind of a levels in the next week although the next week is truncated but I think a lot will depend on how the crude oil prices behave because the crude oil prices will have some impact on the 10ear as well as the longer yields not only domestic but even in global markets especially US. So so that will be the biggest variable to sort of watch out for. But uh like I said if I look at a ratio chart of Nifty 500 versus Nifty 100 I think that has become better. Right now you have 72% of the Nifty 500 stocks which are trading above their 50-day simple moving average compared to 68 or odd% a week earlier.

[00:02:10]So so from that perspective the broader market continues to look good. Uh the Nifty will perform only when we see some resolution of this conflict.

[00:02:20]>> Right. Uh talking about the uh fall in the markets, I think a lot of uh stress has been because of the foreign investors. What is their stance as of now?

[00:02:29]>> So Vishu, I think they continue to be on the selling spree. uh though the intensity has definitely come down in the first fortnight of May they sold somewhere about 27,000 odd crores and within that financial sectors financial segment continues to bore the maximum brunt of it and roughly 55% of the outflow has happened in the BFSI segment roughly about 18,000 odd crores and then oil and gas because of the volatility in crude oil prices has witnessed an outflow of about somewhere about 7,000 odd crores And then you have minor exits in telecom plus technology plus FMCG. So I think BFSI and IT continue to sort of see the impact of the FBI selling but however on the positive side if I look at it the services sector has seen an inflow of about 7,000 odd crores and our intelligent guess is that it would be largely to do with the Adani group of companies because they've settled their legal issues especially in the US. uh so that might have helped and we have seen Adani enterprises from the bottom it has really rallied about 50 odd%. And I think manufacturing side or infrastructure side continues to witness a decent inflow. So capital goods has seen an inflow of about uh 2,600 odd crores and about 1,700 odd crores in metal mining and uh so I think overall when we look at FBI are aggressively drisking from the large gaps and I think overall industrial segment is something which is looking good but till then we don't see a resolution we will continue to see pressure on large cap largely because of FBI ST sales Right. Uh coming to the results that were announced this week. Uh I think ITC was one major company. How good were the numbers?

[00:04:20]>> So Vishu one the number is not comparable on a Y basis because of the significant changes in the taxation structure for for cigarettes. Now when we look at revenues have grown by 70 odd%. This is on the back of about 32% growth in cigarette business. The FMCG business has grown about 15 odd%. Now coming specific to cigarette business uh the volume growth uh in the Q3 quarter was about 7 odd% now it has dipped to 4 to 5 odd%. And our sense is that see ITC the taxation increase was somewhere about 13 35 odd%. And ITC has taken half of it. So half of it is still pending and our sense is that this will be taken and this will have implications for volume growth. So we are expecting a volume decline in Q2 in FI27 of 8 odd% and in FI20 at about 2 odd%. So I think volume growth of or volume decline of cigarette business remains the key and that is what is going to probably hold the stock and our sense that first half is where you'll see the maximum pressure. Now coming uh specific to the other business which is FMCG I think FMCG business did okay. We have seen a margin improvement of over 200 dips. But then again here also the challenge is that because a lot of input prices have gone up. So margin pressure is expected in the first half. So first half is crucial. If we don't see any major negatives panning out there then the stock will become a buy. But since a lot of still we are yet to see so which is why we have put a hold rating on the stock.

[00:05:58]>> Right. What's happening in the telecom sector?

[00:06:03]So Vishu Bharti is already doing very well.

[00:06:07]So I think there are fundamental drivers to it. One if I look at the key metrics is average or revenue per user. So for Bharti the RPOS were up about five odd% without any tariff. Similarly for Vodafone the RPO was up about 6 odd%.

[00:06:24]Now the last ter happened in July 2024.

[00:06:28]So our sense is that with Gio's IPO coming in in the second half of this financial year there is a possibility of a tariff hike in between it is possible that the ARUS will keep on going because uh the companies are looking at uh offering better services to high paying subscribers. I think the interesting part is that we are seeing promoter activity sort of going up. So for example in case of Bharti the promoter through their entity called Bharti Telecom are looking to increase the stake from 14 and a half% to 51 odd%. Similarly, we have seen a equity infusion of nearly 4,730 odd crores in Bodafon idea by the Aditella group and Bodafon Idea has seen a good price rally plus we have seen favorable relief coming from the government as well and uh so as a result of that the overall benefits which we have sort of calculated is somewhere about 57,000 odd crores which is why they made a exceptional profit this year but having said That for vod of fun idea the key thing is that company is talking of a double digit revenue growth and tripling their every three years and that will not happen without a tariff. So tariff holds the ghee and we are quite hopeful of the tariff. The only thing is the quantum is still sort of worked out but some total with the promoters looking to increase the stake plus companies knowing free cash flow especially bharti has seen a free cash flow of nearly 56,000 odd crores last year fi26 so that perspective I think telecom is getting lot more better uh from a regulatory perspective also from operational metrics perspective so I think telecom especially bhart is topic Right. Uh coming to defense, Bharat Electronics came up with numbers. Uh how did you like them?

[00:08:28]>> So Vishu, we don't really chase or look defense companies from a quarterly perspective. From a yearly perspective, it is better. So Bat Electronics delivered about 16% kind of a returns.

[00:08:40]Margins were quite steady at about 29 odd%. Now going forward the company is guiding for about 15% kind of a revenue growth and margins of about 28% plus so roughly similar kind of a margins. Now a good part is that for this year FI27 they are looking at a order inflow of somewhere around 55,000 odd crores and 30,000 cr is expected to come from QRS.

[00:09:05]So that is a key variable and this order is expected in the first half in this current quarter. uh otherwise bat electronics a pure stable uh defense company because electronic component is going up. So this company will continue to sort of do well and which is why and continue to sort of deliver mid to highend kind of a growth both in terms of topline bottom line. So we continue to like this stock and maintain a buy rating with a target price of 530.

[00:09:33]>> Next up we have Apollo hospitals. How are the results?

[00:09:37]So hospitals are another thing which we like and Apollo has been at the forefront of it. So number wise nothing to sort of complain. Uh revenue growth was 80 odd% we have seen margin improvement as well. Now the biggest ch for this company is the hospital business where we have seen a growth of 16 odd%. And margins have been good at about 24 odd%. And the company is doing a massive or a pretty aggressive capex of about 8,200 odd crores. 3,200 is already they have incurred and they want to sort of add 3,400 plus kind of a bed. The other is that their pharmacy chain and the digital healthcare business which they have got so that has seen a growth of 20 odd%.

[00:10:22]And that is the business which will witness a a de merger or a split one year down the line. And uh our sense is that the pharmacy business uh though it's a low margin business at about 6 odd% compared to hospitals it's a high rose business and that is where when the entities demerge the value accretion will happen and which is why I feel that we are still sort of looking at broader numbers because still a lot of time but our sense is that if 8,000 is the kind of a price about 80 odd% is going to acrewue in the hospitals and 20% is expected to acrew in in the pharmacy chain business. Uh our target price for this is 9,660. So we continue to like this stock.

[00:11:08]>> Right. Uh next up, let's discuss steel industry. What's happening in the domestic steel sector?

[00:11:14]>> So Vishu inflation is good at times and steel is clearly an example of it. After 5 years of low prices, now the prices have started improving. So this year we have already seen double digit increase in prices.

[00:11:28]And uh the numbers are clearly sort of visible or we can see clearly this in the numbers of all these steel companies. So one is the realizations for all these steel companies have gone up by 32 to nearly 4,500 rupees per ton in Q4 and parallelly AITA per ton has also seen an improvement of in the range of say 2,200 to 3,800 rupees per ton. uh the bitter improvement is slightly less because some of the input prices like cooking coal prices have also gone up. A good part is that the next quarter companies like Tata Steel is guiding for a bit improvement of 6,000 rupees per ton.

[00:12:09]Mind you this quarter the improvement is only 2,500. So next quarter is expected to be even more better and which is why I think uh this segment continues to sort of do well. In fact, some of the companies have started to improvise on their capeex plan. So for example, JSW was targeting a capacity of about 50 million tons by 2031. Now they target targeting about 62 odd million tons. And along with their G JV's the capacity they are chasing is 78 million tons. So that's massive. uh similarly I think sale also has looking to sort of do far more capex of some 35,000 odd kores compared to 20,000 odd kores this year and along with that all the other players are guiding for good volume growth for this year some total what we like is Tata steel with a target price of 270 sale with about 240 odd and gindel steel our sense is that the company will deliver 20% kind of uh volume growth. So that is why we have a buy rating on this JW steel since the valuation reach are rich. So we have maintain a hold as of now >> right. Uh next up let's discuss the electronic sector we can start with the LG electronics maybe the numbers of LG electronics and then move on to contract manufacturers.

[00:13:30]So Vishu coming to LG electronics and even the MS player the common weak link has been the air conditioner business because uh when we look at LG electronics out of the top line of 8,000 odd crores which witness a growth of 8 odd% the home appliances division witness a growth of some 6 odd% of which the air conditioners have been a part and I think uh the brighter side is on the home entertainment division especially the likes of television and monitors plus audio devices there the growth has been about 20 odd%. And since uh the uh home appliances division did not do well so we have seen pressure on the margins but the only thing to watch out for in LG is the 5,000 cr capex which company's doing in city and our sense is that this is largely to accelerate the exports and export contribution is expected improve from 6 to 7 odd% to nearly mine kind of a levels and which is why we keep maintaining a buy on this. Now coming specific to EMS players, both Amber and EPAC posted weaker quarter uh impacted by near-term margin headwinds. Though this is expected to be transitory because when we look at Amber, the revenues were 4,000 odd crores up about 10 odd percent. uh which is not really a great number to sort of look at and I think uh what we're clearly seeing is that the consumer durable business space multiple headbands including inconsistent summer then there is a high channel inventory all that impacted now good part is that amber is now diversifying from a room air conditioner player to other value added segments so for example PCB or PCB to reduce the volatility and which is why we are hopeful that Q1 is expected to be good as they're looking to sort of diversify and management is guiding for 40% kind of a growth going forward. So, so that is why we are maintaining a positive stance on it. EPAC again very weak set of numbers the margins were a quite a negative surprise around 4 odd%. uh now there the thing was that because company prod did lesser amount of production so they couldn't claim PLI so there was a PLI reversal which impacted their margins but this company is also guiding for a topline growth of 30 odd% uh over the next two years so which is why we're liking this but yes Q1 or Q4 was a wash out hopefully this year things are going to become lot more better with already power demand at peak >> absolutely Right. Um next up I think 6 to 8 week backs also we were discussing how we have a bullish view on plastic piping. Any update on that?

[00:16:15]>> So Vishu again when we look at numbers numbers have been good but there's been some volatility which I'll sort of explain. So one we have seen that the PDC prices jumped 21% quarteron quarter to 115 odd rupees a kg and subsequently the prices sort of corrected about 22 odd% to 90 rupees a kg and what did uh it did was that it led to uh a steep inventory correction and while it is good for big players like say Astral Supreme and Prince because they have gained market share but a lot of these smaller lot of players couldn't digest the uh volatility and which is why uh these players have witnessed market share again. Now our sense is that the prices will sort of stabilize or probably improve because this 7 and a half% custom duty exemption is set to expire by 30th of June. Specifically, Astral did quite good with the revenues growing 25% margins have been good. The company is guiding for again a volume growth of 10 to 15 odd percent. So we are expecting a good set of numbers. Uh in fact they are doing a macro integration in the resident sidebc resin side. So that should improve their margins by 200 bips. So we are expecting mid to high teen kind of a growth in top line and bottom line. Same is with supreme supreme volume growth was 40 odd%. The results had come out earlier.

[00:17:44]Now this company is also doing a capex of thousand odd crores by to expand the capacity and we are expecting a similar mid teen to high teen kind of a growth in the top line and bottom line. So again maintaining a buy. Uh Prince pipes again did quite well. Uh so this company also is guiding for a volume growth of 12 to 15 odd% and a beta margins of 11 to 12 odd%. And uh uh for this company since the margin improvement is from uh from the lower single digit to mid lower double digits. So which is why uh the revenue growth is expected to be 13 odd% in line with other players. But the bottom line growth is going to be a lot more higher at about 50 odd%. So which is why we're liking the entire set of these companies. Hopefully things are going to become lot more better from Q1 onwards for these.

[00:18:35]>> All right. Uh and finally now it's time for the hidden gem of the week. Which will it be this time?

[00:18:41]>> So Vishu, we have been liking defense for quite some time and we have been coming up with a lot of companies in the defense. So we have recently initiated coverage on a company called Zen Technologies. We like this company with a target price of 1,900. Now this company was earlier into combat training and simulation and since last year they did not witness much of an order flow.

[00:19:04]which is why we have seen quite a volatile set of numbers and uh while our sense is that the uh the uh simulation business will sort of grow at 67 odd% because they are going into navy naval simulation also but the story for this uh company is on the anti- drone side now this is one segment which is finding favor especially this Iraq conflict and uh there is an expectation from the industry that this segment can grow at 30% C over the next 10 odd years. This company has gone into there and uh so they have guided for a revenue of about,000 odd cr which is a jump of 45% they are looking in FI27 and guiding for about 3,000 cr kind of a revenue in FI28 and a bit margin has been maintained or they're maintaining at about 35 odd% company did a QIP uh in the recent past uh of which half of was utilized for working capital then uh some for in organic expansion in the drones or entry drone and the balance is yet to be sort of utilized. So our sense is that this company next two years is going to witness a superlative growth and which is why I feel that uh it is better to sort of participate early here though the valuations are rich because this is trading at about 29 times and we feel that it can come out 35 kind of a multiple given the fact that the earnings are going to grow at pretty fast place in excess of 50%.

[00:20:38]Absolutely. Well, that was it for this time. Thank you so much for your insights and thank you so much everyone for watching. We'll be back next week.

[00:20:45]Until then, if you have any questions, please put them in the comments and we'll try to get back. Thank you.

[00:20:50]>> Thank you so much.

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