December 12, 2024

TOP NEWS

November US CPI annual inflation rises 2.7%, in line with expectations for 2.7%. Core CPI inflation increased 3.3% Y/Y, matching forecasts for a gain of 3.3%.- Positive for IT stocks 

The Chinese government pledged to loosen monetary policy and enact more targeted stimulus measures to boost economic growth and signaling a bolder stimulus for next year- Positive for Metals stocks.

Godawari Power: The company has entered into a seven-year agreement with GAIL (India) for the supply of RLNG gas for the company's upcoming pellet plant. Positive

ACME Solar Holdings: The company secured the 250 MW FDRE (Firm & Dispatchable Renewable Energy) Project  in the e-reverse auction held by NHPC today at a tariff of Rs 4.56 per unit. The project includes a greenshoe option that could potentially expand its total capacity from the initial 250 MW to 500 MW. With this latest win, Acme Solar’s total capacity now stands at 6,970 MW. Positive

Vedanta: The company will consider the fourth interim dividend on Dec. 16. Positive

Hindalco: Government considering reducing import duty on raw materials of aluminium sector and increasing them on the final product. Positive

Gland Pharma: The company received approval from the US FDA for Phytonadione Injectable Emulsion USP, 10 mg/mL Single Dose Ampules.

Shakti Pumps: Bags orders worth Rs 754 crore for 25,000 solar water pumps from Maharashtra. The order entails the design, manufacture, supply, installation, testing, and commissioning of 25,000 stand-alone off-grid DC pumping solutions. Positive

Afcons: Bagged order worth Rs 504 crore for water supply project in Rajasthan under Jal Jeevan Mission. The water supply project is for 353 villages in Dungarpur district, The project includes operation and maintenance for 10 years. Positive

Varun Beverages: The Jubilant Bhartia Group will acquire a 40% stake in the country's largest Coca-Cola bottler, in a transaction said to be valued between ₹12,000 crore and ₹12,500 crore (EV - Rs31250crore). Deal is likely to be value at 2.2x its FY24 sales. Coco Cola is well known cola brand in India. Jubilant Bhartia group has strong understanding of India’s consumer market through its QSR business (Dominos). This along with Coco Cola global expertise and strong portfolio of brand will help the company regain its loss ground in the coming years.

View: Carbonated and non-carbonated beverages market is growing in strong double digit in India. Varun Beverages with PepsiCo India has strong hold in the market and expanding territories through regular investment in setting up new capacities. Jubilant group acquiring stake in Coco Cola will increase the competition and try to regain share in the key territories. Further, Campa Cola is trying to establish itself in the domestic market. Hence, we expect competition to enhance in the carbonated drink space in the near term. Varun Beverages has recently raised QIP of Rs8000crore to support investment of expanding capacities in India, scale up its snack business and expanding base in African region. Thus, the company is focusing on de-risking its business model to improve its growth avenues in medium to long run and maintain its strong positioning in the increase competitive domestic carbonated space. 

Nuvama Wealth Management:  Edel Finance Company and Ecap Equities are likely to sell a 7.1% stake in Nuvama Wealth via block deals, source media reports. The floor price is expected to be Rs 6,800 per share, and the deal is likely to be valued at Rs 1,734 crore. Positive

Shriram Finance: The company completes sale of housing finance arm to Warburg Pincus:Shriram Finance, the flagship company of the Shriram Group, on Wednesday announced the successful completion of the sale of its entire stake of 84.44 per cent in its housing finance subsidiary Shriram Housing Finance Limited (SHFL) to Warburg Pincus, a leading global growth investor firm for a sale consideration of Rs 3,929 crore.

Sammaan Capital: The Board has approved the raising of funds up to Rs 2,500 crore through the issuance of equity shares in one or more qualified institutional placements. Positive

IOB: IOB Order of refund of ₹808.30 crores from the Income Tax Department. Positive

MACRO WRAP

·         US equities resumed their rally after a brief intermission over the start of the week. The S&P 500 is up 0.9% and back around Friday’s level, while the NASDAQ is 1.8% higher, scaling a fresh record high, The 2-year yield is up 1 basis point to 4.16%, while the 10-year yield is 4 basis points higher at 4.27%.

·         US inflation prints were in line with consensus forecasts, while real average hourly earnings eased slightly to 1.3% y/y in November from 1.4% y/y previously, both solidifying rates cut bets next week. Headline inflation accelerated to 2.7% y/y in November (prior: 2.6% y/y) as prices for food picked up pace, while energy prices fell at a slower rate, while core held steady and elevated at 3.3% y/y and +0.3% m/m. The index for shelter rose 0.3% m/m, accounting for nearly 40% of the monthly increase, while prices of vehicles, household furnishings, medical care and recreation also increased during the month. Data is sentimentally negative for USD, positive for Equities.

·         OPEC slashed projections for demand growth for 2024 and 2025 for a fifth month. Cartel now expects global oil demand to grow by 1.61 million barrels per day in 2024, which is less than the 1.82 million barrels forecasted last month and 27% down from July estimate of 2.25 mbpd. For 2025, growth estimate to 1.45 million barrels per day from 1.54 million barrels. Sentimentally medium-term negative for crude oil prices

·         Crude oil prices jumped on reports that the Biden administration is considering additional sanctions on Russia’s oil trade, a move that could tighten the market. the Biden administration is considering additional sanctions on Russia’s oil trade, a move that could tighten the market. West Texas Intermediate crude oil futures for January closed $1.70 or nearly 2.5% at $70.29 a barrel. Brent crude futures settled at $73.52 a barrel, gaining $1.33 or 1.84%. US crude inventories fell by a more-than-expected last week with inventories down 1.43 million barrels. Sentimentally short term positive for Crude oil.

INVESTMENT CALL

Stock update: Triveni Engineering & Industries - Restructuring to enhance shareholders value

Rating – BUY                       CMP – Rs.478                       PT : Rs582

• Triveni Engineering & Industries (TEIL has proposed a strategic restructuring to simplify business structure and enhance shareholders’ value in the long run.
• For every 137 shares of Sir Shadi Lal Enterprises (SSEL), the shareholders will receive 100 shares of TEIL. Further, the power transmission business (PTB) will be demerged and listed into separate entity in the ratio of 3:1.
• Demerger of PTB (including gears and defence business segments) will enable each business to sharpen its focus and help in fast scale-up of business in the long run.
• Stock trades at 27x/22x/19x its FY2025E/26E/27E earnings. We maintain our Buy on the stock with revised PT of Rs. 582.

Valuations (consolidated)                                                                                                                 Rs.  crore

Stock Update: Bajaj Finance - Building a strong & sustainable franchise

Rating: Buy         Reco Price: Rs. 7116 Target price:  Rs. 9500

• BAF unveiled a new long-range strategy for FY25-29 and is reasonably confident. AI integration would drive gains on opex and credit costs.

• It also identified three new megatrends – Green finance on product front, multi-cloud and zero trust on tech front– and now has 28 megatrends that it will be working on.

• Company aims to build leadership in personal loans, gold loans, MFI and two-wheeler loans. It is confident to deliver 20-22% RoE.

• Stock trades at 4.5x/3.8x/3.2x its FY2025E/FY2026E/FY2027 ABV. We maintain a buy rating on Bajaj Finance Ltd. (BAF) with a PT of Rs. 9,500.

OTHER NEWS

Happiest Minds Technologies: The company arm Pure Software has strengthened its position in the digital lending space with its flagship banking-as-a-service platform, Arttha.

Reliance Power: The company arm Reliance NU Suntech received a 930 MW solar energy contract with a battery energy storage system project from the Solar Energy Corporation of India in an e-reverse auction. Reliance NU Suntech will also have to install a minimum storage capacity of 465 MW/1,860 MWh charged by solar power.

Waaree Energies: The company’s arm received a letter of award for the development of a 170 MW solar power plant in Madhya Pradesh from Rewa Ultra Mega Solar. The solar power plant will enable the generation and transmission of clean energy via the Inter-State Transmission System. The project will supply renewable energy to Madhya Pradesh Power Management Company and Indian Railways.

Embassy Office Parks REIT: The company approved the issuance of NCD of Rs 1,000 crore.

AMI Organics: The company has approved an enhancement in capital expenditure amounting to a total cost of Rs 177 crores for its brownfield project focused on electrolyte additive products at the Jhagadia facility. his increase is attributed to the additional expenditure required for building dedicated ancillary infrastructure, which includes transforming manual operations into fully automated systems, as well as constructing dedicated utilities and storage and packaging facilities.   

Bajaj Housing Finance:  shares of the company will be in focus in trade on December 12 as the three-month shareholder lock-in period for anchor investors comes to an end.     

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