- 3 years ago
Trade Talk | Alex and Hiral put the spotlight on #Titan, #AdaniPorts, #AdaniPower, the #MurugappaGroup amongst others. #BQLive
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00:00 Good morning and thanks so much for tuning in.
00:03 You are watching Trade Talk.
00:04 My name is Alex Mathew and this is BQ Prime of course.
00:08 With me is Heeral Dadia.
00:09 Hi Heeral.
00:10 Hi Alex.
00:11 Good morning.
00:12 Good morning and happy Monday to everybody tuning in.
00:14 You know the earning season is out of the way last week of course and well the attention
00:20 turns to several other factors.
00:21 Today I guess the big talking point is going to be the GFS listing.
00:25 Later in the week you are going to have from the global point of view.
00:28 I think there are two aspects that are playing out Heeral.
00:31 One is the China factor and how bad that slowdown is and of course in the US you have Jackson
00:37 Hole symposium which takes center stage but that's towards the end of the week.
00:41 We are still looking for direction.
00:43 Absolutely and if you see in terms of the direction, we are absolutely mirroring what's
00:49 happening in the global markets.
00:51 If you see in terms of Indian markets, four consecutive weeks of decline is what we have
00:55 already seen in the markets.
00:57 Obviously it's the metals as well as the financial stocks that have been underperforming
01:01 so far.
01:02 Now if you talk about the key indices, it's a broad range where they are stuck in and
01:07 till the markets do not find a major trigger, the consolidation that we have seen in the
01:13 last couple of trading sessions that is expected to continue as well.
01:18 From a structural perspective if you see, that is still intact which is interesting
01:23 because we will not be surprised to see some buying that could emerge at lower levels as
01:28 well.
01:29 So buy on dips, sell on rally, that's a strategy that investors are still continuing.
01:34 Now 19250, that's the critical support that we are watching out for.
01:38 Any drift below 19350 would result in a sharp correction that could lead Nifty to almost
01:44 19100 to 19000 levels in trade.
01:48 Now the put writers have also seen exiting positions from 19400 and 19500 strike which
01:54 is telling you that there is not much confidence that's coming in there.
01:58 If you talk about Bank Nifty as well, there is that indecisiveness that is looming in
02:03 terms of Bank Nifty.
02:05 And a strong close if you see above 44,000 is absolutely required for Bank Nifty to see
02:12 a change in terms of trend is concerned.
02:15 If Bank Nifty breaks below the 43,500 level on the downside, then we can go to 42,600
02:22 as well.
02:23 So these are key levels we should be watching out for.
02:25 But from the options end, if you see the highest put OI on Nifty seen at 19300 and the highest
02:31 call OI is at 19400 as well.
02:34 So these are a few of the levels we should be watching out for.
02:37 Key is there is consolidation right now in the markets.
02:40 A major trigger is required as well to see the upside.
02:44 And thirdly, the overall trend still remains intact where people are still looking to buy
02:50 at lower levels and sell on rally.
02:52 And we are considerably off, if you think about it, about 600 points off or there were
02:58 in fact more than that, 690 points off the high point that we hit not too long back.
03:03 And we have seen 4 weeks effectively of consolidation.
03:07 So that time-wise consolidation and in fact, the small price correction also has taken
03:12 place.
03:13 Now, like we said at the start, the big talking point at the start of today's session in the
03:17 first one and a half hours or so is going to be the Geo Financial Services listing.
03:23 And Mihika is joining in to give you some perspective on what to expect and also the
03:27 scenario for GFS as it enters the fray as a listed entity.
03:33 Good morning, Mihika.
03:34 Good morning.
03:35 What would you start with?
03:36 Would you talk about how it lists and what happens over the next couple of days?
03:41 Yes.
03:42 So, previously, after the demerger from Reliance Industries on July 20, a special pre-open
03:48 session was held, which gave Geo Financial Services a skype value of Rs. 261.85 per share.
03:56 This was a 96.87% premium to Reliance's apportioned cost of Rs. 133 per share.
04:03 A similar special pre-open session will be held today as well as the company goes live
04:09 from 9 to 9.45 am.
04:12 This session is for the purpose of the price discovery and will determine the price at
04:15 which Geo Financial Services lists finally on the exchanges.
04:19 And then the stock will resume normal trade from 10 am.
04:22 Before I talk about the stock's removal from the respective indices, let me provide some
04:26 background.
04:27 GFS is currently listed under a dummy ticker due to its price discovery session that happened
04:31 on July 20.
04:32 However, the shares were not transferred to the eligible Reliance shareholders.
04:37 And since permissions were pending, the GFS stock remained in the benchmark indices Nifty50
04:43 and BSE Sensex as a dormant stock.
04:46 Starting today, GFS will be retained in the index for three trading days.
04:51 The stock will remain on the index at its constant price of Rs. 261.85 till the listing
04:56 price is determined and post that it will trade normally.
05:01 In order to have a smooth transition, the stock will be removed from the indices, as
05:04 I mentioned before, after the third trading day.
05:07 In case the share price hits the circuit on the first two days, then the exclusion from
05:12 the indices will be again deferred for another three days.
05:15 However, if the stock price hits the price band on the third day, but not on the first
05:22 two consecutive days, the stock will be removed from the indices.
05:27 Earlier, FTSE had also announced that it would slate the stock from its indices, but after
05:31 Jio announced that it would list today, it has revoked the declaration and the stock
05:36 will remain on several FTSE global indices.
05:38 The stock will also be added to MSCI Global Standard Index from August 23.
05:43 Furthermore, the derived value of Rs. 261.85 per share brings Jio Financial's market value
05:50 to Rs. 1.66 lakh crores today, which is nearly Rs. 20 billion.
05:55 This makes the company the second-largest NBFC in terms of market capitalization after
05:59 Bajaj Finance.
06:00 However, the story on the ground could be different a few months down the line.
06:04 JFS does plan to foray into the digital payments bank and operations space.
06:08 The company has also applied for an insurance license as it plans to expand and enter into
06:12 this segment.
06:13 Furthermore, it has also announced a venture with BlackRock as a point of entry to India's
06:19 asset management industry.
06:21 So, although these business expansions might take time to fructify due to the regulation
06:25 requirements, the digital payment banks like Paytm or even banks like HDFC and ICICI Bank
06:30 could also be viewed as Jio's competitors in the future as their business model has
06:35 integrated insurance and asset management businesses.
06:38 Thanks, Meeka, for getting us the details.
06:40 This is going to be very interesting to see how it pans out because I was just reading
06:44 one of the reports by Jefferies as well, which is clearly indicating that with a market cap
06:48 of Rs. 1.66 lakh crores, they are seeing a core book valuation at Rs. 1.9 times price
06:54 to book so far.
06:56 And apart from that, value of the 6.1% stake that it has in Reliance Industries, that itself
07:03 is valued at around Rs. 1 lakh crores, which is almost 63% of the market cap, right?
07:08 And the promoters hold the remaining 46%.
07:12 So the entire journey from here on is going to be interesting because my conversation
07:16 with Aditya Shah on Friday also indicated that the way they will derive value for it
07:24 and what the future value for the company would be will actually depend on a lot of
07:29 businesses that they undertake because currently, it's a clean slate for them, not a lot of
07:34 businesses where they've already forayed into and started doing business.
07:39 And I think one more important factor to watch, at least in the AMC space, I know a lot has
07:44 been said about the BlackRock joint venture.
07:46 One, it hasn't yet taken off.
07:49 It has to get regulatory approvals, SEBI has to approve it.
07:52 That could take a little while.
07:53 In fact, some estimates point to next year, maybe second half is when they could get things
07:59 moving.
08:01 The other aspect is that they want to play in the index space or the passive space, which
08:06 is BlackRock's strong point, which is generally a very low margin business.
08:11 So how much money will they make as a business house?
08:14 Of course, scale is what they are aiming at, but it's not very easy to get that scale because
08:18 the incumbents have been there for quite a while.
08:21 And they've stated quite clearly that they're ready to pivot to account for anything that
08:27 a new entrant will do.
08:28 Absolutely.
08:29 It's a value versus time kind of a play that we should be watching out for.
08:33 So that's with regards to Geo Financial Services.
08:35 Watch out for a detailed coverage on BQ Prime today as well.
08:39 But moving on, you have Titan, another nifty 50 stock that is in focus in today's session.
08:45 And that's on the back of the additional stake that they've purchased in Carrot Lane, Alex.
08:51 In fact, Saloni is joining us today.
08:53 Erasmus Saloni, what's the rationale?
08:55 What is their strategy with regards to jewelry business that's made them actually increase
08:59 their stake in Carrot Lane?
09:01 Right.
09:02 So Titan did sign a share purchase agreement on the 19th of August with the founder of
09:07 Carrot Lane to acquire all the shares held by him and his family members.
09:11 That is 91.90 lakh odd shares, representing 27.18% of the total paid-up equity share capital
09:18 of the company for a total consideration of Rs. 4,621 crores.
09:25 The acquisition increases Titan's shareholding in Carrot Lane from 71.09% to 98.28%.
09:33 So Titan first invested in Carrot Lane in 2016 when Titan acquired 62% of Carrot Lane
09:40 for a consideration of Rs. 357.24 crores.
09:45 So talking about the financials of both the companies, Carrot Lane's total income surged
09:49 by 71.8% to Rs. 2,177 crores in FY23.
09:56 And Titan's revenue from its jewelry division grew 37% year-on-year to Rs. 31,897 crores.
10:04 And this revenue accounted for 88% of its total revenue in FY23.
10:09 Now Titan's jewelry division comprises an array of distinct brands such as Tanishq,
10:15 Mia, Zoya and Carrot Lane.
10:17 The division continues rapidly expanding in its network presence and successfully added
10:24 100 new stores to its network.
10:27 The company's goal for the next year includes expanding space in 15 existing stores and
10:32 opening over 40 new stores.
10:35 Alright, so that's some perspective on the business.
10:38 Again an interesting space.
10:39 Thank you so much, Saruni, for that.
10:41 Because if you look at the kind of changes that are happening in this jewelry business,
10:47 and we've spoken about this I think, is that more players are moving towards that franchise
10:51 model and that started business is becoming more and more important for the traditional
10:56 players as well as they see higher margins in that product range.
11:01 So Carrot Lane will be interesting because again it's started jewelry, right?
11:05 It is started jewelry and what's happening is it's slightly on the lower cost side.
11:09 So gifting purpose, online purchases, that side of the business probably is what Titan
11:15 is looking to grow.
11:17 And that's one of the reasons why they're seeing an increased purchase.
11:19 So covering the whole gamut, right?
11:21 Okay, so that was the story on Carrot Lane and Titan, of course.
11:26 So watch out for...
11:27 And then an interesting story I think we recently had done was whether to invest in gold or
11:34 as opposed to jewelry companies.
11:36 And clearly the trend that emerged out of it as well was that the jewelry companies
11:40 have given a higher return as compared to investments in gold from a short to medium
11:45 term perspective.
11:46 So that's an interesting aspect for anyone to consider, specifically likes of a Titan,
11:51 Kalyan Jewelers, etc.
11:52 Maybe it's the 20% making charges, you know, who knows?
11:56 But anyway, let's talk about bulk and block deals, which if you've been watching this
12:01 channel for the last few weeks, you'll have noticed that there are a lot of bulk and block
12:06 deals that have taken place.
12:07 There are several to talk about today as well.
12:09 And Varsha has all of them in a list.
12:11 Morning, Varsha, what do you have for us?
12:13 So a few of the bulk deals that took place on Friday.
12:16 So the first one is GMM Fodler.
12:18 Now, Fodler has sold almost 13.56% equity of GMM Fodler via block deal on Friday.
12:26 On completion of the share sale, the shareholding of the Fodler in the company is now at 1%.
12:31 Also among the buyers in the deal included Geranium Investments Limited, Atreides Investments,
12:36 BB and Infinity Partners, which are the funds controlled by Cris Capital.
12:41 Shares of the company tanked almost 11% in the early deals on Friday to hit a 52-week
12:45 low at Rs. 1,350 on the BSE following reports of the bulk deal.
12:50 Also, the stock later recouped losses and traded around 2% lower.
12:55 As a result of Fodler's shareholding falling below 10% in the company, two of the company's
13:00 non-executive directors, Malte Wobbys and Harsh Gupta, have resigned.
13:05 The next one we have is Jay Prakash Associates.
13:07 Now, Prarthana Enterprises sold almost 1.6 crore shares, representing 0.6%.
13:13 And this was bought by Jainam Share Consultant, almost 0.6% at Rs. 7.96 apiece.
13:20 Also, Prarthana Enterprises did one more deal in Zoya Healthcare, where it sold 3 lakh shares
13:27 at Rs. 465.55 apiece.
13:30 The next one we have is Sterling and Wilson Renewable Energy, wherein Khurshed Yazdi Darwala
13:35 sold 10 lakh shares, which represents 0.5% at Rs. 345.04 apiece.
13:41 And BF Utilities, so BF Utilities sold 2.2 lakh shares, exchange hands on Friday.
13:46 This trade led one investor, that is Ved Prakash Agarwal owned 0.6% of the company at Rs. 595.64
13:53 apiece.
13:54 Post this deal, the stock was up 3.51% on Friday.
13:58 Then we have Sriram Properties, where Samy's Dreamland sold 10 lakh shares at Rs. 73.46
14:05 apiece.
14:06 The last one we have is SJS Enterprises.
14:08 Now, Ashish Kacholia, who is famously known as the big whale of the Indian stock market,
14:12 sold part of its stake in aesthetic solution provider, that is SJS Enterprises, for Rs.
14:18 11.6 crore through the open market on Friday.
14:21 Now, he sold the shares at a premium of 1% to Thursday's closing price of the stock.
14:26 Also, on Friday, shares of SJS Enterprises ended around 1% higher on the NSE at Rs. 639.65.
14:33 As on June end, Kacholia held almost 4.34% stake in the company, which made its debut
14:39 on the bourses in November 2021.
14:42 If you see the year-to-date performance, shares of the company have given nearly 30% returns
14:47 to investors.
14:48 That's an interesting one to watch out for as well.
14:50 Thank you, Varsha, for getting us the details.
14:52 So, these are a few of the bulks of the block that we've been watching out for.
14:55 But apart from this, a lot of action that we've seen in Adani Group of companies in
14:59 terms of Friday's session as well, where you did see GQG picking up stake.
15:04 In fact, if you see the performance, a few of the names in terms of Nifty 50 did come
15:08 in from there.
15:09 Market cap addition was to the tune of almost, if I'm not mistaken, Rs. 50,000 crores.
15:15 So, good addition coming in there on Friday.
15:18 I think Rishi has more details on it.
15:20 Rishi, what do you have for us?
15:22 So, as you said, Adani puts GQG picked up an additional 0.1% stake in Adani Ports.
15:28 Which increased the total GQG stake in the company to 5.03%.
15:31 Now, apart from this, there's also Adani Par, where there was some selling from the
15:36 promoters.
15:37 So, firstly, there was Worldwide Emerging Market Holding Limited, which sold 1.21% stake,
15:43 which reduces overall stake from 5% to 3.79%.
15:47 Then there's Afro Asia Trade and Investment Limited, which sold its entire 6.88% stake.
15:52 So eventually, the promoter shareholding, it fell to 66.88% from the previous 74.97%.
15:58 Now, then we also have a couple of other stocks that are in use, particularly there's the
16:02 Murugappa group of stocks, there are about 11 stocks under this group.
16:07 So the Murugappa family's members have agreed to settle all the disputes which arose post
16:13 the demise of Mr. M. V. Murugappan.
16:15 So basically, after the demise of M. V. Murugappan, there were basically two branches within the
16:22 family group and there were disputes with Ms. Valli Arunachalam sorting a representation
16:28 on the Ambadi Investments, which is the holding company of the Murugappa group, post the demise
16:34 of her father.
16:35 Now, according to the latest update, the members have agreed to withdraw all the legal proceedings
16:39 post after all the agreed steps under the family settlement have been taking place.
16:44 And particularly, they have also committed to undertake all the necessary transactions
16:47 under the settlement within the next 90 days.
16:50 So the 11 companies that are under the Murugappa group companies are likely to express a sigh
16:54 of relief finally.
16:55 Then there's KEC International, which secured new orders worth of 1000 odd crores.
17:01 And these orders are part of three of its businesses.
17:05 So firstly, under the civil business, it received order for design, engineering, procurement,
17:09 as well as construction of a multi-speciality hospital in India.
17:12 Then there's a transmission and distribution segment.
17:15 It secured a substantial order for a 380 kilowatt overhead transmission line project in the
17:20 Middle East.
17:21 And finally, under its cable segment, the business has secured orders for supply of
17:25 various types of cables in India and overseas.
17:27 All right.
17:28 Thanks so much, Rishi, for that.
17:30 In case you were curious, some of the stocks in the Murugappa group are Tube Investments
17:36 as well as EID Parry, there's Shanti Gears, there's Carborundum Universal, Cholamandalam
17:41 Investment, there's Coromandel International, TI Financial, Wendt India, CG Power.
17:47 So a very diversified group, of course.
17:50 And this is something that has been plaguing that group, if you can call it that, since
17:56 2020.
17:57 And this is a settlement that I think a lot of the minority shareholders will also be
18:00 satisfied with.
18:02 Of course, I believe Vali and her sister have about 8% in that holding company.
18:10 So it is a minority stake, but it is an amicable settlement.
18:13 So that is positive.
18:14 We've got a lot more stocks to talk about.
18:16 And we've got Himansh joining in to give us some perspective on that.
18:21 Himansh, good morning.
18:22 Hi, good morning, Alex.
18:23 So I've got a clutch of stocks I'm tracking.
18:25 So firstly, PNB Housing Finance, the company is off put off a bunch of bad loans, summing
18:31 up to 784 crore rupees via a sale to asset reconstruction companies.
18:36 Now, this represents 1.3% stake, sorry, not stake, but 1.3% of the overall loan book.
18:43 Then Spandana Spurti Financial, the ICRA has upgraded the ratings and revised the outlooks
18:49 for various instruments from positive to stable.
18:52 The long term funds based off rupees 2,105 crores have been upgraded from ICRA A minus
18:59 to ICRA A, while non-convertible debentures of almost 380 crores have been upgraded in
19:05 a similar manner.
19:06 Now, this, besides the potential positive impact on the stock price, brings in a host
19:10 of benefits for the company, where a rating upgrade improves the credibility.
19:14 It also makes it easier to raise funds from capital markets and also reduces borrowing
19:19 costs.
19:20 Now, ONGC Videsh has secured a three year extension to explore oil and gas reserves
19:25 in Block 128 of the South China Sea.
19:28 ONGC informed this on a tweet or on the platform XNOW, formerly known as Twitter.
19:35 And this is the eighth extension it also added, and it's valid until June 15, 2026.
19:41 Now, this is in the Vietnamese part of the South China Sea in the contested waters.
19:46 And we'll see how ONGC brings out more reserves in this block.
19:53 Then we have Axis Bank, where the Competition Commission of India has imposed a penalty
19:57 of rupees 40 lakh on Axis Bank for failing to notify the regulator about its acquisition
20:02 of stake in CSEE governance.
20:05 The watchdog said in its order that the transaction under the consideration comprised 9.91% stake
20:12 in CSEE governance, and it was completed in November 2020.
20:15 However, the leading private sector bank failed to inform the trade regulator of this transaction.
20:22 So let's see how the stocks react to these developments in trade today.
20:28 Thanks so much, Hemansh, for bringing us those updates.
20:30 All right, so we've covered a lot of ground.
20:32 And despite the fact that we're still searching for direction, there is a lot of stock specific
20:35 action that you can look forward to in trade today.
20:38 And you'll find all of that live on the platform BK Prime.
20:42 So do stay tuned.
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