Winning Strokes

The BSE Senses closed at 54,277.72 on last Friday, down 215.12 points (-0.39%), the Nifty ended the day at 16,238.20 up 56.40 points (-0.35%). The indices are likely to consolidate around the current ranges, while the action will be shifted to small and mid cap counters. However, Nifty is expected to slowly crawl up in the coming days. 

The stock of Future Retail Ltd (Rs.52.55), unnecessarily hit the LC on last Friday, when the Supreme Court verdict has nothing much to do with the merit of the case. It was just of academic importance, as it deals with the enforcement of the judgement of an International arbitration court. The way the stock of Future Retail reacted on last Friday, shows that Indian markets are still immature and has low depth.

Anyway, Amazon is keenly awaiting for the SIAC verdict which in all likelihood is tentative to come within a couple of weeks. SIAC had set up a tribunal to look into allegations by Amazon that Future Group had not maintained its contractual obligations by engaging with Reliance Retail for the deal.

Meanwhile, FRL is expected to file a special leave petition and appeal against the order of Justice Midha in the Supreme Court to obtain appropriate reliefs to pursue its proposed deal with Reliance Retail. The Times of India (7 August, 2021) reported, that, "Future Retail intends to pursue all available avenues to conclude the deal to protect the interests of its stakeholders and workforce."

Another interesting point to understand is, what will be Amazon's game plan given the current Indian FDI rules, which bars foreign marketplaces to buy inventories in India. Before the deal, Amazon had taken 49% stake in Future Coupons, a Future Group entity for Rs.1,500 crore. Future Coupons holds around 7% stake in Future Retail that gives Amazon direct stake of around 3.5% in Future Retail. But according to my assessment, Amazon can't buy Future Retail directly, due to FDI rule in retail. Also, the Amazon being a minority shareholder in Future Retail, will not have much standing as far as the board decisions are concerned. 

Hence, according to my understanding the deal will ultimately go in favour of Reliance Retail, even though Amazon claims to have a first refusal agreement signed by Kishore Biyani. 

Moreover, with Local Train Service getting operational for general public from 15 August (those who have completed the full vaccination course), it augurs well for the company. Its e - commerce business is also doing fine after it was launched some months back. Like Patel Engineering Ltd (Rs.16.50), we may also see turnaround in the coming days. 

#The stock of Den Networks Ltd (Rs.51.35) is not able to break above Rs.62 - 65 ranges, but the things are set to change in the short term. 

For Q1FY22, the company's net profit rose 21% while revenue decline 7% over Q4 FY21. The results will further improve as the successive state governments relax the knockdown norms.

Live Mint reported on 1 June,  2021 that In a repeat of last year, due to Second Covid -19 wave: cable, DTH companies may lose up to 20% subscribers. This news might have spooked the investors and the scrip hell down. However, the portal also said they the DTH active subscriber base increased to 70.99 million in December 2020 from 70.70 million in September 2020. 

Another important fact is that, many customers in low-income groups have moved out from metros to hometowns and villages, commercial spaces like restaurants and hotels have also been shut down for more than a month. The stock has already reacted to such negative developments, but as the knockdown norms get further relaxed with the opening of Mumbai's suburban local train services, workers may start returning back (as situation improves and things start to get normal). 

Importantly,  compared to last year, which had seen a nationwide lockdown, people are better prepared to deal with disruptions this year and not all activity has been halted. 

Another good news for cable and DTH companies stems from their continuing relevance and ability to innovate. According to Global State of the Consumer Tracker, a survey by professional services network Deloitte, as far as discretionary spends are concerned, Indians have shown the highest intent on spending on cable TV as compared to any other country globally at 38%.

Besides,  Digital Payments are gaining an important presence in semi-urban and rural markets where data connectivity is low and the only source of infotainment is television. While there may have been discovery of web content in smaller towns, television will continue to be the mainstay in the broader perspective with no significant migration to streaming services.

All DTH platforms have already launched ‘hybrid set-top boxes’ which have linear TV and streaming sites built on one single platform. This gives the users, the required freedom to toggle between regular TV and any streaming site very easily. These boxes have gained a large number of subscribers in the last year and soon DTH operators will be launching full scale monetization of the same.

In another significant development, cable TV operators are also experimenting with their own channel launches in different ways and with movie content libraries that they are building.

Hence, accumulate the scrip of this A - group debt free Mukhesh Ambani group company in every decline. We can look for of Rs.72/97/110 by the end of this year. Photo: Zee Business. 

#Patel Engineering Ltd (Rs.16.50) came up with excellent set of June quarter number. We can look for targets of Rs.31/35 before Deepawali. Accumulate on declines. 

#The stock of National Fertilizer Ltd (Rs. 61.95) made a new 52 - week high some weeks back at Rs.73.70. If you remember it was very strongly recommended last year around Rs.18/27 ranges. Those who are still holding are requested to book profits and wait for dips to enter around Rs.57. 

#The shares of Reliance Capital Ltd (Rs16.70) should be accumulated in every market declines. 

Reliance Capital Ltd (Rs.16.70) came out with comparatively good set of numbers for the June, 2021 quarter. The consolidated net loss of the company for Q1FY22 came out to be Rs.1006 Cr against Rs.1095 Cr in Q1FY21. Sequentially speaking the net loss of the company was lower as compared to Rs.1649 Cr in the March, 2021 quarter.  The total income of the company for the June quarter was higher at Rs.4448 Cr Vs Rs.4287 in Q1FY21.

It has a presence in Finance and Investment business, General and Life Insurance, Commercial Finance and Others. The company is looking at time - bound asset monetization to meet the obligations towards the lenders and the debenture holders.