Winning Strokes

The Sensex is trading at 60,281.21 up 232.74 points (+0.39%), while the Nifty is now seen at 17,911.00 up 57.80 points (+0.32%). The EOD candlestick chart of Nifty shows that it is likely to consolidate around 17700 - 18000. The real action is now expected to happen in the small and mid cap space. However, the long term trend of the indices are bullish. Photo: The Business Standard

#Meanwhile, the Iron Ore Iron prices are sliding, along with steel price and that trend is likely to continue, due to expected weak demands from China; following the Evergrande episode. Not only that the prices of aluminium and copper have also fallen on fears of poor demand from China. Though, the steel demand in India remains robust amid a revival in construction activity post second wave, but if the international markets are not showing strengths, then this optimism is likely to fizzle out soon. 

In view of this, I'm recommending a BUY on the shares of Suzlon Energy Ltd (Rs.6.35), near the CMP for short term targets of Rs.9/9.50.  Suzlon Ltd had reported a consolidated net profit of Rs.3.64 crore for the quarter ended June. Interestingly, the company had reported a consolidated net loss of Rs.398.86 crore in the same quarter of the previous fiscal. The total income rose to Rs.1,148.61 crore in the quarter from Rs.528.22 crore in the same period a year ago. The company also said the agenda pertaining to the enabling resolution for issue of securities to an extent of Rs.1,000 crore has been dropped, indicating the optimism of the management towards a turnaround. Though Q1FY22 was impacted by the second wave of the Covid-19 pandemic, making it difficult to ramp up execution, the quarterly results for the period was encouraging. One of major factors which hit the Bottomline or the margins of the company was the Steep increase in steel prices by nearly 73.80% in a year. 

Despite that, it was able to keep its operations on track and continued to build on the foundation. Even in difficult times, the order book stands at a healthy 978.2 MW.  Overcoming the challenges of Covid-19, the Operations and Maintenance Service (OMS) business continued to deliver good turbine performance. With the fall of steel prices, the company's margins are likely scale upwards.

India has set a target of achieving a 450GW renewable energy capacity by 2030. It currently has an installed renewable energy capacity of 89.63GW, with 49.59GW capacity under execution.

Also, the appointment of Himanshu Mody on-board as the Chief Financial Officer of the Suzlon Group, is seen as a positive step to cut down on expenditure and for streamlining the operations of the company.

#There are some positive news for the shareholders of Coffee Day Enterprises Ltd (Rs.31.15). The company's 70 outlets are open now and more are likely to see the light as the lockdown restrictions eases. Also, their customer care number has also started to function. 

Moreover, Rs.700 Cr plus some dues recoverable from VK Siddhartha's Mysore Amalgamated Coffee Estates Limited (MACEL), which owes a sum of Rs.3,535 crore to the subsidiaries of Coffee Day Enterprises are likely to provide the necessary life blood, to the company going forward. 

Also, the P/E of the sector in which Coffee Day Enterprises Ltd (Rs.31) operate is very high. Which means a small jump in net profit will translate into large movements in the share price of the company.

Look at its peer group companies:

#Jubilant FoodWorks Ltd (Rs.4,072.65).

#Barbeque-Nation Hospitality Ltd (Rs.1,172.30).

#Specialty Restaurants Ltd (Rs.75.80).

#Tata Coffee Ltd (Rs.205.55).

#Burger King India Ltd (Rs.163.85).

All the stocks in this sector are buzzing, as the nationwide lockdown is easing and Covid - 19 cases are ebbing.

By the way,  in Mumbai Metropolis too, Mumbaikars have been allowed to dine inside the restaurants.

Coffee Day Enterprises Ltd (Rs.31.15) will give multi - bagger returns, going forward.  I reiterate, at the moment, 70 outlets are open -- more of them will commence operations, soon. Good days are ahead for the shareholders.

#The shares of Future Retail Ltd (Rs.47.35) is consolidating around the current ranges. But one thing is baffling: if the shares of V2 Retail Ltd (Rs.161.40) is hitting continuous upper circuits, why is the share of Future Retail Ltd not moving up?

Also, I feel that June, 2021 quarter results of Future Retail Ltd, are sham and doesn't fit into the optimism shown by its CEO, Mr.Naik.  

Fundamentally speaking, not only the company's online business is doing excellently well but due to the easing of lockdown restrictions, the shopping 🛒 malls have started to function. Accumulate in declines. The last quarter results surprisingly doesn't reflect that....!!