Today's Call and Other Information 

#Buy the shares of Adani Wilmar Ltd near Rs.375/Rs.377, for intraday target of Rs.383.15 (Upper Circuit) and Rs.457 an Rs.660 for the short term.

Billionaire Gautam Adani's flagship entity Adani Enterprises on Thursday approved the demerger of the company's food FMCG business to Adani Wilmar.

"It is believed that the proposed demerger will unlock the direct value of the demerged company’s shareholders into the resulting company and allow a focused strategy and specialization for sustained growth for enhanced value, which would be in the best interest of all the stakeholders and the persons connected with the aforesaid companies," Adani Enterprises said in an exchange filing. Photo: Value Research.

#According to my sources, there are some good news for the shareholders of Debock Industries Ltd (Rs.7.60). 

After the exit of one of the promoters, now the business has shifted to the pragmatic hands of the gentleman, Mr.Manveer Singh. He is amiable, dynamic and business minded. We can pin our hopes on him.

Furthermore, once the new company merges with Debock Industries Ltd, then it might propel the stock to Rs.31/32. The new company I'm told has a Resort and is making a Race Course in Jaipur. The new company is tentatively to get merged before the next Deepawali, once it gets the required NCLT clearance.  

The mining from Granite Mines were scheduled from July, 2024, but is yet to commence. 

Moreover, the recent Union Budget's stress on agriculture is positive for this company. During the Budget 2024 presentation, the finance minister Smt. Nirmala Sitaraman, announced an allocation of ₹1.52 lakh crore for the agriculture sector. Additionally, the minister stated that the government plans to introduce 109 new high-yielding, climate-resilient seeds for 32 different field and horticulture crops.

Caveat: Some of information presented regarding Debock Industries Ltd, are source based news and hence you should confirm them from your contacts.

#The 1st Target of Parsvanath Developers Ltd (Rs.17.44) has been achieved as the stock. hit the upper circuit. You should book some profits and hold the rest with a SL of Rs.16.65.

#The shares of J P Associates Ltd (Rs.9.30), a world class company in the infrastructure space has hit the Upper Circuit. The stock unnecessarily fell from dizzy heights, especially when fresh bidding is expected to take place for its cement division. We can look for targets of Rs.12/17.

#Every dip should be used to accumulate the shares of the Aditya Birla group company, Vodafone Idea Ltd (Rs.16.28). Today it fell to Rs.15.75, where the prudent investors might have accumulated. 

Vodafone Idea Ltd has a total of $26 billion in outstanding debt, almost all of it owed to the Indian government for spectrum purchases. So any positive response from the NDA government, could push up the scrip to new 52 week levels.

Furthermore, you have to check the promoters list to understand the pedigree of the company. We have a target of Rs.50 - plus in the coming months. 

 Today's Call and Other Information

#By the shares of KFC India operator Devyani International Ltd (Rs.181.06) for targets of Rs.109/Rs.117. SL: Rs.172. 

The company remains optimistic about witnessing a recovery over the next few quarters and is confident of reaching 2,000 stores by the end of calendar year 2024. Photo: Devayani International Ltd.

#The morning call on J P Associates Ltd (Rs.8.44) saw it hit the Upper Circuit. The call was given when the scrip was at Rs.8.40. 

T₁: Rs.12,

T₂: Rs.17.

There is as such NO major negative news in the counter, except the debt overhang.  Now Fresh Bidding will take place for its cement division.

#The shares of 63 Moons Technology Ltd (Rs.384) is consolidating around the current ranges. It needs to give a close above Rs.387, for further upmove.

#The shares of Swan Energy Ltd (Rs.759.30). I had earlier give a target of Rs.1000, when it was available around Rs.210.

#The stock of BLB Ltd (Rs.18) can spurt anytime from now. Accumulate with a SL of Rs.16. 

#The stock of Vodafone Idea Ltd (Rs.16.39) has started to move in a range. Keep accumulating, it for targets mentioned earlier. 

The most striking point in the scrip is that: the government of India is holding substantial stake in the company. It is likely to be another Suzlon Energy Ltd (Rs.69), which if you remember, I recommended it around Rs.6.10, when most of the investors were not ready to buy the scrip -- some were even coming up with scary debt stories at that time. Now, all of these men have suddenly vanished.

#I waiting for the June, 2024 quarter results of Rajesh Exports Ltd (Rs.314). I am expecting some improvement in the Q1FY25 results, atleast in the topline. Meanwhile, the promoters have hiked their holdings in the counter. The work is going on for the completion of Lithium-ion battery factory at Dharwad, Karnataka.

Porinju Veliath: The Downfall of His Boldest Stock Call

Porinju Veliath, the charismatic stock market maven whose predictions in the mid, small, and micro-cap spaces once enthralled investors and traders on Indian bourses, has seen his star fall faster than a penny stock in a rising bull market. That's the price you pay for excesses in the share market.

💢Remember GVK Power & Infrastructure? At Rs.6.34, it’s making new 52-week lows. Porinju, in his heyday, boldly forecasted a target of Rs.27/29. Alas, the stock barely touched Rs.17, despite his relentless endorsements on various business channels. Sure, it hit an all-time high of around Rs.80 some 15 years ago, but those glory days are long gone.

💢The Hyderabad - based power and infrastructure company GVK Power & Infrastructure, dabbling in power, roads, urban infrastructure, bio-science, hotels, and manufacturing, was once heralded by none other than Porinju Veliath as the next Rs.1,00,000 crore giant. Fast forward to today, with a current market price of Rs.6.34, it barely scrapes together a market capitalization of Rs.1,001 crore. That's what happens when you go on a debt binge—things go south faster than a stock tip from a dubious guru.

Porinju Veliath, who once owned the stock, has since distanced himself from it. However, the damage has already been done,  GVK Power & Infrastructure has tumbled spectacularly from grace and investors lost money.

💢It seems the savvy investing crowd has caught on to his game of stock manipulation. After questioning his dubious recommendations, like Archies Ltd., I found myself blocked on Twitter—a badge of honor, perhaps.

💢Once, media channels couldn't get enough of him. At the drop of a hat, they'd roll out the red carpet for his so-called "STRONG Recommendations." Following that, YouTube videos would come at lightning speeds.

But after the spectacular flameouts of some of his top picks, their enthusiasm has waned. I suspect these business channels may have been swayed by financial incentives—after all, we live in an era where "paid news" isn't just a conspiracy theory but a business model.

💢Investors, especially those dabbling in small and micro-cap stocks, should tread carefully. Porinju Veliath's fall from grace in one of his highly recommended counters serves as a cautionary tale: the market is as much about careful analysis as it is about glitzy endorsements.

As the legendary investor Warren Buffett often advises, "Be fearful when others are greedy and greedy when others are fearful." Buffett's success stems from diligent research, a focus on fundamentals, and a long-term perspective. He warns against following the herd and stresses the importance of understanding the businesses you invest in.

Key Principles of Stock Investing:

1. Do Your Homework: Before investing, thoroughly research the company. Understand its business model, financial health, competitive landscape, and growth prospects. A well-informed decision is less likely to be swayed by market noise.

2. Focus on Value, Not Hype: Invest in companies with solid fundamentals and intrinsic value. Avoid getting caught up in market fads or hot tips that lack substantial backing.

3. Diversify: Spread your investments across different sectors and asset classes to mitigate risks. Diversification helps cushion against market volatility and unforeseen downturns in specific industries.

4. Think Long-Term: Successful investing requires patience. Focus on the long-term potential of your investments rather than short-term gains. As Buffett says, "Our favorite holding period is forever."

5. Stay Disciplined: Develop a clear investment strategy and stick to it. Avoid emotional decisions based on market fluctuations. Discipline helps in maintaining a balanced portfolio and achieving long-term goals.

6. Understand Your Risk Tolerance: Assess your risk tolerance and invest accordingly. High-risk investments can offer high rewards but also come with significant losses. Ensure your investment choices align with your risk appetite.

7. Beware of Speculation: Distinguish between investing and speculating. Investing is about buying shares in a company with the expectation of long-term growth, while speculation is akin to gambling on short-term market movements.

Conclusion: It's a jungle out there, folks. Investing in stock tips from strangers, no matter how charming or seemingly knowledgeable, can be perilous. The stock market is rife with pitfalls and sirens luring you with promises of quick riches. Beware of the sweet talk and glittering targets; they often mask the harsh realities of market volatility and the risks of following tips blindly. Do your due diligence, question boldly, and remember that no one—no matter how persuasive—has a crystal ball.

As the story of Porinju dims on the stock market horizon, may it remind us all to invest wisely and question boldly.

 Winning Strokes: Think Different 

The Indian markets are on a roll, after the Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 which focused on employment, skilling, MSMEs, and the middle class. The rally in the coming days is expected to become more broad-based -- picking up momentum in the small and mid cap space. The two very important development we witness in the budget 2024 are:

💢Provision of Rs 11.11 lakh crore (3.4% of GDP) for capital expenditure.

💢Aiming to reduce the fiscal deficit below 4.5% next year and and maintaining a declining central government debt-to-GDP ratio from 2026-27 onwards.

Proposing an investment of Rs 10 lakh crore, including Rs.2.2 lakh crore in central assistance, over the next five years under PM Awas Yojana Urban 2.0 to address the housing needs of 1 crore urban poor and middle-class families. This is positive for the real estate companies which are into affordable housing.

Post Budget 2024, the mutual fund managers have been recommending three sectors where you can park your fund: 

💢 Infrastructure.

💢Banks and Financial Sector.

💢 Consumption.

I have already recommended few stocks in the space among them are: J P Associates (Rs.8.50), Reliance Infrastructure (Rs.190.70),  Paytm Ltd (Rs. 494.55), Dhanlaxmi Bank Ltd (Rs.43.13) and Parsvnath Developers Ltd (Rs.11.97). 

My old recommendation, A2Z Infra Engineering Ltd (Rs.19.46) around Rs.5, has already given multibagger returns. I recommended when the ace Investor Shankar Sharma had just exited his holding in the company.

In the consumption story the stocks like: Rajesh Exports Ltd (Rs.313.40) and Vodafone Idea Ltd (Rs.15.98), Sarthak Industries Ltd (Rs.22.83), Eros International Media Ltd (Rs.19.40) is coming to my mind at the moment. These are my old recommendations. I'm expecting the scrip of Rajesh Exports to start doing well from H2FY25.

Meanwhile, Narendra Modi government who is a major stake holder in the company is making a killing in the shares of Vodafone Idea Ltd. It acquired its stake in Vodafone Idea Ltd at ₹10 per share, above the then market price of ₹6.85; as per Companies Act regulations. It was a very prudent move of the NDA government at the correct juncture.

The markets are expected to maintain positive momentum in the coming days, with the rally slowly turning into broad-based. The investors are suggested to cut down on speculation and buy scrips which has a story to tell. 

JP Associates Ltd (Rs. 8.50) and Buyer Freeze Syndrome

JP Associates Ltd has been enjoying a series of Buyer Freezes lately. Interstingly, when stocks surge, everyone becomes a market sage armed with lofty targets coupled with an array of postive vibes. 

But when they stumble or when the share starts hitting continuous Seller Freezes, it's all doom and gloom out there in the bourses — a phenomenon Rakesh Jhunjhunwala famously called "Analysis Paralysis." 

I've seen this play out with my earlier recommendations too like: Premier Explosives Ltd at Rs.29/30, Suzlon Energy Ltd at Rs.6, Swan Energy Ltd at Rs.210, and Wockhardt Ltd at Rs. 170, to name a few. These stocks have turned into multi - baggers over time. 

Incidentally, the real issue arises when some folks in stock market start comparing option trading gains to equities—apples and oranges, guys! Don't get confused!

Meanwhile, some of you have asked me, about JP Associates Ltd’s targets. Honestly:

💢 I have no clue why it plunged from such dizzy heights. The acronym, NCLT probably kicked in the fear psychosis.

💢 2ndly, with Adani reportedly interested in its cement division, who knows where it could go?

I'll post a brief review on my blog today, factoring in the latest news and budget updates, if time permits. Keep an eye on the blog update, after 7 pm.

Good morning and have a fantastic Sunday!

 BLB Ltd (Rs.18.05): An Emerging Opportunity in the Share Market

Recent intel from my reliable sources in Delhi indicates that the proposed open offer price of Rs.22.50, which surfaced in January 2024, was ultimately rejected by both parties due to procedural and other undisclosed issues. 

However, these setbacks have not deterred the company's outlook, as it is poised for a promising performance starting this quarter, according to the sources who preferred to remain anonymous.

By the way, as the shares of numerous brokerage houses are climbing in sync with the Sensex, this particular stock has the potential to be a standout performer. It is advisable to accumulate this stock close to the company, as it is expected to gain momentum imminently. Photo: Economic Times, March 2024.

Price Targets:

💢First Target: Rs. 32

💢Second Target: Rs. 37

So, dear investors, it appears the stage is set for this stock to steal the spotlight and dance its way up the charts. Keep an eye on it, for you never know when the music might start and the share price might just waltz to new heights. Happy investing, and may your portfolios be ever in your favor!

Important: Some shares where virtually there's hardly any activity, like sloth on a lazy Sunday, is  languishing in the T - group for months; for some reasons as mysterious as the Bermuda Triangle.

I would like to reiterate and emphasize that, since the arrival of the new Chairperson, the performance of SEBI and its Surveillance Department have been very abysmal and worrisome. 

Therefore, the Government of India should step in, plug the loopholes and rev up their engines to get things back on track.

The recent Telecom Tariff Hike was comparable to what money would have earned in Bank FDs..

Interest charged by banks and financial institutions is like a premium on your idle money, or in simpler terms, it's the rent you pay for letting your money change locations from your pocket to theirs.

Recently, telecom companies hiked their tariff plans after a three-year pause, much to the chagrin of many Indians. However, these recent hikes, ranging from 17-19%, coupled with the natural growth in data usage thanks to the 5G wave, are expected to push the industry average revenue per user (ARPU) to a decade-high of Rs.225-230 by fiscal 2026, up from Rs 182 in fiscal 2024, according to CRISIL Ratings. Photo: The India Times.

CRISIL Ratings also noted that, along with a reduction in capital expenditure due to fewer network investments following the completion of 5G roll-outs and limited spectrum renewals, the return on capital employed (RoCE) will improve. This will support deleveraging in the industry, thereby enhancing credit profiles. Prior to this, the telecom companies had raised their mobile tariffs in November 2021.

Now the question remains: was the telecom Tariff hike too steep. Let's examine:

Suppose we have Rs.1000, how much time would it take to double the amount with an existing interest rate of 8% for one year FDs? ====================

To find out how long it takes for an investment to double with an 8% annual interest rate, we can use the formula for compound interest:

 A = P (1 + r/n) ⁿᵗ ------ (1)

where:

- A,  is the amount of money accumulated after ( t) years, including interest.

- P, is the principal amount (the initial amount of money).

- r, is the annual interest rate (decimal).

- n, is the number of times that interest is compounded per year.

- t, is the number of years the money is invested for.

Here:

A = Rs.2000

P = Rs.1000 

r = 0.08 (or 8% per year)

n = 1 (We have taken it as compounded annually. If it is compounded monthly or weekly the figure would be different)

We need to solve for "t" (The time period the principal sum gets doubled). Putting the values in the equation (1) we get:

2000 = 1000 (1 + 0.08/1)ᵗ,

=> 2 = (1+ 0.08)ᵗ

Taking natural logarithm (ln) of both sides:

ln (2) = t * ln (1.08),

=> t ~ 9 years.

It will take approximately 9 years for Rs.1000 to become Rs.2000 at an 8% annual interest rate, compounded annually.

This means if anyone had kept the money in Banks it would have earned at ~26% (25.97%) interest in 3 - years. 

Remember we have taken PLR for calculation. The companies takes loan at a  much higher intes rate. So, considering those cases, was the telecom Tariff hike too high or less or fine ? 

Do let me know your views, either in this website or in the socal media platforms where I am active (Facebook and Twitter basically).

 Today's Call 

#Buy the shares of 63 Moons Technology Ltd (erstwhile Financial Technical Ltd) near the CMP of Rs.350, SL: Rs.342, T: Rs.421. 

63 Moons Group is radically transforming from a traditional fintech company to a leading-edge technological enterprise. This evolution focuses on emerging technologies, including blockchain, digital assets, cybersecurity, artificial intelligence (AI) and legal tech. 

63 Moons Technologies Ltd is transforming from fintech to tech enterprise, focusing on blockchain, AI, and cybersecurity. Key initiatives include 63 SATS, 3.0 Verse, and QiLegal. Photo: AngelOne

As mentioned above, the company has forayed into new verticals which will take the scrip to new highs.

63 moons Technologies offers consultancy, computer programming, and related services. It is a global leader in supplying technical intellectual property (IP) and domain expertise for the development and trading of advanced financial markets. These markets are designed to be transparent, efficient, and liquid, covering a wide range of asset classes such as stocks, commodities, currencies, and bonds.

#Accumulate the shares of Vodafone Idea Ltd near Rs.16.57/Rs.16.60, T: Rs.25/Rs.27/Rs.32. Three recent developments involving Vodafone Idea are noteworthy:

💢Financial Guarantee Waiver Request: As reported by The Business Standard on July 11, 2024, Vodafone Idea has approached the Department of Telecommunications (DoT) to request a waiver for a financial bank guarantee worth Rs 24,747 crore, which is due in September 2025. 

This guarantee must be deposited one year prior to the due date, as per spectrum auction rules. A source, who wished to remain anonymous, informed PTI of this request.

The moratorium period for spectrum payment obligations from auctions held until 2016 ends between October 2025 and September 2026. Given the government’s significant stake in the company, it is anticipated that measures will be taken to prevent any adverse impact on Vodafone Idea.

💢 Convertible Debentures Conversion: According to a report by the Economic Times on July 12, 2024, the Indian unit of American Tower Corp (ATC) has asked Vodafone Idea to convert the remaining 1,600 optionally convertible debentures (OCDs) into 160 million fully paid equity shares, representing a small 0.2% stake. Vodafone Idea is working towards this conversion as part of its financial strategy.

💢 Funding and Network Improvements: The India Times reported on July 11, 2024, that Vodafone Idea, bolstered by Rs 215 billion in recent funding, is set to enhance its network quality, potentially slowing subscriber growth for competitors Reliance Jio and Bharti Airtel. S&P Global noted that Vodafone Idea raised most of these funds through a Rs.180 billion follow-on public offer (FPO) completed in April 2024. 

The company plans to issue shares worth Rs.24.6 billion to equipment vendors Nokia and Ericsson to settle outstanding payments. 

Meanwhile, Equity Analysts have set target prices for the company’s shares ranging from Rs.22 to Rs.34, despite expectations of revenue decline due to a lack of network expansion and ongoing subscriber churn. 

Furthermore, on the positive side, the impact of recent tariff hikes by all three telecom operators is expected to be felt from the third quarter of FY25.

In an interesting development, Narendra Modi government is making a killing in the shares of Vodafone Idea Ltd. It acquired its stake in Vodafone Idea Ltd at ₹10 per share, above the then market price of ₹6.85; as per Companies Act regulations. It was a very prudent move of the NDA government.

#Accumulate the shares of BLB Ltd (Rs.18.65) in market dips. In January 2024, media reports indicated that Dream Achiever Consultancy Services Private Limited had announced an open offer for the acquisition of up to 1,37,44,967 (One crore thirty-seven lakh forty-four thousand nine hundred sixty-seven) fully paid-up equity shares of BLB Limited.

The shares have a face value of Re.1 each and represent 26% of the total issued, outstanding, and fully paid-up equity share capital of the company. The offer price was set at Rs.22.60 per equity share, higher than the CMP of the shares, indicating some form safety in terms of investment.

#In another significant development, the shares of Indowind Energy Ltd (Rs.32) made an intraday high of Rs.34.65, a couple of days back. I have been recommending the share since it was near Rs.10. The stock has given multifold returns to patient shareholders. You may book complete profits and wait for dips to enter.

#In an encouraging development, the shares of my recently recommended P C Jewelers Ltd (Rs.70) made a new 52 - week high Today at Rs.70.70. You may book profits and wait for dips to enter again. Congratulations to the shareholders.

 Today's Call

Introduction: BLB Limited specializes in 'Jobbing and Arbitrage,' known for its strong capital commitment and deep understanding of market dynamics and structure. The company's main business is trading and investing in shares and securities. BLB Limited is a corporate member of the National Stock Exchange of India Limited (NSE).

Buy the shares of BLB Ltd near the CMP of Rs.19.50, for targets above Rs.27.

According to ICICI Securities, here are the strengths of the company:

💢 Rising Net Cash Flow and Cash from Operating activity.

💢Company with Low Debt.

💢Increasing Revenue every quarter for the past 2 quarters. Photo: Nirmal Bang.

In a significant development in January, 2024, Dream Achiever Consultancy Services Private Limited, purchased 1.37 crore fully paid-up equity shares from public shareholders at a price of Rs.22.60 per share through an open offer. The total expenditure incurred by Dream Achiever Consultancy on this open offer amounted to Rs 31.006 crore. The face value of BLB Limited shares is Re.1.

Special Offer: If you have a portfolio size of Rs.1 (one) lakh and want to earn a steady income through a steady mix of delivery based (>= 80%) and options trading (<= 20%), then you can go for my profit sharing (70:30 below Rs.10 lakhs -- fixed) arrangement. If you remember, earlier the minimum portfolio size to join me was Rs.2 (two) lakhs.

Procedure:

💢You have to compulsorily open a demat account in my associated Brokerage House.

💢 Provide me, User Name and Password to trade (buy and sell) in your account.

💢The profit and loss will be adjusted every week and settled. If there's any loss, it will be adjusted in the future trade.

💢No stock will be bought in Figures Market, except sometimes a little risk will be taken in the Options Trading with less than 20% of the total portfolio amount (occassionally) to speed up the process and at the same time lower the risk of the money invested. 

💢No margin trading will be done in the account, to maintain a limited risk profile of the portfolio.

💢No other demat account, except those from my associated Brokerage House, will qualify for this offer.

💢This offer is valid till Kali Pooja (Deepawali/Sambat).

💢For more details, please send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

1.

 Today's Call

Introduction:

Ashoka Metcast Ltd is a part of a diversified business group having interests in several sectors, which include: Oil and Gas, Steel, Infrastructure, Electronic Equipments and Real Estate. 

Its flagship Group Company - Gujarat Natural Resources Ltd is engaged in the business of Oil & Gas exploration and production. The company is listed in the BSE.

Buy the shares of Ashoka Metcast Ltd near Rs.20.40/Rs.20.50, for short term targets of Rs.32/37.

Financials:

Market Cap: Rs.50 Cr.

EPS: Rs.2.

TTM P/E: 10.10.

Industry P/E: 44.24.

Book value: Rs.41.83.

Ashoka Metcast Ltd's March, 2024 quarter's Financial Performance: 

Ashoka Metcast's net profit increased by 185.60% to Rs.3.57 crore in the quarter ending March 2024, compared to Rs.1.25 crore in the same quarter of the previous year. During the same period, sales went up by 104.62% to Rs 39.39 crore, from Rs.19.25 crore the previous year.

For the full year ending March 2024, the net profit grew by 48.76% to Rs.4.79 crore, up from Rs.3.22 crore the previous year. Annual sales also rose by 31.34% to Rs.66.25 crore, compared to Rs.50.44 crore in the previous year. 

From Simply Wall:

Ashoka Metcast had ₹127.9m of debt at March 2024, down from ₹157.5m a year prior. However, because it has a cash reserve of ₹15.1m, its net debt is less, at about ₹112.8m.

The latest balance sheet data shows that Ashoka Metcast had liabilities of ₹206.1m due within a year, and liabilities of ₹60.2m falling due after that. On the other hand, it had cash of ₹15.1m and ₹262.8m worth of receivables due within a year. So it actually has ₹11.6m more liquid assets than total liabilities.

This surplus suggests that Ashoka Metcast has a conservative balance sheet, and could probably eliminate its debt without much difficulty. Photo: Markets Guruji.

Special Offer: If you have a portfolio size of Rs.1 (one) lakh and want to earn a steady income through a steady mix of delivery based (>= 80%) and options trading (<= 20%), then you can go for my profit sharing (70:30 below Rs.10 lakhs -- fixed) arrangement. If you remember, earlier the minimum portfolio size to join me was Rs.2 (two) lakhs.

Procedure:

💢You have to compulsorily open a demat account in my associated Brokerage House.

💢 Provide me, User Name and Password to trade (buy and sell) in your account.

💢The profit and loss will be adjusted every week and settled. If there's any loss, it will be adjusted in the future trade.

💢No stock will be bought in Figures Market, except sometimes a little risk will be taken in the Options Trading with less than 20% of the total portfolio amount (occassionally) to speed up the process and at the same time lower the risk of the money invested. 

💢No margin trading will be done in the account, to maintain a limited risk profile of the portfolio.

💢No other demat account, except those from my associated Brokerage House, will qualify for this offer.

💢This offer is valid till Kali Pooja (Deepawali/Sambat).

💢For more details, please send me a mail at: suman2005s@rediffmail.com or sumanm2007s@gmail.com.

 Today's Call

#Re - enter the shares of Vodafone Idea Ltd (Rs.17.41) near the CMP for short term targets of Rs.22 and Rs.28. After the tariff hike and a bounce from Rs.17.30, the stock is looking attractive Moreover, Nuvama expects an inflow of $ 254 million through the passive funds. Also, Vodafone Idea, 5 other stocks expected to enter MSCI index, as per a recent report in Economic Times.

Meanwhile, JM Financial is bullish on Vodafone Idea as they see the telecom space remain in pink after the recent price hike. The stock has witnessed a bump in volumes in the last 3 months along with a bullish pole and flag pattern set up, says the research firm. The analysts gave a target of Rs.24/28 for the stock.

Amar Deo Singh, Head Advisory at Angel One on Monday said the telecom companies will gain from the recent tariff hike as they have not raised tariffs since 2021. 

For Vodafone Idea Ltd (VIL), the analyst said the stock has been like a "slow and steady" performer recently. "It seems that the worst is over for the stock. If it manages to sustain above Rs 21-22 levels, then the stock is headed for significant rally," Singh stated.

#The stock of Swan Energy Ltd (Rs.624) made an intraday high of Rs.628. The value unlocking of the shares will take place after the listing of RNEL, which has the capability to manufacture war ships.

#The shares of Indowind Energy Ltd (Rs.29.99) hit the Buyer Freeze in the NSE. I have been repeatedly advocating a buy and hold in the scrip since it was around Rs.11/12.

#Paravnath Developers Ltd (Rs.12.58) is showing gradual Improvement in fundamentals. The risk taking investors can buy the scrip for short term targets of Rs.21/22.

Front Running and Swan Energy Ltd (Rs.192.15)

Accumulate the stocks from distress selling....

Front-running is an illegal and unethical practice where someone trades in shares based on advance information from a broker, dealer, analyst, or other executive at a market intermediary in their personal accounts, before the trades are executed by that entity.  Photo: The Hindu BusinessLine.

After the name of Swan Energy Ltd, got entangled with Quant Mutual Fund, selling has been witnessed in the counter, especially yesterday when it fell more than 4% in intraday trade, closing near the days low. 

It is to be noted that around 100 stocks out of the basket consisting of 178 that are part of the portfolio of Quant Mutual Fund ended lower, post Moneycontrol's report on Sunday that mentioned SEBI's search and seizure operations on the premises of the fund house. The operation was conducted across two locations – Mumbai and Hyderabad. Quant Mutual Fund is owned by Sandeep Tandon, with assets under management close to Rs.90,000 crore.

It is pertinent to mention here that Quant Mutual Fund has been a top performer, growing its AUM significantly from Rs.258 crore in January 2020 to over Rs.90,000 crore by June 2024. 

However, selling in the counters of Swan Energy Ltd is just a MISNOMER, since allegations of front running is on the fund house and has nothing to do with individual stocks; except creating a negative sentiment on future performance (of the stocks in its portfolio); leading to forced redemptions by the investors -- means there could be sudden increase in supply of the shares of Swan Energy Ltd. 

The prudent investors should therefore accumulate the panic - selling - stocks by the investors of Quant Fund.

Meanwhile, according to Trenlyne, in May 2024, 27 mutual funds bought while only 4 mutual funds sold Swan Energy Ltd, resulting in a net change of 193,576 shares. 

Kirtan Shah from Credence Wealth Advisors LLP noted that Quant MF holds substantial investments in large-cap stocks, with significant exposure to Reliance. He mentioned that liquidity for redemptions isn't a concern but anticipated potential selling in mid and small-cap stocks held by Quant, possibly leading to short-term underperformance.

You need to accumulate, since a major event like RELISTING of the shares of Reliance Naval and Engineering Ltd (RNEL) will take place very soon. Post Listing Swan Energy Ltd will get the tag of Defence Stock, since according to my sources, RNEL has a high probability of getting contract for making WAR SHIPS.

Another major factor fueling the positive sentiment around Swan Energy Limited is its recent success in obtaining a significant order from the Karnataka government. 

The company will be installing India's second-largest solar plant, a pioneering project that highlights Swan Energy’s dedication to sustainable energy solutions. This initiative aligns seamlessly with the Indian government’s ambitious renewable energy targets and is anticipated to greatly enhance the company’s long-term growth.

About Swan Energy Ltd:

Swan Energy Limited, based in Mumbai, Maharashtra, is a global company with a long history dating back to 1909. Owned and managed by the Dave and Merchant families, it operates in three main areas:

Textile: Swan Energy produces and sells cotton and polyester textiles. It has a modern fabric processing plant in Ahmedabad, capable of handling 100,000 meters per day.

Real Estate: This segment focuses on developing and managing residential and commercial properties. The company is known for its high-quality construction and has completed over 24 million square feet of projects.

Energy: Swan Energy plays a crucial role in India’s energy sector with its 5 MMTPA FSRU-based LNG terminal in Jafrabad, Gujarat, the first of its kind in the country.

The company is known for its quality products and services and is always looking for growth and innovation opportunities. 

Some of its notable achievements include the 2018 commissioning of the Jafrabad LNG terminal, winning the “Best Energy Company” award at the CNBC-TV18 India Business Leaders Awards in 2020, and being ranked 10th on Forbes India’s Most Valuable Private Companies list in 2021.

As Swan Energy continues to grow and achieve milestones, it remains a significant player in India’s industrial sector. With a strong focus on renewable energy, the company is well-positioned for a bright future that aligns with India’s energy goals.

Investors and stakeholders are keenly watching its progress, expecting substantial returns in the coming years.

 Today's Calls

#Buy the shares of P C Jewelers Ltd (Rs.50.40) near the CMP for targets of Rs.61/67. The company has come up with better Bottomline in March, 2024 quarter. It is raising Rs.2000 crore debt through rights issue and private placement. Photo: Just Dial.

On June 26, 2024 the price of 10 grams of gold was ~Rs.72,000. Pure 24-carat gold was valued at Rs.72,220 per 10 grams, while 22-carat gold was priced at Rs.66,240 per 10 grams, indicating a drop in price. At the same time, the price of silver dropped to Rs.91,600 per kilogram.

#The share of Vodafone Idea Ltd (Rs.18.04) made a new 52 - week and reached my 1st Target of Rs.18. Book some profits and wait for dips to enter.

#The stock of Parshnath Developers Ltd (Rs.13.70) moved to Rs.13.80. The company came up with satisfactory March quarter results. Accumulate for targets of Rs.17/22. 

#The scrip of J P Associates Ltd (Rs.9.92) made an intraday high of Rs.10.25 yesterday. Accumulate for targets of Rs.17/19.

#Accumulate the shares of Eros International Media Ltd (Rs.19.52) near the CMP. T: Rs.27/32, which it should reach before Durga Pooja.

 Swan Energy Ltd (Rs.618.65): Buy

Target: Rs.1000+

Time: 9 to 12 months.

One of the most influential businessmen in NaMo's India is someone you likely haven't heard of much. If you search for Nikhil V. Merchant online, you'll struggle to find a photograph, profile, interview, or even a quote from the entrepreneur in his fifties. However, his close ties with Narendra Modi are well-known among the top ranks of the Bharatiya Janata Party (BJP) and its government in Delhi. Photo: Instgram.

While other corporate giants make headlines, the promoter of a relatively obscure company, who is believed to have Midas touch, Swan Energy Ltd, is genuinely enjoying "Achche Din" as public sector firms eagerly seek to do business with him. Swan is led by Nikhil Merchant and his father-in-law, Navinbhai Dave, who purchased it from the Goenka group in 1991.

Swan Energy Limited is an Indian business enterprise that operates in the petrochemical, textile, real estate, and energy industries. Textile, Energy, Building/Others, Distribution & Development, Warehousing, Manufacturing, and Power Generation are some of its segments.

Swan Energy's diversified business verticals include Oil & Gas, Petrochemical Manufacturing & Trading, Textiles, and Realty. Its business segments encompass Textile, Energy, Construction/Others, Distribution & Development, Warehousing, Manufacturing, and Power Generation.

Swan Energy Ltd (Rs.618.65) earlier this year raised Rs.3,000 crore from qualified institutional placement of shares, priced at Rs.670 apiece, this is at a premium of ~7.50% with respect to CMP. 

In March, 2024, its natural gas business arm Swan LNG Pvt Ltd prepaid Rs.2,206 crore of loan taken from a consortium of lenders. Post-prepayment, Swan LNG's debt has come down to Rs.1,611 crore and the firm will save around Rs.250 crore in interest cost annually.

Reliance Naval and Engineering Limited (R-Naval) is an Indian company based in Mumbai that builds ships and heavy industrial equipment. It used to be called Reliance Defence & Engineering Limited, Pipavav Shipyard Limited, and Pipavav Defence & Offshore Engineering Limited. The company is working on getting listed again on both stock exchanges.

In March, 2024 Swan Energy announced that in accordance with the order of the Hon'ble NCLT, Ahmedabad Bench dated 23 December 2022, issuance of 1 equity share for every 275 equity shares held by the existing shareholders of RNEL (Reliance Naval and Engineering Ltd) is completed. RNEL is in the process of obtaining the RELISTING approval from the stock exchanges and has made the required payments as demanded by the exchanges. The final listing approval is under consideration of the exchanges. Once the listing of RNEL is done tentatively by August, 2024, the value will unlock.

This acquisition is a strategic move for the company, positioning itself as major player in the commercial and Naval Vessel manufacturing and ship repair company in India. It is poised to become the largest private entity in its domain of operations in India. Moreover, according to my sources, there's a high chance of RNEL getting contracts for making  WAR SHIPS as it is a highly sophisticated company. 

It is to be remembered that Swan Energy is a strategic investor of Successful Resolution Applicant (SRA), i.e., Hazel Mercantile (HML), through a Special Purpose Vehicle, namely Hazel Infra (HIL), to acquire Reliance Naval & Engineering.

In a significant development, in August 2016, India's major public sector oil companies, ONGC, IOC, and HPCL, backed Merchant's favored project—an LNG terminal at Jafrabad port in Gujarat. These three firms reserved 60% of the terminal's capacity, which is a floating storage regasification unit (FSRU). Additionally, the Gujarat government company GSPC reportedly booked 1.5 MT of the terminal's capacity. These offtake agreements have made the LNG venture almost risk-free for Nikhil Merchant.

I am not aware of the final status of its Rs.5600 crore (Rs.56 billion) Floating Storage and Regasification Unit-based liquid natural gas (LNG) import terminal at Jafrabad in Gujarat, but last time I read somewhere that it is in the final stages of completion. This is a massive venture and could alone take the scrip above Rs.1000.

In 2022, Swan Energy, the manufactures and markets cotton and polyester textile products in the country expanded the capacity of its Ahmedabad plant to 3 million metres per month. 

The business aims to tap into retail and export markets in areas including Latin America, South Africa, Vietnam, Bangladesh, Sri Lanka, and the US.

Flip side: Probably, the only notable controversy involving Swan occurred in March 2009, when the Gujarat government under Narendra Modi decided to transfer a 49% stake in the Gujarat State Petroleum Corporation’s Pipavav Power Company Ltd (GPPL) to Swan Energy for Rs.381 crore.

 Today's Calls

#You can take fresh entry at Paytm Ltd near the CMP of Rs.404.75, T: Rs.441, SL: Rs.392. 

There are media reports about Zomato Ltd (Rs.195.50) being in talks with Paytm for acquiring the latter’s movies and event ticketing business. Both the companies confirmed the development but said that the talks were at preliminary stages and no binding agreement was signed. This if happens will be a win - win situation for both the companies. If you remember, I recommended Zomato Ltd near Rs.53, which turned out to be a multibagger. There is rumour of Gautam Adani group, in talks with Paytm Ltd to take a substantial stake in the company.

The Economic Times reported on June 16, 2024 that Zomato is looking to acquire Paytm’s movie booking and events unit, in a deal that may value Paytm’s vertical at around Rs.1,600-1,750 crore. Post the addition of receivables from cinema exhibitors, the valuation could go up to Rs.2,000 crore, according to that report.

#The stock of Indowind Energy Ltd (Rs.25.45) is clocking huge volume today. In the NSE, the volume of shares traded has crossed 18 lakhs. Something could be cooking in the counter. Keep watch.

#The scrip of Vodafone Idea Ltd (Rs.17.10) is getting resistance around Rs.17.40. Unless the shares closes above this level, it might consolidate around the current ranges. Keep SL of Rs.16.70.

#The cost cutting measures of Zee Entertainment Enterprises Ltd (Rs.155.45) should etch a better fundamentals for the company. The company has already turned positive in the March, 2024 quarter. This positive momentum is expected to continue in future. You should keep it in your portfolio, as it rumoured to be closely associated with the BJP government. Target: Rs.197. Photo: Live Law.

#The stock of J P Associates Ltd (Rs.10.74) made an intraday high of Rs.10.94, clocking a huge volume of 68.45 lakhs. Accumulate!

#Meanwhile, Parsvanath Developers Ltd (Rs.13.26) came out with satisfactory set of March, 2024 quarter results.

💢Consolidated net loss of Rs.307.37 crore in Q4FY24 Vs Rs.421.18 crore in Q4FY23, showing an improvement on Y - o - Y basis.

💢However, an elevated Finance cost of Rs.223.46 crore in Q4FY23 Vs Rs.106.37 crore in Q4FY23 is a matter of concern.

💢Fall in sales should not be of much concern for a construction company, because it will deliver when its project gets completed. Hold!! 

 Today's Call

#Accumulate the shares of Zee Entertainment Enterprises Ltd near the CMP of Rs.155 for targets of Rs.170 and Rs.197.The short term correction seems to be over in the scrip. 

#The shares of Sarthak Industries Ltd (Rs.25.50) have not moved up since a long time. This quarter results of the company is expected to be better than Q4FY24.

#Accumulate the shares of Eros International Media Ltd (Rs.20.68) near the CMP for targets of Rs.27/31. The season of the media sector has already kicked off.

#The stock of IDFC First Bank Ltd (Rs.83.40) made an intraday high of Rs.83.94. The stock was recommended around Rs.78 on Twitter (X) last week.

#Buy the shares of Parsvanath Developers Ltd (Rs.14) for short term targets of Rs.19/21. If you remember, I have been recommending the scrip since it was around Rs.7/8.

In the Q3FY24 the company came out with good results. The topline increased by 223.41% & the loss decreased by 89.75% YoY. As compared to the previous quarter the revenue grew by 83.1% and the loss decreased by 77.98%.

Parsvanath Developers Ltd has informed the BSE that the meeting of the Board of Directors of the Company is scheduled on 20/06/2024 ,inter alia, to consider and approve The Audited Financial Results of the Company (both Standalone and Consolidated) for the Quarter and Financial Year ended March 31, 2024, and Recommend dividend, if any, for the Financial Year 2023-24.

#The shares of Indowind Energy Ltd (Rs.26.10) hit the Upper Circuit. I have been advocating a buy on the scrip since some time.

#In a significant development Vodafone Group plans to sell an almost 18% stake in India's Indus Towers for up to $ 2 billion (~Rs.16,500 Cr). This is a significant increase from the approximately 10% stake they initially intended to sell. 

The telecom company, holds 21.50% stake in Indus Towers. It is planning to use the proceeds from the sale to repay debt, according to a report by Reuters.

Moreover a tariff hike of ~20% by telecom Companies can come at any time.

Thus the revised target of Vodafone Idea Ltd (Rs.16.54) is Rs.32.

#My recently recommended Dhanlaxmi Bank Ltd (Rs.44.88) hit the Upper Circuit. It is one of the finest banks from South India.

#Accumulate the shares of J P Associates Ltd (Rs.10.80), for targets of Rs.21/25, as now NCLT will speed up the process of the sale of cement division.

 Today's Call

Buy the shares of Jaiprakash Associates Ltd (J P Associates Ltd) near the CMP of Rs.11.21, for short term targets of Rs.19/21. SL: Rs.9.70.

Founded by Jaiprakash Gaur, the group experienced rapid growth from 2000 to 2006, benefiting from surges in real estate and infrastructure. Jaypee Power Ventures Ltd and the group’s engineering and construction arm, JP Associates Ltd, saw their revenues increase significantly, with annual growth rates of 26.92% and 32.08%, respectively, from 1999-2000 to 2014-15. However, during this period their debts also grew substantially, increasing by 40 times and 20 times, respectively.

Recently, the Allahabad bench of the National Company Law Tribunal (NCLT) directed initiation of insolvency proceedings against debt-ridden Jaiprakash Associates (JAL). The insolvency plea against the company was filed by ICICI Bank and State Bank of India in 2018 and 2022 respectively.

Pronouncing the order, a two-member NCLT bench, comprising members Praveen Gupta and Ashish Verma also appointed an interim resolution professional (IRP). Photo: Just Dial.

Reduction or Debt: The company has been selling its cement plants to reduce debt. In December 2022, Jaiprakash Associates (JAL) and Dalmia Bharat had signed a framework for the acquisition of JAL's cement, clinker and power plants for an enterprise value of Rs.5,666 crore. In April 2023, a definitive agreement was signed between Dalmia Bharat and JAL to acquire the cement business as per the announcement.

Out of its substantial debt of ₹29,805 Cr, JP Associates (Rs.10.80) plans to transfer ₹18,955 Cr to a SPV. This transfer, which is part of a Scheme of Arrangement, awaits approval from the NCLT and has already been endorsed by all relevant stakeholders.

In order to reduce its debt, J P Associates Ltd in November last year, announced a deal to transfer about shares worth Rs.360 crore to ICICI Bank under a settlement agreement.

The company is thus slowly cutting down its debt and currently it needs around Rs.5000 crore to clear off the NCLT mess, which I believe is achievable, without much hassles.

I feel this NCLT move might speed up the process of Cement division sale, which is struck up since 2022.

Coffee Day Enterprises Ltd (Rs.57.30): Buy

Coffee Day Enterprises Ltd (Rs.57.50) is engaged in the trading of coffee beans. The company owns and operates a resort and renders consultancy services. It is also engaged in the coffee business which ranges from procuring, processing and roasting coffee beans to retailing coffee to domestic and overseas customers.

Coffee Day Enterprises Ltd has seven subsidiaries:

💢Coffee Day Global, 

💢Tanglin Retail Reality Developments, 

💢Tanglin Developments, 

💢Giri Vidhyuth (India), 

💢Coffee Day Hotels & Resorts, 

💢Coffee Day Trading and 

💢Coffee Day Econ.

As per media reports, Prashant Jain, the former MD and CEO of JSW Energy, has bought a stake in in Coffee Day Enterprises Ltd, through his personal fund Tikri Investments. He picked up 40 lakh shares, translating to 1.89% stake in the company. The shares were bought at Rs.70.94 apiece, which is much higher than the CMP. Photo: Business Today.

 Today's Calls

India's retail inflation, though exceeded the central bank's target of 4%, has remained within the 2-6% tolerance range for nine consecutive months. Last week, the RBI maintained the policy rate at 6.5%, indicating that interest rate cuts may be delayed as the central bank waits for inflation to stabilize.

According to data from the statistics ministry, retail inflation based on the consumer price index (CPI) dropped to 4.75% in May from 4.83% in April, marking the lowest rate in a year. This moderation was driven by slower price rises in food items like meat, fish, dairy products, vegetables, and spices. Inflation has remained below 5% since March.

Food inflation, which constitutes nearly 40% of the overall consumer price basket, rose 8.69% year-on-year in May, slightly down from 8.70% in April. Food prices have remained high for over a year, largely due to last year's uneven and below-normal monsoon rains. Food inflation has consistently stayed above 8% since November.

Last week, the Reserve Bank of India (RBI) kept the benchmark repo rate unchanged at 6.5%, signaling that interest rate cuts might be delayed. However, Interstingly two monetary policy panel members advocated for a rate cut and a change in monetary stance. The RBI last raised the repo rate to 6.5% in February 2023 and has kept it unchanged since then.

Regulating interest rates is a crucial tool for the central bank to control inflation. Higher interest rates make borrowing more expensive, reducing demand among banks, financial institutions, and the general public, which can decrease consumer spending and inflation.

Meanwhile, the factory output rose 5% in April, up from 4.9% in March and 5.6% in February, following an eight-month low of 2.5% in November. For the April-March (FY24) period, factory output grew by 5.9%, slightly surpassing the previous year's 5.2% growth.

India's economy expanded by an impressive 8.2% in FY24, driven by a 7.8% increase in the January-March quarter, defying fears of a slowdown as manufacturing, electricity, and construction sectors thrived. This strong fourth-quarter growth meant that the actual GDP growth for FY24 exceeded the National Statistical Office's forecast of 7.6%. Fortunately, for FY25, the RBI estimates economic growth at 7.2%.

#Since retail inflation is more or less stable, so while buying stocks we need to focus on rate sensitive sectors like: Real Estate & Construction, Banks & NBFCs, Auto & Auto components, etc. I have already recommended one stock from the banking sector. 

#The stock of Vodafone Idea Ltd (Rs.16.50) is getting bounced from Rs.16.70. For the time being the short term traders can book some profits and re - enter when the scrip closes above that resistance levels. The long term investors can however, hold the stock with a SL at Rs.16.25.

#If food inflation is the problem then you need to buy the scrips from this sector.

#Indowind Energy Ltd (Rs.25.25) hit another Upper Circuit today, before cooling down a bit. The company should do well in the coming days in view of reduction of debt and capacity expansion. 

#There is an excellent news for the shareholders of Debock Industries Ltd (Rs.7.80). 

According to my close sources the company could start mining GRANITE tentatively from July, 2024.

Also, as per some highly placed sources who refused to be named, the shareholding pattern of the company is all set to improve through a REVERSE MERGER of a group company. This is a very encouraging news for the shareholders and could alone push the scrip above Rs.30.

#Those who are still holding or have taken fresh entry into the shares of my recently recommended Paytm Ltd (Rs.402), can hold the same with T: Rs.420 and SL: Rs.392.

#You can start accumulating the shares of Eros International Media Ltd (Rs.20.60), T: Rs.32, SL: Rs.17.

#But the shares of IDFC First Bank Ltd near the CMP of Rs.77.91, T: Rs.88, SL: Rs.76. 

#Buy the shares of Coffee Day Enterprises Ltd (Rs.59) near the CMP for targets of Rs.72/Rs.77, SL: Rs.56. 

In the middle of April, 2024, there was media report that Prashant Jain, the former MD and CEO of JSW Energy, had bought a stake in in Coffee Day Enterprises. Through his personal fund Tikri Investments, Jain picked up 40 lakh shares, translating to 1.89 percent stake in the company. The shares were bought at Rs.70.94 apiece.

#Those who are holding the shares of Rajesh Exports Ltd (Rs.285) can start averaging, as I feel the company in all likelihood, will start manufacturing Lithium-ion batteries from this fiscal. 

I feel the Bottomline fell more due to money being diverted to battery making plant. Once the Lithium Battery comes in the market the stock will cross Rs.1000, as it will be a huge business opportunity, apart from its current verticals. Photo: Swarajya 

 Today's Call

Buy the shares of Dhanlaxmi Bank Ltd near the CMP of Rs.42.50, T: Rs.47, SL: Rs.37. 

A non-performing asset (NPA) is a debt that remains overdue and unpaid for a specified duration. 

Trendlyne Data reports that in Q4FY24, Canara Bank, Punjab & Sind Bank, Bandhan Bank, and Central Bank of India experienced the most significant reductions in NPAs. The net NPA ratio of Dhanlaxmi Bank stood at 1.25% in Q4FY24, Vs 1.27% in Q3FY24.

Dhanlaxmi Bank recorded a net profit of Rs.57.82 crore for the financial year that ended on March 31 (FY24) against Rs.49.36 crore in net earnings received in the previous year. The operating profit for the period came to Rs.69.26 crore.

Total business reached ₹24,687.21 crore from ₹23,205.38 crore, registering a growth of 6.39 per cent. Total Deposits reached ₹14,290.31 crore from ₹13,351.65 crore, a growth of 7.03 per cent. CASA’s share of total deposit was 30.66 per cent.

Retail term deposits registered a growth of 9.17 per cent to reach ₹7,189.75 crore from ₹6,586.01 crore.

Business growth and growth in retained earnings lead to an increase in balance sheet size by 5.49 per cent from ₹15,132 crore to ₹15,962 crore. Earnings per share was ₹2.29. Book Value of shares was ₹40.70 and market capitalization improved from ₹365.60 crore to ₹1,043.67 crore.

In March, the bank’s board approved a rights issue to raise Rs.300 crore. Photo: CNBC TV18.

The recent 15% rise in edible oil prices in May is poised to bolster the financials of Companies like: Adani Wilmar, Emami Agrotech and Sunvin Group. 

Introduction: The present surge in prices of edible oils can be attributed to a confluence of factors affecting both domestic production and international supply chains. Given that India relies on imports for around 60% of its edible oil requirements, the volatility in the global market has significant repercussions on local prices.

India's dependence on imported edible oils such as palm oil, soybean oil, and sunflower oil is substantial, with these oils constituting a major portion of the market. 

Causes: Soybean oil shipments from Brazil and Argentina have encountered significant disruptions due to floods in Brazil and labor strikes in Argentina. Consequently, soybean oil prices have increased by Rs.3-4 per liter. Annually, India needs to import approximately 30 lakh tonnes of soybean oil to meet its demands.

The domestic market for mustard oil is also experiencing a price hike, driven by the extensive procurement of mustard seeds by the National Agricultural Cooperative Marketing Federation of India (NAFED) and the Haryana State Co-operative Supply and Marketing Federation (HAFED). 

Additionally, farmers are withholding their mustard seed stocks, anticipating further price increases, which has resulted in a 15% rise in mustard oil prices.

India's sunflower oil imports, predominantly sourced from Russia and Ukraine, face potential future disruptions due to adverse climatic conditions in these countries. Although it is not currently the season for sunflower oil supply, the anticipated impact of high temperatures on crop yields could exacerbate the situation.

The increased use of palm oil for biodiesel production in Indonesia and Malaysia has also constricted its availability on the global market, pushing up prices further. Indonesia's biodiesel mandate program, which allocates 13.4 billion liters for 2024, has contributed to this trend by maintaining a high blending rate. Palm oil, which makes up 38% of India's edible oil consumption, is thus significantly impacted by these international policies and production trends.

Moreover, the global production of palm oil experienced a seasonal low from January to March, resulting in reduced stocks and affecting both production and imports. 

Indonesia’s palm oil production forecast for 2023-24 stands at 45.8 million tonnes, slightly up from the previous year’s 44.7 million tonnes. 

While soybean oil imports from South American countries have not yet been affected, geopolitical tensions and rising freight rates could pose future challenges for sunflower oil imports from Ukraine and Russia.

Historically, restrictions on palm oil exports by Indonesia and the Ukraine-Russia war had caused a surge in edible oil prices in India. However, a subsequent cooling of prices last year led to increased imports. Companies that capitalized on this price differential by importing large quantities of oil stand to benefit the most from the current price rise.

Furthermore, the growing trend of eating out and the rise in online food purchases have contributed to increased per-capita consumption of edible oil in India. This consumer behavior shift is another factor underpinning the recent price hikes.

Conclusion: The rise in edible oil prices is driven by a complex interplay of global supply chain disruptions, domestic market dynamics, and changing consumer behaviors. 

If the price rises sustains, then companies like Adani Wilmar Ltd (Rs.343)Emami is likely to see improved profit margins. 

However, the sustained high prices pose challenges for consumers and highlight the need for strategic management of both imports and domestic production to stabilize the market. Photo: Business Bar

Q. Why the shares of Adani Wilmar Ltd (Rs.345) didn't perform too well in the recent past and how its future look?

Ans. I feel it fell primarily due to a couple of reasons, apart from other factors.

💢Adani Commodities and Lence Pte had to divest a part of their shareholding between December 26 to January 31, 2024. The two promoter entities of Adani Wilmar planned to sell up to 1.6 crore shares or 1.24% stake in the company as part of the programme to meet the minimum public shareholding norm prescribed by the SEBI. When such huge supplies come in the market all of a sudden, shares of the company are likely to fall. 

💢The company was not doing well till the September quarter due to sudden fall in inventory valuations. 

Now, the 1st episode is over, while the edible oil prices have stabilized in the international markets. 

However, according to the Economic Times, the companies like Adani Wilmar Ltd (Rs.343.50), Emami Agrotech and Sunvin Group said while disruption of Soyabean oil supplies, from Brazil and Argentina is driving up prices, mustard oil prices have risen as NAFED and HAFED have purchased large quantities of mustard seeds.

Also, the company has turned around in the last quarter and future looks bright due to NDA government coming at the center with which it has an umbilical cord relationship.

Also, due to ensuring Festival Season, the demand for edible oil and other FMCG products are set to increase. 

Incidentally, valuing a company solely by its P/E ratio is incorrect, particularly for a growing company like Adani Wilmar, which has a vast reach and numerous factories. Photo: Equity Bulls.

Buy at the CMP of Rs.345, T: Rs.700+, SL: Rs.311.

 Today's Call

Buy the shares of 63 Moons Technology Ltd near Rs.343/Rs.344, T: Rs.441, SL: Rs.331. 

According to The Times of India:

"Jignesh Shah, a notable figure in the tech industry, is making a significant comeback with a focus on new-age technology ventures. Recognized for his past disruptive contributions such as ODIN, MCX, and Energy Exchange, Shah is now poised to explore innovative tech businesses.

Leveraging the momentum of the current tech wave, Shah's promoted company, 63 Moons (formerly Financial Technologies), is diversifying into cybersecurity, blockchain, and legal tech sectors.

Expressing his aspirations, Shah highlighted his desire to establish India's first set of technology "decacorns," aiming for significant growth in these new ventures. Collaborating with global players like Blackberry, Resecurity, and Morphisec, 63 Moons' cybersecurity venture is making strides in introducing new products and services". 

Financials: The Net profit of 63 Moons Technologies came to Rsm8.02 crore in the quarter ended March 2024 as against net loss of Rs.23.78 crore during the previous quarter ended March 2023.

However, sales declined 66.42% to Rs.37.44 crore in the quarter ended March 2024 as against Rs.111.51 crore during the previous quarter ended March 2023.

Impressive Performance in FY24: For the full year, net profit came as Rs.222.51 crore in the year ended March 2024 as against net loss of Rs.16.31 crore during the previous year ended March 2023.

Sales rose 62.86% to Rs.471.76 crore in the year ended March 2024 as against Rs.289.68 crore during the previous year ended March 2023. Photo: Daily Mint.