India's Bangladeshi Connection: The Textile Industry's Interdependence

Introduction: Bangladesh, the world's second-largest exporter of garments, is a key player in the global textile market. Its remarkable success is driven by an efficient supply chain that appeals to major global brands seeking cost-effective production solutions.

A significant factor behind this achievement is the strong economic cooperation between Bangladesh and the European Union (EU). Under the EU-Bangladesh Cooperation Agreement of 2001, the partnership extends beyond trade and economic development to include human rights, good governance, and environmental initiatives. Photo: India Today.

Bangladesh and WTO: Bangladesh's membership in the World Trade Organization (WTO) since 1995 further bolsters its position.

As a least developed country, it benefits from the EU's 'Everything but Arms' (EBA) arrangement, which provides duty-free and quota-free access to the EU market for all exports except arms and ammunition. This arrangement has been pivotal for Bangladesh, which is the one of the largest beneficiaries under the EBA framework.

The EU remains Bangladesh's primary trading partner, accounting for 20.7% of the country’s total trade in 2023, while Bangladesh is the EU's 36th largest trading partner.

Notably, clothing comprises over 90% of the EU’s total imports from Bangladesh, highlighting the country's dominance in this sector. Meanwhile, EU exports to Bangladesh are primarily machinery and chemical products.

While China remains the global leader in the apparel market, with exports valued at $182 billion in 2022, Bangladesh has firmly secured the second spot. Following Bangladesh are Vietnam ($35 billion), Turkey ($20 billion), and India ($18 billion). 

Bangladesh’s apparel industry contributed a staggering 84.58% of its export earnings during this period, underscoring its critical role in the national economy. This favorable trade environment also presents significant opportunities for Indian textile companies.

Firms like Sangam India Ltd (An Indian Yarn and Fabric manufacturer, Rs.417.20), have found a lucrative market by supplying yarn and fabrics, particularly polyester viscose dyed yarn, to Bangladesh's thriving garment industry. The consistent demand from Bangladesh enables these Indian companies to maintain robust business, ensuring a steady market for their products.

Thus, the stability of Bangladesh is as vital for the continuity and growth of its garment industry, as with the fortunes of Indian Yarn and Fabric Manufacturers. Or any disruption in Bangladesh is likely to have a major impact on the Indian textile sector.

As Dr. Muhammad Yunus has emphasized, political and economic stability in Bangladesh is therefore essential for sustaining this symbiotic relationship. Any instability could disrupt the supply chain, directly impacting Indian suppliers who rely heavily on consistent orders from Bangladeshi manufacturers.

Conclusion: The interdependence between India and Bangladesh in the textile sector highlights the importance of stability in the region. While Bangladesh's growth in the global apparel market provides substantial opportunities for Indian companies, any disruption in its stability could have far-reaching consequences.

Ensuring political and economic stability in Bangladesh is not just a regional concern but a strategic necessity for the sustained growth of the textile industries in both countries.

Highlights:

🏵️Bangladesh's Position: Bangladesh is the world's second-largest garment exporter, significantly benefiting from EU trade agreements.

🏵️Economic Cooperation: The EU -  Bangladesh Cooperation Agreement and the 'Everything but Arms' arrangement provide substantial trade benefits to Bangladesh.

🏵️Global Apparel Market: China leads, followed by Bangladesh, Vietnam, Turkey, and India in global apparel exports.

🏵️Indian Opportunities: Indian companies like Sangam India Ltd. capitalize on supplying yarn and fabrics to Bangladesh.

🏵️Importance of Stability: Political and economic stability in Bangladesh is crucial for sustaining the textile industry's growth in both nations.

Today's Call 

Buy shares of Sangam India Ltd (Rs. 406.25) around the current market price for a target of Rs. 442/511. Stop loss: Rs. 391.

Overview:  Sangam India Ltd is a leading textile manufacturer and exporter, particularly known for being Asia’s largest producer of PV dyed yarn at a single location. The company also specializes in ready-to-stitch fabrics.

Sangam India is well-positioned to benefit from the "China Plus One" strategy, where companies are diversifying their supply chains beyond China. 

Sector Outlook:  The textile sector, which has been sluggish for a while, is showing signs of revival. With the recent drop in cotton prices, the industry is expected to see a strong rebound in the second half of 2024.

Key Insights:  The company's increased production capacities are set to be fully operational by 2nd half of FY25. This should help in lowering costs through better optimization.

Future Projections:  Sangam India, a producer of cotton, PV-dyed yarn, and ready-to-stitch fabrics, aims to achieve a revenue of around Rs. 4,000 crore by FY25, following a significant expansion at its seven production units in Bhilwara, Rajasthan.

Moreover, it is aiming to strategically leverage the D2C (director) market and the digitised textile space to further elevate its reach and supply in India and overseas.

Financials: The Net Sales of the company came at Rs.696.68 crore in June 2024 up 2.89% from Rs.677.13 crore in June 2023.

Quarterly Net Profit came at Rs. 12.75 crore in June 2024 down 10.15% from Rs.14.19 crore in June 2023.

The EBITDA stood at Rs.67.85 crore in June 2024 up 22.27% from Rs. 55.49 crore in June 2023.

The EPS of Sangam India Ltd has marginally increased to Rs.2.87 in June 2024 from Rs.2.86 in June 2023. 

About the Company:  Sangam India Ltd is involved in producing and selling synthetic blended, cotton, and texturized yarn, as well as denim fabrics, and ready-made seamless garments. The company operates under various brands like Sangam Yarns, Sangam Suitings (its flagship brand), Sangam Denims, and C9 Airwear.

Its clientele includes notable names such as Banswara Syntex, Siyaram, RSWM Limited, Arvind, Trident, Marks & Spencer, Reliance Trends, Zivame, Myntra, Lifestyle International, Benetton, and Westside, among others.

Capital Punishment: A Barbaric Relic in a Modern Society

"The degree of civilization in a society can be judged by entering its prisons." – Fyodor Dostoevsky.

Introduction to the Landscape of Capital Punishment: Before delving into the discussion on the Trinamool Congress (TMC) of Bengal’s move to enact a law mandating the hanging of rapists, let us first take a sweeping glance at the global landscape of capital punishment—a complex canvas woven with threads of morality, legality, and cultural beliefs.

As of August 2024, the world stands divided on the issue of the death penalty. A significant shift has occurred, with 112 countries having abolished this ultimate form of punishment, renouncing it as a relic of a less enlightened past. Meanwhile, 54 countries still uphold the death penalty in both law and practice, holding firm to the belief that such measures serve as a necessary deterrent to the gravest of crimes. Then there are the 23 countries that, while retaining the death penalty in law, have turned away from its actual practice, having refrained from executions for at least a decade. A few nations, like Malaysia, have taken a middle path, easing their stance by partially abolishing the mandatory death penalty for certain serious crimes, signaling a gradual shift towards a more humane approach. 

This global panorama presents a myriad of perspectives, reflecting the deep and often conflicting values held by different societies on justice, punishment, and the sanctity of life. In such a scenario, enacting a law to HANG Rapists is just another route to take the world to savagery.

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In the labyrinth of legal and moral debates, the question of capital punishment has always sparked fierce contention. While some argue that it serves as a powerful deterrent, history and human psychology paint a different picture. 

Take, for example, the harsh punishments of 16th century England, where pickpocketing was deemed a capital offense, punishable by hanging. Yet, even with the gallows looming as a constant threat, did pickpocketing cease? Quite the contrary; crowds drawn to public executions often found their pockets picked, illustrating the ineffectiveness of fear as a deterrent. 

Moving to more contemporary settings, let's consider Saudi Arabia, where beheadings are still carried out in public squares, aiming to deter crimes like murder and drug trafficking. Despite these brutal measures, crime persists, suggesting that the spectacle of death does not cleanse the streets but rather, it desensitizes the public to violence. When the state itself employs death as a form of punishment, it sends a grim message: that brutality is acceptable under the guise of justice.

Closer to home, we have the political rhetoric of leaders like Mamata Bandyopadhyay (Banerjee). Despite her legal background, one could question her grasp of criminal psychology. 

Her call for capital punishment in certain henious crimes seem less about understanding crime prevention but more about appeasing a vocal, reactionary populace. 

Her stance, like that of many leaders, overlooks the complex motivations behind serious crimes like Rape - Murder, which are often rooted in social, economic, or psychological factors that a noose or an executioner's blade cannot address.

Capital punishment, therefore, is not just an act of violence; it is an abdication of responsibility, a refusal to engage with the underlying causes of criminal behavior. 

It is a reactive measure, not a proactive one. As mentioned in my recent blog post discussing SEBI's verdict on Debock Industries Ltd., real change comes from thoughtful, strategic actions, not from reactive measures that serve only to placate public outrage or garner votes.

The proponents of capital punishment often fail to recognize this distinction. They shout and play to the gallery, feeding into a cycle of violence rather than fostering a culture of understanding and rehabilitation. 

It’s a form of populism that might win votes but does little to uplift the moral and intellectual fabric of society. True progress, after all, is marked by the ability to empathize, to seek solutions that go beyond the simplistic binary of retribution and forgiveness.

Conclusion: Capital punishment, far from being a solution to grave crime, is a symptom of a society that has yet to evolve beyond its basest instincts. 

It brutalizes, it desensitizes, and most importantly, it fails. If we wish to build a just and humane society, we must look beyond the gallows and the chopping block, and towards a deeper understanding of justice, one that seeks not to destroy but to heal.

The SEBI Shuffle: When the Regulator Plays Catch-Up in Slow Motion

"Why close the barn door after the horse has bolted? Because sometimes, it's the only trick SEBI knows."

Debock Industries Ltd (Rs.6.31), a small-cap company listed on India's NSE, has recently become the center of a regulatory storm, albeit a delayed one. On August 23, 2024, SEBI barred the company’s promoters from accessing the capital markets due to significant financial irregularities. 

The action by SEBI, however, comes two years after the alleged malpractices occurred in FY22 and FY23, a delay that raises eyebrows and questions about the efficacy of India's primary market regulator.

SEBI's Belated Crackdown: A Case of Too Little, Too Late

According to SEBI, Debock Industries’ financials for FY22 and FY23 displayed a suspicious surge in revenue and purchases. This was allegedly a smokescreen, timed to coincide with the company's migration to the NSE main board. 

These financial shenanigans according to the regulator allowed the promoters to portray a healthier financial status, which was, in fact, a mirage designed to deceive investors. The problem, however, lies not just in the alleged financial irregularities but in the timing of SEBI's response. 

Why did it take until FY25 to take action on activities that occurred two years earlier?

SEBI's order: A blank - fire towards investor protection and a Pattern of Reactive Regulation:

The order which includes banning the promoters, may seem like a firm stance against corporate malpractice, but in reality, it’s akin to bolting the stable door long after the horse has fled. 

Investors who were duped by the fabricated financials are left holding the bag, and the regulatory response seems more like an afterthought than a proactive measure to safeguard their interests.

This isn’t the first time SEBI has been accused of moving too slowly. The Debock Industries case is a glaring example of a broader pattern where SEBI appears to act only after the damage has been done. The regulatory body often steps in with bans and penalties years after fraudulent activities have been committed, leaving investors to fend for themselves in the meantime.

I reiterate: one might ask, what’s the point of regulatory action if it doesn’t happen in real time? 

Incidentally, the time SEBI decided to act against Debock Industries, the alleged deceptive gains had already been made, and the alleged fraudulent figures had already served their purpose. It’s a bit like a fire department arriving at a burnt-down house and proudly declaring they’ve stopped the fire from spreading—after everything of value has already been lost.

Erroneous Phone numbers/Addresses: or Listed Companies: Strengthening Regulatory Oversight: Ensuring Accurate Disclosures in Stock Exchanges:

I would like to take the opportunity to mention that even today, as per my knowledge goes, there are n - number of instances where listed companies on the NSE and BSE have failed to provide up-to-date addresses and contact (phone) numbers on their websites and on the BSE/NSE portals. Unfortunately, despite raising this issue multiple times through blog posts and social media platforms such as Facebook and Twitter (X), there has been little action to address this loophole. 

On one occasion, I personally contacted the NSE to report fictitious phone numbers listed in a PDF submitted to the exchange. Disgustingly, instead of taking immediate corrective measures, I was advised to email the company directly, and if there was no response, to follow up with NSE—a rather ineffective and cumbersome approach to addressing corporate misconduct.

Moreover, there are several companies with significant disclosure issues on the stock exchanges. 

Besides, WhatsApp and Telegram groups are created to jack up share prices in broad daylight in full view of the regulator. How much a share can be jacked up can understood from the current share price of Brightcom Group Ltd.

Thus, when a company presents manipulated or synthetic financial statements, it is imperative for regulators to act promptly rather than taking years to uncover the fraud. If this lag in regulatory action continues, we risk encountering more cases like Debock Industries Ltd. 

The responsibility of a regulator, especially when dealing with the financial assets of investors, is to act swiftly and decisively, not to respond only after years have passed with a simple declaration of banning the wrongdoers.

Such delayed actions serve little purpose if they do not ultimately enhance shareholder value. Regulators must be more proactive in ensuring that corporate disclosures are timely, accurate, and transparent to protect investor interests effectively.

The SEBI needs to revamped its Regulatory Vigilance:

SEBI, under the aegis of the Finance Ministry, must adopt a more aggressive stance against potential Frauds. This means not just reacting to violations but also instituting preventive measures. 

Early detection systems could be bolstered by deploying cutting-edge technology, such as AI-driven analytics and blockchain for real-time tracking of financial transactions and disclosures. By minimizing the lag between the identification of red flags and regulatory action, SEBI could act swiftly to prevent damage rather than merely punishing it after the fact.

Steps Towards Better Investor Protection:

To prevent "Debock-style" episodes, in future, the SEBI needs to rethink its approach. Here are a few steps that could make a significant difference:

💢Timely Interventions: SEBI must ensure that its surveillance systems and investigation processes are robust and agile enough to detect and act on fraudulent activities as they happen, not years after the fact.

💢Improved Transparency: Listed companies should be required to maintain accurate and up-to-date information on their websites and with the stock exchanges. The lack of such basic compliance is a glaring loophole that can easily be exploited by fraudulent companies.

💢Utilizing Technology: SEBI should leverage advanced data analytics and AI for real-time monitoring of trading activities and financial disclosures. By identifying anomalies early, the regulator can take swift action, preventing fraud from escalating.

💢Investor Education: While regulatory oversight is crucial, investors also need to be educated about red flags and encouraged to conduct their due diligence before investing in any stock.

Conclusion: From Firefighting to Fire Prevention:

"The best way to catch a fish is to cast your net when the fish are swimming, not after they’ve already left the pond."

The case of Debock Industries Ltd mirrors previous corporate scandals like Brightcom Group Ltd, where warning signs were visible long before the regulatory intervention. 

Despite the clear indicators of fraud, stock price manipulation, and blatant disregard for regulatory norms, action was delayed, allowing the situation to escalate unchecked. This lapse in action is comparable to notorious cases like Dinesh Dalmia’s DSQ Software and Ramalinga Raju’s Satyam Computers, both of which have become infamous examples of corporate misconduct and regulatory failure. Such cases highlight the urgent need for more proactive and timely regulatory measures to prevent similar situations in the future.

For the SEBI and other regulatory bodies to truly serve its purpose of protecting investors, the lesson is clear: it needs to shift from a reactive to a proactive regulatory model -- from being a reactive entity that only steps in after the damage is done to a proactive force that prevents the damage from occurring in the first place.

The case of Debock Industries should serve as a wake-up call, highlighting the need for more immediate and effective oversight. Investors deserve a market that is fair, transparent, and well-regulated, where regulators don’t just show up to close the barn door but ensure the horses are never stolen in the first place. Let’s hope SEBI takes this opportunity to improve, rather than merely repeat the mistakes of the past.

Finally, with more stringent rules, better technology, and a commitment to investor protection, we can avoid future scenarios where the regulator arrives not just late, but far too late. It’s therefore high time for SEBI to act before the barn door even creaks open, ensuring that all investors can feel secure in the marketplace.

Debock Industries Ltd (Rs.6.43): Hold.

Recent reports have surfaced about the Securities and Exchange Board of India (SEBI) taking action against Debock Industries Ltd following allegations of financial misconduct. The NDTV website reported on August 25, 2024:

"Mukhesh Manveer Singh, Chairman and Managing Director of Debock Industries, and Priyanka Sharma, the former Non-Executive Director, have been barred from holding any director or key managerial roles in listed companies or SEBI-registered intermediaries."

"Promoter Sunil Kalot is also prohibited from trading or accessing the capital markets. The involved parties are required to deposit Rs 89.24 crore, identified as illicit gains, into an interest-bearing Escrow Account within 15 days. Furthermore, they must return all funds raised from the rights issue, except the amount already impounded, back to the company."

"Banks and depositories linked to these individuals have been instructed to freeze their accounts and restrict transactions, allowing only those necessary to comply with SEBI’s order. No debits are allowed from these accounts without SEBI’s authorization, except for transferring funds to the Escrow Account."

According to my contacts in Rajasthan, SEBI’s order was issued without a show cause notice, raising concerns about the fairness of the process. A source, who preferred to remain anonymous, expressed surprise at SEBI's decision and mentioned that they plan to challenge this unilateral order in court or before the appropriate authorities shortly.

The source also indicated that the Granite Mining Operations will commence after the monsoon (probably post Deepawali), and everything else remains on track—suggesting there's no immediate cause for concern.

Nonetheless, it's advisable to hold the stock with a strict stop-loss at Rs.6. Avoid taking new positions until the situation becomes clearer and more transparent, as unforeseen developments could impact the stock further.

 NHPC Ltd (Rs.97.05): Buy

Book Value: Rs.37.61

P/E: Rs.26.97

Highlight: 25 power stations across 13 states. It has signed a MoU on 3 Jan 2024 with GPCL for proposed investment of Rs.4000 Cr in Kuppa Pumped Storage Project (750 MW), Chhota Udaipur, Gujarat.

Company Profile: NHPC is the largest hydropower company in India and holds the status of a Mini-Ratna Category-I Public Sector Undertaking (PSU).  Photo: Business Standard.

The company is involved in every phase of hydropower project development, from initial planning to final commissioning. NHPC has a strong track record, in-house engineering expertise, and consistently strong operational performance. 

With the government's goal to reach 500 GW of installed electricity capacity from non-fossil sources by 2030, hydropower is becoming increasingly important to provide grid stability, especially given the intermittent nature of solar and wind power. Hydropower can quickly adjust output, making it valuable for managing peak demand and maintaining grid frequency. 

Currently, only 46 GW of India's estimated 145 GW hydropower potential has been utilized, indicating significant untapped potential.

NHPC stands at a crucial juncture in the power sector, actively developing hydro and renewable energy projects with a total capacity exceeding 10,000 MW, including the ambitious 2,880 MW Dibang Multipurpose Project. Major projects such as the 2,000 MW Subansiri Lower Hydroelectric Project and the 800 MW Parbati-II Hydroelectric Project are nearing completion.

Recently, the company reached a significant milestone in the Subansiri Lower Hydroelectric Project with the successful installation of Spillway Radial Gates Nos. 7, 8, and 9, along with the sealing arrangement on April 25, 2024. Additionally, diverting the Dirki Nalla at the Dibang Multipurpose Project was a key step forward, ensuring all-weather road access to the site.

Furthermore, it is heartening to note that NHPC’s achievements were recognized on the international stage at the 26th World Energy Congress (WEC) in Rotterdam, Netherlands. NHPC signed a Memorandum of Understanding (MoU) with Ocean Sun, a Norwegian company specializing in floating solar technology.

Besides, under the MNRE-REIA Scheme, NHPC has signed Power Purchase Agreements (PPAs) and Power Sale Agreements (PSAs) for 3,000 MW of solar power. As the Renewable Energy Implementing Agency, NHPC will earn trading margins through this initiative.

In the last financial year, the total cumulative generation across all power stations reached 21,779 Million Units (MUs), with an overall annual Plant Availability Factor (PAF) of 77.60% for the financial year 2023-24. Six power stations met their annual design energy targets, while ten power stations achieved their respective Normative PAF. 

NHPC has 6,434 MW of hydropower projects under construction. With the anticipated completion of the 2,000 MW Subansiri Lower and 800 MW Parbati II projects by the end of FY24E, NHPC’s capacity is expected to increase by 40%, with the impact visible in FY25. 

The signing of multiple Power Purchase Agreements (PPAs) and Memoranda of Understanding (MoUs) for both hydro and renewable power projects, along with a regulated business model for hydropower, ensures strong earnings growth potential. Additionally, 1,105 MW of renewable energy projects are under construction, with more projects in the pipeline.

Earlier in March 2021, the company had informed that it has completed the formalities for the takeover of Rangit Stage-IV Hydro Electric Project (120 MW) by remitting Rs.165 crore to the account of JPCL for distribution to the creditors according to the approved resolution plan. JPCL is now a wholly-owned subsidiary of NHPC Ltd.

Shareholding: FII/FPI have increased holdings from 6.80% to 8.96% in Jun 2024 qtr. Number of FII/FPI investors increased from 319 to 569 in June 2024 quarter. Number of MF schemes increased from 27 to 28 in June 2024 quarter. Institutional Investors have increased holdings from 19.39% to 20.51% in June 2024 quarter. Life insurance corporation of India (LIC) has 3.84% stake in NHPC with 385,595,015 shares of the PSU for the June 2024 quarter (LIC stake was 3.24% stake in March 2024 quarter), according to Trendlyne.

​Q. Can the share of NHPC Ltd cross Rs.500 in the next 3 - 4 years ?

Ans. We know that NHPC Ltd (Rs.97.05, P/E: 24.70), serves both the Hydroelectric and Solar Energy Sectors.  But unfortunately the share price has not risen to the levels many renewable energy players from the sector has shown in the last  couple of years, viz. Waaree Renewables Technologies Limited (Rs.1432.45, TTM P/E: 90.26, Book Value: Rs.22.30), a vertically integrated new energy company that generates power from renewable sources, basically from solar space. Or Websol Energy Systems Ltd (Rs.955.45, FV: Rs.10, Book Value: Rs.25.52)

If we go by this logic of P/E or Book Value analysis then, the rough value of NHPC Ltd should be around Rs.275/300, after suitable discounting and post implementation of Capex plan, the share should cross Rs.500.

Conclusion: However, though taking a view on the share price of any company only through P/E analysis is not a correct method, even then I feel the share price of NHPC Ltd is highly undervalued, especially considering the vastness of its present and upcoming projects and its geographical reach.

 Today's Call 

Buy the shares of Indowind Energy Ltd (Rs.26.20) near the CMP for targets of Rs.32/35. SL: Rs.24.

The production suffered a bit in the last quarter due to the wind season starting late by a month (for the current year). This aberration is expected to get optimised in the current quarter. 

Furthermore, the power tariff in Tamil Nadu was increased w.e.f 1st July 2024 by TANGEDCO. The resultant revenue benefit will be available from this (June - September) quarter. Hence, we might get to see a sharp uptick in both top and bottomlines from Q2FY25, onwards.

 Winning Strokes: Think Different 

The key equity indices barely managed to stay in the green on Thursday, with the Nifty just above 24,800, as the market rode a roller coaster thanks to the weekly F&O expiry. The Sensex added a mere 147.89 points (0.18%) to hit 81,053.19, and the Nifty 50 nudged up by 41.30 points (0.17%) to settle at 24,811.50. Broader markets took the lead, with the Mid-Cap and Small-Cap indices gaining 0.67% and 0.47%, respectively.

While European and Asian markets celebrated the possibility of a U.S. rate cut like it was a long-lost friend, a sobering reality check arrived in the form of a massive downward revision in U.S. payrolls data—818,000 fewer jobs than previously thought. 

Cue the nervous laughter about a potential recession in the world’s largest economy. Investors are now anxiously awaiting Federal Reserve Chair Jerome Powell's upcoming remarks at the Jackson Hole Symposium on Friday, hoping for some clarity amidst the uncertainty.

#BLB Ltd (Rs.21.84) hit another Buyer Freeze. However, the stock exchanges have reduced the circuit limit and has put restrictions in day trade. 

Reducing the circuit limit to below 2% from ~5% just after few days of trade shows the bankruptcy of intellectual capital of those at the helm of the stock exchanges. There can be circuits but putting a speed breaker after every 10 metres on slight pretext, goes to show the (rotten) quality of brains working in the surveillance department of the BSE/NSE. Unfortunately, both the stock exchanges have not been performing well after the new SEBI chairperson stepped in. 

Furthermore, the website of NSE does not even show the closing price of the scrip. From the beginning NSE website has been worst in terms of design and content. The Bombay Stock Exchange, standing firm at Dalal Street, still stands tall among all the exchanges in India, however much NSE thinks to ecplise it. 

#The stock of Coffee Day Enterprises Ltd (Rs.41.16) hit the Upper Circuit yesterday. However, it might face headwinds to cross Rs.41/42 ranges. Hold!! 

#The stock of Vodafone Idea Ltd (Rs.16.20) has started to inch towards Rs.22/24/27/34 ranges. 

By the way, the telecom companies are expected to do exceptionally well in future due to fast change of Technology from 3G to 4G to 5G, enhancing the user experience and shifting a large part of the technology savvy audience from Television Segment to Internet based video streaming networks. This Aditya Birla group company, with government of India stake is sure to do well in future. Accumulate in dips. 

#The stock of Sarthak Industries Ltd (Rs.24.80) put up an impressive performance yesterday. The scrip made an intraday high of Rs.25.90 before closing, 4.55% in the BSE. I have recently recommended the shares after its good June, 2024 quarter results. It will invariably cross Rs.50, over a period of time. 

#I have taken some shares of NHPC Ltd (Rs.97.93) for my portfolio clients, considering its future growth trajectory. I have considered the 1st Target of Rs.109, followed by Rs.117. 

Now tell me at the moment, which according to you is a better investment option?

💢Tata Power Ltd (Rs.422.75) with Face Value of Re.1 (one) and P/E 42.57.

💢NHPC Ltd (Rs.97.93) with Face Value of Rs.10 (ten) and P/E of 23.88. Besides, NHPC Ltd is planning to add capacity at a massive 21% CAGR over FY24-27E, though a large part of it is only expected in FY27E. Nevertheless, share price of a company always moves in advance, like we had seen in Zomato Ltd. 

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#The stock of Devyani International Ltd (Rs.181.40) made an intraday high of Rs.182.80, before closing up 3.54%. I have already predicted when it was around Rw.169/Rs.170 that it will make a new 52 - week high in the coming days, due to the scintillating performance of its overseas business and due to the ensuring Festival Season kickstarting with Ganpati Festival in Mumbai and elsewhere. The stock has been on roll since then. Moreover, the company came out with good numbers for the June, 2024 quarter. Hold! 

#My recommended P C Jewelers Ltd (Rs.108.76) made a new 52 - week high Today. I have been recommending the scrip since it was around Rs.27. In this context keep a close eye on Rajesh Exports Ltd (Rs.298.25). 

Meanwhile, according to a report published in Business Standard on 26 July, 2024: Jewellers are now rolling in gold as buyers rush to stock up on bling, thanks to the government's shiny new import tax cuts on gold, silver, and platinum. With prices dropping faster than a bride’s bouquet toss, Mumbai’s Zaveri Bazaar is buzzing like a beehive, boasting a whopping 60-70% surge in customer traffic.

The government earlier slashed Customs duties on gold bars from 15% to 6%, and now gold dore gets away with just a 5.35% duty. Silver isn’t left out of the party either, with bars and dore now taxed at a cool 6% and 5.35%, respectively. This price correction has seen people rushing to jewellers like an alcoholic to a beer bar.

In Delhi, where jewellers previously saw tumbleweeds rolling through their shops, foot traffic has spiked by at least 50% since the Union Budget announcement. As Yogesh Singhal, chairman of the Bullion and Jewellers Association, quipped, “Customers are coming in; even if they aren’t buying, at least they’re browsing, which is more than we could say before the Budget.” And with the wedding season around the corner, it looks like the glitterati are gearing up for a golden October!

 Today's Call 

#Buy the shares of Plaza Wires Ltd (Rs.89.60) near the CMP for targets of Rs.117/ Rs.132.

Looking back, the past year brought a solid 9.5% increase in revenues for Plaza Wires Ltd. Impressively, revenue has grown by 38% over the last three years, helped by the recent 12 months of growth. Consequently, it's fair to conclude that the company's recent revenue growth has been exceptional.

#Buy the shares of MTNL Ltd (Rs.67.70) near the CMP for targets of Rs.100+.

In recent months, the government has shown a preference for transferring control of MTNL's operations to BSNL without officially merging the two companies. Reports suggested that this approach would avoid some of the logistical challenges of a merger, such as de-listing MTNL and buying back a certain number of shares, which in turn would be beneficial for the shareholders.

Recently, the MTNL announced that it has approved this plan, with the new agreement allowing BSNL to manage the operator for the next ten years. The deal has the potential to be renewed by mutual consent and can also be terminated by either party with six months' notice.

However, this solution comes with its own challenges -- the Department of Telecommunications (DoT) is currently investigating the tax implications of such an agreement, stating that they will not approve the deal until they are certain it will not lead to unexpected tax liabilities for the government. Having understood that, I feel there is no other better option at present to revamp the fundamentals of the MTNL.

So, whatever be the way, it is good to see that the NDA Government is taking steps to revive the health of the MTNL. 

When Charts Collide With Common Sense!!

Let’s start with a little wisdom:

"Investing in shares is an art, not a science."

We all know that technical analysis often feels like performing a post-mortem on stocks, while true investing requires foresight and correct analysis of the future variables. Photo: VectorStock.

In the vibrant world of stock market analysis, the debate between fundamentalists and technicians has been ongoing for ages. It’s like an old comedy act— remember Laurel and Hardy — but with a lot more financial jargon firmly planted on the space.

The fundamental analyst is akin to a seasoned sage, armed with balance sheets and income statements, whispering tales of profit margins and debt ratios. These are the experts who can discern whether a company is a goose ready to lay golden eggs or just another lame duck. 

Fundamental analysts are like doctors, constantly monitoring a company's health. They delve into financial reports, gauge earnings, and even probe management’s mindset, all in an effort to foresee whether the company has a prosperous future ahead.

And technical analysts? I feel they are the share market’s version of Sherlock Holmes. These sleuths who examine charts with the intensity of a detective -- analyzing every candlestick pattern. They’ll spot a head and shoulders pattern and proclaim, "The stock is about to soar—or maybe crash—depending on how they look at it!" They proudly flaunt themselves as the master of understanding the rhythm of the market 

In this  context let me share a little story about two stocks: Sakuma Exports Ltd (Rs.8.39) and Sarthak Industries Ltd (Rs.24.63).

When Sakuma was around Rs.10, a technical analyst confidently pointed to the chart, interrupted me in between and  said: "This stock could soar to Rs.12, since I glided through candlestick patterns and moving averages". 

"See that trendline?" 

"It’s pointing to a perfect pirouette to Rs.12!",  he quipped staring at my face.

Meanwhile, I’m standing in the wings, holding the voice of caution, advising against it. 

"Don’t put your money on Sakuma it looks highly overvalued at the CMP," I warned, time and again, "this rally might just be a mirage." 

And then what happened? 

The stock never took the leap to conquer Rs.10 on the upside, leaving our chart-loving friend staring at his screen, possibly questioning his career choices.

On the flip side, while the former looked to be costly, the case of Sarthak Industries Ltd (Rs.24.63), is just its mirror image; after it recently reported strong results for the June 2024 quarter. But did anyone notice? Not really!!

This happened, even though I gave a brief review of the company on this blog -- ironically,  traders and investor, chose to ignore my words. Probably they will buy when stock will hit Rs.40. It’s like the Suzlon Energy saga all over again. I recommended Suzlon at Rs.6.10, but my advice fell on deaf ears of the investors, some even questioning me about the debt of the company. The stock has already soared to Rs.81+. Suddenly, everyone’s on board! The irony is thick enough to slice with a knife.

Conclusion: In the grand arena of stock investing, fundamental analysis is like a skilled trapeze artist, calculating every move with precision and foresight. Technical analysis, on the other hand, often resembles the clown car—entertaining, unpredictable, and sometimes downright perplexing.

Sure, technical analysis might give you a quick thrill (or a moment of despair), but true investing requires you to be both an artist and a visionary, with enough common sense to sidestep the pitfalls on the trading floor. 

So, before you put your trust in the next chart that promises the moon, remember: stocks are more than just lines on a graph—they’re the unfolding stories of businesses. 

Finally, I reiterate when you’re deciding where to invest your hard-earned money, keep in mind: it’s not just about what the charts are saying; it’s about the future narrative a company is crafting, and whether or not you believe in that story.

 Today's Call 

Buy the shares of Sarthak Industries Ltd (Rs.23.91) for targets of Rs.31/37. 

Introduction: Incorporated in 1982, Sarthak Industries Ltd is engaged in manufacturing and repairing of LPG Cylinders and merchant trading of agri-commodities, mining and mineral based industry on opportunity basis.

Product & Services:

a) Industrial and household liquefied petroleum gas (LPG) cylinders of different weights

b) Trading of agro-commodities like vanaspati ghee, wheat, chana, Masoor, etc.

Manufacturing Unit:

Company's unit is located at Pithampur with a manufacturing capacity of 7 lacs cylinders per annum.

Clientele:

Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd. and also to private companies.

Revenue Breakup:

In Q1FY25 company generated revenue mainly from sale of LPG cylinders Rs.6.79 crore and Trading Business Rs.89 lakhs.

Source: Screener.

Financials:

The reported Standalone quarterly numbers for Sarthak Industries are:

Net Sales of the company came at Rs.7.62 crore in June 2024 down marginally by 2.29% from Rs. 7.80 crore in June 2023.

Quarterly Net Profit was seen at Rs.0.25 crore in June 2024 up a whooping 939.51% from Rs.0.02 crore in June 2023.

The EBITDA stood at Rs.0.57 crore in June 2024 up 72.73% from Rs.0.33 crore in June 2023.

Source: Money control.com.

Consolidated Numbers:

On consolidated basis, the total income of the company for the June, 2024 quarter came at Rs.8.44 crore Vs Rs.7.19 crore in Q4FY24 and Rs.8.67 crore in June, 2023 quarter.

The net profit of the company came at Rs.25.26 lakhs against Rs.2.43 lakhs in June, 2023 quarter and Rs.7.96 lakhs in the March, 2024 quarter, showing a significant improvement in the Bottomline.

Total Comprehensive Income for the June, 2024 quarter: Rs.26.98 lakhs Vs Rs.15.63 lakhs in March, 2024 and Rs.11.94 lakhs in the June, 2023 quarter on an equity capital of Rs.9.29 crore.

Reserves (excluding revaluation reserves): Rs.30.92 crore, which is more than 3 times its equity capital.

Market Jitters or Misunderstandings: The Queer Case of JP Associates Ltd (Rs.8.74) and MEP Infrastructure Ltd (Rs.8)...

In recent times, it appears that some traders are eager to exit scrips that have been placed under restricted trade by the exchanges. This behavior tends to create a ripple effect, influencing the mindset of other investors who may start to believe that something significantly negative is unfolding. Photo: Dreamstime.

I feel that many investors, are not familiar with the basic operations of the NCLT (National Company Law Tribunal) and the NCLAT (National Company Law Appellate Tribunal), and this seem to harbor misconceptions about the functioning of these two organisations. There’s a prevailing assumption that once a company is linked with NCLT, it signals the onset of the company’s demise or it is bankrupt.

The situation is exacerbated by the role of Hindi vernacular papers, which are notorious for stoking emotions on both ends of the spectrum. They frequently equate a company's entry into NCLT with व्यवसाय का दिवालियापन (business bankruptcy), which is a misleading interpretation.

Meanwhile, market operators seize this opportunity to manipulate investor sentiment through various WhatsApp and Telegram groups, playing mind games that can sway public perception. Off late we've witnessed this phenomenon across multiple scrips.

Unfortunately, the toothless SEBI looks the other way around while the operators continue with their games in various WhatsApp and Telegram groups.

 Today's Call 

#Speculative Buy: Coffee Day Enterprises Ltd near the CMP of Rs.40.30, T: Rs.47/51, SL: Rs.37.

 Brief Buzz

The trading in the shares of J P Associates Ltd (Rs.9.20) was restricted due to IBC. The stock hit the lower circuit in the last trading session, even though positive news abounds in the counter. This shows how maximum investors are guided by YouTube Videos which are prepared by amateurs. Let's recapitulate some of the recent events surrounding the company.

On June 3, 2024 the NCLT initiated insolvency proceedings against Jaypee Associates Limited (JAL) following a petition by a consortium of lenders led by ICICI Bank. The lenders turned to the NCLT because JAL failed to meet its financial commitments. Let's now take a few FAQs. 

Q. Why was the insolvency procedures initiated?

Ans. The insolvency process is intended to address JAL's debt challenges and find an appropriate solution for the creditors. 

Key issues included: 

💢 Dispute with land authorities.

💢 Principal repayment due in 2037. 

Q. How is J P Associates Ltd addressing the issue?

Ans. The company plans to refinance its debts and sell assets, including real estate and cement plants, and a Formula One racetrack to reduce its financial liabilities. 

Q. What are other methods, J P Associates Ltd's management is considering to cut down the debt in the short term?

Ans. Jaypee Group seeking high cost funding of Rs.10,000 crore from global credit funds such as Varde Partners, Area Cerberus, and Hillhouse to rescue its flagship company Jaiprakash Associates (JAL) from insolvency.

Q. Will it be able to get out of the NCLT initiated insolvency procedures?

Ans. Yes JAL might be able to exit the insolvency process, subject to creditor approval, under certain legal provisions.

Company Profile: Jaiprakash Associates is a leading infrastructure conglomerate in India, specializing in hydropower projects. It is the only integrated solution provider in this sector, known for strong project execution. The company also operates in cement, power, fertilizers, real estate, and hospitality.

In April, JAL planned to sell 150 acres along the Yamuna Expressway to raise Rs.15 billion to pay Yeida, but Yeida objected since 80 acres were already mortgaged. This land is part of the Sports City project, a major development along the expressway.

JAL proposed securing the outstanding amount against 150 acres, valued at Rs.27.6 billion, intending to sell or sublease the land within a year and deposit proceeds into an escrow account, with Yeida entitled to withdraw up to Rs.14.8 billion.

JAL's total borrowing is Rs.29,277 crore, with Rs.3,956 crore overdue as of April 2023. 

Positive Points: After restructuring and divesting its cement business, the debt could be nearly eliminated. JAL is contesting an insolvency case filed by ICICI Bank, with the matter pending alongside a proposed real estate transfer to a special purpose vehicle (SPV). Recently, JAL announced the sale of its remaining cement assets to Dalmia Bharat Ltd for Rs.5,666 crore to reduce debt.

Conclusion: When the price stabilizes or starts to move up, start accumulating the scrip of J P Associates Ltd, for targets of Rs.20+.

Zee Entertainment Enterprises Ltd (Rs.134.52)

I want to The likelihood of USD depreciation or appreciation against the INR depends on various economic factors and trends. Here are key considerations for each scenario. a few points here:

Q. What is the coupon rate of FCCBs?

Ans. The coupon rate is 5%, which will be applicable for 10 years. This is substantially lower than the 11%/12% PLR which is generally available in India. 

Q. What is the conversion price of FCCBs after 10 years?

Ans. The conversion price is Rs.160 per share. 

Q. What is the total consideration under FCCB?

Ans. The total amount is$239 million (Rs.1960 Cr).

Q. Is there any problem of equity dilution in the short term?

Ans. Let us first read the news on the topic from CNBC TV18 website:

The FCCBs will be issued to Resonance Opportunities Fund, St. John's Wood Fund Ltd. and Ebisu Global Opportunities, on terms and conditions mutually decided between the company and the 'proposed' investors.

Zee Entertainment further said that these FCCBs will carry a coupon of 5% per annum and will be unsecured and unlisted in nature with a maturity period of 10 years.

In case all the FCCBs are converted to equity, it will result in a post-money dilution of 11.7%. As of the June quarter, promoter stake in Zee Entertainment is currently at 3.99%.

In the short term there will not be  any issue of equity dilution. In future a rise in top and bottomlines of the company will take care of equity dilution (if any), especially when the June, 2024 quarter results are good.

Q. Does ZEEL have presence in OTT platform?

Ans. ZEEL has presence both in Television segment and the OTT platforms. ZEE5 is the brand new digital entertainment destination launched by Zee Entertainment Enterprises Ltd. It is in OTT platform. 

Hence, if competition hardens in the TV space, it may shift a substantial chunk of its business or shift altogether to the OTT platforms. 

Q. What could be approximately price of the ZEEL shares after 10 years?

Ans. It is hard to predict its price after 10 years, however if we take an incremental INFLATION figure into consideration we could see a substantial rise in its share price (as a going concern) considering the current management guidance and their optimism.

Q. What does the company want to do with the FCCB?

Ans. This is an Irrelevant question, since such funds are generally used for the benefit of any company. Hope the management, under the able leadership of Puneet Goenka will utilise the funds to increase shareholders value.

Q. Since it is FCCB and hence it is affected by the USD ($) Vs INR (Rs) ratio. Will it have any adverse effect on the company?

Ans. If the USD ($) depreciates, it will generally benefit the Indian company that has issued Foreign Currency Convertible Bonds (FCCBs).

Reasons:

💢Lower Repayment Cost: FCCBs are denominated in USD ($), so the company needs to repay the bondholders in that currency. If the USD depreciates against the Indian Rupee (INR/Rs), the company will need fewer INR to buy the required USD for repayment. This reduces the overall cost of repayment.

💢Conversion to Equity: FCCBs have an option for bondholders to convert their bonds into equity at a predetermined conversion price. For example in this case the conversion price is Rs.160.

If the USD depreciates, the value of the conversion option may be less attractive to bondholders, as they might receive fewer INR for the same amount of USD. However, this primarily affects the bondholders and not the issuing company directly.

Overall, a depreciating USD will reduce the financial burden on the Indian company when it comes to repaying the principal and interest, thereby benefiting the borrower.

Q.  What is the chance of USD depreciation in future, considering the excessive money printed by fed?

Ans. There's a possibility that the USD could depreciate in the future if the U.S. Federal Reserve (FED) continues to print a significant amount of money. Let's find out how:

💢Inflation Risk: When the US Fed prints more money, it increases the money supply. If this increase outpaces economic growth, it can lead to inflation, where the value of each USD decreases because there are more dollars chasing the same amount of goods and services. 

This inflationary pressure can cause the USD to lose value relative to other currencies.

💢Decreased Confidence: Excessive money printing can lead to concerns about the long - term value of the USD. If investors and foreign governments lose confidence in the stability of the dollar, they may shift their investments to other currencies or assets, leading to a decrease in demand for the USD and, consequently, its depreciation.

A 15 July, 2024 edition of The Hindu says: "India and Russia have doubled their payments in national currencies (rupee-rouble) since last year despite sanctions by the U.S. and European Union, said Russia's largest, state-controlled bank Sberbank that handles a majority of payments for Indian exports to Russia". 

💢Interest Rates: To counter inflation, the US Fed might eventually raise interest rates. While higher rates can attract foreign investment (which might strengthen the USD), the timing and effectiveness of such measures are uncertain. If the inflationary impact of money printing is not contained, the depreciation risk remains.

💢Global Economic Factors: The USD's value is also influenced by global economic conditions, such as the strength of other currencies, geopolitical events, and trade balances. While money printing is a significant factor, it's not the only one that determines the USD's exchange rate.

In summary, excessive money printing by the US Fed could contribute to a future depreciation of the USD, especially if it leads to high inflation or erodes confidence in the currency. However, the actual impact will depend on a range of economic and policy factors. I believe there is more chance of USD depreciation than appreciation.

Q. If the USD depreciates then will the bond holders ask their money back or convert into equity? Which one is more likely?

Ans. If the USD depreciates, the decision by bondholders to either ask for their money back (redeem the bonds) or convert them into equity will depend on several factors, including the bondholders' expectations about the future value of the equity and the terms of the Foreign Currency Convertible Bonds (FCCBs). Let's look at the few hypothetical scenarios:

💢Redemption of Bonds (Asking for Money Back):

   💠Depreciating USD Impact: If the USD depreciates, the value of the repayment in USD decreases in terms of the bondholders' local currency. This might make bondholders more inclined to redeem the bonds, especially if they believe that the value of the equity (in INR) will not compensate for the loss due to currency depreciation.

   💠Risk Aversion: Bondholders who are risk-averse or unsure about the future performance of the issuing company’s stock might prefer to get their money back, especially if they expect further depreciation of the USD.

💢Conversion into Equity:

  💠Attractive Equity Valuation: If the company's stock is performing well or is expected to perform well, bondholders might opt to convert their bonds into equity. This could be particularly appealing if they believe that the potential gains from the stock market will outweigh the losses from the depreciating USD.

  💠Hedge Against Currency Risk: Converting into equity might also serve as a hedge against further depreciation of the USD. By holding equity in an Indian company, bondholders can benefit directly from any appreciation in the company’s stock, which might also appreciate due to a stronger INR.

Q. What if the USD appreciates Vs INR, then what option will the bond holders likely to take?

Ans. If the USD appreciates against the INR, bondholders will likely evaluate their options based on the following considerations:

💢Redemption:

   💠Higher Repayment Value: If the USD appreciates, the value of repayment in INR terms increases. Bondholders may find that redeeming the bonds is more attractive because they will receive a higher amount in INR compared to when the USD was weaker.

   💠Risk Management: For bondholders who prefer to avoid currency risk or seek a stable return, redemption might be preferred to secure the higher INR value now rather than potentially facing future uncertainties.

💢Conversion into Equity:

  💠Potential for Equity Growth: If the company's stock is performing well or is expected to perform well in future or is much above the agreed conversion price into equity bondholders might see potential for higher returns from the company's stock than from redeeming the bonds.

 💠Hedging Against Currency Risk: Conversion into equity could also be viewed as a way to hedge against further fluctuations in currency exchange rates, especially if bondholders expect continued volatility.

💢Bond Terms and Company Performance:

   💠Conversion Price: If the conversion price is favorable and the company’s stock is expected to appreciate, bondholders might choose conversion even with a stronger USD, as the potential gains from equity could outweigh the benefits of redemption.

  💠The Company’s Financial Health: The company’s performance and growth prospects will heavily influence this decision. A strong-performing company with good future prospects may make equity conversion more appealing despite the appreciation of the USD.

💢Market Conditions:

   💠Overall Market Sentiment: The broader market conditions and investor sentiment towards the company's sector can impact the decision. If the market outlook for equities is positive, bondholders might be inclined to convert.

The Summary:

💠Redemption: Bondholders might opt for redemption if the stronger USD results in a significantly higher INR repayment amount, especially if they prefer stability or are risk-averse.

💠Conversion: If the company’s equity offers promising growth prospects or if bondholders believe that converting into equity will yield better returns in the long run, they might choose to convert despite the stronger USD.

In essence, the decision will depend on the bondholders' assessment of the company’s future performance, their risk tolerance, and the comparative advantages of redeeming the bonds versus converting into equity.

Q. Which is likely for the USD? Appreciate or Depreciate?

Ans. Predicting the future movement of currencies, including whether the USD is more likely to depreciate or appreciate, involves considering a variety of economic factors and conditions. Here are some key factors to consider:

💢Points Supporting USD Depreciation:

      💠Monetary Policy:

    - Excessive Money Printing**: If the Federal Reserve prints too much money, it can lead to inflation and a decrease in the value of the USD.

         - Low Interest Rates: Extended periods of low interest rates can make the USD less attractive to investors seeking higher returns.

      💠Trade Deficits:

   - Continued Trade Imbalances: Large and persistent trade deficits can weaken the USD as more dollars are exchanged for foreign currencies.

💢Economic and Political Uncertainty:

   - Instability or Uncertainty: Political instability or economic challenges in the U.S. can erode confidence in the USD, leading to depreciation.

💢Global Economic Trends:

   - Rise of Other Currencies: If other major economies (like the Eurozone or China) strengthen their currencies or experience economic growth, the USD might weaken relative to these currencies.

💢Factors Supporting USD Appreciation:

     💠Interest Rate Differentials:

   - Higher Interest Rates: If the Federal Reserve raises interest rates, it can attract foreign investment, increasing demand for the USD and leading to appreciation.

💢Strong Economic Performance:

   - Robust Economic Indicators: Strong U.S. economic performance, including growth, low unemployment, and high consumer confidence, can strengthen the USD.

💢Safe-Haven Status:

   - Global Uncertainty: During times of global economic or geopolitical uncertainty, investors often flock to the USD as a safe-haven asset, leading to appreciation.

💢Fiscal and Monetary Policy:

   - Effective Policy Measures: Strong and effective fiscal and monetary policies can support the USD.

💢Conclusion:

Predicting whether the USD will depreciate or appreciate is complex and influenced by many variables. Historically, the USD has shown both appreciation and depreciation trends based on shifting economic conditions and policy decisions. Keeping informed about current economic indicators and policy actions is crucial for understanding potential future movements of the USD.

 Today's Call and Other Information 

Buy the shares of NMDC Ltd near the CMP of Rs.213.30, T: Rs.151/Rs.270. SL: Rs.192.

NMDC is India's single largest iron ore producer. NMDC is operating four Iron Ore mechanized mines viz., Bailadila Iron Ore Mines – Kirandul Complex (Dep-14, 14 NMZ, 11B & 11C), Bailadila Iron Ore Mine – Bacheli Complex (Dep-5,10 & 11A) in the Chhattisgarh State, Donimalai Iron Ore Mine and Kumaraswamy Iron Ore Mine in the Karnataka State. Photo: Egov.

Incidentally, a bench led by Chief Justice DY Chandrachud in a recent verdict allowed states to collect past dues in the form of royalty and tax from April 2005. The Chief Justice said that the time for payment of demand for tax shall be staggered in installments over a period of 12 years, starting April 1, 2026.

However, according to a report in CNBC TV, the three states who had earlier levied this kind of cess are: Odisha, Jharkhand, and Tamil Nadu. Hence, as per my understanding, NMDC Ltd will not be affected by this Supreme Court order. 

#The shares of BLB Ltd (Rs.18.39) Freezed in the NSE. I have good holding in my portfolio accounts. 

I have been recommending the scrip since sometime, especially when it fell around Rs.17.10. Buy scrips based mostly on Fundamentals and less on Charts.

#Buy the shares of ZEE TV Ltd (ZEEL) near the CMP of Rs.134.90, for targets of Rs.160/172. I am expecting an upgrading of the stock post raising of funds through FCCB.

However, on the negative side, in case all the FCCBs are converted to equity shares, the proposed equity shares that stand to get diluted will be 12.46 crore with a face value of ₹1 each at a conversion price of ₹160.2 per share. 

On the positive side the conversion price is more 15% premium to Zee Entertainment's CMP

#On the other hand issues related to J P Associates Ltd (Rs.9.22) and MEP Infrastructure Ltd (Rs.8.45) are on the verge of settlement, according to my close sources, who refused to be named.

#The shares of Devyani International Ltd (Rs.171) have again started its upward movement. You can take fresh positions in the counter. We can look for targets of Rs.200+ in the coming weeks, as Festival season is approaching.

 Today's Call 

Buy the shares of Integra Essentia Ltd near the CMP of Rs.4.67, for targets of Rs.7/9. SL: Rs.3.97.

Last month, Integra Essentia announced that the board of directors had approved the scheme of amalgamation of Integra Essentia (transferee company) and G G Engineering (transferor company).

The report further said: Integra Essentia shall issue and allot 48 equity shares of face value of Re.1 each to equity shareholders of G G Engineering for every 100 equity shares of face value of Re.1 each held by them in the transferor company.

G G Engineering specializes in producing high-quality infrastructural and structural steel, as well as engineering products, which are utilized in various sectors, including infrastructure, construction, large-scale projects, modern buildings, and high-rise residential and commercial developments. The merger will bolster the infrastructure division of G G Engineering, enhancing its operational efficiency and market competitiveness. The goal is to broaden the range of combined products and expand the customer base, both domestically and internationally.

Financial Performance Update: In the first quarter of FY24-25, Integra Essentia Ltd reported a impressive performance. 

The company's sales rose by 56.47% to Rs.86.06 crore for the quarter ending June 2024, as per a stock exchange filing. Net profit for the quarter saw a significant increase of 107.63%, reaching Rs.2.45 crore, compared to Rs.1.18 crore in the same period last year.

In the previous quarter, the company's net profit had soared by 250% year-over-year (YoY) to Rs.5.91 crore. Additionally, the company's total income for the first quarter increased by 40% YoY to Rs.100.6 crore, up from Rs.68.1 crore in the corresponding quarter of the previous year.

Company Profile: Integra Essentia operates in the Life Essentials sector, offering a wide range of products and services essential for modern living. These include Food (Agro Products), Clothing (Textiles and Garments), Infrastructure (Materials and Services for Construction and Infrastructure Development), and Energy (Materials, Products, and Services for Renewable Energy Equipment and Projects), along with many other products and services that support contemporary life.

Sadbhav Infrastructure Project Ltd and other Information  

Yesterday, I took some shares of Sadbhav Infra Project Ltd (Rs.7.60) and also sent this message on Facebook and Twitter (X). The stock initially hit the Upper Circuit, only to open few minutes later, when I believe most of my well-wishers could enter. 

Brief description: Roads are the backbone of any economy, and India's rapid growth has heightened the demand for a robust road infrastructure. While public funds alone cannot meet the needs for upgrading National Highways, the government of India has adopted a policy to involve the private sector through Build-Operate-Transfer (BOT) projects. 

Sadbhav Infrastructure Project Limited (SIPL), a subsidiary of Sadbhav Engineering Limited (SEL), was established in 2007 as an asset-holding company for road and infrastructure BOT projects. 

SIPL focuses on the development, operation, and maintenance of road infrastructure, aiming to build a sizable asset base in the road BOT sector. With less competition in the BOT Roads and Highway sector, SIPL is in a strong position to win projects with desired returns in future.

Currently, SIPL manages 10 BOT projects, covering a total of 2595.92 lane kilometers. Of these, six are operational, one is partially operational, and three are under development.

Financials: Net Sales of the company came at Rs.174.33 crore in March 2024 up 11.03% from Rs.157.01 crore in March 2023. 

Quarterly Net Loss was at Rs.95.40 crore in March 2024 down 127.89% from Rs.342.06 crore in March 2023, which is very encouraging.

However, the EBITDA stood at Rs.81.52 crore in March 2024 down 44.04% from Rs.145.67 crore in March 2023. I'm looking at a target of Rs.10+ for the scrip.

#In May, 2024, there was a news report in The Times of India, that: "Municipal Corporation of Delhi (MCD) has issued a public notice to auction on May 7 four confiscated properties, worth around Rs.30 crore, of former toll contractor MEP Infrastructure Developers Ltd (Rs.8.43) in Mumbai". 

There was another report on the same page saying: "In March, MCD had issued a public notice for the attachment of over Rs 3,900-crore assets and properties belonging to the company for non-payment of toll dues.".

Now there are few points here I would like to mention:

💢There are a whooping 31 subsidiary companies of MEP Infrastructure Ltd (Rs.8.45). I have reports that it's tool tax collections are going on smoothly at Airoli (New Bombay) and Dahisar (Bombay) tool Nakas (plazas).  

💢The company has more than 17+ years of experience in Toll Collection in 15 states in India with 3000+, workforce.

Brief description: Maintenance of, and collection of toll at, the five Mumbai Entry Points along with 27 flyovers and certain allied structures on the Sion–Panvel Highway, the Western Express Highway corridor, the Eastern Express Highway corridor, the Lal Bahadur Shashtri Marg corridor and the Airoli Bridge corridor. Collection of toll at five entry points into Mumbai consisting of five toll plazas at Airoli, Vashi, Dahisar, Mulund on Lal Bahadur Shastri Marg and Mulund on Eastern Express Highway.

Period of contract: 20.11.10 to 19.11.26 (means upto November, 2026).

The company is currently going through Debt restructuring and hence we need not have to worry much.

#Devyani International Limited, a quick service restaurant (QSR) operator, had recently released its financial results for the quarter ending June 30, 2024. The company, which operates KFC and Pizza Hut outlets in India, reported a 44.3% year-on-year (YoY) increase in revenue, reaching ₹1,221.9 crore in the June quarter, up from ₹846.6 crore in the same period last year.

Revenue in the first quarter also grew sequentially by 16.7%, rising from ₹1,047.1 crore in the fourth quarter. KFC India contributed ₹555 crore, Pizza Hut India brought in ₹182 crore, and Costa Coffee added ₹45 crore to the total.

Devyani International Limited posted a net profit of ₹22.43 crore in the June quarter, a significant improvement from the loss of ₹1.59 crore recorded in the previous year. This also marks a strong sequential recovery, following a loss of ₹48.95 crore in the last quarter.

The season of this sector will kickstart with Ganpati Festival in Mumbai and elsewhere. The Brokerage House Nuvama has given a target of Rs.208 for the scrip.

#The shares of P C Jewelers Ltd (Rs.95) hit another Upper Circuit and Buyer Freeze. We can look for target of Rs.97/99, in the short term. The Jewelry stocks have been rising due to the fall in gold prices.

The shares of the Financial Services Firm BLB Ltd (Rs.17.81) is trading near the 52 - week low price. I am expecting a satisfactory June, 2024 quarter results. The targets for the scrip till Durga Puja are Rs.27 and Rs.31.

Unfortunately, the stock is languishing in the T - group since a long time, even though there is hardly any activity in the counter. The SEBI should explain the reasons for executing such a behaviour with certain scrips listed in the BSE/NSE. 

By the way, the perfomance of the surveillance department of the BSE/NSE has been going from bad to worse. The NDA government should clarify the causes for such absymal functioning of the two leading domestic bourses.

Update on MEP Infrastructure Ltd and other information

#The stock of MEP Infrastructure Ltd (Rs.8.89) got suspended temporarily due the action by the surveillance department of the stock exchanges, under the provisions of IBC. 

It is to be noted that the National Company Law Tribunal had earlier initiated the corporate insolvency resolution process (CIRP) against MEP Infrastructure Developers Ltd on a plea filed by Bank of India and appointed an interim resolution professional to take control of the company. 

Meanwhile, according to a report in ET, MEP Infrastructure is contemplating to submit a plan under section 12A of the IBC and seek settlement with the lenders. Hence, there is no cause for worry.

#The shares of 63 Moons Technology Ltd (Rs.364.14) is available at a good price. You can accumulate them in phases.

#The shares of J P Associates Ltd (Rs.10.24) has hit another buyer freeze. Keep accumulating in market dips, as a big story is floating in the counter.

#Devyani. International Ltd (Rs.178) has come up with good, June quarter numbers. The stock would soon cross Rs.200. Stay Invested.

#A big corporate story is unfolding in Adani Wilmar Ltd (Rs.377). We can look for targets of Rs.600+ in the coming months.

 Today's Call 

Buy the shares of MEP Infrastructure Ltd (Rs. 8.77) for targets of Rs.17 and Rs.21. 

On 17 June, 2024 the ET reported quoting its Chairman that,  MEP Infrastructure Developers (MIDL) will submit a plan under Section 12A of the Insolvency and Bankruptcy Code (IBC) and seek a settlement with lenders. 2nd Photo: The Economic Times.

Average/Accumulate the shares of Vodafone Idea Ltd (Rs.15.15), J P Associates Ltd (Rs.9.76), Moons Technology Ltd (Rs.483), Adani Wilmar Ltd (Rs.372) in any market dip.

Meanwhile  Devyani International Ltd (Rs.173) came out with impressive set of numbers for the June, 2024 quarter. 

The company has reported a consolidated net profit of Rs.22.4 crore in Q1 FY25 as against a net loss of Rs 1.6 crore in Q1 FY24. Revenues from operation increased by 44% year-over-year to Rs.1,221.9 crore in the June’24 quarter. Accumulated!

#The selling in Indian bourses is basically due to unrest in Bangladesh. The government of India is keeping a close eye on the situation. I hope the things will get streamlined soon, with effective measures implemented by the Hasina Wazed government in Dhaka.