In n the week gone by, global stock markets remained weak due to weak economic I data coming out from US and other countries. Actually, the weak data has fueled fears of a slow and prolonged economic recovery across the globe. US imports jumped nearly 11 percent in July, driving the trade gap up to $63.6 billion in the month. Although American exports also rose in July, it was far less than imports, contributing to the $10.1 billion jump in the overall deficit -- nearly 19 percent higher than June, according to the report. US Budget deficit to hit record $3.3 trillion due to coronavirus, recession. Recent data has showed that the Japanese economy has shrunk at its fastest rate on record as it battles the coronavirus pandemic. Activity in Japan’s services sector contracted at a faster pace in August for the first time in four months, as uncertainty from the coronavirus pandemic weighed on sentiment, hurting business at home and from abroad.
Back at home, stock market also remained weak following weak global cues after tech sell-off pulled US markets lower amid tension on India-China border and valuation concerns. India’s Gross Domestic Product growth rate had contracted by 23.9% for the April to June quarter. Meanwhile, Finance Minister Nirmala Sitharaman has asked banks and NBFCs to roll out loan restructuring scheme for COVID-19 related stress by September 15 and provide adequate support to the borrowers following the lifting of moratorium on repayment of debts. The recent data showed that India’s Gross Domestic Product growth rate had contracted by 23.9% for the April to June quarter. On the flip side, easing of lockdown and resumption of economic activities resulted in a rise in two-wheeler sales as three of the top six manufacturers, which control 96 percent of the domestic market, reported an increase in demand. India services PMI for the month of August came improved to 41.8 in August from 34.2 in July thus signaling an improvement in the services sector. Even activity in the country’s manufacturing sector rebounded in August after four months of contraction, led by an increase in new orders. Going ahead, the market may look forward for more positive signs of economic recovery and would track the development around US stimulus announcement. Investors will also continue to track India-China border tensions and global markets for cues.
On the commodity market front, with correction in bullion and energy and some pause in the rally of base metals, CRB took little downside and traded near 150 levels. Better than expected manufacturing data of China which improved for continuous fourth month couldn’t give much support to the industrial metals and energy prices; nevertheless it erased some of the risk premium form bullion counter. Bullion counter may recover from the lower side and gold and silver should trade in range of 49000- 52000 and 65000-69000 respectively. Energy counter may remain volatile on weather and hurricane issues. Base metals have seen healthy profit booking nevertheless some weaker data from US exerted pressure on the prices, base metals futures may see some recovery too from lower side. GDP data of Japan, Euroarea and UK, Consumer Confidence Index of Australia, Inflation Rate of China, Germany, US and Mexico, BoC Interest Rate Decision, ECB Interest Rate Decision, ECB Press Conference, Eurogroup Meeting, New Yuan Loans etc are many data and events scheduled this week which may impact commodity prices.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
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SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.
The company delivered a resilient performance led by strong growth in its US business. While the India business was impacted by lockdown, the company maintained its outperformance in its key established therapies of anti-infectives and gastro-intestinal. Superior revenue mix and savings on marketing activities helped company register strong EBITDA margins. Going forward, while it’s difficult to predict how the situation will unfold, it is taking all the necessary steps to ensure minimal impact on its operations. Thus, it is expected that the stock will see a price target of Rs.3270 in 8 to 10 months time frame on a one year average P/Ex of 27.03x and FY21 EPS of Rs.120.98.
NHPC is actively exploring opportunities for the development of pumped storage schemes in potential rich states like Maharashtra, Karnataka, Odisha etc. The diversity also minimises risks associated with geographical concentration. The company continued to remain comfortable by low overall gearing and stable debt coverage metrics. Thus, it is expected that the stock will see a price target of Rs.25 in 8 to 10 months time frame on a one year average P/BVx of 0.75x and FY21 BVPS of Rs.33.46.
The stock closed at Rs 37.15 on 04th September 2020. It made a 52-week low at Rs 18 on 24th March 2020 and a 52-week high of Rs. 45.80 on 14th November, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 32.62
As we can see on charts that stock is forming an “Inverted Head and Shoulder” pattern on weekly charts which is bullish in nature. As of now, we don’t have the pattern breakout but its consolidation from past few weeks indicates that there is a strong spurt in coming days. Therefore, one can buy in the range of 36-37 levels for the upside target of 44-46 levels with SL below 34.
The stock closed at Rs 2288.80 on 04th September 2020. It made a 52-week low of Rs 1506.05 on 13th March, 2020 and a 52-week high of Rs. 2358 on 30th July, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 2105.33
Short term, medium term and long term bias are looking positive for the stock as it is trading in higher highs and higher lows on charts and formed a “Bull Flag” pattern, which is considered to be bullish. Apart from this, technical indicators such as RSI and MACD are suggesting buying for the stock. Therefore, one can buy in the range of 2240-2250 levels for the upside target of 2440-2480 levels with SL below 2170.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: RELIABLE SOFTWARE
Charts by Reliable software
After two weeks of stunner rally, Indian markets took a breather last week with bears made a comeback as Nifty ended the week with loss of nearly 2.70% while bank nifty also witnessed sharp selloff at the end of the week below 23100 mark. From derivative front, call writers added hefty open interest at 11500 & 11600 strike while put unwinding was observed at 11300 strike. The maximum option pain for current week and monthly expiry is at 10400 which will consider as key level. The Implied Volatility (IV) of calls closed at 18.33% while that for put options closed at 19.57 The Nifty VIX for the week closed at 20.50% and is expected to rise. PCR OI for the week closed at 1.37 slightly down from the previous week. From the technical front, secondary oscillators suggest that market may trade in a range bound manner with nifty likely to consolidate in range of 11200 to 11500 levels. However volatility will likely to grip the markets as tug of war among bulls and bears will continue in coming week as well.
**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric futures (October) may continue to witness correction towards 5800, facing resistance near 6200. On the spot, the stockiests after inspecting the samples are buying limited stock for their requirement without quoting increased price. Whereas, the traders though not receiving fresh upcountry demand, are buying a reasonable number of turmeric bags for their local demand from the masala firms and turmeric powder grinding units. Due to no increase in price, the farmers are bringing lesser quantity of good produce for sale. At the Erode Turmeric Merchants Association sales yard, finger turmeric was sold at Rs. 5,199 to Rs. 6,299 a quintal, the root variety was sold at Rs. 4,791 to Rs. 5,791/quintal. At the Erode Cooperative Marketing Society, finger turmeric was sold at Rs. 5,259-Rs. 6,106 a quintal, the root variety at Rs. 4,769 to Rs. 5,899 a quintal. Jeera futures (October) is expected to descend and test 13900-13800, facing resistance near 14200. The spot prices have started to weaken because Gujarat and Rajasthan, the main jeera growing areas of India, received heavy rainfall, which is expected to boost production and supply of the commodity as farmers expand the area under cultivation. Jeera being a rabi crop requires good soil moisture for better yield. This year monsoon has almost fulfilled this requirement. There is an expectation that the sowing area may increase this season. Dhaniya futures (October) is expected to consolidate in the range of 6750-7050 and with a downside bias amid rising arrivals in Ramganj mandi and weak demand. Meanwhile prices were steady in Baran and Kota mandi along with Guna mandi of Madhya Pradesh. The Badami variety at Rajkot mandi of Gujarat quoted at Rs 1160- 1240, and Eagle variety was priced at Rs 1190-1275 per 20 Kgs.
Bullion counter has been dipped as the dollar rebounded after robust U.S. manufacturing data bolstered hopes of a swift global economic recovery, rubbing some of the allure off safe-haven bullion. The broader picture is still in favour of gold, as the U.S. Federal Reserve and other central banks are likely to stay accommodative for an extended period of time. The dollar index bounced off two-year lows after U.S. data showed manufacturing activity accelerated to a near two-year high in August. Stronger greenback makes gold expensive for holders of other currencies. The firm manufacturing activity also boosted investor appetite for riskier assets, limiting inflows into safehaven bullion. However, expectations that U.S. interest rates would stay low for longer under the new monetary policy approach from the Fed put a floor under bullion prices. Fed Governor Lael Brainard said the U.S. central bank would need to roll out more stimulus to fulfil its new promise of stronger job growth and higher inflation. The U.S. central bank last week announced an average inflation target policy, which will allow rates to stay low even if inflation rises a bit in the future. However, besides other strong fundamentals like weak economy and lower interest rates, Australian and U.S. mints reporting very high demand for gold coins will take gold above $2,000 in the long run. For the next week, gold may trade in the range of 48200-52600 and Silver may trade in the range of 60200-70400. Whereas on COMEX gold may trade in the range of $1850-$1990 and Silver may trade in the range of $23.00- $29.60.
Soybean futures (October) is expected to consolidate in the range of 3800- 4100 levels. According to SOPA, there is no fresh damage reported from other parts of the State. The demand side is weak as the country has about 10 lakh tonnes of carry over stock, and exports happening at such higher domestic prices. On CBOT, soybean futures is moving on a strong path, thanks to healthy demand from China and also concern about a possible downgrade to U.S. yields in the next USDA report. The USDA will update its U.S. harvest forecasts in a monthly supply and demand report on Sept. 11. The bull-run shall persist in mustard futures (October) as it has the potential to test 5600-5700 levels. Amidst weak availability and hike in mustard seeds prices by the NAFED, mustard seeds also quoting higher on the spot markets. Millers are trying to buy and hold stock of maximum quantity. Also, the stockiest and farmers are also holding the oil to gain higher profit by selling later. Soy oil (October) may trade sideways to up in the range of 870-910. Amidst scattered buying support, reports of damage to soybean crops on account of pest infection and excessive rains in Madhya Pradesh, soy oil has been ruling higher in Indore. CPO (Sept) is expected to trade on a cautious note in the range of 750-780. The market participants would be watchful ahead of the data from Malaysia Palm oil Board. It is estimated that Malaysia's palm oil stockpile in August is forecast to rise 6% from July as production grew 6% on-month and exports may witness a slump in days to come.
Crude Oil prices on track for biggest weekly drop since June, as lacklustre demand and ample fuel supplies offset support from a weaker dollar. The volume of crude arriving in China, the world’s largest crude importer, is set to slow in September after rising for five straight months as its refiners gradually digest bloated inventories. Production cuts led U.S. gasoline inventories to fall at a “manic” pace in the past two months. WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil. Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said. On Nymex week ahead it is expected that Crude oil may post further correction where support is seen near $35.40 and resistance is seen near $46.00. For next week we may witness correction in crude oil where it may take support near 2720 and face resistance near 3380. U.S. natural gas has completed the correction on the short term. Some of the cooler-than-normal weather after heavy rains from Laura turned a bit warmer, providing support to the market. The reaction to the EIA report suggests traders read the numbers as neutral. However, the 35 Bcf build marks the second week that it was lower than the week before and this indicates that supply and demand is tightening. This could be enough to send prices higher into the close if traders decide to ignore warnings about LNG demand. For next week Natural gas may trade within the wider range of 170-210.
The correction in cotton futures (Oct) may deepen to 17300-17200, facing resistance near 17900. This season the supply side is taking a toll over the demand, as the domestic and the export consumption has slowed down. Secondly, after a suspension for a week, Cotton Corporation of India has resumed its auctions under new terms and conditions, to keep a check on hoarding practices. Chana futures (October) will probably continue to enjoy its bull-run and trade in the range of 4850-5100. The recent news of Directorate General of Foreign Trade (DGFT) restricting imported consignments of yellow and white peas lying on western ports of the country may have a positive impact on the bouquet of pulses. Earlier, it was said that the consignments of peas can be released with penalty. But DGFT informed custom department that the imported pulse cannot be released right now. Such release will be contradictory to the government’s existing policy. On spot markets, most of the pulse seeds in Indore are witnessing an uptrend on weak availability. Guar seed futures (Oct) may trade with a bearish bias in the range of 3800-4100, while guar gum futures (Oct) may trade sideways to down in the range of 6000-6600. According to traders, guar gum demand from crude oil sector is almost absent. Only food sector demand from US market is giving little support which is not being enough to support the prices. On the spot, the quotes of Churi and Korma are also showing signs of weakness as demand from cattle feed manufacturers weakened. According to the traders, guar sowing area is estimated to come down from last year’s acreage. However, recent rain may improve prospects for better crop. Sowing activities almost concluded but the rain can improve productivity
Base metal may trade in range as weaker greenback, declining stocks in LME, and recovery of manufacturing activities in major countries may support the prices while recovery in the production of metals with smooth supply and geopolitical tension may pressurise the counter. Production in Peru had fallen as low as 20.4% in the period from January to June 2020, but year-on-year output was only down 2.2% in July. Codelco produced 133,300 tonnes of copper in July, up 2.3% over the first seven months of 2020 compared to the previous year, while production at Escondida mine owned by BHP rose 3.8% in July to 100,900 tonnes, and production from Collahuasi mine, majority owned by Anglo American and Glencore, rose 22.8% in July to 58,100 tonnes. Copper can move towards 500 by facing near 530. Zinc may trade in the range of 185- 200 while. Lead can move in the range of 147-156. The Electric Vehicle Battery market in the U.S. is estimated at US$8.3 Billion in the year 2020. China, the world`s second largest economy, is forecast to reach a projected market size of US$19.8 Billion by the year 2027. Within Europe, Germany is forecast to grow at approximately 12.7% CAGR. Nickel may test to 1140 by taking support near 1070. While the stainless steel segment continues to be the demand driver for Nickel, the Electric Vehicle (EV) markets are soon expected to steal the limelight. Aluminum may trade in the range of 141-152 with firm bias. China imported 123,000 tonnes of primary aluminium in June and another 185,000 tonnes in July. The two-month count already exceeds every yearly total since 2013 and most analysts think there is more to come.
ALUMINIUM MCX (SEP) contract closed at Rs. 144.80 on 03rd Sep’2020. The contract made its high of Rs. 148.35 on 05th Aug’2020 and a low of Rs. 140.45 on 28th Jun’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 145.36. On the daily chart, the commodity has Relative Strength Index (14-day) value of 48.854.
One can sell near Rs. 146 for a target of Rs. 140 with the stop loss of Rs. 149.
CRUDE OIL MCX (SEP) contract closed at Rs. 3044.00 on 03rd Sep’2020. The contract made its high of Rs. 3285.00 on 05th Aug’2020 and a low of Rs. 2943.00 on 30th Jun’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 3138.40. On the daily chart, the commodity has Relative Strength Index (14-day) value of 39.972.
One can sell near Rs. 3150 for a target of Rs. 2750 with the stop loss of Rs. 3350.
GUARSEED NCDEX (OCT) contract was closed at Rs. 4020.00 on 03rd Sep’2020. The contract made its high of Rs. 4251.00 on 25th Aug’2020 and a low of Rs. 3834.00 on 24th Jun’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4071.32. On the daily chart, the commodity has Relative Strength Index (14-day) value of 42.302.
One can sell below Rs. 3900 for a target of Rs. 3500 with the stop loss of Rs 4100.
With correction in bullion and energy and some pause in the rally of base metals, CRB took little downside and traded near 150 levels. Better than expected manufacturing data which improved for continuous forth month couldn’t give much support to the industrial metals and energy prices; nevertheless it erased some of the risk premium form bullion counter. A stronger US dollar put pressure on gold prices. The dollar index, which measures the dollar's performance against a basket of six currencies, rose to 92.852, making gold costlier for holder of other currencies.The persistent rally in US and global equity markets amid hopes of economic recovery is also negative for gold. On the physical side, although overall consumption remained weak, especially in top buyer China, gold sales from Australia's Perth Mint rose threefold yearon-year in August, while India saw imports jump, pointing to a gradual recovery. Meanwhile, Turkey's gold imports surged four-fold as Turks scrambled to hedge against record drops in the lira currency. Silver too traded weak and witnessed outflow in ETF demand. In energy counter, both natural gas and crude edged down amid lower physical demand and poor data. Augustloading barrels destined for China were 7.93 million bpd, down from 8.2 million bpd in July and well down from the second quarter average of 11.87 million bpd.The net long bets on natural gas hit a nearly two-year-high in Aug and prices saw sharp upside, after that it fell from the higher side. Natural gas prices dropped as tropical storm Nana formed in the Gulf of Mexico but is headed for Latin American and is not going to target any of the natural gas installations according to the most recent report from NOAA. Base metals mostly saw sideways to downside move on mix data’s. Data released on Wednesday showed US private employers hired fewer workers than expected in August, suggesting that the labor market recovery was slowing.
Soyabean saw sharp move and then some profit booking from higher levels. The news of the crop damage has acted as a catalyst to fuel the prices of soybean in the domestic market. Excess rains in Central India over the past couple of weeks have dampened the prospects of a record harvest for kharif oilseeds, mainly soybean.Dwindling stocks of mustard sent the prices above 5400. New mustard crop will arrive the market after at least six months. Guar counter traded sideways. Weaker demand guar gum manufacturers pull down prices of guar seed in Jodhpur and other markets of Rajasthan and Haryana. Guar gum prices also fell down due to bearish mood of the market. Chana prices continued to move up on improvement in physical demand. Chana is in demand to fulfill the PDS upto November.
The Purchasing Managers' Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors. The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.
India’s Manufacturing Purchasing Managers’ Index (PMI) for August has come in at 52, compared to 46 in July, signalling growth and rebound in production volumes for the first time in five months. In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months. The headline PMI is a number from 0 to 100. APMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change.
For the first time since March, output expanded in the Indian manufacturing sector in August. Production growth was largely driven by greater client demand for Indian goods following the resumption of business operations after lockdown restrictions eased amid the COVID-19 pandemic. The factory output and new orders expanded at the fastest paces since February – recording a 21-month high.
Higher levels of production supported a modest rise in the quantity of purchases during August, but the limited availability of goods, which onset a further reduction in stocks of purchases, has extended the current rate of depletion to five months. Supply chains were disrupted for a sixth consecutive month, with transportation restrictions, supplier delays and capacity pressures as the main drivers of lengthening delivery times.
The muted performance by the services sector indicated a challenging road to recovery after the economy contracted nearly a quarter in April-June. India's first quarter GDP has contracted by a massive 23.9 per cent, owing to coronavirusinduced lockdown.
A composite index, which measures both services and factory activity, improved to 46.0 in August from July's 37.2, cushioned by a better manufacturing performance. However, it remained well below the neutral 50.0 level.
China's manufacturing purchasing managers' index (PMI) decreased to 51 in August from 51.1 in July while US manufacturing sector expanded at a stronger pace in August than it did in July with the ISM's Manufacturing Purchasing Managers' Index (PMI) climbing from 54.2 in July to 56. Higher PMI of major countries like US, China and India are raising hope for economic recovery hit by covid-19 and thus boost the demand and prices of base metal and energy.
The volatility in FX space has raised substantially amid various changes in monetary policy stances by major central bankers. Recent move by RBI over forward looking comfort for the rupee appreciation to reduce imported inflation triggered bulk shifts in USD/INR positions this week. However due to oversold situation in dollar globally and expected domestic buying in dollar from importers side may pause the slide in USDINR to some extent. Meanwhile euro once again failed to surpass 1.20 levels against dollar last week. The August inflation print went below zero for the first time since 2016 which was the broad reason for euro to slide. Additionally many euro zone policymakers’ raises concerns over rising euro which somehow pushes negative sentiment in euro as we also kept pointing to remain cautious. On upcoming Thursday, ECB monetary policy will be key for euro move. While Sterling hits the highest level in this year against dollar globally and also in rupee terms. The UK's impressive economic data in helped pound so far. Going forward the move now will depend on Brexit talks which will start from mid - September onwards. Next week we have light economic calendar from UK, so a broad dollar move will guide the pound on relative terms.
USD/INR (SEP) contract closed at 73.6775 on 03-Sep-20. The contract made its high of 73.9075 on 31-Aug-2020 and a low of 72.9200 on 01-Sep-20 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 74.43.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 25.12. One can sell at 73.60 for the target of 72.90 with the stop loss of 74.10.
GBP/INR (SEP) contract closed at 97.6575 on 03-Sep-20. The contract made its high of 98.5975 on 01-Sep-20 and a low of 97.6100 on 03-Sep-20 (Weekly Basis). The 21-day Exponential Moving Average of the GBP/INR is currently at 97.93.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 49.42. One can sell at 97.60 for a target of 96.70 with the stop loss of 98.20.
|31th AUG||India's federal fiscal deficit crossed full year budget target in four months|
|31th AUG||India's first-quarter GDP contracted by record 23.9% y/y|
|01st SEP||U.S. extended some China tariff exclusions only through year end|
|01st SEP||U.S. factory activity accelerated as orders jump to more than 16- 1/2-year high|
|02nd SEP||India's services activity shrank for sixth month in August, job losses mount|
|03rd SEP||India reported record daily jump of 83,883 corona virus infections|
|03rd SEP||U.S. trade deficit jumped to 12-year high in July|
|03rd SEP||U.S. weekly jobless claimed below one million; but labor market recovery ebbing|
EUR/INR (SEP) contract closed at 87.0350 on 03-Sep-20. The contract made its high of 88.1300 on 01-Sep-20 and a low of 86.7075 on 03-Sep-20 (Weekly Basis).The 21-day Exponential MovingAverage ofthe EUR/INR is currently at 87.98.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 35.62. One can buy at 86.90 for a target of 87.60 with the stop loss of 86.40.
JPY/INR (SEP) contract closed at 69.2425 on 03-Sep-20. The contract made its high of 69.9650 on 31-Aug-2020 and a low of 68.9550 on 02-Sep-20 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 70.18.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 31.00. One can sell at 69.30 for a target of 68.50 with the stop loss of 69.80.
The company proposes to utilise the Net Proceeds towards funding the following objects:
Considering the P/E valuation on the upper end of the price band of Rs. 166, the stock is priced at pre issue P/E of 32.46x on its actual annualised FY20 EPS of Rs. 5.11. Post issue, the stock is priced at a P/E of 34.00 x on its EPS of Rs. 4.88. Looking at the P/B ratio at Rs. 166 the stock is priced at P/B ratio of 8.77x on the pre issue book value of Rs.18.92 and on the post issue book value of Rs. 25.56 the P/B comes out to 6.50x.
On the lower end of the price band of Rs.165 the stock is priced at pre issue P/E of 32.27x on its annualised FY21 EPS of Rs. 5.11.Post issue, the stock is priced at a P/E of 33.79x on its EPS of Rs. 4.88. Looking at the P/B ratio at Rs. 165, the stock is priced at P/B ratio of 8.72x on the pre issue book value of Rs. 18.92 and on the post issue book value of Rs. 25.56, the P/B comes out to 6.46x.
Happiest Minds Ltd offerings include, among others, Digital Business Service (DBS), Product Engineering Service (PES) and Infrastructure and Management Security Service ( IMSS). The company also offers solutions across the spectrum of various digital technologies such as Robotic Process Automation (RPA), Software-Defined Networking/Network Function Virtualization (SDN/NFV), Big Data and advanced analytics, Internet of Things (IoT), cloud, Business Process Management (BPM) and security. As of June 30, 2020, Happiest Minds has 148 active customers and has a global presence in countries like US, UK, Australia, Canada and Middle East.
Strong brand in digital IT services: The company claims that its brand positioning “Born Digital. Born Agile”, is a reflection of digitalization being built into the essence of its business. In Fiscals 2019 and 2020 and the three months ended June 30, 2020, 97.2%, 96.9% and 96.3% respectively of its revenue from operations was from providing digital IT services.
Scalable business model with multiple drivers of steady growth: The company believes that its business model is scalable across customer industries, functions and geographies. In addition to its spread across customer industries and geographic markets it has also developed key operational drivers delivering it steady growth. These drivers include its revenue mix, contract structure, utilization rates and bill rates.
Strong R&D capability with depth in disruptive technologies creating value through newly engineered solutions: The company has garnered experience in next-generation technologies that drives its ability to provide solutions for digital evolution, agile transformation and automation. To help its customers to future proof their digital transformation initiatives, The company has created offerings in emerging technologies.
Agile engineering and delivery: The company helps its customers deliver effective, quality software. As its customers digitally evolve and plan to adopt the Agile approach, it helps integrate new systems into their existing technology architecture and help their existing systems keep pace.
Further investments in its CoEs and digital processes: To deliver value to its customers efficiently, it intends to continue investing in its employees and increase its R&D capabilities, particularly with a view to create solutions in emerging disruptive technologies that enhance its ability to develop tools for leading its entry into new areas such as payments and intelligent enterprises and developing products that address industry specific customer requirements. At this stage, it has identified AI, blockchain, RPA, robotics & drones as focus technology areas.
Domain led approach towards customer acquisition and revenue generation in specific verticals: It has traditionally focused on enterprises that are technology- and information-centric, where it believes its software development expertise is valued. To further enhance and develop its solutions and offerings, it has focused on certain verticals including banking and financial services, Edutech, Retail, Manufacturing,Travel andHospitality and Enterprise.The company believes thatits experience working within its core customer base will also be of particular value in expanding its verticalreach.
Selectively Pursue Strategic Acquisitions: The company plans to selectively pursue acquisitions. Its focus is on augmenting its core capabilities to enhance its experience in new technologies and verticals and increase its geographic reach, while preserving its corporate culture and sustainably managing its growth. Consistent with these goals, in the past, it has completed two acquisitions, both of which have accelerated core strategic goals. In 2017, it has acquired OSSCube LLC and Cupola Technology Private Limited to expand its DBS and PES BUs, respectively.
The company is a versatile digital business, product engineering and infra management solution provider company. Digital is growing much faster than traditional business of the company. As much as 97% of the company’s revenue comes from digital, where as the average contribution from digital stands at 40-50%. The company has adopted a mindful IT strategy for its future growth. On the flip side, the company intends to raise Rs 702 crore from the issue, of which 592 crore is offer for sale.
Axis Mutual Fund has launched 'Axis Global Alpha Equity Fund of Fund' which will invest in Schroder International Selection Fund Global Equity Alpha. The fund house said it is targeting to collect up to Rs 1,500 crore from a new offering which will help domestic investors take bets in the global markets. It can be noted that Indian indices are experiencing a rally in a contracting economy, and there have been concerns about high valuation of Indian equities. The fund house is targeting to get Rs 1,000-1,500 crore from up to 75,000 investors in the new fund offering. Schroder is the largest asset manager in Europe with over USD 500 billion under management and also owns 25 per cent in Axis AMC, as per a statement. Schroder International Selection Fund Global Equity Alpha d invests in a compact, high conviction portfolio of geographically and sectorally diversified equity stocks with a strong focus on North America and technology sectors.
In an update to investors, Franklin Templeton has informed that now 4 of the 6 shuttered schemes have turned cash positive as of August 31. Two schemes namely Franklin India Low Duration Fund (FILDF) and Franklin India Credit Risk Fund (FICRF) turned cash positive with 5% and 1% of their respective AUM available in cash to distribute to unit holders subject to a successful unit holder vote in August end. Cash position in Franklin India Ultra Short Bond Fund (FIUBF) & Franklin India Dynamic Accrual Fund (FIDA) rose to 31% and 14% of their respective AUM as of 31 August 2020. The fund house also informed investors that the 6 shuttered schemes of Franklin Templeton have received total cash flows of Rs 6486 crore till August 31. Between August 15-31 they have received Rs 1498 crore. However the fund house cannot disburse any money to unit holders as e-voting and unit holders meet continue to remain suspended with the case being fought in the Karnataka High Court. The fund house informed investors that active monetization of assets of the schemes and distribution.
To further enhance transparency, markets regulator Sebi on September 1 revised disclosure requirements pertaining to debt and money market securities transactions for mutual funds. The new framework will come into effect from October 1, the Securities and Exchange Board of India (Sebi) said in circular. Now, the regulator has asked mutual funds to disclose details of debt and money market securities transacted in their schemes portfolio, including inter-scheme transfers, on a daily basis with a time lag of 15 days in a prescribed format. At present, a time lag of 30 days has been allowed. Under the new disclosure format, fund houses need to mention about name of the security, type of security, most conservative rating of security at the time of transaction, if applicable, name of the rating agency and transaction type. Among others, they need to disclose about listed status of security, name of mutual fund, scheme name, type of scheme, residual days to final maturity, deemed maturity date, quantity traded, face value per unit and value of such trade.