Stocks In Focus: South Indian Bank, IndiGo, PVR Inox, Havells & More

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#StocksInFocus | Independent Market Analyst Ambareesh Baliga shares insight on #SouthIndianBank, #IndiGo, #PVRInox and other top stocks to watch for in trade today. #BQLive #BQStocks

Transcript

00:00 Hello and welcome to BQ prime. A very good morning to all the viewers. I'm here all that

00:04 clearly the markets to continue to trade under pressure today as well. We are trading below

00:09 the 19,300 mark. Clearly you have Bank Nifty that's outperforming the benchmark indices,

00:15 but no major gains. It's pretty much on the borderline, but in the green as mentioned

00:20 earlier as well that we have been witnessing a lot of stock specific action over the last

00:23 couple of trading sessions. And that's a similar point that we have been witnessing today as

00:29 well. What's interesting is the way the IT pack has been trading under pressure in today's

00:33 session. Let's welcome in our guest Amrish Malika to get us more in terms of the individual

00:39 stocks and see what we're doing with all of them. Amrish, good morning and welcome to

00:46 the show. Good morning. Thank you for having me. Always a pleasure to speak to you. Amrish,

00:52 my first question, let's start with a few of the interesting names that have been movers

00:57 and shakers today. Manipuram Finance, a block deal that happened on this counter in today's

01:01 session on the back of which some moves coming in there. What's your view on the Manipuram

01:05 Finance and what would you advise investors to do? See, in fact, I mean, I'm not too positive

01:13 on the NPFCs and especially the gold NPFCs at this part of time, because clearly I see

01:18 the margins coming down, possibly some of the NPA could increase to a certain extent

01:24 because of the way the retail loans have ballooned. I think that's a pocket of problem. So for

01:31 the time being, I like I'll not be too positive on Manipuram. I would suggest that those who

01:36 have should in fact utilize any opportunity of a rise in this stock to possibly book out.

01:45 Moving on, South Indian Bank is another one which is seeing some smart moves in today's

01:52 session. And this is one, there has been a block deal that has happened and you have

01:57 the RBI which has gone ahead and approved the appointment of P. R. Shishadri as the

02:01 managing director and CEO. What do you make of it?

02:05 Yeah, this I think is an extremely positive move which has happened because Mr. Shishadri

02:11 was earlier with Karuvaisa Bank and we have seen the way the bank has actually improved

02:17 its performance, it has modernized. So South Indian Bank if you see, I mean, was one of

02:23 the poor performers among the banking pack. I mean, all this moved up on those levels

02:27 of about 10 to levels of about 21, 22. But then I think under his leadership, you could

02:33 see the bank really growing extremely well over the next three years. So I think it's

02:38 still a buy at these levels. And I'll not be surprised if we see levels of about 30,

02:42 34 quite soon for the stock.

02:44 Right. Amrish, Indigo is an interesting one to watch out for as well. You have recently,

02:50 you know, the stock which was under pressure as the Gangwal family paid their stake via

02:54 block deals. Now, its weight has been increased in FTSE as well. How are you looking at it?

03:01 Because from an operations perspective, the tourism industry is booming. In the domestic

03:07 market as well, Indigo has the highest market share. How are you looking at the dynamics

03:12 and from a valuation perspective, good time to look at Indigo?

03:15 See, the market share is already quite high. I don't see the market share moving up much

03:20 from here. And if you look at the capacity utilization, that's also extremely good. Margins

03:26 have been better basically because the fares have stayed high for quite a while and they

03:31 are stabilized. I mean, earlier we used to see those spikes and then the fares used to

03:34 come down. But if you see the last six to eight months, the fares have stayed high.

03:40 And because of which I clearly see the margins improving because efficiencies have been improving

03:45 year on year at Indigo. Whenever the promoter family sells, in fact, we had Gangwal family

03:51 selling I think about 2.5% stake in the last two days. I think that's the opportunity to

03:56 buy because whenever they sell, I mean, you see a dip of about 4 to 5% and that's a buying

04:01 opportunity because if you, like normally on the airline stocks have not been too bullish,

04:07 but the way things have panned out for Indigo in the last year, year and a half, I mean,

04:11 in fact, I've turned bullish. I had a price target of 2500 levels, which has been achieved.

04:16 And now I see in the next 12 months or so, I'll not be surprised if you see levels of

04:21 about 3200 to 3400.

04:22 Right. Moving on, PVR INOX has been an interesting one since last week on the back of the success

04:29 of the latest Hindi films. Overall, do you think that will address the concerns of underdelivery?

04:35 Because clearly on 13th August, PVR INOX also achieved its highest ever admissions and gross

04:41 box office collection in a single day. How are you looking at it?

04:46 I think this is clearly because of those three or four movies, which have all come together.

04:55 For example, Gather 2, Jailor, OMG 2, all of them are done extremely well. So it's quite

05:00 natural that someone like INOX, which is the largest PVR INOX, which is the largest, will

05:06 actually benefit out of that. But then if you look at the recent history, the revenues

05:11 have been quite clumpy, and there's been a long dry period. So I would say this is more

05:16 of a trading opportunity because of these movies, possibly you could see some more bump

05:20 up in the stock. But then this is not an investment grade stock at this point of time. I mean,

05:25 unless you have that visibility that you will have a decent number of such movies coming

05:30 in. And unfortunately, in this business, you cannot have that visibility.

05:34 That's going to be an interesting one to watch out for. Another one, which is trading under

05:40 pressure is JN Irrigation. They are looking to raise around 200 odd crores for preferential

05:45 allotment of equity share warrants. How are you looking at JN Irrigation? Because clearly

05:51 in terms of the first quarter, we did see a 30-32% up move. And overall, there was a

05:57 lot of growth. I mean, from a business perspective as well, how are you looking at it?

06:03 I think the business has been good in this space. But the issue with JN Irrigation was

06:08 its balance sheet. And in fact, they have rebelled to a certain extent. And you look

06:13 at the latest earnings, you have the order book at about 2000 crores. The growth has

06:19 been 20% despite project business, which was the mainstay earlier. I mean, that business

06:24 is reducing. And they have been concentrating more on retail, where the margins are better.

06:29 So if one has patience, this is a stock to stay on with. Because we have seen levels

06:35 of that 100-plus, 160-plus about 5, 6 years back. And after that, they had those problems.

06:43 So now I think it's slowly getting back on track. I mean, again, I'm not saying that

06:46 it will go to those levels. But surely from the current levels, we can see levels of about

06:51 34 to 78 for the stock. Right. Moving on, Havils India is another one

06:57 that has been focused as well. Post first quarter numbers and seeing the seasonality

07:03 of it, what would you advise investors to do with the Havils? Because now they've also

07:08 planned to set up a refrigerator manufacturing unit in Rajasthan itself.

07:12 Exactly. In fact, I mean, their focus area going ahead also would be white label business

07:18 for exports, which is similar to Amber. But then, I mean, you look at the other brands

07:24 which they have, I mean, like a brand like Lloyds, which they had bought about 5 years

07:28 back, the integration has been quite good. 20% of the top line is now Lloyds. They have

07:34 about 6 products which are 1000-plus crore category. Although their total revenue is

07:40 1600 crore plus, but these 6 categories are in fact giving them 1000 crores plus per category,

07:46 which is cables and wire, consumer lighting, fans, residential switchgears and ACs. So

07:51 clearly they are leaders in those. And till date, it's been more of aspirational brands

07:56 of Havils, but now they've gone into premium segment where the margin should be better.

08:01 So I'm quite positive on this stock. In fact, I'm expecting an EPS of about 25, I mean,

08:06 29 for FY25. And here my target price is closer to about 1600.

08:11 Okay, so 1600 is the target you should be looking at on that one. Moving on, Jamna Auto

08:18 is another one. Overall, how are you looking at it? Because it's similar to a multi-bagger

08:24 stock with the kind of returns that we've seen on this counter. What's wrong?

08:32 I didn't get the stock which you're talking about.

08:36 Jamna Auto.

08:37 Okay, Jamna Auto again is a market leader in automotive suspension solutions. And in

08:45 fact, it is the second largest producer in the world for multi-leaf springs. Overall,

08:51 they have a market share of about 68% in India, which is mostly to CVs. And Tata Motors, they

08:57 are providing 70% of the requirement. Ashok Leyland, they're providing 90% of the requirement.

09:02 So quite a key supplier in the auto ancillary space. And as far as EV commercial vehicles

09:09 is concerned, they're clearly going in for a new technology and that technology transfer

09:13 is happening. Going ahead, I'm expecting them to make a margin of about 14% to 15%, which

09:20 should stabilize over a longer term period. And here, in fact, I have a price target of

09:26 about 130. This is in the medium term, which is about 18%, 20% return from where we are

09:31 now. But then if you're talking of a longer term, I think this can easily give you that

09:36 18% to 20% of returns year on year for the next three to four years.

09:40 Right. Moving on, taking the consumption space into consideration, Amrish, everyone's looking

09:46 forward to all the events that could be happening in the second half of the year from the increased

09:50 festivities to the World Cup happening in India and plus a few other events as well.

09:57 Taking that aspect into consideration, what's your view on the Devyani International because

10:00 it could be one of the beneficiaries?

10:03 Absolutely, because they have a number of marquee brands like KFC, Pizza Hut, Costa

10:10 Coffee. I mean, a total revenue of about 3000 crore plus close to about 1300 outlets, which

10:16 should become about 2000 outlets over the next three years. I think this year, they

10:20 should be adding about 275 to 300 outlets. And compared to the other QSRs, the only difference

10:26 which I see out here is that there's also growth happening in the same stores, because

10:31 most of the other QSRs, same store growth has been more or less zero or negative, whereas

10:39 they are showing a small positive, which I expected to improve going ahead. And they

10:44 are also considering quite a lot of non-metros, which is a huge opportunity area. So, I mean,

10:49 here also, I have a short to medium term target of about 225. But again, it's also a long

10:55 term bet where I mean, I'll not be surprised if I see levels of about 350 to 400 over the

11:00 next two to three years.

11:02 Right. And very lastly, a Finolex Cables, a good dividend announcement, 350% per share.

11:10 Overall, they're targeting around 500 crore revenue from their appliances business as

11:15 well, which is small in the next three years. How are you looking at a Finolex Cables? Do

11:20 you think a good investment bet?

11:22 Absolutely, because if you look at, I mean, each of their verticals, they've been doing

11:26 extremely well. The cable business has been showing about a 30% growth, expected that

11:32 to continue with a 13 to 14% sort of a sustainable margins as far as the management commentary

11:38 goes. And that's been quite positive, especially when they're talking of the 5G rollout, and

11:44 because of which the sort of orders which can come for the telecom cables, because the

11:49 anti-dumping duty which has been now imposed, I think their margins should also improve

11:55 as far as the telecom cables are concerned. So here also, in fact, I'm looking at levels

12:00 of about 30, 25, 50 in the medium term.

12:04 Right. So that's with regards to Finolex Cables. Thank you, Umbreach, so much for joining us

12:09 on the show and sharing the view. So clearly, you know, if you see in terms of their markets

12:13 are concerned, last couple of trading sessions, in fact, the entire week has been a week of

12:18 stock specific action. No major trends that are emerging, that consolidation phase does

12:24 continue. But clearly, the trend is more bearish versus bullish because that kind of upside

12:31 that everyone was wanting to see, that is absolutely missing in action right now. And

12:36 overall, if you see in terms of Nifty as well, we're below the 19,300 mark already. Now,

12:43 what levels we close is going to be interesting. Bank50 has been pretty much on the borderline,

12:48 but it's trading below the 43,900 levels, but still outperforming the benchmark indices

12:54 as we speak. That's all that we have in this session. Thanks for watching. And lots more

12:59 lined up on the other side. Please stay tuned to BQPrime.

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