SBICAP Securities’ Sunnyy Agrawal shares insight on L&T, #TataSteel, #MazagonDock, #BajajFinserv and other stocks to watch in trade today. #BQLive
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00:00 Welcome to BQ Primer. Very good morning to all the viewers. I am Heeral Dhadia. Clearly,
00:03 if you go to see a sombre day of trade is what we are witnessing, but we are able to
00:08 sustain above those 19,700 levels, hovering around 19,750 as we speak. The breath, if
00:15 you go to see is in favor of the bears in terms of nifty 50, but some smart moves coming
00:20 in. Let's welcome in our guest to discuss more in terms of stock specific action. We
00:24 have Sunny Agarwal, head of Fundamental Equity Research at SBI Cap Securities. Sunny, good
00:30 morning and welcome to the show. Yeah, thanks Heeral. Thanks. Sunny, let's start with the
00:35 L&T. The stock is at a record high. Market cap has already crossed 4 lakh crores. Overall,
00:42 what's your view? Because there are reports which have indicated that they have won a
00:47 $4 billion deal from Saudi Aramco. And this was reported by, you know, Mead, which is
00:55 one of the Middle East economic digests. Though the Indian entity, I mean, the Indian part
01:00 of the arm has not filed any exchange notification so far. But taking this order into consideration,
01:07 what's your view on L&T? Yeah, definitely. If this development is true, $4 billion order
01:14 is a big order. So right now L&T has got, I believe, a 4 lakh crore order book. And
01:19 on the top of that, 4 billion order size is a humongous order. And I think one more factor
01:23 which is playing out is the ongoing G20 summit, which has kicked off today. So there are expectations
01:30 that during some bilateral meeting between India and some other countries, there may
01:33 be some announcement pertaining to defense sector or shipping sector. And that is the
01:38 reason there is a lot of buoyancy in all these defense companies, including L&T. So definitely,
01:43 if this order win turns out to be true, we may see some upgradation of price target from
01:50 the analyst community. And if this order doesn't come out to be true, I believe 3000 is a fair
01:56 value for a last minute. Right. So that's with regards to, you know, L&T as we speak.
02:03 But moving on, apart from that, let's look at a few of the other names that have been
02:07 in focus as well. You have a Tata Steel that is in focus in today's session. A couple of
02:13 days ago, we were hearing of, you know, the UK arm getting funded. Overall, what's your
02:19 view in terms of Tata Steel? Because the SEZ has signed a moot now with Avada Group for
02:24 a green ammonia plant. How are you looking at Tata Steel taking into consideration the
02:29 way steel prices are panning out as well? Yeah, so definitely what has happened in the
02:35 steel industry is that FI23 was the year where we have seen a muted earning from all the
02:40 steel companies. And for FI24, now we are seeing some optimism in terms of expansion
02:45 on EBITDA part and front. So that is one thing which is driving the entire steel sector.
02:51 And in addition to that, definitely this new development on hydrogen fuel, hydrogen side
02:57 is likely to be a kind of re-rating parameter for Tata Steel because we all know that metal
03:04 as a sector is a cyclical sector and that is an extra certain multiple with Tata Steel
03:09 command because of this cyclicality. In case this new business which comes in Tata Steel,
03:14 we may see some higher multiple being assigned to these new businesses, which is a structurally
03:19 fast-growing business for Tata Steel. Sorry, so that's with regards to Tata Steel.
03:25 Mazcon Dock is another one that has been in focus as well. How are you looking at Mazcon
03:30 Dock as well as the other shipbuilding companies? So yeah, definitely. So I remember during
03:36 the last one for Mazcon Dock, as clearly mentioned that the industry is expecting an order to
03:40 a team of 1.5 to 2 lakh crore and the entire shipping industry will be the beneficiary
03:46 of the same, whether it is Mazcon Dock, Puchin or GRAC. And that is the reason we are seeing
03:51 so much buoyancy in the stock price. Again, what I feel is that the entire shipbuilding
03:56 industry is the well-placed for healthy earning growth over next 10 to 15 years because we
04:02 all know that the shipping, the order for the shipping industry, the gestation period
04:06 is long. So if you want to build one submarine, at least the order will pan out over the next
04:12 three to five years, right? That is the reason we are seeing buoyancy in the stock price.
04:17 Anyway, long-term I am positive on the entire shipping industry and Mazcon Dock is one of
04:21 the top picks in that. Right. Sunny, how are you looking at a Bajaj
04:27 FinServ in trade? What's your view? So yesterday there was data from a life insurance
04:33 industry and what we have seen is that industry has de-grown because of the de-growth in new
04:39 business premium from LIC. However, private players like HDFC, Max and Bajaj have reported
04:46 growth. So I feel the companies which are reporting growth in terms of the new business
04:52 premium collection, they will continue to outperform the industry and that is the key
04:58 point which one needs to look at. Having said that, the blow to the industry in the last
05:06 budget we have seen that there was a tax-laid implication on the sector and that is behind
05:12 now and I think the industry is bouncing back for the growth. So I think the private players
05:15 which are growing can be looked upon from a medium to long-term perspective.
05:21 Sunny, RBI has approved appointment of Deepak Gupta as interim MD and CEO of Kotak Mahindra
05:26 Bank. Now clearly that was something that everyone was eyeing as to what will happen.
05:32 How are you looking at it in terms of the interim approval that has come in for Deepak
05:36 Gupta? What's the trajectory you are looking at from a legacy and a performance perspective?
05:42 I feel this was a big overhang in terms of succession planning for the entire Kotak group
05:47 and I think for me the development is positive. This overhang was supposed to get over in
05:54 the month of December, however, three months ahead we have seen a clear succession planning
06:00 being implemented by Hon. Uday Kotak. I feel this is positive and we have seen that stock
06:05 has not performed for the last two years and now this is a time where once the new CEO
06:11 is on board, we may see some outperformance from Kotak compared to the other banking firms.
06:17 Right, so that's outperformance coming in in terms of Kotak. Moving on, Avomeg Projects
06:22 is an interesting one to watch out for. Now clearly an order win coming in from Vedanta
06:28 as well as Hindustan Zinc. How are you looking at this company on the multiple orders that
06:34 have come in worth around 625 crores and clearly the stock has also seen a good rally.
06:40 So definitely PowerMECH has been on a winning spree in terms of the order since last one
06:47 and a half year and the same is getting converted into numbers also. I believe it is one of
06:52 our top six as far as EPC business and engineering business is concerned. So if somebody has
06:59 invested in PowerMECH, one should stay put and should not rush to book the profit in
07:04 PowerMECH. At the same time, I feel the way power demand is shaping out, definitely a
07:12 new order wins are in pipeline for PowerMECH also. So we may see a lot of orders, we may
07:17 hear a lot of order wins for PowerMECH in the next 6 to 12 months.
07:22 Right. Shimaru has been trading under pressure as well and there are news reports suggesting
07:26 of searches at the premises and some issues with the corporate governance and tax fraud.
07:32 What would you advise investors who are holding a Shimaru to do?
07:36 I think one should not stick to such businesses where there is an upturn of corporate governance.
07:41 So better to shift out of Shimaru and shift to other sectors which are in momentum. So
07:47 there are many other opportunities which are available in market, many good businesses
07:51 getting listed, off-lit. So one should exit from Shimaru and shift to some fast-growing
07:57 businesses from maybe defense, auto, shipping, banks. So there are many, whole lot of other
08:03 sectors which are doing well. Right. So these are a few of the names one
08:08 should be watching out for as well. Thank you, Sani, so much for joining us on the show
08:12 and sharing your views. So clearly, if you go to see in terms of a market score as well,
08:17 yes, we are seeing a lot of stock-specific action. But clearly, you have NTPC, which
08:22 is one of the top gainers today, L&T, Bajaj, Finsoff that we already discussed. Tata Motors,
08:26 Power Grid, also seeing some good moves. Hindalco, JSW Steel, both trading under pressure. SBI
08:31 Life, which was in the gaining streak yesterday, seeing some profit booking as we speak. And
08:37 if you see from broader market names as well, it's very interesting to see names like GTL
08:43 Infra, Graphite, Mazda, SOBA seeing some smart gains. Whereas on the losing end, you have
08:49 MTNL, MMTC, Dish TV, Glenmark, which are losing in trade as well. That's all that we have
08:55 on the session. Thanks for watching. And lots more lined up on the other side. Please stay
08:58 tuned to BQ Prime.
09:07 [END]