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Nifty IT up after Fed signals rate cut; HSBC cautions on midcap IT stocks

Nifty IT up after Fed signals rate cut; HSBC cautions on midcap IT stocks

by | Aug 26, 2024 | Share Market


3 min read Last Updated : Aug 26 2024 | 1:06 PM IST

IT stocks rally: The Nifty IT index, which tracks the performance of India’s top IT companies and the Information Technology (IT) sector as a whole, gained 1.77 per cent in the intraday trade on Monday, August 26. The uptrend in IT stocks came after the US Federal Reserve, at the Jackson Hole meet, signalled a likely rate cut in September.


“Indian equity benchmarks made positive start with IT sector leading the pack on Monday after US Federal Reserve Chairman Jerome Powell’s speech indicated that an interest rate cut cycle by the US central bank was not too far away. Investors are also anxiously awaiting earnings from AI darling Nvidia on Wednesday to see if it can match the market’s uber-high expectations,” said Narendra Solanki, Head Fundamental Research – Investment Services, Anand Rathi Shares and Stock Brokers.

 


Both these above triggers aided today’s IT sector optimism, Solanki added.


At the last count, Persistent Systems shares were up over 2 per cent, while Wipro, LTIMindtree, Infosys, TCS, Mphasis, HCL Tech, and Tech Mahindra were up over 1 per cent each on the Nifty IT index. Meanwhile, Coforge was up 1 per cent and L&T Tech services were up 0.36 per cent.


HSBC on Indian IT stocks


Global brokerage HSBC, however, cautions investors against the rise in Indian IT stocks, especially the mid-tier stocks.


“Most incremental growth in mid-tier IT companies is coming from margin dilutive ‘cost-rationalisation’ deals, and it has been hurting the margins of mid-tier companies more than top-tier companies. However, cash conversion has improved for many of the mid-tier companies in FY24,” the report read.


While the growth outperformance is normalising, the real negative surprise has been the weaker operational resilience of mid-tier companies (in the recent quarters) compared with the top-tier, HSBC added.


The global brokerage has downgraded KPIT to ‘Hold’ from ‘Buy’ and prefers L&T Tech over KPIT and Cyient on the back of its single vertical exposure and some early signs of slowdown in the Autos vertical.


“Mid-tier average valuations are now at a 50 per cent premium to top-tier companies, compared with 35 per cent in the past five years,” HSBC said.


Analysts believe the revenue growth of mid-tier IT companies has significantly outperformed top-tier IT since the end of the pandemic, leading to a sharp re-rating. This growth differential, however, has started to moderate, and we continue to estimate it will settle in a 4-6 per cent range (over the next two years) from an average of 10 per cent since the pandemic ended.

First Published: Aug 26 2024 | 1:02 PM IST



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Mid-market update: Sensex, Nifty trade higher; 194 stocks hit 52-week high

Mid-market update: Sensex, Nifty trade higher; 194 stocks hit 52-week high

by | Aug 26, 2024 | Share Market


3 min read Last Updated : Aug 26 2024 | 12:07 PM IST


Mid-market update today: Indian benchmark indices S&P Sensex and Nifty 50 kicked off this week’s trading session on a positive note and continued to trade higher on Monday, buoyed by positive global sentiments.  At around 12:02 PM, the S&P Sensex was at 81,686.43, up 0.74 per cent, while the Nifty 50 was at 25,005.70, up 0.74 per cent, fueled by a rally in IT shares.


Out of the 2,667 stocks traded on the NSE, 1,478 advanced, while 1,111 declined, and 78 remained unchanged. Meanwhile, 13 stocks hit the upper circuit, while 52 were locked in the lower circuit.


Top gainers on the Nifty50 included ONGC, Hindal Industries, Wipro, LTIMindtree, and Tech Mahindra, with gains of up to 2.34 per cent.  Among the 30 constituents of BSE Sensex Bajaj Finserv, Tech Mahindra, NTPC, and TCS were leading the gains, rising up to 1.60 per cent.


Broader indices were also trading higher, with the Nifty Midcap 100 and Nifty Smallcap 100 leading by 0.43 per cent and 0.24 per cent, respectively. 


Among the sectors, IT was leading the gains with the Nifty IT index climbing 1.42 per cent, driven by Persistent Systems, Wipro, and LTIMindtree. In contrast, PSU Bank, Media, and Healthcare indices were trading lower.


Stocks at 52-week high on Monday


As many as 194 stocks hit their 52-week highs during intraday trade on Monday, including Dixon Technologies (India), Neuland Laboratories, Inox Wind Energy, Bajaj Auto, Gillette India, Trent, Craftsman Automation, Persistent Systems, InterGlobe Aviation (IndiGo), Swaraj Engines, Network People Services Technologies, Styrenix Performance Materials, Hindustan Unilever, Doms Industries, KDDL, Poly Medicure, Summit Securities, Pondy Oxides & Chemicals, Caplin Point Laboratories, Aurionpro Solutions, Zen Technologies, Radico Khaitan, Jubilant Industries, PB Fintech (PolicyBazaar), Aarvee Denims & Exports (AIIL), Cholamandalam Financial Holdings, Glenmark Pharmaceuticals, Voltas, Dhunseri Ventures, Dynacons Systems & Solutions, Natco Pharma, Fiem Industries, Aurobindo Pharma, Narendra Properties, Sansera Engineering, Sportking India, Emcure Pharmaceuticals, SMS Lifesciences India, Agarwal Industrial Corporation, Eris Lifesciences, Interarch Building Products, RPSG Ventures, Sundaram Brake Linings, Deepak Fertilisers,, Suven Pharmaceuticals, Wockhardt, PG Electroplast, and Welspun Investments. 


Stocks at 52-week low on Monday


Meanwhile, 18 stocks fell to their 52-week lows during intraday deals, including Dhani Investments, Interarch Building Products Private, Future Supply Chain Solutions, Bharat Aluminium Company, Sunteck Realty (commonly referred to as SSDL), Aesthetic Laminates Private, AM Jumbo Bags, Asha Logistics, Filatex Fashions, Force Motors, GSS Infotech, Tarini International, Prizor Group Private, Divgi TorqTransfer Systems, CMI (formerly known as CMI Cables), Securities Credit India, Sunlite Metals, and Braceport Infrastructure.


Volume gainers


Medplus Health Services, Honasa Consumer, Manugraph India, Quick Heal Technologies, Goa Carbon, Debock Industries, and Gujarat State Petronet were among the top volume gainers on the NSE during Monday’s intraday deals.


Medplus Health Services, HDFC Bank, Interarch Building Products, HBL Power, and Reliance Industries were among the most active stocks by value on the NSE.

First Published: Aug 26 2024 | 12:04 PM IST



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Craftsman Automation Share surges 13%, hits record high on healthy outlook

Craftsman Automation Share surges 13%, hits record high on healthy outlook

by | Aug 26, 2024 | Share Market


3 min read Last Updated : Aug 26 2024 | 11:05 AM IST


Shares of Craftsman Automation (CAL) hit a record high of Rs 6,671.25, as they rallied 13 per cent on the BSE in Monday’s intra-day trade on healthy business outlook. 


The stock of the auto components and equipment manufacturing company is trading higher for the fifth straight day, surging 23 per cent during the period. It has bounced back 63 per cent from its June month low of Rs 4,095 on the BSE.

CAL manufactures several components and sub-assemblies on supply and job-work basis according to client specifications in the auto, industrial and engineering segments.

Key products in the auto segment include power train products, cylinder blocks, cylinder heads, cam shafts and crank cases for commercial vehicles, sports utility vehicles, two-wheelers, farm equipment and earthmoving and construction equipment, among other things.

Broader trends across the industry segment indicate that all leading industrial engines manufacturers for multi-varied applications, including power generation, as well as internal combustion (IC) engines used in off-highway applications, such as mining and construction, are striving towards sustainable Net-Zero Emissions, with new technologies and flex fuels such as H2, LNG, Bio LNG, HVO, Synthetic Diesel, etc.

The possibility of flex fuels will extend the useful life of current IC engines. This has sparked another wave of development of new engines that are more efficient, with higher power densities. CAL is engaged with major engine manufacturers and will stand to gain from this transformation, the company said in its FY24 annual report.

CAL’s business performance continued to see sustained improvement in fiscal 2024, with revenues increasing by 40 per cent, on-year. The company also benefitted from the full year contribution of DR Axion, steady demand for components, mainly from original equipment manufacturers (OEMs), and increase in share of business with customers.

DR Axion is a major supplier of cylinder blocks and heads for leading passenger vehicle (PV) OEMs such as Hyundai Motor India Ltd, Kia Motors India Private Ltd, and Mahindra & Mahindra.


CRISIL Ratings pegs CAL’s revenues to increase by 20-25 per cent upon completion of the acquisition of Sunbeam Light weighting Solutions (SLSPL), besides the steady double digit revenue growth from its existing businesses, supported by an increase in the share of business from existing and new customers, besides new component addition.

The company’s operating profitability is expected to fall temporarily in FY25 on account of partial consolidation of SLSPL, along with a moderate fall in margins on standalone basis due to product mix and lower offtake from the commercial vehicle (CV) segment.

Nevertheless, the company’s margins are expected to remain at healthy double-digit margins at the end of this fiscal and improve over the medium term, backed by its cost cutting measures and turnaround plans of SLSPL, which will remain a monitorable, the rating agency stated in its research note.

CRISIL Ratings believes CAL will benefit from its established market position, strong customer relationship, diversified revenue base from DR Axion and healthy operating efficiency, while turnaround of operations of SLSPL and the ramp-up of business from upcoming new facilities will remain monitorables for the company.

Moreover, the financial risk profile of the company is expected to improve further, with higher accruals from its existing businesses due to improved capacity utilization and well managed capex plans.

This is expected to result in continued improvement in the company’s debt metrics.

First Published: Aug 26 2024 | 11:02 AM IST



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Interarch Building Products IPO listing today at over 43% premium on BSE, NSE

Interarch Building Products IPO listing today at over 43% premium on BSE, NSE

by | Aug 26, 2024 | Share Market


2 min read Last Updated : Aug 26 2024 | 10:12 AM IST


Interarch Building Products IPO listing today: Interarch Building Products, a provider of turnkey pre-engineered steel construction solutions, made a stellar debut on the stock market on Monday, driven by positive market sentiment.


The company’s shares were listed at Rs 1,291 on the BSE, marking a 43.46 per cent premium over the upper end of its issue price of Rs 900.


On the NSE, Interarch Building Products shares opened at Rs 1,299, reflecting a 44.43 per cent premium.  As a result, investors saw a return of Rs 399 per share, or over 44 per cent, post-listing.


Ahead of its debut on the stock exchanges, Interarch Building Products’ shares were trading at a premium of Rs 320, or 35.56 per cent, in the grey market, signaling a strong listing gains for investors. 

 


The public issue, which closed on Wednesday, August 21, 2024, received favourable reviews from brokerage firms including Reliance Securities, Deven Choksey Research, SBI Securities, and Swastika Investmart. 


The IPO was offered at a price band of Rs 850-900 per share, with a lot size of 16 shares. It comprised a fresh issue of 2,222,222 shares, aggregating up to Rs 200 crore, along with an offer for sale where the company’s promoters and investors offloaded 4,447,630 equity shares with a face value of Rs 10 per share. The basis of allotment for Interarch Building Products IPO shares was finalised on Thursday, August 22, 2024. 


Interarch Building Products Limited is one of India’s leading providers of turnkey pre-engineered steel construction solutions, offering integrated facilities for design and engineering, manufacturing, and onsite project management for the installation and erection of pre-engineered steel buildings.


Interarch Building Products, in its Red Herring Prospectus (RHP) papers, stated that its revenue from operations grew from Rs 834.94 crore in FY22 to Rs 1,293.30 crore in FY24, achieving a Compound Annual Growth Rate (CAGR) of 24.46 per cent per cent. Additionally, the company’s profit after tax (PAT) rose from Rs 17.13 crore in FY22 to Rs 81.46 crore in FY23, and further to Rs 86.26 crore in FY24.

First Published: Aug 26 2024 | 10:08 AM IST



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Dividend, Buyback today: These stocks will trade ex-date; Check FULL list

Dividend, Buyback today: These stocks will trade ex-date; Check FULL list

by | Aug 26, 2024 | Share Market


2 min read Last Updated : Aug 26 2024 | 9:10 AM IST


Dividend, Buyback today: Benchmark equity indices, BSE Sensex and NSE Nifty50, are likely to kickstart the week’s first trading session on a positive note, buoyed by strong global cues. Global markets are rallying after US Fed Chair Jerome Powell signalled a potential rate cut in September. 

At home, as of 8:30 AM, GIFT Nifty futures were up 60 points at 24,910 levels.

Meanwhile, traders and investors will be closely watching Dhruv Consultancy Services, and Manappuram Finance as their shares will trade ex-dividend today. A dividend is a portion of a company’s profit distributed to its shareholders, usually paid quarterly or annually, and can provide a regular source of income for investors. The eligibility for the dividend payout on the ex-dividend date depends on whether an investor owns the company’s stock before or on that date.


Dhruv Consultancy Services: As per data available on exchanges, shares of the infrastructure consultancy company will trade ex-dividend today as the company has announced a dividend of Re 0.25 per equity share (0.25 per cent of face value Rs 10) for FY24. The record date is August 26, 2024. On Friday, shares jumped 5 per cent to close at the upper circuit of Rs 149.46, also its 52-week high on the NSE.


Manappuram Finance: Shares of the leading gold loan NBFC will trade ex-dividend today as the company has announced a dividend of Re 1 (0.50 per cent of face value) for its shareholders. The record date for the dividend announcement is also today, August 26, 2024. Shares ended the previous week’s last trading session down 0.65 per cent at Rs 215.40 on the BSE.


Besides these, shares of VLS Finance will remain in focus as they will trade ex-date today for a buyback of up to 33,00,000 fully paid-up equity shares at Rs 380 per share, totaling Rs 125 crore (representing about 9.48 per cent of the total equity share capital).


Additionally, traders will be closely watching Trent, and Bharat Electronics, which are set to be included in the Nifty 50 index, replacing Divi’s Laboratories, and LTIMindtree, effective from September 30, 2024.

First Published: Aug 26 2024 | 8:52 AM IST



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