Short Call | Big guns short of confidence, altitude sickness hits HAL, Coal India a bargain? Zomato, Biocon in focus

HNIs and operators are in no mood to load up on stocks, including their favoured ones.

“For some reason, you lose money rapidly in the stock market but don't make it rapidly.” - Peter Lynch

The storm that ravaged the market last week might have calmed down, but it could take a while for the market to regain its upward momentum. Till last month, the big guns of the market were clueless about what was fuelling the mad bull run. But that was OK since everyone was making money. And, after last week’s meltdown, they are clueless again. But this time they are lacking in confidence as well.

HNIs and operators are in no mood to load up on stocks, including their favoured ones. The strategy for now is to nibble, but not to end up providing an exit for others looking to book profit. For the new investor, it still seems a ‘buy-on-dips’ market. But for those who have been around for a while have already seen around 30 percent rapidly knocked off from market fancied names, any rise would be an opportunity to take some money off the table.

Hindustan Aeronautics: (Rs 3009, -2%)

The company last week bagged a Rs 8,073-crore order from the defence ministry for 34 advanced light helicopters and associated equipment for the Indian Army and the Coast Guard.

Bull argument: The company is sitting on an order book of Rs 84,000 crore, and is expecting another Rs 50,000 crore worth of orders shortly. Outlook on defence spending is bullish.

Bear argument: The stock failed to gain even after announcement of a massive order. This could indicate that the market now sees the stock as fully valued in the short term. Valuations don’t price in execution risks.

Coal India (Rs 427.75,  +2.75%)

The recent slump in shares throws up a good opportunity for investors to buy into the state-run miner, Jefferies said in a note.

Bull argument: Domestic power generation is expected to grow by 7.7

percent in FY24, which will drive coal demand.

Bear argument: The company's overall coal production target is expected to be lower than the earlier guidance. Investors who put money in the stock 10 years ago have not made any meaningful returns.

Zomato (Rs 159.9, +4.68%)

Kotak Institutional Equities has retained its ‘buy’ call with a target price of Rs 190.

Bull argument:  The brokerage expects higher average order value, improved unit economics, and customer loyalty. Kotak expects Zomato’s food delivery Gross Order Value to grow 19 percent CAGR from FY23 to FY26. Blinkit’s expansion to new areas will also improve the sentiments.

Bear argument: Other income contributes huge chunk to company’s profit. Domestic institutional holdings have risen sharply over the last three quarters. The stock is now over-owned.

Biocon (Rs 251.6, -5.9%)

Biocon has entered into a long-term commercial collaboration with Eris Lifesciences to expand patient access to its portfolio of metabolics, oncology, and critical care products in India.

Bull argument: Going ahead, Biocon’s biosimilars and peptides pipeline can potentially drive double-digit growth, according to Nuvama.

Bear argument: Kotak Institutional Equities does not expect a significant contribution from this supply agreement. "Amid execution risks, we believe there is limited scope for positive surprises," it said while retaining a 'reduce' rating on the stock with fair value (FV) pegged at Rs 260.

L&T Technology Services: (Rs 5,408, +2 %)

The company has won an Rs 800-crore order win to deliver advanced cyber security solutions to enhance public safety in Maharashtra.

Bull argument: Management commentary on the demand environment was relatively more positive in recent quarters as LTTS is seeing a good business environment across sectors, according to Motilal Oswal.

Bear argument: Outlook on the sector in general remains cautious. With interest rates expected to stay high for some time in the US, clients would be cautious on their spending budgets.

With inputs from Srushti, Ananthu, Yash and Anishaa