“You can’t be a good value investor without being an independent thinker – you’re seeing valuations that the market is not appreciating. But it’s critical that you understand why the market isn’t seeing the value you do.” - Joel Greenblatt
Cheerleaders of the chemicals sector will need to show some more patience. Demand stays muted, even in Q3, writes Meet Vora of Emkay Global in his note to clients.
“Discretionary spends like pigments and polymers have started seeing some improvement, whereas textiles and dyes remain weak,” Vora writes. Agricultural chemicals tend to have a quicker turnaround from production to use, but there can be variations in how much of it is available in the supply chain, he says. He is betting on a faster recovery in bulk chemicals, which have a relatively diversified end-user market, and a gradual recovery in agrochem and pharma chemicals.
Indiabulls Real Estate (Rs 89.80, +9.45%)
Investors are hopeful of merger between Indiabulls RE and Embassy group entities ahead of the next NCLAT hearing on December 12.
Bull argument: Given the company’s weak operating numbers, a merger is the only positive for the stock. FIIs have raised stake recently, vote of
confidence in the merger going through.
Bear argument: The long pending merger has weighed on the stock over the past one year, causing the stock to underperform peers. There is no saying how much more investors may have to wait.
IIFL Securities (Rs 122.80, + 4.2%)
Sentiment for the stock has improved after the Securities Appellate Tribunal (SAT) overturned a Sebi order barring addition of new clients for two years.
Bull argument: Market is doing well, so addition of new clients should add to revenues.
Bear argument: Stock still around the same level it was in July 2021. Despite strong numbers, the market is giving a much lower valuation to the stock, comparted to other players like AngelOne and ICICI Securities.
Blue Dart (Rs 7384, + 1.2%)
The board has approved the purchase of two leased aircraft by the aviation division for Rs 40 crore. Stock has been struggling over the last year after hitting a peak of Rs 9640 in October last year.
Bull argument: Logistics will do well in a growing economy.
Bear argument: Margins have been under pressure of late. Competition in the sector rising. Unless the company has a very strong second half, the year-on-year growth will be tepid.
Kansai Nerolac (Rs 330, -1.1%)
The company’s recent analyst meet does not appear to have impressed analysts. Morgan Stanley is 'underweight' with a Rs 250 price target and Macquarie has a 'neutral' call with a price target of Rs 345.
Bull argument: Higher infra spending should bode well given the company’s strong positioning in the industrial paints segment.
Bear argument: Company has lost market share in decorative paints segment.
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