Short Call | Realty on outreach overdrive; Castrol on smooth climb, Nerolac in green, UP powers BEL, Adani Wilmar in focus

Nifty Realty on a bull run.

“The fact that a stock is considered to be growth stock is no assurance against a decline in income or market value during the downtrend of a business cycle, as growth stocks often depreciate as much as other groups.” - T Rowe Price

As we reflect on the year near its close, we can't simply overlook the stellar run in the Nifty Realty index, which soared over 75 percent on strong pre-sales, boom in luxury market, and declining debt levels of companies.

To capture the growing demand, players with regional strongholds are on an expansion overdrive. While Bengaluru-based Prestige is widening to Mumbai, Mumbai-based Godrej Properties is reaching out to Delhi-NCR. Many listed developers are selling out luxury projects in tier-2 and tier-3 cities. But, who exactly are buying these flats? Ask any fund manager and the reply is, "startup employees with ESOPs and midcap company promoters who have turned millionaires overnight".

Castrol (Rs 182.55, +12.30%)

The stock gained on heavy volumes. Yesterday's trading volume was over 8 times the 20-day average volumes.

Bull case: A strong brand with good dividend play. The company has developed a range of fluids for EVs and is getting future ready. Valuations are not demanding.

Bear case: Lubricants is a crowded market. OMCs hold a major chunk of the market. Catrol's sales and profit growth has been in mid-single digits over the past few years. FII and DII holding has not moved, while the LIC stake overhang stays on.

Kansai Nerolac (Rs 324.70, +0.70%)

The stock will be in focus as it has sold a land parcel for Rs 726 crore. The FY23 net profit was about Rs 820 crore. So all eyes on other income this

quarter.

Bull case: New products have improved the share of premium products in the decorative segment. Automotive paints segment continues to see traction.

Bear case: Slower sales growth than Asian Paints and Berger. Grasim's impending entry could hurt market share. DII holding has fallen over the last few quarters.

Bharat Electronics (Rs 182.50, +4.45%)

Shares reacted positively to order wins worth Rs 678 crore, including a contract for Rs 445 crore from the UP government for the UP Dial 112 project.

Bull case: Orderbook is healthy. The company is a prime beneficiary of the Make-in-India defence theme. Diversifying revenue to non-defence streams such as the UP project is a positive move.

Bear case: Any delay in order execution and high raw material prices can impact margins. Dependency on imports continues to be a challenge.

Adani Wilmar (Rs 363, -0.63%)

Promoters of Adani Wilmar have conveyed their intention to sell the equity shares to comply with minimum public shareholding norms.

Bull case: Market leader in branded edible oils segment. Exports are slowly increasing. Huge headroom for growth in the foods and FMCG segment.

Bear case: Barely any institutional holding. The company reported losses in last two quarters. Adverse macroeconomic conditions could continue to impact the bottomline.