“The stockholder wants both income and appreciation, but in general the more he gets of one the less he realises of the other.” - Benjamin Graham
“Man mein mandi, screen pe teji (bearishness in minds, but bullishness rules the trading terminals)," a dealer summarised his view of the market to Short Call. Nine out of ten people on the Street say the market is overvalued and one stays away. But prices clearly show that market participants are putting their money where their mouth is not. There is a strong desire that the market shows some signs of rationality with a 1,000-point correction in the Nifty, which should also allow people to buy cheap. Ideally, that is what should happen when random stocks are quoting at bizarre valuations and pedigreed names are not finding takers. But then, the market has consistently shown that it never defers to the majority view. So the wait for return to rationality could be longer.
HDFC Bank (Rs 1,678, +0.31%)
ADR down 2 percent. The bank reported a 33 percent on-year growth in net profit.
Bull argument: System credit growth remains strong. While unsecured lending might slow down this year, while corporate lending is expected to pick up. The stock might be the biggest beneficiary of FII inflows, when they take a favourable view of the stock.
Bear case: The year-on-year numbers are not comparable due to merger, so they look inflated. Margin pressure remains as deposit growth has not been strong.
Suzlon Energy (Rs 42, -4%)
After a stellar run, the stock has run into resistance around Rs 45 levels.
Bull argument: Has reduced debt, the market is still upbeat on the renewables energy story.
Bear argument: Topline growth has been under pressure over the last many quarters. Renewables space is prone to pricing war because of high competition.
Metropolis Healthcare (Rs 1,556, +0.02)
The stock held ground in Tuesday’s bearish session, and appears to be
recovering from the selloff last week.
Bull argument: Core business grew 12 percent YoY on the back of 9 percent volume growth in Q3. Strong growth in premium wellness segment also augurs well for the company.
Bear argument: Margins were under pressure. Concerns over price war has abated, but the company needs to show sustained growth in topline.
Syngene (Rs 715, -2.6%)
The stock fell on Tuesday after UBS downgraded it to ‘sell’ from ‘buy’, with a revised target price of Rs 700.
Bull argument: Acquisition of Stelis Biopharma is progressing well and is expected to start contributing from FY25.
Bear argument: Guidance downgrades from global CROs, lower PE/VC fundings in biotech and tighter client budgets suggest FY25E is likely to be challenging.
Paytm (Rs 746, 4.7 %)
The stock gained nearly 5 percent after foreign brokerage UBS initiated coverage with a 'buy' call.
Bull argument: The company is a payment leader with strength across merchants and customers. Quarterly losses have been narrowing steadily.
Bear argument: The RBI’s curbs on unsecured loans to hit demand for small-ticket loans. Analysts say for a the stock to get rerated, it will need to approval for its own NBFC operations.
PNB Housing Finance (Rs 847, +6.25%)
Motilal Oswal rated the company as its top picks in its NBFC and housing finance coverage.
Bull argument: The company has started adding new branches and plans to take the total branch count to 300 by March 2024. Earlier, branch additions were stagnant for almost 18 months. Net interest margins are expected to improve because of lower borrowing costs and expansion in yields.
Bear argument: The company has a low sales growth of 5 percent over five years. Plus PNB Housing’s retail segment has been declining due to competition from peers.
With inputs from Shailaja, Yash, Ananthu, Srushti and Anishaa
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