Short Call | Promoter selling may play spoilsport; J Kumar, Paytm, Aditya Birla AMC, Tata Steel in focus

With elections due in a month and the results in another month-and-a-half, there is no tearing hurry among market participants to load up on stocks.

“Reliance on historical perspectives must be tempered by individual market analysis.” - Sam Zell

“Whatever appetite institutions have for stocks is being met by promoters,” a seasoned market player told Short Call. “There is no need to buy the stock from the open market. So how can share prices rise?”, he wondered. BAT just got with its ITC stake sale last week, Tata Sons is selling shares in TCS, Aditya Birla AMC has an OFS lined up, and Coforge, a QIP.

Promoter selling was rampant last year too, but market conditions were different. There was plenty of money going around. The mood is cautious now, and there is less money going around, except for the steady flows into mutual fund SIPs. With elections due in a month and the results in another month-and-a-half, there is no tearing hurry among market participants to load up on stocks. Already, gross institutional turnover (buy + sell trades) has dropped sharply in March. Mutual funds and FIIs’ names are not figuring regularly in bulk deal disclosures. Odds are that the market could remain sideways for a while.

Crompton Greaves (Rs 271.5, -1.45%)

The company has been granted a patent for the invention titled 'Linear Node Tubular Lighting System' for 20 years.

Bull argument: The company is a market leader in fans and has withstood the ongoing pricing pressure in the lighting industry. Consumer preference for high-end models of fans and lighting continues, with both segments yielding healthy results for the company.

Bear view: The recently-acquired Butterfly Gandhimati is facing industry-related and internal impediments, causing a string of poor quarterly performances.

Tata Steel (Rs 148.8, +5%)

The stock gained on heavy volumes after China’s industrial output number was ahead of estimates. This is giving rise to hopes that China’s economy may be on the mend. Also, the industry is expecting a restriction on steel imports after they hit a six-year high.

Bull argument: The strong steel demand in India, and the restriction of Chinese steel imports will benefit the company.

Bear argument: The company’s UK unit has ceased operations of coke ovens at the Port Talbot plant in Wales. This will lead to increased imports of coke for the company. Also, much depends on the recovery of China’s economy. There have been false dawns before. If China’s economy struggle, it will continue to find ways to dump its steel produce in global markets, including India.

Aditya Birla Sun Life AMC (Rs 475.35, -0.75%)

Promoters Aditya Birla Capital and Sun Life (India) AMC Investments will offload up to an 11.47 percent stake in the company on March 19-20 via OFS. The floor price is set at Rs 450 per share.

Bull argument: Strong third-quarter numbers show that things are starting to look up.

Bear argument: The company witnessed a decline in market share across investor categories, asset classes, and SIPs. SIP book increased 6.7 percent YoY but SIP market share declined 123bp YoY to 5.7 percent as industry growth outpaced the company’s growth. More shares in circulation will keep the stock price in check.

J Kumar Infraprojects (Rs 598, flat)

The company has got a letter of award (LoA) from NBCC for a  project worth Rs 334.25 crore

Bull argument: The company has guided for a 16-17 percent topline growth in FY25, after an estimated 15 percent growth in topline this year. Order book at Rs 18,000-Rs 19,000 crore.

Bear argument: Stock has not been reacting to order win announcements of late. The market may have priced in most of the positives for the time being.

Paytm (Rs 389,  +5%)

Yes Securities has rated the stock a buy. Negativity around the stock has reduced following NPCI’s approval to allow the company to participate in UPI as a Third-Party Application Provider (TPAP), enabling the company to facilitate payments.

Bear argument: The discontinuation of the wallets business will hurt revenues near term. Loan distribution is presently stalled and continues to weigh on growth.

Bull argument: The run-ins with the regulator may finally be over, and most of the negatives are already reflecting in the price.

(With inputs from Anishaa, Yash, Srushti and Ananthu)