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PSU stocks headed for re-rating as bargain hunters out in force
05:01 Min | October 19, 2021, 9:35 AM IST
Tune in as we tell you what's happening in the market, what's making news this morning, and look at some of the buzzing stocks.
Transcript
Hi there, Good Morning. Welcome to ETMarkets Morning, the show about money, business and markets. I am Nikhil Agarwal. Let's start with the headlines first.
- FMCG sales set for double-digit rise in Q2
- Economy coming out of Covid shadow: RBI paper
- Maharashtra govt eases curbs, allows schools to reopen
- Global tax deal to hurt Indians who moved trusts to the UAE
Now lemme give you a quick glance on the state of the markets.
Dalal Street is likely to have a positive start this morning. Nifty futures on the Singapore Exchange traded 80 points higher at 8:30 hours (IST). Major Asian shares opened higher on Tuesday after Wall Street ended mostly up and with investors awaiting corporate earnings. MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.48 per cent.
Elsewhere, the yield on 10-year Treasuries slipped three basis points to 1.57%. The dollar languished near the bottom of its recent range against major peers on Tuesday, knocked back by weak U.S. factory data overnight and on market wagers of faster normalisation of monetary policy in other countries. Bitcoin traded around $62,000. Oil prices fell on Tuesday, with Brent down a second straight day, after Chinese data showed slowing economic growth and US factory output dropped in September, raising fresh concerns about demand amid patchy recovery from the coronavirus pandemic. Brent crude was down by 43 cents, or 0.5%, at $83.90 a barrel after falling 0.6% on Monday.
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That said, here’s what is making news.
PSU stocks are headed for a re-rating as a cohort — and in a tearing hurry — after they gained Rs 5.6 lakh crore in marketcap this year, up 52%. That compares with a 32% rise in the Nifty. And most of the stellar gains have come lately. Listed state-owned firms excluding banks have gained nearly Rs 2 lakh crore in market capitalisation in the last one month. Yet, despite a sharp rally, many of the PSUs are still undervalued compared with their private-sector peers, offering great value.
UltraTech will increase cement prices in the coming months as the cost of production increases in tandem with rising fuel prices. A key parameter on which the company has scored well is cost management. Thanks to its low interest expenses, earnings did not fall. Its net profit grew at a meagre 0.3% year-on-year to Rs 1,314 crore during the quarter. On the valuation front, considering its one-year forward earnings, the stock of UltraTech Cement is trading at an EV/EBIDTA of 16.4. This is slightly higher than its past three-year average of 15.9. This may expand given its size, scale and capital expenditure.
The Securities and Exchange Board of India (Sebi) has approved the initial public offering (IPO) plans of PB Fintech, the parent company of online marketplaces Policybazaar and Paisabazaar, ET reported. It is looking at a valuation of around $6-7 billion for the listing, the report said, adding that PB Fintech could look to list around Diwali. According to its draft filing, the company plans to use the IPO proceeds to enhance the visibility and awareness of its brands and expand its user base.
LASTLY,
Passenger vehicle makers could lose 250,000-450,000 units in sales, dragging down annual volumes in this calendar year, with the shortage of semiconductors severely disrupting production at leading manufacturers in the past few months. The production loss, depending on the supply situation, is expected to pull down wholesale volumes to 2.9-3.1 million units in 2021, from about 3.34 million units initially estimated by automotive consultancy firm Jato Dynamics.
-----------
NOW Before I go, here is a look at some of the stocks buzzing this morning...
Infrastructure firm Larsen & Toubro Limited on Monday emerged as the
lowest bidder for the construction and maintenance of the first three buildings of the Common Central Secretariat under the Central Vista redevelopment project.
Bharti Telecom (BTL), a holding company of Bharti Airtel’s promoters, is raising around Rs 1,400 crore via corporate bonds in the local money markets to help it mainly participate in the telco’s ongoing Rs 21,000 crore rights issue, and also refinance some high cost debt.
Embassy Office Parks REIT has raised Rs 4,600 crore debt at 6.5% interest against security of its assets at Embassy Manyata Business Parks to repay its existing debt. The move reduces the costs on borrowed funds by 260 basis points.
Sunteck Realty has acquired a 110-acre river-front land parcel at Pen-Khopoli Road near Mumbai in a joint development project to make bungalows and bespoke individual homes.
-------
Do also check out over two dozen stock recommendations for today's trade from top analysts on ETMarkets.com.
That’s it for now. Stay with us for all the market news through the day. Happy investing!
- FMCG sales set for double-digit rise in Q2
- Economy coming out of Covid shadow: RBI paper
- Maharashtra govt eases curbs, allows schools to reopen
- Global tax deal to hurt Indians who moved trusts to the UAE
Now lemme give you a quick glance on the state of the markets.
Dalal Street is likely to have a positive start this morning. Nifty futures on the Singapore Exchange traded 80 points higher at 8:30 hours (IST). Major Asian shares opened higher on Tuesday after Wall Street ended mostly up and with investors awaiting corporate earnings. MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.48 per cent.
Elsewhere, the yield on 10-year Treasuries slipped three basis points to 1.57%. The dollar languished near the bottom of its recent range against major peers on Tuesday, knocked back by weak U.S. factory data overnight and on market wagers of faster normalisation of monetary policy in other countries. Bitcoin traded around $62,000. Oil prices fell on Tuesday, with Brent down a second straight day, after Chinese data showed slowing economic growth and US factory output dropped in September, raising fresh concerns about demand amid patchy recovery from the coronavirus pandemic. Brent crude was down by 43 cents, or 0.5%, at $83.90 a barrel after falling 0.6% on Monday.
-----------
That said, here’s what is making news.
PSU stocks are headed for a re-rating as a cohort — and in a tearing hurry — after they gained Rs 5.6 lakh crore in marketcap this year, up 52%. That compares with a 32% rise in the Nifty. And most of the stellar gains have come lately. Listed state-owned firms excluding banks have gained nearly Rs 2 lakh crore in market capitalisation in the last one month. Yet, despite a sharp rally, many of the PSUs are still undervalued compared with their private-sector peers, offering great value.
UltraTech will increase cement prices in the coming months as the cost of production increases in tandem with rising fuel prices. A key parameter on which the company has scored well is cost management. Thanks to its low interest expenses, earnings did not fall. Its net profit grew at a meagre 0.3% year-on-year to Rs 1,314 crore during the quarter. On the valuation front, considering its one-year forward earnings, the stock of UltraTech Cement is trading at an EV/EBIDTA of 16.4. This is slightly higher than its past three-year average of 15.9. This may expand given its size, scale and capital expenditure.
The Securities and Exchange Board of India (Sebi) has approved the initial public offering (IPO) plans of PB Fintech, the parent company of online marketplaces Policybazaar and Paisabazaar, ET reported. It is looking at a valuation of around $6-7 billion for the listing, the report said, adding that PB Fintech could look to list around Diwali. According to its draft filing, the company plans to use the IPO proceeds to enhance the visibility and awareness of its brands and expand its user base.
LASTLY,
Passenger vehicle makers could lose 250,000-450,000 units in sales, dragging down annual volumes in this calendar year, with the shortage of semiconductors severely disrupting production at leading manufacturers in the past few months. The production loss, depending on the supply situation, is expected to pull down wholesale volumes to 2.9-3.1 million units in 2021, from about 3.34 million units initially estimated by automotive consultancy firm Jato Dynamics.
-----------
NOW Before I go, here is a look at some of the stocks buzzing this morning...
Infrastructure firm Larsen & Toubro Limited on Monday emerged as the
lowest bidder for the construction and maintenance of the first three buildings of the Common Central Secretariat under the Central Vista redevelopment project.
Bharti Telecom (BTL), a holding company of Bharti Airtel’s promoters, is raising around Rs 1,400 crore via corporate bonds in the local money markets to help it mainly participate in the telco’s ongoing Rs 21,000 crore rights issue, and also refinance some high cost debt.
Embassy Office Parks REIT has raised Rs 4,600 crore debt at 6.5% interest against security of its assets at Embassy Manyata Business Parks to repay its existing debt. The move reduces the costs on borrowed funds by 260 basis points.
Sunteck Realty has acquired a 110-acre river-front land parcel at Pen-Khopoli Road near Mumbai in a joint development project to make bungalows and bespoke individual homes.
-------
Do also check out over two dozen stock recommendations for today's trade from top analysts on ETMarkets.com.
That’s it for now. Stay with us for all the market news through the day. Happy investing!
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