Market this week 21-10-2023
Motilal Oswal has a target of Rs 735 for neutral Shoppers Stop.
The primary causes of Shoppers Stop’s (SHOP) EBITDA’s 4% YoY reduction to INR1.6b in 2QFY24 were a 4% (calculated) drop in LFL and a margin contraction of 100bp YoY. The sluggish demand, the postponed holiday season, and the poor performance of Private Labels were blamed for the margin decline; nevertheless, double-digit growth in the Beauty segment partially countered these factors. In the current holiday season, the management has guided for mid-single digit SSSG, led by health LFL. Its recently introduced value retail concept, InTune, is steadily improving, and it has ambitious plans to open 164 more stores between FY24 and FY26.
Over the course of FY23–25, we anticipate a 15%–19% CAGR in revenue/EBITDA, and its capacity for sustained high growth may influence valuation. We maintain a TP of INR735 and a Neutral rating.
Reduce Nestle India with a Rs 20,000 HDFC Securities as a goal
Revenue increased by 9% and margins (both GM/EBITDAM) rose, giving Nestle a Q3CY23 print that was in line with expectations. 10% YoY growth in domestic revenue (HSIE: 11% YoY) was widespread across all channels. Mix and volume (which experienced low-single-digit volume increase) helped to sustain prudent pricing. GM increased by 380bps YoY to 56.5% (57% two years ago) on the strength of a stable RM basket and better net realization. A good winter flush would help to maintain steady milk prices even though uneven rain and deficiency rain can affect the prices of maize, sugar, oilseed, spices, and green coffee. EBITDA margin increased by 250bps YoY to 24.8% due to improved cost management. (HSIE 20%) EBITDA increased by 22% YoY. Nestle has announced that the face value of each share will be divided into INR 1.Nestle is still putting emphasis on capacity building, category expansion, and distribution strengthening. We continue to be optimistic about OOH products and maintain in-home product growth. We keep our EPS projections.
Despite a 1% market decline, small-cap companies outperform; their gains range from 10% to 29%.
The investors’ concerns regarding the Middle East war between Israel and Hamas continued to weigh on the benchmark Indian indexes, which fell 1% in the week ending October 20. The increased price of crude oil, the US bond yields reaching 5% for the first time since 2007, ongoing FII selling, the Fed’s planned continuation of monetary tightening, and India Inc.’s mixed earnings all contributed to a downturn in market mood.
The Nifty50 dropped 208.4 points or 1.05 percent to conclude the week at 19,542.65, while the BSE Sensex lost 1.33 percent or 885.12 points to complete the week at 65,397.62.
The BSE Small-cap index outperformed the other larger indices, ending flat, while the BSE Mid-cap and Large-cap indices both had declines of 1%.
ICICI Bank Q2 net profit could increase by 25% year over year, but margins and provisions need to be watched.
According to analysts, ICICI Bank is expected to make a net profit of Rs 9,422 crore in the July-September quarter of the fiscal year 2023–24 (Q2FY23–24), an increase of 25% year over year (YoY). This growth would be driven by robust net interest income (NII) and stable asset quality. However, the earnings will probably drop sequentially by 2% from Rs 9,648 crore in Q1FY23-24.
On October 21, 2023, the private sector lender must submit its Q2 scorecard. The bank announced in an exchange filing that the media briefing will start that day at 4:15 pm (added).
Cyient declines as FY24 sales growth comes in below expectations, but brokerages are still optimistic
Cyient on October 20 fell over 3 percent after the tech company’s management said that its DET (digital, engineering and technology) revenue growth is likely to be at the lower end of 15 – 20 percent range this fiscal. At 11 am, the Cyient stock was quoting at Rs 1,713.95 on the NSE, down 2.8 percent from previous close. Trading volumes at the time were close to 3 lakh shares.
Speaking to CNBC-TV18, Krishna Bodanapu, executive vice chairman and managing Directod, Cyient said, “Company is guiding for revenue at lower end of guidance due to softness in communication sector. This quarter is the bottom for the communication vertical. We don’t expect communication vertical to see significant growth in Q3, but it won’t slide.”