After falling to the day’s low of 60,213.64 in the second half of the session, price rallied slightly, ending a 0.19% low to close at 60,433.45 . Indian benchmark stock indexes have moved sideways over the past five sessions. NSE hit the day’s high of 18,112.60 before hitting a low of 17,983.05. The index closed at 18,044.25, down 0.13% today. So far, the NSE Nifty has managed to hold above the 18,000 level. The benchmarks are trading at a slightly higher level than the previous month. For the past two days, electricity stocks have been doing rounds. Tata Power, Adani Power (NS :), Voltamp Transformers are some scripts that have worked very well during the last trading sessions. We have identified two stocks that can generate decent returns in the short to medium term.
1. Bharat Heavy Electricals (NS 🙂 Limited
Bharat Heavy Electricals Limited (or BHEL) manufactures power plant equipment. BHEL’s products include gas turbines, generators, thermal units, diesel locomotives, turbo units, hydraulic units, power transformers, switchgear, circuit breakers and boilers. Apart from this, BHEL also manufactures compressors, valves, rectifiers, pumps, condensers, oil rigs, as well as castings and forgings. The push by the Indian government towards Atmanirbhar Bharat in the defense sector, a sharp post-pandemic increase in energy consumption, the push by the government on infrastructure development, the proposed divestment in BHEL are expected to drive the stock short and middle term. The markets’ perception of the power of PSUs has changed as they were previously underperforming. The decks were cleared for BHEL to manufacture native super fast gun mounts (or SRGMs) for the purchase of 12 light utility helicopters from Hindustan Aeronautics Limited.
During the September 2021 quarter, mutual funds and DIIs slightly increased their stake in BHEL shares. The script has a mixed signal based on the main technical indicators. While RSI and MACD look unfavorable for the script, the stock looks attractive based on a 50 day / 100 day / 200 day EMA. In one year, the share has gained 155.9%, 86.4% year-to-date, 9.9% in six months and 8.1% in one month.
2. Dabur India (NS 🙂 Ltd
Dabur India Ltd manufactures and sells soaps, detergents, hair oils, dental powders, antacids and processed foods all over the world. No likelihood of the 3rd wave of the Covid19 pandemic should boost management’s confidence in the prospects for the future. The company has set a target of achieving double-digit overall growth for fiscal 2022, supported by high double-digit growth in the food sector, double-digit growth in the healthcare division for home and person and a single digit average in the health care industry. After a decent monsoon, rural consumption is expected to experience a V-shaped recovery aided by strong demand. Innovation, strong product pipeline, market share gains and growth across all segments are expected to drive Dabur’s top line growth. New products represent nearly 5% of the company’s turnover. E-commerce, which accounts for around 8% of sales, has grown 100% in recent quarters. Although the price hike does not fully consume the effect of rising input costs, the company is expected to maintain its current EBIDTA margins thanks to the savings of Rs 100 crore from the Samriddhi program. The company also continues to reduce its inventory pipeline quarter over quarter.
In the quarter ended September 2021, Dabur India’s net profit increased 4.71% to Rs 504.35 crore from Rs 481.68 crore in the previous quarter ended September 2020. Revenue jumped 12% to Rs 2,817.58 crore in the quarter from Rs 2,516.04 crore in the corresponding quarter. quarter ended September 2020. While DIL’s revenue and net income CAGR is not in double digits, its return on equity looks better at 25%. The stock’s PE appears to be low compared to companies in its peer group. FIIs / REITs have steadily increased their equity ownership over the past five quarters. The script has mixed signals based on key technical indicators.