- #RelianceIndustries and tech majors spearhead #Nifty rally
- #TataConsumerProducts announces two acquisitions
Find out where money is moving today with Hiral Dadia and Agam Vakil on 'Hot Money'. #NDTVProfitLive
- #TataConsumerProducts announces two acquisitions
Find out where money is moving today with Hiral Dadia and Agam Vakil on 'Hot Money'. #NDTVProfitLive
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02:31 >> Friday's rally extends to Monday.
02:34 Benchmarks scale fresh highs for a second day.
02:37 Sensex starts the week above 73,000 mark
02:40 and Nifty soars to 22,000.
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02:45 Broader markets remain firm, mid cap and small cap in the green.
02:49 Meanwhile, Nifty IT skyrockets over followed by real estate and PSU banks.
02:56 On the side, media underperforms.
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03:02 RIL and tech majors spearhead Nifty rally
03:05 as the market is pricing in softer US macros and Fed rate cuts.
03:10 Meanwhile, earnings candidates Wipro and HCL tech soar post Q3.
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03:17 Tata Consumer announces two acquisitions,
03:19 Capital Goods and Organic India
03:21 will be bought for 5,100 crores and 1,900 crore rupees respectively.
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03:30 The World Economic Forum kicks off today at Davos.
03:33 Top political and corporate voices to attend the summit
03:38 catch the coverage through the day on NDTV Profit.
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04:00 Hello and welcome. This is Hot Money.
04:02 I am Agam Vakil and with me is Hiral Dadia.
04:04 Hi, Hiral.
04:06 Well, we are looking at the markets currently trending higher,
04:10 building on the kind of gains that we have seen on Friday
04:13 and today is no different.
04:15 Advances coming through for the Nifty,
04:18 higher around 0.7% and while we are looking at a little bit of a tussle
04:24 between advance and declines in today's day of trade,
04:27 on the whole, it certainly is a positive day of trade.
04:30 Now, let's consider the Nifty, right?
04:33 Because we have seen an advance of nearly 7% on Wipro.
04:36 When was the last time you saw 7% up move on a counter like Wipro?
04:40 Well, today is a day, perhaps a historic one after a really long time.
04:44 And we have seen gains in HCL Technologies
04:47 building on the very strong quarter that it has come up with.
04:52 Tech Mahindra is the other one.
04:54 Of course, we are awaiting earnings from Tech Mahindra.
04:56 But besides that, good gains coming in for two heavyweights
05:01 like HTFC Bank as well as Reliance Industries.
05:03 And that's perhaps, it's what is driving the indices higher at the moment.
05:08 On the losing end, sure, there are a handful of counters which are under pressure.
05:13 HTFC Life, of course, down around 3.4%
05:16 and Tata Consumer, while it did start with a lot of strength,
05:20 it gave up all its gains on an intraday basis
05:23 and it's currently trending in the red
05:25 and a little bit of weakness coming in for Bajaj Financial Services.
05:29 So keep an eye on that, all these counters.
05:31 Very quick look at the broader markets
05:33 and how things are panning out there as well.
05:35 There has been an advance of 0.6% as far as your mid-cap 150 is concerned.
05:41 The small cap index is also up and about
05:44 but not as much as the benchmarks for now.
05:47 And even in terms of the broader markets,
05:49 we're keeping an eye on counters like IRFC,
05:53 another whopping 18% as we speak.
05:56 What's really going on with IRFC?
05:58 It's really something to take note of for now.
06:03 Aurobindo Pharma is the other one on good volumes to advancing
06:06 and Oracle Financial Services along with Oil India.
06:09 In fact, the entire oil and gas space is buzzing at the moment.
06:14 And BHEL, of course, advances further up another 2.9%
06:18 after it signed another MOU with NLC India as well.
06:23 This time it was for an order worth 15,000 crores.
06:26 On the losing end, we have a little bit of profit-taking
06:29 as far as TVS Motor Company goes.
06:31 Sun TV under pressure down 2.7%
06:33 and Dixon Technologies down 2.5%.
06:36 But all in all, Hiral Vylde,
06:38 the advanced decline ratio is 1-1 nearly.
06:41 There certainly seems to be a lot of strength when it comes to benchmarks.
06:44 Absolutely. And you know, when you're mentioning the railway pack as well
06:47 with IRFC, RVNL, Tittagar, all of the counters are up and about in trade, right?
06:52 So there is something which is absolutely brewing
06:54 with regards to where railway counters are concerned.
06:57 But on the macro front, you have the WPI inflation data
07:00 that has just come in at the bottom of your screens.
07:02 We are at a nine-month high.
07:04 That's the number that has been indicated.
07:06 Fuel and power inflation at a negative 2.41.
07:09 The primary articles inflation at a 5.78 versus a 4.76 in November.
07:16 So these are the month-on-month numbers.
07:18 Food inflation at 5.39 versus a 4.69 is what we are picking up.
07:23 Manufactured products at a negative 0.71 versus a negative 0.64 in November.
07:30 The core inflation at a negative 0.6% versus a negative 0.4% in November.
07:37 Clearly, a nine-month high number is what we are tracking
07:41 at 0.73 versus a 0.23 in November.
07:46 So an interesting number coming in, Agam,
07:48 with regards to where the inflation numbers,
07:50 where inflation numbers are concerned on the domestic front.
07:54 But let's quickly shift to stock-specific action.
07:57 We'll be joined by Sharmila Joshi as well
07:59 to discuss the names that you will see on the screens.
08:02 You have the ITPAC, which is in focus.
08:04 So Wipro and HCL Tech are two names that we will be discussing in today's session.
08:08 Apart from that, HDFC Life, which is trading under pressure
08:11 on the back of earnings and brokerage reports.
08:14 And LIC, which is in focus as well on the back of the tax right pack that they have seen.
08:19 Consumers, again, on the back of the two acquisitions will be in focus.
08:22 Avalon Technologies, eMudra and Goodluck India,
08:25 last two counters on the back of the fundraise via QIP that are in focus.
08:30 So these are the names that will be in discussion today with Sharmila Joshi.
08:34 Sharmila, welcome to the show.
08:36 But firstly, let me head across to my colleague Tushar,
08:38 who's standing by. Tushar, clearly, you know,
08:41 it's a mixed earnings quarter overall.
08:43 But what next? Because, you know,
08:46 what are the nifty IT packs so far done according to you?
08:50 So what we are sensing here,
08:55 I'm so sorry. What we are sensing so far here is that the IT pack is,
09:00 nifty IT has surged exceptionally high so far.
09:04 So what we, the sense that we are getting is that markets are pricing in
09:08 as like the end of an IT slowdown. So the situation hasn't worsened.
09:12 Yes, it's a mixed bag, but the situation hasn't worsened
09:16 So essentially what we are looking at is that what markets are thinking,
09:19 this is the end of the IT slowdown.
09:21 So markets are pricing in softer US macros for the incoming year
09:25 and Fed rate cuts that will happen.
09:27 IT firms, some of the IT firms have seen green shoots of deal making.
09:32 Profitability has been maintained despite reduction in the top line.
09:36 Essentially, they're looking at say one or two quarters,
09:40 maybe Q4 will be equally painful.
09:42 But then after that, they're expecting a lift off.
09:45 Quickly, if you look at the big four earnings so far,
09:47 TCS revenue up 1.49%, EBIT margin sustained at 25%,
09:52 one big key takeaway, TCS is set to gain in a big way
09:57 when discretionary spending returns.
09:59 Remember, it's still not back, but TCS has all the fundamentals in place
10:03 when there's discretionary spending returns.
10:05 Infosys, all figures basically in the red,
10:09 revenue down 0.44%, margins at 20.50%,
10:14 compared to 21%.
10:17 But the one big takeaway was that the company has revised its guidance
10:21 to a narrower band of 1.5% to 2%,
10:25 from 1% to 2.5% for FY24.
10:28 So analysts believe that a strong ramp-up of deals in FY25
10:34 will propel the growth rate to about 7.5% in FY24.
10:38 HCL Tech, biggest takeaway, 6% up and outlier altogether.
10:44 Key takeaway, it's all down to the ramp-up of the Verizon
10:47 and the ASAP deals that the company struck in Q2.
10:50 That is also reflecting heavily in the top line
10:53 and going ahead that only is going to grow ahead.
10:56 Wipro, fantastic performance by the stock today.
11:00 Key takeaway, Wipro is seeing green shoots of discretionary spending
11:04 and the consulting business, according to the company's CEO,
11:07 is seeing double-digit growth in the order inflow.
11:11 So essentially, some green shoots for Wipro after a long time of downturn.
11:14 Right. So Tushar, taking us through the key takeaways is helpful,
11:19 but if you have to compare all of the companies
11:22 which have reported numbers, the big four so far,
11:25 where does it stack up?
11:27 And secondly, from a valuation perspective as well,
11:29 how are you looking at them?
11:31 So let's take five parameters or metrics.
11:34 On revenue growth, all of the companies are in the red,
11:39 which is a positive growth in Q3, except HCL Tech, 6% up,
11:42 because for them, it was a seasonally strong quarter.
11:45 Remember, HCL Tech works in the products and platforms business.
11:48 For them, Q3, October, December, is a seasonally strong.
11:51 For others, it's a seasonally the weakest quarter.
11:54 When it comes to profitability, all of the companies
11:57 have maintained their profitability at the expected range,
12:00 which effectively shows that they also still have margin levers in play
12:04 to keep those profitability numbers high.
12:08 The return value or deal wins, again, are robust,
12:10 8.1 billion for TCS, and HCL Tech is 1.9 billion
12:15 after the Verizon deal that happened in Q2.
12:18 So again, big numbers there.
12:20 It's still not converting meaningfully into revenue.
12:23 We have to look at it in the future.
12:26 Attrition rates are back to pre-pandemic levels.
12:29 Net headcount, another key metric, is the fact that all of the companies,
12:33 TCS, Infosys, and Wipro, have seen their headcount decline in Q3.
12:37 Except HCL Tech, which has added about 3,600 employees
12:43 just to deploy them to the big deals it won.
12:47 Down to the valuation front, the companies are currently trading,
12:52 as you can see the numbers, at about a fair valuation
12:55 compared to that three-year average that we are seeing so far.
12:58 So essentially, all is looking good for IT at this point of time.
13:02 But we don't know how the rest of the earnings are going to pan out
13:05 in the quarters going ahead.
13:07 Thanks, Tushar, for getting us the details.
13:08 Let me get in Sharmila as well.
13:10 Sharmila, Tushar actually took us through the comparatives
13:12 and the key takeaways.
13:14 How were you looking at the IT pack?
13:16 Because overall, the expectation was muted.
13:19 And from what's reported and the kind of performance,
13:22 we are seeing it spectacular.
13:24 Well, honestly, I did expect IT to rally in January.
13:29 And the signs were it had come in December
13:32 when we saw software data coming in from the US.
13:36 And as you all were just discussing right now,
13:37 I think one of the key things that you have heard
13:40 from all the IT majors over this last year, year and a half,
13:43 is the fact that they are not seeing companies close orders quickly.
13:49 And the reason why I expected January to be sort of a good month for IT
13:54 was that I thought that given the kind of data
13:56 that we were getting from the US,
13:58 a lot of the large companies finalized their budget spends in January.
14:02 So you could actually see a bit of change in commentary
14:05 when IT companies reported their numbers.
14:08 Now, honestly, that hasn't happened,
14:10 but I think markets sort of taken out from the fact that numbers are OK.
14:14 We've just heard how the numbers have been.
14:17 And the fact that US data continues to indicate
14:21 that going forward in the year, you could see a rate cut.
14:25 And as you remember, even for US,
14:27 it is an election year at the end of the day.
14:30 So there is likely to be some amount of interest rates
14:35 or perhaps maybe one or two quarters down the line.
14:38 So I think the market is sort of reacting very positively to that.
14:42 And I do believe that a lot of the concerns
14:45 that got built into the stock prices,
14:48 given what was happening in the US,
14:50 that whole debate about hard landing, soft landing,
14:53 I think that now somewhere we are coming to getting out of that.
14:57 So while the stocks have rallied,
14:59 I do think that perhaps if you've got a dip or whatever,
15:03 I still think that there is sort of money to be made in these stocks.
15:06 It's yet that has always been my sort of preferred play.
15:09 And I think there in this quarter,
15:11 you really saw that the performance came both from software and services,
15:14 which was one of the reasons why I sort of preferred this
15:17 to some of the other large IT names.
15:19 So I'm happy about that.
15:21 And I do think that there is an upside in most of these stocks.
15:24 All right. OK, let's talk about another pack
15:27 which could have possibly underperformed at the moment.
15:32 I'm talking about the life insurance space,
15:33 in this case, specifically HDFC Life Insurance.
15:35 Before I get in my colleague to talk to us about the earnings
15:38 and what the brokerages have made,
15:40 I want to point out that HDFC Life,
15:42 the first time it moved above the mark of 600
15:45 was back in October of 2019.
15:49 Since then, it has gyrated
15:51 and moved above the mark of 750 odd levels
15:54 and once again come back.
15:56 At the end of the day, over the past four and a half years,
16:00 HDFC Life has given you a return of 0%.
16:03 As we speak, what are the challenges here?
16:06 That is something that we want to understand
16:08 and maybe Monal, who's joining us right now,
16:11 could perhaps further elucidate this one.
16:13 Monal, good afternoon.
16:15 Can you tell us about the earnings
16:17 as well as what the street is making of these numbers?
16:19 Yeah, Agam. Yes, definitely.
16:22 So actually, what the results that came out on Friday,
16:24 the net profit increased 16%,
16:26 but the V&V margins were a little weaker.
16:29 They were down 2%,
16:30 which was way below street estimates of around…
16:32 I mean, it was down approximately 7%
16:35 from the street estimates,
16:37 which is why the sentiments that the brokerages resonate
16:40 are more so that they are maintaining their stance on the stock,
16:43 but all of them have trimmed down their earnings estimates.
16:46 So their expected earnings,
16:48 City Research has come up with a neutral rating,
16:51 cut down the price target to 675,
16:54 Nomura has cut it down to 740,
16:58 CLSA has brought it down to 700,
17:00 Jeffries has maintained it at around 800,
17:02 but the key concern that most of these brokerages are highlighting
17:05 is the fact that there's been a slower growth
17:07 in the first nine months of the year.
17:09 And this is, of course, on the back of multiple issues
17:11 that have been plaguing the life insurers.
17:13 I mean, first we had the budget announcement
17:15 where they curbed the 5 lakh policies
17:17 and also now there's a lot of contention
17:19 that's happening around the surrender charges
17:21 that life insurers are supposed to face,
17:23 which, of course, has been stated as an overhang
17:25 by most of these brokerages.
17:27 Apart from that, Nomura has been saying
17:29 that it's maintaining its rating
17:31 because of the company product profile,
17:33 but it's trimming its estimates
17:35 because of no recovery or a slow recovery
17:38 in the high-ticket products.
17:40 At this point, tier 2 and tier 3 development
17:43 seems to be the key driving force,
17:45 and I think Jeffries has stated
17:48 that that is what is going to drive the AP
17:51 for the next two years.
17:53 But again, these things are going to be taking a toll
17:56 on the company.
17:58 The management does say that there's a possibility
18:01 that they'll recover from this
18:03 and their tier 2, tier 3 would be their stronger counter.
18:06 So that is something that we should watch out for.
18:08 Okay, absolutely, Mona.
18:10 Thank you so much for joining us
18:12 and taking us through the numbers
18:14 as well as what the street is making
18:16 of HDFC Life Insurance.
18:18 Sharmila, a frustrating counter to say the least,
18:20 but also part of the nifty
18:22 and one where a lot of prospects
18:24 and a lot of hopes have been pinned on.
18:26 HDFC Life hasn't showed up any results yet,
18:28 and even if you consider LIC,
18:30 this life insurance corporation,
18:32 it's outperformed to a tad bit,
18:35 to a certain extent.
18:37 What's your view on HDFC Life
18:39 and how would you compare that to LIC?
18:41 First of all, just a little while back,
18:44 you gave the return over the last four years,
18:46 and I think that's a little unfair
18:48 because the COVID years were not particularly great years
18:50 for any of the life insurance companies.
18:52 Having said that, for the longest time,
18:55 while approaching life insurance as a business,
18:58 you'll see great growth potential,
19:01 given our population
19:03 and how many are buying life insurance, etc.,
19:05 as a product.
19:07 My strategy always was to buy a basket
19:09 of Pooh Life, SBI Life, and HDFC Life,
19:12 which is why I've always tracked,
19:15 not very deeply, but tracked their numbers
19:17 over these last three, four years.
19:19 I find that actually SBI Life
19:21 has really outperformed the other two
19:24 given better numbers than both.
19:25 So yes, I think that HDFC Life,
19:27 as you all were discussing,
19:29 a little tad disappointing numbers,
19:31 and I think that's likely to continue for a bit.
19:33 So I'm not a neutral on the stock.
19:35 I'm not exactly negative because I like the space.
19:38 There have been sort of,
19:40 the last budget wasn't particularly favorable,
19:42 the last two years weren't particularly favorable,
19:44 so I think they'll take time coming into their own.
19:47 But given the fact that
19:49 we are at the population that we are at
19:52 and the percentage of the population
19:54 that has life insurance as a product,
19:57 that would show that we have a tremendous way to go.
20:00 Sure, sure. All right.
20:02 So, neutral on HDFC Life,
20:04 but positive when it comes to the life insurance space.
20:06 That's the word coming in from Sharmila.
20:08 We take a small break, but on the other side,
20:10 we talk about a long list of other stocks
20:12 that we want to talk about.
20:14 Stay tuned in.
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22:45 Welcome back. You're watching Hot Money.
22:47 Tata Consumer is a stock that is in focus
22:49 as well in today's session and it is
22:51 on the back of the two acquisitions,
22:53 Capital Foods as well as Organic India.
22:56 Some cooling off has happened.
22:58 In fact, now it's trading with cuts of almost 1.4%
23:01 and they're also planning a 3,500 crore rights issue.
23:05 That is what has been communicated so far.
23:08 Sharmila, how are you looking at Tata Consumers?
23:10 One, from the acquisition perspective.
23:13 Second, the rights issue and what is the kind of dilution?
23:17 Do you think that's something which the investors
23:19 will be happy about?
23:21 So, first of all, this is a stock that I like for various reasons.
23:25 I think that one consistent thing that they've done,
23:28 if you were to just talk of the news that we have,
23:32 is that over a period of time, you have seen that
23:34 they've shown interest and acquired various brands
23:37 over these last couple of years.
23:39 And they've, over a period of time,
23:41 integrated them into the company.
23:43 You had that one, Soles, Sins, etc.
23:45 Coming to both these brands, I think they're very interesting
23:47 because, you know, capital mind is that
23:51 Ching's and Smith & Jones and we know that
23:54 Indian Chinese is a cuisine in itself
23:56 and they are the market leader in that.
23:58 And Organic India is also an interesting acquisition
24:01 given the fact that increasingly people are looking
24:03 at those kind of products.
24:05 So, both will add to their earnings going ahead
24:08 and the company is really expecting that.
24:10 So, very interesting acquisitions.
24:12 Coming to, you know, the stock had actually
24:16 already sort of rallied and which is why
24:18 we are seeing it correct.
24:20 So, I don't particularly think that the rights issue
24:23 will be viewed negatively given the fact that,
24:27 the company does seem to be on a bit of a,
24:29 sort of an acquisition and expansion sort of a mode.
24:33 So, to my mind, investors will worry less about the dilution
24:37 and will look more at, you know, the business possibilities
24:40 that all these things are representing.
24:43 Okay. Alright. From there onwards,
24:45 we move on to Avalon Technologies.
24:47 This is a relatively smaller company
24:49 and we understand the company has tied up with SEDAC.
24:54 SEDAC is the Center for, well,
24:57 Development of Advanced Computing India.
25:00 Now, what Avalon is going to do is that,
25:03 of course, we know that that's an electronics manufacturing company
25:06 and what Avalon is going to do is that
25:08 it is going to aid SEDAC in, well,
25:10 manufacturing high performance computing servers.
25:13 Of course, that's the reason why we are looking
25:15 at strength in today's trade.
25:17 We are yet to ascertain how big this particular contract
25:20 can be for Avalon, but advances all the same.
25:23 Sharmila, if you track Avalon Technologies,
25:26 specifically, your view, even otherwise,
25:29 what is your view as far as electronic manufacturing services are concerned?
25:33 How would you go about the sector?
25:35 So, the space is very interesting.
25:37 There is no taking away from the fact,
25:39 which is why you are seeing markets give this news a big thumbs up.
25:42 But my concern is more to do with, you know,
25:46 the balance sheet of Avalon and the fact that
25:48 working capital, etc., seems to be under stress.
25:51 So, those are issues that the company will have to sort of
25:54 sort and deal with as they go ahead.
25:57 But perhaps the reason why market is ready to sort of give them
26:02 sort of the valuation they are giving them
26:05 is because they are somewhere perceived that, you know,
26:09 this is the sort of way to go and these are the businesses to be in,
26:13 which is why market is giving them this kind of a valuation.
26:16 But very honestly, I think it would be better to be a little cautious
26:21 and overall I would have like a neutral view of the stock.
26:24 Sure. So, caution at least as far as the stock is concerned.
26:27 But on that note, we slip into another short break.
26:30 But on the other side, we talk about two more stocks which are on the radar.
26:34 Stay tuned in.
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28:25 Welcome back. Another stock that we are focusing on today is E. Mudra.
28:29 And this is on the back of the fundraise through QIP4.
28:32 43.6 is what the issue price is. The floor price is, I beg your pardon, Sharmila.
28:38 How are you looking at E. Mudra? 4% is the kind of gains that we are seeing.
28:42 And if you look at the dilution as well, I think somewhere in that range of 6.1%.
28:47 Yes. So, I think once again, like we were talking about Avalon Technologies just a little while earlier,
28:53 I think that you are even more so a very, very interesting business model.
28:58 And the kind of products that they are offering and I think the usage is only going to increase with the period of time.
29:06 So, I don't see any concern on that front.
29:10 So, once again, I think market is giving them the kind of valuation that they are getting
29:16 because market recognizes that this Internet of Things and this kind of e-governance
29:21 and these are the sort of companies and models of the future.
29:25 So, once again, I think a stock that I like, the only caution would be a little bit on the valuation front.
29:31 Valuations are concerned. That's the only thing one should be watching out for.
29:35 Thank you, Sharmila, so much for joining us on the show.
29:37 But we are completely out of time on this edition of Hot Money.
29:41 Thank you from Agam and myself. Please stay tuned to NDTV Profit for lots more.
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