Latest news with #Vakil
Mint
01-06-2025
- Business
- Mint
From VA Tech Wabag to PCBL Chemical— Devarsh Vakil of HDFC Securities suggests 5 stocks to buy for long term
Stocks to buy for the long term: Indian stock market benchmark, Nifty 50, extended gains to the third consecutive month in May, supported by largely better Q4 earnings, foreign capital inflows and healthy domestic macroeconomic indicators. However, stretched valuations and geopolitical uncertainties kept the gains capped. The Nifty 50 rose nearly 2 per cent in May after a 3 per cent gain in April and a 6 per cent gain in March. Year-to-date, the index has risen 4.7 per cent. Experts point out the remarkable resilience of the Indian economy and markets, which have overcome domestic and global challenges. They remain positive about the domestic market's medium-term prospects due to a healthy economic growth outlook and a strong influx of retail investors. "The medium-term outlook remains bright, supported by robust growth prospects driven by a domestically-oriented economy, youthful demographics, and advancing digitalisation— creating diverse, high-quality investment opportunities across industries," said Devarsh Vakil, Head of Prime Research, HDFC Securities. "India's domestic economic foundation provides protection against global volatility, reinforcing that market downturns are temporary. We maintain a bullish outlook on markets for the long term and present these five long-term investment opportunities," Vakil said. Vakil picks the following five stocks to buy for the next one to two years for healthy upside. Do you own any? PCBL Chemical is India's largest and the world's 7th largest carbon black company, which is essentially used as a reinforcing material for manufacturing tyres. The company has presence in three major product lines: (i) tyres, (ii) performance blacks, and (iii) speciality blacks. Management is positive on the long-term demand outlook. Management hinted that the completion of de-stocking in the global market and lowering inflation could be positive for demand pickup. The company will continue to operate in capex mode for the next three years, adding brownfield capacity in Chennai, doubling aqua-pharm capacity, increasing speciality CB capacity, and infusing money into the JV to capture future growth opportunities. The company has started work on a large-scale pilot plant in India that will develop nano-silicon additives for use in the anodes of Li-Ion batteries. It is looking to invest nearly $30 million in the JV and expects combined JV EBITDA of ₹ 800-900 crore at peak levels in the 36 months after commercialisation. It expects commercialisation by Q4FY27E. "We expect revenue and PAT to increase at a CAGR of nearly 14 per cent and 20 per cent, respectively, over FY25-27E. At the current market price, the stock trades at 21.5 times FY27E EPS (earnings per share)," said Vakil. Va Tech Wabag is a pure-play water company with a strong presence of more than 25 years in water technology and customised water treatment solutions through EPC (engineering, procurement, and construction) services, O&M (operations and maintenance) services, research and development, construction and commissioning. The company exhibits multiple growth triggers, with record FY25 performance across key metrics like sales, EBITDA, PAT, healthy cash balance, and order book (three times sales), ensuring strong revenue predictability for three years. Wabag's asset-light, profitable growth strategy, 95 per cent multilateral/sovereign-backed order book, expanding international focus, along with an upgraded AA credit rating, exhibits robust investment potential. "Investors can buy the stock at current levels for a target price of ₹ 2,100 per share (33 times FY26E EPS)," said Vakil. Star Cement is one of the leading players in the most profitable North-East region. With a cement capacity of 7.7 MTPA, Star commands a nearly 24 per cent share in the North-East market. "We believe that it has a strong, sustainable competitive advantage in the North East region, as entry of outside players in this market is limited," Vakil said. Over the years, Star has created a strong brand recall and is well-positioned to capitalise on future growth opportunities. "We expect a healthy performance from the company in the coming years on the back of increased clinker and cement capacity, leadership position in the profitable and growing North-East market, and cost-saving initiatives to drive profitability," said Vakil. "We believe investors can buy the stock in ₹ 210-225 band (10.9 times FY27E EV/EBITDA) and add on dips in ₹ 180-195 (9.4 times FY27E EV/EBITDA) band - fair value of ₹ 260 (12.8 times FY27E EV/EBITDA) over the next two to three quarters," said Vakil. EPL is the leading manufacturer of laminated plastic tubes in the world, with nearly 35 per cent market share in oral care and catering to companies like Unilever, Colgate, P&G, etc. In the personal care market, EPL's global share stands at nearly 10 per cent, and with an opportunity three times as big as oral care, the runway for growth is long. EPL is a market leader (nearly 20 times share in global speciality packaging) that is set to continue gaining market share in an industry which is undergoing a structural shift owing to innovative product introduction. EPL's strong innovation pipeline, a plethora of sustainable solutions, is expected to be quickly adopted by larger personal care brands given their commitment to sustainability goals. The company has delivered robust results in recent quarters amidst a challenging geopolitical backdrop. The key positive is the sustained margin expansion, as the EBITDA margin expanded for the 10th consecutive quarter. EPL's management has committed to delivering double-digit revenue growth and with an EBITDA margin ambition of nearly 20 per cent in FY26. Stability in raw material prices should further aid the margin recovery. "Going ahead, we expect revenue and EBITDA CAGR of 10 per cent and 14 per cent, respectively, over FY25-27E. RoCE and RoE are expected to increase further from 16.3 per cent and 17.4 per cent, respectively, in FY25 to 17.9 per cent and 21.1 per cent by FY27. The company currently trades at 15.5 times FY27E EPS," said Vakil. Castrol India is an automotive and industrial lubricant manufacturing company, supported by a strong distribution network that reaches over 1.48 lakh retail outlets and 350 distributors. Castrol India is focused on brand building, widening the distribution network, and launching new products, which will contribute volume growth and market share expansion. Recognising the need for advanced cooling solutions in rapidly expanding data centres, Castrol India is leveraging its expertise in fluid technology to innovate in this new domain. The company is focused on volume growth while maintaining margins and emphasising the premiumisation of products. "We expect Castrol's lubricants volume to increase by 4.5 per cent and 5 per cent in CY25E and CY26E, respectively. We recommend buying the stock with a target price of ₹ 239. At the current market price of ₹ 217, the stock trades at 19.5 times CY26E," said Vakil. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
India Today
27-05-2025
- Business
- India Today
Sensex slumps nearly 800 points: Why is the stock market falling today?
Equity benchmarks slipped sharply in early trade on Tuesday, erasing gains from the previous session as investors turned cautious amid global uncertainty and profit 9:29 AM, the BSE Sensex was down 752 points at 81,424, while the NSE Nifty50 dropped 209 points to 24,792. Broader market indices also faced selling pressure, with heightened volatility dragging down sentiment across the board. Banking, IT, and financial services were among the worst-hit TRIGGERED THE MARKET DROP?A surge in Covid-19 cases has reignited fears of economic disruption, prompting a risk-off mood among investors. The spike comes just as markets were attempting to consolidate after a strong run-up. While no single factor is solely responsible, the rise in infections, weak cues from Asian markets, and a round of profit booking all appear to be weighing on V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the market may be entering a consolidation phase. 'High valuations are prompting selling on rallies, while any dip will likely be bought into, given that mutual funds are sitting on ample cash,' he noted. He added that a sustained upward move is unlikely without clear signs of a pickup in earnings growth, which is something that remains a few quarters away. However, he pointed to 'slow accumulation in rate-sensitive sectors like autos,' anticipating rate cuts as inflation continues to added that one positive trend is that Systematic Investment Plan (SIP) flows remain strong, with retail investors staying invested longer than in the past—providing a degree of underlying support to the FACTORS AT PLAYDevarsh Vakil, Head of Prime Research at HDFC Securities, pointed to losses in Chinese and Hong Kong equities as another headwind. 'Automobile shares fell on renewed price war concerns, and Apple suppliers declined amid fears of fresh US tariffs,' he home, sentiment had been buoyed in recent days by positive cues — including US President Donald Trump's decision to delay additional tariffs on the European Union and optimistic forecasts for India's monsoon season. But with those factors now priced in, markets seem to be the Nifty appears to have broken out of its recent consolidation between 24,500 and 25,000. Resistance is seen at 25,207, the 76.4% Fibonacci retracement of the drop from 26,277 to 21,743. On the downside, immediate support is expected near 24, InMust Watch
Mint
26-05-2025
- Business
- Mint
Retail participation supports markets; banks, cement, defence may generate alpha: Devarsh Vakil of HDFC Securities
Expert view on markets: Devarsh Vakil, Head of Prime Research, HDFC Securities, says a confluence of factors, including geopolitical uncertainties, ongoing earnings season and institutional capital flows, keeps the market volatile. He adds that steady retail participation provides crucial market support during corrections. In an interview with Mint, Vakil says banks, cement, chemicals, defence, pharmaceuticals, metals, logistics, and telecom may generate alpha in FY26. Here are edited excerpts of the interview: Geopolitical uncertainties, ongoing earnings season, institutional capital flows, and derivatives expiry dates are the primary drivers of volatility in the Indian stock market. Unresolved issues on India's borders contribute to uncertainty that affects investor confidence and economic planning. Disputes occasionally along the Line of Actual Control (LAC) with China continue to present national security challenges. Cross-border terrorism from Pakistan and India's response weighed on investor sentiment and business confidence. The strategic competition between the United States and China continues to be a defining feature of the global landscape, impacting trade, technology, and security alliances worldwide. The war between Ukraine and Russia remains a primary source of instability in Europe, with significant humanitarian, economic, and geopolitical ramifications. Rapid advancements in areas like artificial intelligence (AI), quantum computing, and cyber capabilities are creating new arenas for geopolitical competition, especially between China and the West. India's markets and economy have demonstrated remarkable resilience, consistently overcoming domestic and global challenges. The medium-term outlook remains bright, supported by robust growth prospects driven by a domestically oriented economy, youthful demographics, and advancing digitalisation, creating diverse, high-quality investment opportunities across industries. India's domestic economic foundation provides protection against global volatility, reinforcing that market downturns are temporary. The country's ongoing trade negotiations with Western nations will strengthen international business ties, expand export opportunities, attract steady foreign investment, and enhance global competitiveness. Monthly systematic investment plan (SIP) inflows across mutual funds continue showing consistent growth, driven by rising disposable incomes and increased awareness of disciplined investing. This steady retail participation provides crucial market support during corrections. The earnings season has met subdued expectations. Among 43 out of 50 Nifty companies that have reported, aggregate topline and bottom-line growth reached 5-6 per cent as anticipated. Consensus estimates project 12-13 per cent growth for the next year, which appears achievable. Banks, IT services, consumer, real estate, PSU banks, and non-lending NBFCs registered downgrades. Metals and OMCs (oil marketing companies) saw upgrades post these quarterly results. Automobile, NBFCs, and pharmaceuticals sectors saw notable upgrades in their FY26E EPS estimates. While US-China trade normalisation might trigger temporary capital flows from China, the longer-term outlook remains strong due to structural advantages. India's path to becoming the world's third-largest economy, supported by favourable demographics and rising per capita GDP, creates expanding domestic markets that attract both production and export-oriented FDI, as seen with Apple's manufacturing expansion. Government fiscal prudence and India's inclusion in global debt indices ensure steady bond flows, while foreign investors benefit from easier market access compared to China's restrictions. Declining inflation and lower energy prices support rate cuts, boosting capex and future growth potential. Indian corporations offer superior growth prospects, higher return on capital, and better governance standards than their Chinese counterparts - factors increasingly valued by institutional investors. Any near-term diversions to China likely represent tactical shifts rather than strategic repositioning. India's structural growth story, improving business environment, and corporate quality should continue attracting foreign capital across equity and debt markets, making temporary outflows a buying opportunity rather than a fundamental concern. The Reserve Bank of India (RBI) forecasts GDP growth at around 6.5 per cent. On inflation, the RBI expects CPI inflation to be around 4 per cent for FY26. Strong domestic demand, fuelled by tax cuts and recovering rural consumption due to an above-normal monsoon, remains a key driver. The continued government focus on infrastructure and manufacturing—"Make in India" will boost investment. The service exports are expected to show resilience. Indian manufacturing is gradually benefiting from global supply chain diversification efforts. Global trade war-related uncertainties, including trade tensions and volatile commodity prices, pose significant external risks BFSI remains our preferred sector this year. Beyond this, we favour selective opportunities across cement, chemicals, defence, pharmaceuticals, metals, logistics, and telecom to generate alpha. Banks: RBI has cut repo rates by 50 bps, and we expect a further 50-75 bps reduction in FY26 as inflation has been firmly under control. Asset quality has improved across the board, and the trend could continue in the coming quarters. PSU banks have benefited from recoveries/upgradations and are likely to witness MTM gains due to falling yields. Cement: Increase in prices across regions (south being the leader, followed by east, central and west) on the back of an improvement in demand. The Indian cement industry is witnessing robust growth with a 7-8 per cent CAGR demand forecast through 2027, driven by strong infrastructure spending and housing demand, alongside an unprecedented consolidation phase where major players have aggressively acquired over 65 million tonnes of capacity recently, enhancing market reach, operational scale, and pricing power. Chemicals: There has been an increase in consumption of durables and non-durables, especially speciality chemicals, leading to demand growing faster than supply. Agrochem: A better monsoon forecast this year should boost the growth outlook of agri inputs, and will also benefit from recent inventory destocking. Pharmaceuticals: In the US, price erosion has stabilised in the base business. It was primarily offset by a robust contribution from niche products. The domestic formulation business would see steady growth of 8-14 per cent, depending on its therapeutic focus. Chronic should lead the growth of about 200- 300 bps ahead of overall IPM growth. Metals: government measures such as a 12 per cent safeguard duty on flat steel imports to protect domestic producers amid rising imports. Steel demand in India is projected to grow by approximately 8-10 per cent in 2025, driven by intensified infrastructure spending, vigorous construction activity, and supportive government policies, positioning the sector for continued expansion. Logistics: Falling energy costs will lead to margin expansion in steady demand. Government support for consumption, rising e-commerce penetration, and rural market expansion create a favourable backdrop for logistics companies. Telecom: Driven by improved average revenue per user (ARPU), expanding 5G adoption, and continued growth in home broadband connections. We expect to see another ARPU hike in the next one to two quarters. The defence sector, particularly in light of the Indian government's strong push for 'Atmanirbhar Bharat' and 'Make in India' initiatives, has emerged as one of the most promising sectors within the Indian markets. These policies are fundamentally reshaping the industry, creating significant opportunities for domestic players. We have been optimistic about this space and have recommended various defence stocks from time to time, contingent upon our assessment of valuation and margin of safety. Shipyards stocks look very promising for the longer term. Overall, the long-term trajectory appears positive, driven by a clear policy direction and a focus on indigenous manufacturing and procurement. When it comes to PSUs, it's important to recognise that this is a very broad and diverse category, encompassing companies across numerous industries. Therefore, a generalised view on PSUs would not be appropriate. Our approach is more selective. Currently, we see potential in select PSU banks. These institutions are benefiting from a healthier credit cycle, improved asset quality, and a supportive macroeconomic environment. However, we maintain a cautious stance on PSU oil and gas companies at this juncture. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Mint
15-05-2025
- Business
- Mint
Is the worst of inflation behind? What it means for the Indian stock market? Experts decode
Amid global economic uncertainty, there are emerging bright spots. Inflation has eased significantly in both the US and India, fueling hopes of interest rate cuts by the US Federal Reserve and the Reserve Bank of India, which could boost demand, improve liquidity, and support broader economic growth. India's retail inflation eased in April to its slowest pace in over six years, thanks to lower food prices. According to data from the Ministry of Statistics and Programme Implementation, the Consumer Price Index (CPI) rose 3.16 per cent year-on-year in April, down from 3.34 per cent in March, 3.61 per cent in February, and 4.83 per cent in the same month last year. On the other hand, US consumer prices saw the smallest annual increase in four years. The US Consumer Price Index increased 0.2 per cent in April after dropping 0.1 per cent in March. Year-on-year, the CPI climbed 2.3 per cent, marking the smallest gain since February 2021. In March US CPI rose 2.4 per cent year-on-year. While recent data and macroeconomic indicators suggest that the worst of inflation may be behind us, risks stemming from the trade war continue to persist. "After aggressive US tariff policy, and its recent discussions on reduction, the tariffs are unlikely to return to pre-announcement levels, and hence, the medium-term inflation risk is alive in the US," said Trivesh D, COO of Tradejini. The US has announced trade deals with the UK and China, while India, too, is expected to seal a deal in the coming few days. US President Donald Trump has said that India is offering his country a trade deal with zero tariffs. Geopolitical risks have subsided significantly in the last few days, and experts hint that the worst of inflation could be over. "It's still early to call it a complete reversal, but the worst of inflation may be behind us if global macro trends continue to support easing," said Abhishek Jain, Head of Research, Arihant Capital Markets. Jain warns that a mild uptick in US inflation could have a ripple effect on some Indian companies, particularly those with significant exposure to the US market. Devarsh Vakil, the head of Prime Research at HDFC Securities, underscored that the recent US-China tariff truce, involving a temporary reduction in tariffs, suggests lower inflation and a decrease in uncertainty in global trade. "While the reduced tariffs are still significantly higher than pre-Trump levels, they represent a step back from the escalated full-blown trade war, potentially easing the economic impact and allowing businesses to resume some trade activity," said Vakil. Vakil highlighted that declining crude oil prices have eased inflationary pressures across supply chains, and due to the combined effects of enhanced productivity gains and falling logistics costs, will lead to moderating consumer prices. This will set a compelling foundation for central banks to implement interest rate reductions. The broader trend does not indicate a sharp spike in inflation in India and the US. Jain of Arihant Capital Markets underscored that with the US moving closer to resolving tariff-related issues through recent and upcoming trade agreements, inflationary pressures may remain contained. "For Indian markets, this could mean a more stable outlook, and as inflation concerns fade, investor sentiment should improve," said Jain. Vakil of HDFC Securities pointed out that the punishing era of elevated interest rates is behind us, and financial markets now stand at the threshold of a more accommodative monetary landscape. "Central banks are poised to orchestrate a gradual but deliberate pivot toward policy normalisation," said Vakil. Trivesh of Tradejini highlighted that India's inflation trends show that demand-side pressures are contained. With this, the RBI now has more flexibility, and while a rate cut isn't imminent, the bias clearly shifts towards supporting growth. For equity markets, Trivesh believes India's disinflation provides comfort and reduces macro uncertainty, offering greater clarity for investors. "India enhances interest rate visibility, which generally aids valuations. In the future, interest rate-sensitive sectors such as banking, real estate, and consumer durables may witness new investor interest," said Trivesh. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
Time of India
12-05-2025
- Business
- Time of India
Sensex soars 2,975 points, largest single-day gain
Sensex soars MUMBAI: A ceasefire between India and Pakistan lifted investor sentiment on Dalal Street on Monday, spurring the sensex and Nifty to their biggest single-day gain ever in terms of points. The day's rally also made investors richer by Rs 16.2 lakh crore, marking the biggest one-day gain in market capitalisation. After an initial surge in the two leading indices, news about a US-China trade deal further boosted market sentiment, brokers and analysts said. At the close of Monday's session, the sensex was at 82,430 points, up 2,975 points or 3.7%, while Nifty was up 917 points or 3.8% at 24,925 points. At the closing level, the sensex was at an over seven-month high level. The day's rally also lifted India's market capitalisation to Rs 432.6 lakh crore, translating to just above the $5-trillion market cap mark again. According to Devarsh Vakil of HDFC Securities, in addition to the thawing of geopolitical uncertainties, the US-China trade deal, the US-UK trade deal, the India-UK free trade agreement, and strong mutual fund subscription data for April are currently fuelling investors' sentiment in the domestic market. "Signs of easing of the US-China trade tensions also calmed investors' nerves," Vakil said. Stock futures on the US markets surged after the White House announced a trade deal with China, which also aided the domestic market rally, he said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Writing in English Doesn't Have to Feel Hard Grammarly Learn More Undo The rally was supported by foreign and domestic fund buying, but these were muted relative to the past few weeks. End-of-the-session data on the BSE showed that while foreign portfolio investors were net buyers at Rs 1,246 crore, domestic institutions were net buyers at Rs 1,448 crore. Outside of the leading indices, investors were hugely bullish on midcap and smallcap stocks. As a result, while the midcap index on the BSE closed 3.9% higher, the smallcap index was up 4.2%. In Monday's session, buying was across-the-board with IT, real estate, and metal indices leading the pack. However, select healthcare stocks closed deep in the red after Trump announced that the US would put a cap on all medicines exported into the country. For some Indian pharma majors, the US is a major export market, hence the selling in those stocks. For Tuesday, market players are expecting another relatively steady market on Dalal Street, mainly on the back of a strong rally in the US market on Monday night. At 10pm, the tech-heavy Nasdaq Composite was up more than 3.5%, while both the Dow Jones and S& indices were up more than 2% each. As investors shifted their focus to risky assets on the back of recent sentiment-boosting geopolitical and economic news, gold and silver prices suffered. In the domestic market, gold closed at Rs 93,700 per 10 grams, down over Rs 3,500 from Friday's level, while silver closed at Rs 94,300 per kg, down about Rs 1,500. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
