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NIFTY analysis with experts, Emmbi Industries Q2 review, Indian markets fallback…. Market updates for 21/12/18

PurpleTrades - stock market courses > News > NIFTY analysis with experts, Emmbi Industries Q2 review, Indian markets fallback…. Market updates for 21/12/18

Report by- Sabyasachi Bhattacharya



Emmbi Industries Q2 review; company focusing on B2C-

Emmbi Industries, the manufacturer of woven polyethylene and polypropylene bags, has delivered a strong financial performance in the first half of this fiscal year. The earnings momentum is expected to continue as the company targets market penetration through new product launches, capacity expansion and augmentation of of the distribution network. Revenue growth of 17 percent was aided by revenue contribution from the new food and pharma grade facility. The company also reported a healthy 39 percent jump in exports on a sequential basis. Operating profits increased 23 percent as margins expanded 70 bps on the back on a higher share of exports and change in product mix. Water conservation and agro polymer verticals together contribute around 25 percent of the sales and have considerably higher margins at 17-18 percent than the other two verticals. In FY18, water conservation business reported a healthy sales rise in excess of 20 percent on the back of pond liners gaining strong traction. The company sees huge potential in the pond liners business that has a market size of around 250,000 ponds. In H1FY19 it completed more than 1,000 ponds compared to 1,300 ponds in FY18. Besides, Emmbi has also entered into banking tie-ups for funding of pond liners to farmers. To expand the agro polymer business, the company is working towards enhancing brand visibility among farmers by creating awareness about crop protection technology. The products are being marketed under the ’Krishirakshak’ brand name. The company has an aggressive expansion plan for this vertical and expects it to reach 8 percent revenue share (vs 3 percent currently) over the next 2 years. The company is changing its product mix and focusing on B2C (business to consumer) through an expansion of the retail distribution network. The share of B2C sales has been on a gradual rise and contributed 11 percent to the topline during H1FY19. The company is targeting 25 percent revenue share from B2C sales by FY20. The shift in sales mix towards retail would not only aid business margins but also shorten the cash conversion cycle. The company has completed a 6,000 MT capacity expansion, out of which 3,600 MT is for water conservation and 2,400 MT is for food and pharma packaging. The total installed capacity after expansion stands at 24,200 MT. In FY18, the capacity utilisation was around 75 percent. The same has moved closer 80 percent in the first half of this fiscal year. Emmbi uses various grades of polymers as its raw material, the prices of which have a direct correlation with that of crude oil. It is somewhat insulated from oil price movements as it follows inventory management based on the order pipeline. Besides, rupee-dollar fluctuations also have an impact on the financials as the company generates more than 50 percent of its revenue from exports. Emmbi’s business has a strong rural focus and so the demand from this segment is dependent on natural factors such as rainfall and droughts.

Source- MoneyControl, Purple Trades Research Department   




Indian markets fallback after bullish run for days-

Chart source- Upstox

Indian markets had a bearish outing today as the Indian Index Nifty had a small GAP_DOWN after which it started moving downwards slowly. The Index did find a support at the 10,820 level but couldn’t hold it for long and started moving downwards. As you can see on the chart above Nifty had total bearish run today which ended up good for those who shorted Nifty Futures. Benchmark indices fell sharply on Friday, tracking the sharp correction in global peers after the threat of a US government shutdown and of further hikes in US borrowing costs. The 30-share BSE Sensex slipped 689.60 points or 1.89 percent to 35,742.07 and the 50-share NSE Nifty plunged 197.70 points or 1.81 percent to 10,754. IOC, UPL, Adani Ports, Maruti Suzuki and Indiabulls Housing were top losers among Nifty50 stocks, which fell 3.5-4.5 percent. HPCL, BPCL, Coal India and NTPC were only gainers, up 1-2 percent. About two shares declined for every share rising on the BSE. Shriram Transport, Cummins, NBCC, Ramco Cements, CES, L&T Finance Holdings, Manappuram Finance, Bharat Forge, MRPL, Karnataka Bank, Federal Bank, IndusInd Bank, Axis Bank and Yes Bank were down 1-5 percent.





Let’s take a look at the heat map-


Let’s take a look at the performance of major Indices-

Global markets had a mixed day today. NASDAQ along with Asian Indices such as Straits Times and NIKKEI were all seen in the RED. European Indices CAC, FTSE, DAX were seen in the GREEN.

Source- MoneyControl, Purple Trades Research Department   



Key Points for Traders to watch out for while trading Nifty tomorrow-

  • 10,730 is a short term support for Nifty.
  • If Nifty breaks 10,730 then it has the potential to go down.
  • 10,810 is a short term resistance for Nifty.
  • If Nifty breaks 10,810 then it has the potential to go up.
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