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Nifty analysis with experts, Q3 report of GM breweries, Indian markets rebound…. Market updates for 04/01/19

PurpleTrades - stock market courses > News > Nifty analysis with experts, Q3 report of GM breweries, Indian markets rebound…. Market updates for 04/01/19

Report by- Sabyasachi Bhattacharya

 

GM breweries Q3 result; rise in input costs hurt margin-

Maharashtra-based country liquor manufacturer GM Breweries reported a tepid performance in the third quarter of the current fiscal year. While the topline came in higher by nearly 6 percent, rise in input cost pressures weighed in on operating profits of the company. Further, a sharp jump in employee expenses (up 84 percent YoY) and higher depreciation (up 18 percent YoY) resulted in a subdued bottomline. The topline benefitted from a robust demand during the festive season.  On the cost front, the prices of raw materials (rectified spirit) remained largely stable on a sequential basis but the rise in packaging costs dented the operating margins in the quarter gone by. Prices of PET bottles were higher in Q2 and Q3 due to increase in crude oil prices in the international market as well as adverse currency movements. Brent crude oil appears to have peaked at around 85 dollars per barrel in September and October and have seen a deep correction since. While the Q3 margins hit yearly lows of 20 percent, we anticipate a recovery in margins from Q4 onwards as the PET bottle manufacturers have undertaken successive price cuts during the months of October, November and December.  Besides, the company is gradually shifting to glass bottles to mitigate the packaging-related cost pressures. With an installed capacity of 13.8 crore litres, GM Breweries is the single largest manufacturer of country liquor in Maharashtra. Driven by higher volumes, the capacity utilization moved closer to 50 percent in the last fiscal year.  Going forward, the company plans to leverage its brand presence in Mumbai and Thane to penetrate deeper into other districts of Maharashtra. At the current market price of Rs 640 per share, the stock appears fairly valued at trailing 12-months price-to-earnings multiple of around 14x. However, the stock should be kept on radar for accumulation on dips as the company has strong business fundamentals (debt-free balance sheet and return on capital of more than 25 percent). The company has sufficient capacity headroom to grow the volumes by more than 20-25 percent for the next 3-4 years. However, business execution as well as competitive landscape and regulatory risks needs to be monitored closely.

 Source-Purple Trades Research Department 

 

 

 

Indian markets witness a major Bearish day today-

 

Chart source- Upstox

Indian markets had a mixed day today as Nifty showed a lot of volatility. As you can see BULLS and the BEARS dominated at regular intervals but last 2 hours of buying pressure sent the Index much higher and made sure that it was a bullish day in the end for the Indian markets. So to sum it up the buying counters were buzzing in the last couple of hours for the market, helping them not only recover from low points, but also end the week on a strong note. Except IT names, investors bought across sectors, with maximum gains seen among metals, energy and banks, among others. The Nifty Midcap index ended higher too. At the close of market hours, the Sensex was up 181.39 points or 0.51% at 35695.10, and the Nifty up 55.10 points or 0.52% at 10727.40. The market breadth was narrow as 1322 shares have advanced, against a decline of 1255 shares, and 159 shares are unchanged. Yes Bank, Vedanta, and Bharti Infratel gained the most, while Infosys, TCS, HCL Tech and Tech Mahindra were the top losers.

 

 

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

Global markets had a bullish day today. Asian Indices along with European Indices CAC, FTSE and DAX were all seen in the GREEN. NASDAQ was also seen in GREEN. NIKKEI was seen in the RED.

Source- MoneyControl, Purple Trades Research Department 

 

 

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

  • 10,700 is a short term support for Nifty.
  • If Nifty breaks 10,700 then it has the potential to go down.
  • 10,750 is a short term resistance for Nifty.
  • If Nifty breaks 10,750 then it has the potential to go up.
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