The market went down drastically some time ago but is currently showing some recovery by making an all-time high. Such are the market movements, and predicting its next move is nearly impossible! No one can precisely tell when it has bottomed out or is yet to bottom. But that is of no concern to long-term investors, actively searching for opportunities to bag good stocks at a discount.
To fulfill their purpose, we have created a blog on fundamentally good stocks, which fell drastically a couple of weeks ago. Industries which we have chosen this time are cables, chemicals, IT and Finance. While a stock market paid course might prove to be excellent medium to explain most complicated concepts of stocks
Polycab is the country’s leading cable and wire manufacturer and allied products such as uPVC conduits, lugs, and glands. Recently, Polycab introduced a wide range of electrical products like Fans, Switches, Switchgear, LED lights and Luminaries, Solar Inverters and Pumps. The price of copper has fallen nearly 25% from Peak of 850/Kg to 647/kg. This price fall will benefit the company as it uses nearly 56% of its raw material as copper. Therefore, the margins will significantly improve. Polycab is the market leader with a 24% organized Wires & Cables market share. The management has guided for an annual capex of Rs 350 – 400 crore, of which around two-thirds would be spent on the cables segment. This guidance will result in significant growth in sales in the coming years. Polycab’s new sub-brand in the wires and cables segment in the affordable category, “Etira,” launched in the last quarter, posted 2x growth sequentially. The company is eyeing a turnover of Rs 20,000 crore by FY26. Currently, revenue is at Rs 12000 Crore, which will grow 66%.
Indian Energy Exchange is a Power Exchange for spot trading in power and electricity and trading of Renewable Energy. The company’s main activity is providing an automated platform and infrastructure for trading electricity units. Similar to how stocks are traded at exchanges like NSE and BSE, trading for electrical units happens at IEX. This exchange platform enables price discovery and increases the transparency of the power market. The company has a nearly 95% share in power trading in India. The electricity volume of the company has been growing at 32% CAGR since 2008. IEX launched the first gas exchange in India, the “Indian Gas Exchange.” This segment will grow significantly in the coming years because:
1. Under Paris Climate Agreement, govt commits to reducing carbon emissions, which will promote the use of Natural Gas.
2. Government’s vision of increasing the share of Natural Gas in the total energy basket from 6% to 15% by 2030 will increase gas consumption in the economy from the current 160 MMSCMD to 500+ MMSCMD. This increment will be very beneficial to IEX.
Deepak Nitrite is a chemical manufacturing company headquartered in Gujarat, India. It is a leading producer of organic, inorganic, fine, and specialty chemicals. It holds the distinction of being the largest producer of acetone and phenol in India since 2019. Deepak Nitrite also enjoys a 70% market share in the country’s sodium nitrite, sodium nitrate, and NitroToluenes. Furthermore, the company ranks among the top three global players for products like xylidines and oximes.
Over the past five years, Deepak Nitrite has achieved an impressive return on equity and capital employed, showing a fivefold increase. The company is also debt-free, which enhances its financial stability. Despite a sharp rise in input prices during the year, Deepak Nitrite passed on most of the cost increases to customers, sustaining its EBITDA performance. This action demonstrates the company’s pricing power. Additionally, Deepak Nitrite has planned a capital expenditure of Rs 15,000 crore in the next two years, indicating its commitment to growth.
Regarding the recent fire accident, the company incurred no losses as the loss of assets and business are covered under insurance.
Bajaj Finance primarily engages in lending activities and possesses a diversified portfolio catering to retail customers, professionals, small and medium-scale businesses, and commercial customers across urban and rural India. Additionally, the company accepts public and corporate deposits and offers many financial services products.
Over the past ten years, Bajaj Finance has delivered an impressive compound annual growth rate (CAGR) return of 52%. Since its inception, the company has achieved a remarkable return of 122,000%. In the last 15 years, Bajaj Finance has demonstrated an average figure of assets under management (AUM) growth of around 37% and profit growth of 51% on a CAGR basis. The company’s growth trajectory has been consistently strong.
Recently, Bajaj Finance achieved a significant milestone by crossing an AUM of Rs 2,00,000 crore. During the quarter, new loans booked grew by 60% to 74.2 lahks, compared to 46.3 lahks in Q1FY22. The company also experienced its highest-ever quarterly increase in its customer base, adding 27.3 lakh customers in Q1FY23.
Infosys Limited is a leading consulting, technology, and next-generation digital services provider. The company enables clients to execute digital transformation strategies, including digitizing processes, migration to cloud-based technologies, workplace transformation, business model transformation, enhanced cybersecurity controls, and optimization of IT cost structures.
Due to recent concerns about a potential recession in America, IT stocks have experienced significant downturns. This speculation is due to fears that clients in America and Europe may reduce their technology spending. However, during the Federal Reserve meeting, Jerome Powell stated that a recession is unlikely. Additionally, the IT sector experienced a substantial rally, which required a cooldown. Like other IT companies, Infosys is also facing challenges related to high attrition, which it addresses by increasing salaries.
One significant advantage of Infosys is its substantial cash reserves, totaling $3.1 billion as of FY22. These funds can be utilized for expansion and acquisitions. In FY22, Infosys demonstrated industry-leading growth, achieving its fastest growth rate in 11 years.