Hi! You have reached Goela's newsletter 🙂

Share:

Economic Attack

This week India was buzzing 🔥topic! Be the investors’ patriotic turn saving Adani 🫡, or the biggest aeroplane order placed in History by Air India 🧾, our beloved country has remained in the limelight 🔦.


Chalo, lets dive deep 🏊🏽‍♂️ into these news and unravel 🎊 some new potential investments 🤑!
In this edition, you will learn how one can do fundamental analysis of a stock and lookout on technicals!

To let us know what you want to be covered in the next week, connect with us on Twitter Spaces!
Kyuki baatein to hum ChatGPT se bhi kar sakte hai, par aapki baat hi kuch aur hai…

What sensational did you missed this week?

  • Lithium reserves have been discovered in J&K – the first-time lithium reserves have ever been found in India.

  • India’s retail inflation (CPI) rose to 6.52% in Jan vs 5.72% in Dec, while the wholesale inflation (WPI) stood at 4.73% in Jan vs 4.95% in Dec.

  • Air India has placed orders for 840 planes from Airbus and Boeing, including options to purchase additional 370 aircrafts. It is the largest order in the entire aviation history.

What can you learn from this?

  1. With the wide-scope application of omnipresent Lithium from being used in the chipsets of electronic devices, EVs, rechargeable batteries, antidepressants in the Pharma industry, cooling in space vehicles and military equipment. Not to forget, the pivotal role in the growth of Solar power generation.
    Since the govt. has a major focus on EVs and Renewable Energy, this could be groundbreaking! With indigenous supply, this could be a boon 📈 for companies associated with Lithium related products in the long term.

  2. WPI is used to measure the changes occurring in the price of goods (not services) available for trading in the wholesale market. CPI measures the amount that a consumer has to pay to purchase goods and services over a specific period. CPI is used by RBI to calculate or measure Inflation. Rising CPI indicates rising inflation and thus more seriousness towards Investing 💰!

Upcoming IPOs:

  • Agarwal Float Glass India IPO was subscribed 5.16 times in total. The public issue was subscribed 7.20 times in the retail category, and 3.13 times in the NII category by Feb 15, 2023.

  • Viaz Tyres Limited IPO has opened on 16th Feb 2023.

  • Sealmatic India Limited IPO and Macfos Limited IPO opens today, i.e. 17th Feb 2023.

  • Patron Exim Limited IPO opens on 21st Feb 2023.

Video in Focus!

Is attack on Adani, an attack on India? Real intentions of Hindenburg (as per us) are out… Check here!

Market Outlook this coming week!

Nifty50 : This Week

Foucsed story of the Week - DMart is falling 🔻! Should you invest?

Avenue Supermarts is tumbling in the share market- 40% down 📉 from the all time high is very concerning, so let us excavate the mystery behind what went wrong in this fundamentally sound company?

 

For those who don’t know, this gem founded by Mr. R. K. Damani, engages in organised retail business and runs Supermarts throughout 10 states and 1 UT in India, under the name D-Mart.

Its presence is primarily in western and southern Indian States.

57% of its revenue comes from Food, 20% from retailing and remaining 23% comes from general merchandise and apparel segments.

The company follows cluster-based expansion resulting in a low-cost structure.

Coming to the point, let’s find what went wrong?

The company reported very poor number in the recent quarter. The revenue from sales per retail business area is in a falling trend which depicts the falling efficiency of the business.

 

The fixed asset turnover ratio has fallen from 4.3 times to 1.9 times which is a fall of 56% and the inventory turnover ratio also has fallen from 14.6 times to 6.7 times, a fall of 55%.

The return on capital employed of the company has fallen drastically from 25.9% in FY19 to 11% in H1FY23 which is concerning.

The stock is trading at a PE of 98 times, where as the Departmental Stores Industrial PE under the Retailing sector is 105.12. Surprised? This industry has comparatively high PE ratio only.


For any stock to trade at such a high valuations, it should be able to justify itself. With falling sales and a bad quarter the stock has slumped around 40% from its all time high. So until there is an uptick in all this parameters from the view of Fundamentals its better to wait and watch.

What our premium Fundamental Analysis tool – The GSS Sheet has to say?
Good: Interest Coverage, Promoter Holding, Moats and Risks, Interest and Other income, Compounded Profit Growth 5 Yr and TTM, Stock CAGR 5 Yr
Decent: ROCE 5 Yr, EPS
Bad: Free Cash Flow 5 Yr, Stock CAGR 1 Yr, Dividends
Verdict: A good buy with a strategy but proceeding with caution as Free Cash Flow is negative

The chart below shows the PE (in green) vs the price(in pink) of the stock. One could deduce the hysteria, when the PE of Avenue Supermarts crossed 300 on the stock creating a new all time high.

Now, let us ponder on what technical analysis have to say 🤔 ?

With recent buy signals in MACD and RSI, the stock is trying to move upwards but is facing resistance at ₹ 3540 level.  If the resistance gets broken, it might rise up swiftly.


So should you buy or not?  

Yes, one can enter this stock today with a strict SL of ₹ 3434, as the fundamentals of the company haven’t changed much right now.

Disclaimer: This is not recommendation to buy/sell. It is just for the purpose of information.

You ask, we deliver...

We have started this section specially for you, just to cater to your requirements!

This week: Devansh                                                             

Topic: Fundamental Analysis of GR Infraprojects

  • It is an integrated road Engineering, Procurement and Construction (EPC) Company.

  • Experience lies in design and construction of various road/ highway projects across 16 States and One Union Territory in India. The subsidiaries and joint operations of Holding Company also construct, maintain, operate, and transfer the infrastructure facilities like roads on Build-Operate-Transfer (BOT) basis.

  • Into manufacturing/ fabrication of bitumen, thermoplastic road-marking paint, road signage, metal crash barriers and electric poles. Recently diversified into projects in the railways/metro and power transmission sector. (Aligns with the Budget FY23).

  • Has developed in-house resources with key competencies to deliver a project from conceptualization to completion. (Aligns with Make in India Campaign).

Financial Sheet Analysis:

Good: ROCE 5Yr, Undervalued as per Sector PE, Promoter Holding, Compounded Sales Growth 5Yr,
Decent: Interest coverage, EPS, Moats
Bad: Free cashflow 5Yr, Compounded Profit Growth 5Yr, Dividends, Heavy Government Risks

Verdict: Decent company with decent financials

Technical Outlook: Running below 200 DMA, thus if you buy, procced with a strategy

Question of the Week #4

Replies with correct answers (within the first 5 mins of receiving this newsletter), will get a shoutout from us...

PS: Don't forget to share your Instagram handle too in the reply!

What are pledged shares?

  1. Promoter shares which are kept as collateral to avail a loan, where interests and capital gains on such shares continue.

  2. Promoter shares which are kept as collateral to avail a loan, where interests and capital gains on such shares discontinue.

  3. Public shares which are kept as collateral to avail a loan, where interests and capital gains on such shares continue.

  4. Public shares which are kept as collateral to avail a loan, where interests and capital gains on such shares discontinue.

Answer of Week 3

World’s Largest Derivative Exchange is NSE

Word of the week

Economic Attack: A modern day warfare, aiming at crippling the economy of the enemy through sanctions, trade restrictions and bans, blocking off investments, allegations affecting capital markets, etc. without any direct assault. The outcome is- increasing poverty, food insecurity, nation-wide crisis and unrest, ultimately leading to country collapse.