Indian benchmark indices ended higher for the fifth consecutive week to close at record high levels on December 4. During the week, Nifty gained by 2.4 percent, while broader markets outperformed the benchmarks. Nifty Midcap gained 3.17 percent and SmallCap gained.
Favourable global cues, upbeat GDP data from US and India, strong FII buying as well as softening bond yield and dollar index helped the market to close higher.
Stable US bond yield and dollar index indicating peaking-out US interest kept investors’ sentiments upbeat. Back home seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) in November improved to 56 from October’s eight-month low of 55.5, indicating a stronger improvement in operating conditions.
Meanwhile, India’s gross domestic product (GDP) grew 7.6 percent YoY during the July-September 2023 quarter as compared with the 6.2 percent growth recorded a year ago, ahead of the consensus estimate of 6.8 percent and RBI’s estimate of 6.5 percent. FIIs too turned net buyers in the cash market from the last five consecutive sessions while bumper listing of IPOs too supported the equity market.
RBIs Monetary Policy Committee is also scheduled from December 6, 2023 to December 8, 2023 and hence the commentary related to future interest rate environment amid strong GDP reading will be closely watched.
Here are the two stocks to buy which can fetch up to 14% upside:
Tata Power Company | CMP: Rs 275 | Target: Rs 310 | Upside: 12.7%
Tata Power Company is foraying into 2,800 MW of two brownfield PSP projects including 1,000 MW Bhivpuri PSP and 1,800 MW Shirawta PSP which will be completed by CY27 and CY28 with a capex of Rs 4,700 crore and Rs 7,850 crore respectively. On being operational Bhivpuri and Shirawta will generate 6,000 MWhr and 10,800 MWhr daily.
The company aspires to offer 24×7 renewable energy power by FY28 with a sizeable portfolio of renewable and storage.
The firm is targeting to grow TPSSL revenue from Rs 10,600 crore in FY24 (trailing 12 months) to Rs 17,000 crore/Rs 20,000 crore by FY27/FY30 with a rising share from captive projects. The company remains committed to an only renewable strategy with no plans to venture into new thermal power generation opportunities.
The company estimates a capex of Rs 60,000 crore by FY27. Out of which 45 percent will be spent on renewables during FY24-27.
Hence, Tata Power is a good stock to buy for some handsome returns.
JK Cement is presently increasing its grey cement capacity by 3.5 million tonne per annum (mtpa) in the Central region. This expansion is scheduled to be commissioned between Q3FY24 and Q2FY25, resulting in a total capacity of 24.2 mtpa.
With the coming up of new capacities, the company has the opportunity to capture further market share in the demand accretive central India market with less volatile pricing trajectory.
During Q2 FY24, the company reported better than expected EBITDA margins, driven by higher volume, better realization, and lower fuel costs. Power and fuel costs were down 10 percent/7 percent on a YoY/QoQ basis and further savings are expected in Q3FY24. Cement prices are also trending higher.
Furthermore, the operating costs of new units are expected to normalize as utilization further improves in FY24, which will drive EBITDA margins moving ahead. Post the completion of the ongoing capacity expansion, Central India would constitute around 40 percent of total Grey Cement capacity.
While the per capita cement consumption of the region is the lowest among other regions it is expected to accelerate with the heightened government focus on developing the infrastructure of the region.
With its recent expansion and upcoming capacity, the company is well-placed to take benefit of rising cement demand in the region.
Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.
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