DIWALI RECOMMENDATIONS 2023

DIWALI RECOMMENDATION [EasyDNNnews:PaidContentStart]

ADANI POWER LTD.
CMP : ₹ 401.10 

Adani Power is currently trading at the pivot point of an 8-week Stage-2 base. The stock has experienced a remarkable rally, surging 41.5 per cent from the low on October 26th in just three weeks. During this rally, trading volume has consistently been higher than the average. The stock has retraced over 90 per cent of the previous downtrend. The Relative Price Strength stands at 83, reaching a new high and indicating outperformance compared to other listed stocks. Adani Power is trading above all of its long-term moving averages, with a 13.47 per cent lead over the 50-day moving average and a substantial 55.22 per cent advantage over the 200-day moving average. Both long and short-term averages are in an uptrend. The weekly MACD reflects strong bullish momentum, and the RSI is firmly situated in the strong bullish zone. The Elder's impulse system has generated strong bullish bars. Adani Power is trading above the Ichimoku cloud, as well as the MAMA and FAMA bands. The stock has achieved a bullish breakout and is currently trading near an all-time high. Consider buying this stock in the range of Rs 395-409, with a medium to long-term target set at Rs 478-515. 

Fundamental – Adani Power, part of the Adani Group, is India's largest private thermal power producer. It sells power from its projects through a mix of long-term agreements, short-term deals, and merchant transactions. In the consolidated financial results for Q2FY24, the company reported sales of Rs 12,990.58 crore, reflecting a robust 84.4 per cent YoY increase. Operating profit showed healthy growth, rising by 202.8 per cent to Rs 7,116.49 crore as compared to Q2FY23. Similarly, the net profit saw an 848.1 per cent increase, reaching Rs 6,594.17 crore. The company's 81 per cent capacity is secured under LT/MT PPAs, many of which include fuel cost pass-through or tariff escalation, ensuring robust revenue visibility and cash flow stability. Proximity to pithead provides a logistics cost advantage, leading to increased off-take and improved margins. Operational excellence is maintained in fuel management, logistics, and plant Operation & Maintenance. With ample available capacity and increasing utilization to meet rising demand, the company has a proven track record in project execution and swift turnaround of acquisitions. Hence, we recommend BUY.
 

Hindustan Aeronautics Ltd
CMP : ₹ 2029.40 

The stock is currently hovering near its all-time high, having broken out of a double-bottom (O'Neil) pattern with aboveaverage volume. It aligns with CANSLIM investing criteria, boasting a Relative Price Strength (RS) rating at a new high, indicative of its outperformance. With an EPS Rank of 87, it achieves a GOOD score, reflecting consistency in earnings. The recent surge in buyer demand, evident from increased interest in the stock, adds to its positive outlook. Institutional holding has surged by an impressive 98.28 per cent in the last reported quarter, further reinforcing its strength. With a Master Score of B, HAL is positioned close to being the best. The stock comfortably trades above all long-term moving averages, with a 4.71 per cent lead over the 50-day moving average and a substantial 21.96 per cent advantage over the 200-day moving average. The RSI has entered the strong bullish zone, and the MACD signals a decline in bearish momentum. HAL is trading above the Ichimoku cloud and Anchored VWAP resistance. The Elder's impulse system has formed a robust bullish bar, and the Stochastic RSI has provided a fresh buy signal. Notably, the stock has recently moved above the MAMA, FAMA band. In short, HAL is poised to achieve a new lifetime high. Consider buying this stock above Rs 2,020, with medium to long-term targets set at Rs 2,420 and Rs 2,650. 

Fundamental – Hindustan Aeronautics is a key player in aircraft and helicopter manufacturing, as well as the repair and maintenance of these vehicles. The President of India holds a significant ownership stake of 71.64 per cent. In Q1FY24, the company reported notable growth in net sales, reaching Rs 3,915.35 crore, an 8.05 per cent increase from Rs 3,623 crore in Q1FY23. Additionally, the net profit for Q1FY24 amounted to Rs 810.43 crore, reflecting a substantial year-on-year growth of 33.43 per cent. These financial results underscore a positive trend with improved sales and profitability in the first quarter of FY24 compared to the same period in the previous year. Recent developments, including HAL's Memorandum of Understanding (MoU) with Safran for commercial engine production and the approval for the purchase of 12 Su-30MKI aircraft and avionics upgrades, highlight its active engagement in aircraft production and upgrades, emphasizing its crucial role in the defence and aviation sectors.
 

NCC Limited
CMP : ₹ 155.00 

Technical analysis indicates the formation of a bullish flag pattern on a weekly chart, which also resembles a 10-week double-bottom pattern (O'Neil). The stock has moved above the 10-week average and holds a Relative Price Strength (RS) rating of 78, indicating outperformance compared to 78 per cent of the listed stocks. It is comfortably placed above long-term moving averages and is currently 22.34 per cent above the 200-day moving average and 5.09 per cent above the 100-day moving average. The daily MACD has given a fresh buy signal, and the Weekly RSI is on the verge of entering the strong bullish zone. It also hovers just above the Ehlers MAMA, FAMA band. The Stochastic RSI is poised to provide a bullish signal. Institutional holdings increased by 1.31 per cent in the last quarter, a positive sign. Stan Weinstein's Relative Strength is approaching the zero line, which would be a bullish sign upon an uptick. The stock trades comfortably above the Ichimoku cloud and the Anchored VWAP resistance. Daryl Guppy's Multiple Moving Averages and all other moving averages are in an uptrend. In summary, the stock is forming a counter-trend consolidation pattern and is poised for a breakout. Consider buying this stock in the Rs 155-162 range, with medium to long-term targets set at Rs 192 and Rs 213. 

Fundamental – NCC has established a prominent presence in various construction and infrastructure development sectors, undertaking projects across the nation. In terms of revenue distribution across its diversified business segments, construction leads as the largest contributor, accounting for approximately 48 per cent of the total revenue. Water & Waste Water Treatment follows closely at around 21 per cent, while Mining represents roughly 10 per cent. Electrical contributes about 8 per cent, Roads & Bridge approximately 6 per cent, and both NCC Urban and Irrigation sectors each makeup about 3 per cent. The latest consolidated quarterly financials indicate a robust performance, with a 31.88 per cent increase in net sales and operating income for Q1FY24, reaching Rs 4,380.39 crore compared to Rs 3,321.35 crore in Q1FY23. The net profit for Q1FY24 also demonstrated substantial growth, standing at Rs 182.24 crore, a 35.18 per cent increase compared to Q1FY23.Looking ahead, the company's successful acquisition of substantial water and infrastructure orders worth Rs 4,200 crore reflects its strong performance and ability to secure significant projects in the water and infrastructure sectors, garnering positive investor sentiment.
 

PCBL Ltd
CMP : ₹ 214.00 

PCBL is currently trading at a multi-year high and has broken out of a five-week tight base. It successfully surpassed the 2018 high and formed a new base. In just nine weeks, the stock has surged 20 per cent above the previous pivot. The Relative Price Strength (RS) line has reached a new high at 81, indicating outperformance relative to 81 per cent of listed stocks. PCBL is comfortably positioned above all long-term moving averages, with a 16.66 per cent lead over the 50-day moving average and a significant 45.93 per cent advantage over the 200-day moving average. The weekly MACD exhibits strong bullish momentum, and the RSI has maintained a position in the strong bullish zone for the past six months. Both the KST and TSI indicators are in a bullish setup. As the stock reached a new all-time high, it cleared all resistance levels, including Anchored VWAP resistance. PCBL is trading above the GMMA and the MAMA and FAMA bands, with all GMMA moving averages trending upwards. In summary, the stock has broken out of a tight base and is trading at a new high. Consider buying this stock in the Rs 202-218 range, with a medium to long-term target set at Rs 270-290.

Fundamental - Established in 1960, PCBL Ltd specializes in the production and sale of carbon black, with additional involvement in power sales. The revenue breakdown indicates that Carbon Black constitutes the majority at 95.76 per cent, followed by Power at 4.24 per cent, while other segments such as Custom Synthesis, Inorganic Chemicals, Organic Chemicals, and Manufacturing of Inorganic Metal-based Chemicals do not contribute significantly to the revenue. Furthermore, location-wise revenue distribution reveals that 70.29 per cent of revenue is generated within India, with the remaining 29.71 per cent coming from the rest of the world. The latest consolidated quarterly financials show an 8.6 per cent decline in net sales and operating income for Q2FY24, reaching Rs 1,486.71 crore compared to Rs 1,627.85 crore in Q2FY23. However, the net profit for Q2FY24 demonstrated a 5.46 per cent increase, standing at Rs 122.83 crore compared to Rs 116.47 crore in Q2FY23. PCBL's recent achievements, including securing patents for two grades of carbon black, and progress in its brownfield expansion plans, signify positive momentum in its core business and expansion endeavours.
 

TATA ELXSI LTD.
CMP : ₹ 8060.15 

TATAELXSI's technical analysis reveals that the stock has broken out of a 55-week ascending triangle and a 21-week cup pattern, accompanied by higher trading volumes in recent times. It has decisively moved above the prior pivot point and entered Stage 2. The Relative Price Strength (RS) rating is at a new high, indicating its outperformance relative to other listed stocks. The stock comfortably trades above all long-term moving averages and has retraced 50 per cent of its prior downtrend. The 40 and 10-week averages have acted as strong support levels. The 50-week moving average has transitioned into an uptrend, and the RSI is firmly in the bullish zone. 

The weekly MACD is above the zero line, and the histogram suggests strong bullish momentum. Stan Weinstein's Relative Strength line also demonstrates outperformance and trend strength. The Elder's impulse system shows a strong bullish bar. The stock is currently trading near Ichimoku cloud resistance, above Elher's MAMA, FAMA band, and Guppy's MMAs. In summary, the stock has experienced a Stage-1 base breakout. Consider buying this stock in the Rs 8,000-8,140 range, with a medium to long-term target set at Rs 9,220-9,450.

Fundamental – Tata Elxsi is a global leader in design and technology services, catering to industries like Automotive, Media, Communications, and Healthcare. They provide integrated solutions from research to deployment, with a worldwide network of design studios and development centres. In the consolidated financial results for Q2FY24, the company reported sales of Rs 881.70 crore, reflecting a robust 15.5 per cent YoY increase. The operating profit also showed healthy growth, rising by 20.2 per cent to Rs 294.68 crore as compared to Q2FY23. Similarly, the net profit saw a 14.8 per cent increase, reaching Rs 200.02 crore. The management is confident in its strong pipeline with its key customers for the third quarter. Positive indicators are observed in discussions with customers in the Media and Communication sector. The company continues to invest in disruptive technologies like AR, VR, and AI, with proof-of-concepts. Additionally, margins are anticipated to follow a similar path, with a focus on cost optimization and ongoing revenue growth. Hence, we recommend BUY.
 

Varun Beverages Ltd
CMP : ₹ 1002.00 

Varun Beverages Limited is the largest franchisee of PepsiCo in the world (outside the USA). From a technical perspective, the stock has recently broken out of a 10-week tight consolidation base and is currently trading at a new all-time high. The breakout was accompanied by above-average trading volumes, indicating strong investor interest. The stock's price relative strength line has also reached a new high, demonstrating its outperformance compared to the broader market. Over the last six years, the stock has maintained an uptrend, consistently forming higher highs and higher lows. The Relative Strength Index (RSI) has never dipped into the bearish zone and remains well above all long-term moving averages. Currently, the stock is 9.17 per cent above the 50-day moving average and 27.65 per cent above the 200- day moving average. Daryl Guppy's Multiple Moving Averages of short and long-term averages are in an uptrend, aligned in ascending order, providing a strong bullish signal. The Weekly MACD has generated a fresh bullish signal. The stock also aligns with most of the CANSLIM investing criteria. With an EPS Rank of 94, indicating a consistent earnings track record, and a Relative Price Strength (RS) Rating of 75, reflecting strong recent price performance, this stock appears promising. Institutional holdings have increased by 3.47 per cent in the last reported quarter, which is a positive sign. With solid earnings and a strong technical breakout, it's advisable to stay with the momentum. Consider buying this stock in the Rs 970-1,024 range, with a target set at Rs 1,250-1,340. 

Fundamental - Varun Beverages Ltd, a key PepsiCo franchisee since the 1990s, is a major player in the beverage industry, producing and distributing a wide range of PepsiCo-branded products, including Pepsi, Seven-up, Mirinda Orange, Mountain Dew, Tropicana Juices, and others. In the consolidated financial results for Q2FY24, the company reported sales of Rs 3,937.76 crore, reflecting a robust 21.2 per cent YoY increase. The operating profit also showed healthy growth, rising by 26.9 per cent to Rs 900.65 crore as compared to Q2FY23. Similarly, the net profit saw a 30.1 per cent increase, reaching Rs 514.48 crore. The company has made significant investments in new manufacturing facilities in India and the DRC. These efforts aim to meet rising demand and diversify the product portfolio, including juices and dairy beverages. With India's dynamic demographic and evolving consumption patterns, the company sees significant growth potential in the Indian beverage market and is also focused on global expansion. Hence, we recommend BUY.

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