SBI Share Price Outlook After Banks Q1 Preview: Deposits Rise, Margins Pressure

Due to concerns over Covid-19 in China slowing down the expansion of the world economy, precious metal prices stayed stable at their current levels. Since a few days ago, the US benchmark Treasury yield and the dollar, which measure a basket of six major currencies, have been in a corrective phase. The yields on US 10-year bonds have fallen below 3.7%. Members of the US Federal Reserve hinted at a less aggressive monetary policy for a future meeting in order to encourage the rising economies that drive up the price of gold. The interest rate in the USA is currently 4%, compared to a year ago when it was almost nil. While the inflation rate has decreased to 7.7% from the 40-year high of 9.1%, a negligible decrease, the interest rate is running at higher levels as a result of the current economic condition, heightening the concern of a recession.

On the other hand, China, the world's biggest producer and consumer of industrial metals is having difficulties as a result of the steps taken to reduce Covid-19 instances. Base metals and crude oil prices are being pressured by China's dampened demand, while the Russia-Ukraine war has caused a supply shortage of oil and gas in Europe. The leading central banks' stimulus programs during the pandemic and the Russia-Ukraine war caused inflation to increase, reaching levels not seen in 42 years. The US dollar index has already lost 8% of its 22-year peak. However, emerging market currencies like those of India are strengthening. While the prices of crude oil and industrial metals may continue to decline owing to the current circumstances, the outlook for precious metals is favorable for the upcoming six months.

Technical Analysis

Technically, gold prices are lingering over 52000 levels; if they maintain these levels, a strong uptrend toward 58000 levels may be witnessed in the upcoming months. Important support for gold is at 50000, while resistance is at 56000. Support for silver is at 58000, while resistance is at 66000.

Infrastructure Stocks to Focus on the Ahead of the Budget

The Modi government will announce its last full budget before the 2024 general elections. The path toward boosting the manufacturing sector outlined in the last budget is likely to continue in the upcoming budget. Therefore, the central government’s priority remains to foster the nascent investment cycle through a continued increase in public capital outlays and infrastructural spending. Therefore, capital goods and infrastructure will be in focus.

KNR Construction and PNC Infrastructure remain institutional favorites for a long period. And they have delivered a good return even in a tough time for the industry. PNC Infratech and KNR Construction remain two of our preferred picks in the EPC space given their robust order books, healthy return ratios, and lean balance sheets. The road sector is gaining significant traction on account of the central government's proactive push for infrastructure development, and incumbents like KNR Construction and PNC Infra are likely to be the key beneficiaries of the structural growth opportunities available in the sector with a robust order book and better execution process.

Road, highway, bridge, and flyover building on an EPC, BOT, and Hybrid Annuity Model (HAM) basis are among the services provided by the KNR. Additionally, it works on irrigation projects, agriculture projects, and managing urban water infrastructure.  Some of the customers of the Co include the National Highways Authority of India (NHAI), Ministry of Road Transport & Highways (MoRTH), Government of Telangana, Karnataka State Highway Improvement Project (KSHIP), Madhya Pradesh Road Development Corporation Ltd (MPRDCL), etc.  As per our research analysis as of September 30, KNR had an order book of Rs 8,042 crore, implying a revenue visibility of more than 2–3 years. In FY23 and FY24, management expects EBITDA margins to be in the 18–19% range. Over the years, KNR Construction and PNC Infra have emerged as two of the leading EPC (engineering, procurement, and construction) players in the road sector.

PNC Infratech Limited provides infrastructure implementation solutions that include engineering, procurement, and construction ("EPC") services on a fixed-sum turnkey basis as well as on an item rate basis. It also executes and implements projects on a "Design-Build- Finance-Operate-Transfer" ("DBFOT"), Operate-Maintain-Transfer ("OMT") , Hybrid Annuity Mode (HAM), and other PPP formats. In the case of BOT and HAM, the company bid as a sponsor either alone or in a joint venture with other ventures and once the project is awarded then it is executed by incorporating a special-purpose vehicle. PNC Infratech has established itself as a capable executor in the segments of airport runways, water infrastructure, and roadways. Additionally, PNC is able to complete projects on schedule thanks to its strong execution ability, ownership of contemporary equipment, and internal teams. PNC’s order book at the end of Q2 FY23 was at Rs 19,261 crore. The company provides services to clients like NHAI, HSRDC, AAI, MSRDC, Rites, UPPCL, etc.

If we talk about valuations, then there is comfort in PNC Infratech, which is trading at a PE of 10, which is below its five-year average, while KNR is trading at a PE of 19, which is above its five-year average. Know more about the trading opportunity available to you. We are likely to see a rally in this sector as the infrastructure sector did not participate in the ongoing rally in domestic economy-facing stocks despite the sector's positive outlook.

Stock trading is the process of buying and selling shares of companies to make a profit. It might sound complicated at first, but once you understand the basics, it becomes much easier to grasp. In this blog, we'll walk you through the essentials of stock trading, the different types of stocks, how the stock market works, and the benefits of trading stocks.

To understand stock trading thoroughly, first, you have to understand the basics of stocks and the stock market.

Stock

A stock, also referred to as equity, represents ownership in a corporation. Owning stock entitles the stockholder to a portion of the corporation's assets and income, proportional to the number of shares they possess. These units of stock are called "shares."

In other words, in order to raise money to run their businesses, corporations issue (sell) stock. Depending on the type of shares held, the shareholder who purchases stock also purchases a portion of the corporation's assets and profits. In essence, a shareholder now owns stock in the corporation issuing the stock.

Types of Stock

There are two main types of stocks:

Common Stock:

• This is the most common type of stock.
• Owning common stock gives you voting rights at the company's shareholder meetings.
• You can benefit from dividends (a share of the company’s profits) and the increase in stock price.

Example: You buy 100 shares of ABC Corporation's common stock at ₹100 per share. As a common stockholder, you get to vote on important company matters at the annual shareholder meeting. ABC Corporation announces a dividend of ₹10 per share, so you receive ₹1,000 in dividends. Additionally, if the stock price rises from ₹100 to ₹140 per share, your investment value increases from ₹10,000 to ₹14,000.

Preferred Stock:

Common stock is issued by all publicly traded firms, but only a few also issue preferred stock. The preferred stock offers its owners guaranteed dividends as well as the opportunity for price growth similar to that seen with common stock. The preferred stock dividend may be higher if a company's common stock pays dividends. 

• Preferred stockholders usually don't have voting rights.
• They receive dividends before common stockholders.
• In the event of bankruptcy, preferred stockholders are paid before common stockholders.

Example: You purchase 50 shares of XYZ Corporation's preferred stock at ₹200 per share. Unlike common stockholders, you don’t have voting rights. However, XYZ Corporation promises a fixed dividend of ₹20 per share, so you receive ₹1,000 in dividends before any dividends are paid to common stockholders. If XYZ Corporation faces financial trouble and goes bankrupt, you are more likely to get paid from the company's remaining assets than common stockholders.

What is Stock Market

The stock market is a collection of markets where stocks (shares of ownership in businesses) are bought and sold. In addition to generating and sustaining wealth for individual investors, the stock market assists businesses in raising capital to fund operations.

The two main stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Understanding Stock Trading

Stock trading is a type of investment that puts short-term profits ahead of long-term gains. Stock trading entails buying and selling company shares in an effort to make a profit from daily price fluctuations. The short-term price changes of these equities are actively monitored by traders, who subsequently attempt to buy low and sell high.

Stock traders differ from traditional stock market investors in that they take a short-term perspective rather than a long-term one.

While buying and selling individual stocks can result in quick profits for those who time the market right, there is also a risk of suffering significant losses. Unlike the market as a whole, a single company's fortunes can rise faster but could tumble just as quickly.

If you do have the funds and are interested in learning how to trade, Swastika Investmart has made it easy for you to quickly trade stocks from your computer or Smartphone.

Benefits of Stock Trading

Many investors over the years, whether beginner or experienced, have made considerable profits by strategizing and investing in equities. The fact that some investors' success formulas didn't work at all, however, causes everyone to pause before investing in stocks or entering the stock market. There are greater chances of profiting from investments when an investor makes the right and proper judgments.

The stock market is, after all, extremely volatile. But compared to other investments, stock investing has a number of significant advantages.

Potential for High Returns:

• When compared to other investment options like bank FDs, investing in stocks has the potential to produce substantial returns in a short amount of time.
• Stock trading can provide substantial returns in a short period, especially if you invest in the right stocks.

Flexibility to Invest Small Amounts:

• You don't need a lot of money to start trading. You can buy small quantities of stocks based on your budget.
• Another significant benefit of investing directly in stocks is that investors can make their own purchasing decisions and are not required to make a certain monthly investment.

Hassle-free buying and selling process

• All investors can buy and sell stocks using a simple approach. Stock purchases can be made online, through a financial advisor, or through a broker.
• To open a demat account and begin trading, barely takes any time at all. An investor can quickly buy and sell stocks online without having to travel, and the proceeds are immediately credited to their bank account.

Continuous and Easy Transactions

• When an investor buys stock in a specific company, they are essentially acquiring a share in that business. As a result, buying stocks will provide investors with a sense of ownership.
• Having ownership entitles them to shareholder status and a significant voice in corporate decisions. Additionally, investors will have a voice in corporate choices.

Dividend Perks

A dividend is a payment made by a firm to its stockholders. In simpler terms, it is the yearly additional revenue that every company pays to investors.

• Owning stocks gives you a sense of ownership in the company.
• You can earn dividends, which is a portion of the company’s profits paid to shareholders.

Investment Profits

• The opportunity to increase one's income is one of the main advantages of stock market investing. The values of a specific stock may increase or decrease over time if the value of the stock market increases.

Liquidity:

• Stocks are highly liquid investments, meaning you can quickly buy and sell them.

Diversification:

• Stock trading allows you to diversify your investments across different sectors and companies, reducing risk.

How Does Stock Trading Work?

Stock trading works through exchanges. Here’s a simple process of how trading happens:

1. Opening a Demat and Trading Account:some text
   • To start trading, you need to open a demat (dematerialized) account and a trading account with a brokerage firm.
2. Placing Orders:some text
   • You can place buy or sell orders for stocks through your trading account.
3. Order Execution:some text
   • Your order is then matched with a seller or buyer on the stock exchange.
   • Once matched, the transaction is executed.

Risks of Stock Trading

While stock trading can be profitable, it also carries risks:

1. Market Volatility:some text
   • Stock prices can fluctuate widely due to market conditions.
2. Potential for Losses:some text
   • There's always a risk of losing money, especially if the company performs poorly.
3. Emotional Decision-Making:some text
   • Traders may make impulsive decisions based on emotions, leading to losses.

Conclusion

Stock trading can be an excellent way to grow your wealth, but it's essential to understand the basics and the risks involved. By learning how the stock market works, the types of stocks available, and the benefits and risks, you can make smart decisions and potentially achieve your financial goals.

If you're interested in starting your stock trading journey, consider opening an account with a Swastika Investmart, which offers easy-to-use platforms for trading on both computers and smartphones. Happy trading!

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About the Company

Fusion Micro Finance Ltd (FMFL), founded in 1994, provides financial services to women entrepreneurs from economically and socially disadvantaged backgrounds. Its network and services have increased access to formal credit (loans) at low-interest rates, ultimately improving the lives of people in rural India. FMFL provides financial assistance as well as financial literacy classes.

FMFL operates on a joint liability group-lending concept, in which a small group of women (5-7 members) guarantees each other's loans. The firm has largely focused on strategic regional diversification with a rural emphasis, embracing technology for development, nurturing and developing staff, and risk management.

Fusion Micro Finance Limited IPO

IPO DateNov 2, 2022 to Nov 4, 2022Listing Date[.]Face Value₹10 per sharePrice₹350 to ₹368 per shareLot Size40 SharesIssue Size[.] shares of ₹10(aggregating up to ₹1,103.99 Cr)Fresh Issue[.] shares of ₹10(aggregating up to ₹600.00 Cr)Offer for Sale13,695,466 shares of ₹10(aggregating up to ₹[.] Cr)Issue TypeBook Built Issue IPOListing AtBSE, NSEQIB Shares OfferedNot more than 50% of the Net OfferNII (HNI) Shares OfferedNot less than 15% of the Net OfferRetail Shares OfferedNot less than 35% of the OfferCompany PromotersThe promoters of the Company, namely, Devesh Sachdev, Creation Investments Fusion, LLC, Creation Investments Fusion II, LLC and Honey Rose Investment Ltd

600 crore fresh equity shares will be issued in Fusion Microfinance IPO. Apart from these, an offer for sale (OFS) of 13,695,466 equity shares by promoters and existing shareholders is included. Devesh Sachdev, Mini Sachdev, Honey Rose Investment Ltd., Creation Investments Fusion, LLC, Oikocredit Ecumenical Development Co-operative Society U.A., and the Global Financial Inclusion Fund.

Objects of the Fusion Micro Finance Limited IPO

The issue comprises OFS and Fresh Issue. Net Proceeds from Fresh Issues will be used to Augment the capital base of the Company.

Fusion Micro Finance Limited IPO financials

• The company's revenue increased at a 16.92% CAGR from Rs.720 Cr in FY20 to Rs.1151 Cr in FY22.
• Profit after tax fell from Rs.69.61 Cr in FY20 to Rs.21.76 Cr in FY22, owing mostly to an increase in the impairment cost on financial assets.
• The operating margin fell to 4.7% in the previous fiscal year from 19.7% in FY20.
• As of June 30, 2022, the company's Gross GNPA was 3.67%, while its Net NPA was 1.35%.

Competitive Strengths

• Broad and Diversified Pan-India Presence.
• Proven execution skills with a strong rural focus.
• Access to Diversified Capital Sources and Effective Asset Liability Management
• Proven execution skills with a strong rural emphasis.
• Access to diverse financing sources and effective asset liability management
• Strong underwriting and risk management policies.
• A cutting-edge technological operating model.
• Stable and experienced management team backed by prominent investors.

Risk Factors

1) In the previous three years, company margins have been declining. Profits in FY20 were Rs 69.6 crores, compared to Rs 21.8 crores in FY22. Despite a rise in revenues, a decline in margins is a major issue.2) OFS receives Rs 504 crores from the total IPO proceeds, while the firm receives nothing.3) A Covid epidemic has previously harmed the industry. Such pandemics are unpredictable and may have an influence in the future.4) An increase in NPAs might have an impact on the firm.5) The microfinance business in India confronts specific risks owing to the borrowers it serves, which are not often connected with other types of lending.

Outlook & Valuation

The microfinance industry has recorded healthy growth in the past few years, with microfinance lenders emerging in good numbers. Fusion Micro Finance is one such company that is among the top 10 NBFCMFIs in India. It offers loans to women entrepreneurs. Its business runs on a joint liability group-lending model, wherein a small number of women form a group and guarantee one another’s loans. The company works with a strong focus on rural areas and has a well-diversified and extensive pan-India presence. The company also has access to diversified and recognized sources of capital and has a good financial track record. Although this company's margins are now in declining mode and it is facing risk due to the category of borrowers it serves, an increase in the level of NPAs could also be a concern for the company. Secondly, the company demands a price-book (P/B) multiple of 1.8 on a post-IPO basis, whereas its peers like credit access command a P/B of 3.3. Thus, considering all the factors, we recommend a Subscribe rating for this issue, but only for high-risk investors with a long-term view.

GMP

According to market watchers, the shares of Fusion Microfinance are trading at a premium (GMP) of ₹24 in the gray market today. The company's shares are expected to be listed on the stock exchanges BSE and NSE on Tuesday, November 15, 2022. The allotment of shares is expected on 10 November 2022. The company has said in its draft paper that it wants to use the capital received from this issue to increase its base.

पिछले सप्ताह सोने की कीमतों में 1 प्रतिशत की बढ़त दर्ज की गई है जबकि चांदी के भाव सपाट रहे है। अमेरिकी डॉलर इंडेक्स में छोटी अवधि में हो रही गिरावट पिछले सप्ताह में थमती नज़र आई जिसके कारण कीमती धातुओं में तेज़ी सीमित रही। अमेरिका से जारी होने वाले बेरोज़गारी के दावे और रिटेल सेल्स के बेहतर आकड़ो के रहते चांदी के भाव में दबाव बना हालांकि, सोने के भाव में तेज़ी रही। अमेरिकी फ़ेडरल रिज़र्व के अधिकारियों द्वारा ब्याज दर पर आक्रामक बयान से कीमती धातुओं में मुनाफा वसूली हावी होती नज़र आई। फेड अधिकारियों ने संकेत दिए है की ब्याज दर वृद्धि की गति धीरे हो सकती है लेकिन ब्याज दर बढ़ोतरी होती रहेगी। जिससे अमेरिकी बेंचमार्क ट्रेज़री यील्ड में निचले स्तरों से सुधार रहा और अमेरिकी डॉलर इंडेक्स की गिरावट थमती नज़र आई। मजबूत रिटेल सेल्स के आकड़ो से सम्भावना है की अमेरिकी मुद्रास्फीति अपने उच्च स्तरों पर बनी रह सकती है इसलिए सेंट लुईस फेड प्रेसिडेंट बुलार्ड द्वारा 150 आधार अंको से ब्याज दर बढ़ोतरी करने की आवश्यकता जताई है। हालांकि, चीन कोवीड ऑउटब्रेक के कारण अपने सात महीनो के सबसे बुरे दौर से गुजर रहा है। यहां लॉकडाउन उपायों के कारण आर्थिक गतिविधियों में और ठंडक रहने की सम्भावना है। रूस -यूक्रेन युद्ध बढ़ने की आशंका और धीमे आर्थिक विकास से कीमती धातुओं के भाव को सपोर्ट मिला हुआ है।

तकनीकी विश्लेषण

इस सप्ताह फेड की बैठक के मिनट्स जारी होंगे जिससे कीमती धातुओं में मुनाफ़ा वसूली देखने को मिल सकती है। दिसम्बर वायदा सोने की कीमतों में 52000 रुपये पर सपोर्ट है और 53700 रुपये पर प्रतिरोध है। दिसंबर वायदा चांदी में 60000 रुपये पर सपोर्ट और 63500 रुपये पर प्रतिरोध है।

About the Company

Global Health Limited is one of the major private multi-specialty tertiary care providers in India's North and East. Cardiology and cardiac science, neurosciences, oncology, digestive and hepatobiliary sciences, orthopedics, liver transplant, and kidney and urology are among the company's major specialties.

Global Health Limited now operates four hospitals under the "Medanta" name (Gurugram, Indore, Ranchi, and Lucknow). The Medanta Institutional Tissue Repository was created in 2017 to encourage biomarker and other tissue-based research.

Global Health IPO Details

IPO DateNov 3, 2022 to Nov 7, 2022Listing Date[.]Face Value₹2 per sharePrice₹319 to ₹336 per shareLot Size44 SharesIssue Size[.] shares of ₹2(aggregating up to ₹2,205.57 Cr)Fresh Issue[.] shares of ₹2(aggregating up to ₹500.00 Cr)Offer for Sale50,761,000 shares of ₹2(aggregating up to ₹1,705.57 Cr)Issue TypeBook Built Issue IPOListing AtBSE, NSEQIB Shares OfferedNot more than 50% of the OfferNII (HNI) Shares OfferedNot less than 15% of the OfferRetail Shares OfferedNot less than 35% of the OfferCompany PromotersDr. Naresh Trehan is the company promoter.

The IPO of Global Health Limited, a company that operates and manages hospitals under the Medanta brand, is scheduled to open for subscription on November 3. According to the Red Herring Prospectus (RHP), investors can invest in this IPO till November 7. According to merchant banking sources, the size of the IPO could be around Rs 2,200 crore. Under the IPO, fresh equity shares of Rs 500 crore will be issued. In addition, 5.08 crore equity shares will be sold by the promoters of the company under offer-for-sale (OFS).

As a part of the OFS, Anant Investments, private equity major Carlyle Group and Sunil Sachdeva (jointly with Suman Sachdeva) will sell the shares. At present, Anant Investments holds a 25.64 percent stake in Global Health and Sachdeva holds 13.41 percent in the company. The funds received under this IPO will be used for the repayment of loans and for general corporate purposes.

Objective

The net proceeds of the new issuance will be used to repay debt, finance capital expenditure, fund the future acquisition of subsidiary Bio needs India, fund working capital requirements, and for general corporate purposes.

Competitive Strengths

1. Global Health Limited is the country's major provider of tertiary and quaternary health care. They also have clinical skill in addressing crucial cases that is well-known.
2. Global Health Limited has world-class facilities with cutting-edge infrastructure, medical equipment, and technology based on the most recent breakthroughs.
3. India's leading tertiary and quaternary care provider, renowned for clinical skill, particularly in dealing with complex cases.
4. Concentrate on clinical research and academia.
5. Large-scale hospitals with world-class infrastructure, cutting-edge medical technology, and medical equipment.
6. Proven track record of excellent operational and financial success.
7. Concentrate on underserved areas with dense populations, as well as the presence in major or capital cities of big states (NCR, Lucknow and Patna).
8. Opportunities for expansion in current facilities and diversification into new services, such as digital health.
9. Skilled senior management with significant institutional shareholder backing.

Risks

1. The firm's revenue is concentrated in the country's north and east, and any substantial change in geographic or economic conditions at these rates would have a direct impact on the company.
2. The firm is also vulnerable to the inherent risks of being in the healthcare industry, as well as any legal threats.
3. The company's total income, earnings per share ("EPS"), net asset value ("NAV"), return on net worth ("RoNW"), net profit margin, and return on capital employed ("RoCE") may be lower than those of some of the listed comparable industry peers, as may its price-to-earnings ("P/E") ratio, enterprise value ("EV") to EBITDA ratio, and market capitalization to total income ratio.
4. Its subsidiaries, MHPL and GHPPL, have suffered losses in the previous fiscal years.
5. Currently operates just five hospitals and six multispecialty clinics, which account for nearly all of its income. Inability to attract/retain physicians, nurses, and other healthcare personnel.

Global Health Financials

Over the fiscal years 2017-22, the Indian healthcare delivery industry is expected to develop at a 10-12% CAGR to a value of roughly Rs. 5 lakh crore. Furthermore, with strong sector macros such as lower hospital bed density in relation to population, lower expenditure on healthcare infrastructure as compared to developed and several developing countries, rising income levels & increasing affordability for healthcare services, and the government's Ayushman Bharat scheme, the healthcare delivery market is expected to grow at a 13-14% CAGR over FY22-26E to reach Rs. 8.3 lakh cr.

Outlook & Valuation

With long-term structural factors supporting growth, renewed impetus from PMJAY, and the government's focus shifting onto the healthcare sector, the healthcare delivery market is expected to grow at 13–15%. GHL is one of the largest private multi-specialty tertiary care providers operating in the North and East regions of India and operating under the most popular healthcare brand Medanta. It has generated strong revenue growth in the last 3 years, with a minor setback in FY21. Coming to the offer, the major proportion in this issue is the offer for sale, which could be a limiting factor in this issue. The promoter shareholding would come down to 33% post-IPO, which is another concern; nevertheless, the issuer has good patient volumes and cost efficiency, and its financial profile also shows an increasing trend. Finally, the issue is fairly priced at a P/E of 43 as compared to the average industry P/E of 51.93. Thus, we recommend a Subscribe rating for the long term.

GMP

According to IPO Watch, the grey market premium (GMP) for the Global Health IPO is now rs 25 per share. This suggests that the stock will most likely be offered at 361, a 7.44% premium to the IPO price.

Listing Date

The company's shares will be distributed to winning bidders on November 11, and refunds will be issued on November 14. Shares will be credited to the successful bidders' Demat accounts by 15 November, and the stock will begin trading on the stock markets on 16 November.