Last week, the major stock market indices set new highs every day. The reason is the much-anticipated decrease in interest rates that has occurred in the US.
The lower prices of the US have boosted the interest of foreign investors from Asia particularly India. Profit booking was seen on the last day of last week.
Despite this, the market managed to close higher for the third consecutive week. But, for foreign investors to continue investing, the valuation needs to come to the right level.
This will happen only when the earnings of companies increase. The second quarter results season is about to begin.
Analysts say that there may be a good increase in the profits of companies on a quarter-on-quarter basis. The reason for this is that the profit growth of companies in the first quarter was the lowest after Covid.
The first quarter saw the highest earnings downgrade in the last four years. Analysts say that we have left the difficult times behind. The progress of the monsoon is good.
There is a recovery in demand in rural areas. There is a slight decrease in the cost of raw materials, and the monsoon is now under control. In this scenario, the growth is evident in the earnings of firms.
Accenture has increased its revenue guidance for FY25. This has provided a ray of optimism to Indian IT businesses. Brokerage firms have predicted an increase in the revenue of IT companies from consulting.
The reason is because the costs of companies are likely to rise. While this is happening, the focus will be focused on the performance of the companies in the second quarter of this year.
Since Indian markets have become the most expensive in the world right now. In such a situation, a lot will depend on the profit growth of companies in the second quarter.
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PB Fintech
The share of PB Fintech Ltd (NSE: POLICYBZR) closed 1.87 percent down at Rs 1,608.45 on September 30. The share of the company fell for the fifth day in a row.
Ever since the company announced its entry into healthcare, its share has been under pressure. BOFA has said that the company’s position in online insurance is strong.
Brokerage has also said that PB Fintech will be able to achieve a profit target of Rs 1,000 crore by the next financial year. On the other hand, bears say that many things are not clear about the company’s plan to enter the healthcare space.
The rise in share price will depend on how the company is going to enter the new business. How much capital expenditure does it make?
Amara Raja Energy & Mobility
Amara Raja Energy & Mobility Ltd (NSE: ARE&M) share closed at Rs 1424 on September 30 with a jump of 2.29 percent. In the analysis, the management of Amara Raja Energy has told about the business plan.
The company will spend Rs 9,500 crore in capital in the next 10 years. The focus will be on 85-90 percent capacity utilization for a 10 to 15 percent margin.
Bulls say that the company wants to develop its R&D capacity for lithium-ion batteries. This will reduce the company’s dependence on partners.
The company has started a 1.5 GWh battery pack plant this year. The company plans to expand it.
On the other hand, bears say that the growth of the lead-acid business may be at risk in the future, as the market’s focus is now increasing on the use of lithium-ion technology.
The valuation of the company’s stocks is high. It is trading at a 46 percent premium compared to global companies like CATL and LG Chem.
Company name | PB Fintech
| Stock drop | 3.3% down |
| Closing price | ₹1,608.45 |
| Days of drop | 5 consecutive days |
| New business | Healthcare |
| Online insurance | Strong position |
| Profit target | ₹1,000 crore |
| Expected time | Next financial year |
| CapEx concern | Unclear |
| Share price rise | Dependent on healthcare entry |
Company name | Amara Raja Energy & Mobility
| Stock rise | 2.29% up |
| Closing price | ₹1,424 |
| CapEx plan | ₹9,500 crore |
| Time for CapEx | Next 10 years |
| Capacity utilization | 85-90% |
| Margin Target | 10-15% |
| R&D focus | Lithium-ion batteries |
| Battery plant | 1.5 GWh |
| Expansion plan | Battery pack plant |
| Lead-acid risk | Growing focus on lithium-ion |
| Stock valuation | 46% premium |
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