After rallying more than 20 per cent in the past 45 days, shares of the company have hit a weak patch from which they may not escape anytime soon. The stock fell more than 3 per cent today adding to the more than 6 per drop on Wednesday as media reports suggested that the newly formed panel to look into cigarette taxes may recommend a hike in retail prices of as much as 75 per cent.
Analysts don’t expect such a steep hike to be recommended but it provides a window into the sternness with which the panel will deal with the issue. Analysts are now almost certain that the government will hike taxes in the next Budget, what remains to be seen is the quantum of the hike.
A hike of 5-10 per cent could be digestible for the market, but anything above 10 per cent will make investors panic. Regardless of the quantum, the uncertainty means expecting the recent bullish momentum in the shares of ITC and other tobacco companies will be foolhardy.
YES Bank not convincing enough
By all means, the lender’s earnings performance for the quarter ended September was firm. It posted a better-than-expected net profit and a sequential improvement in asset quality. But, in a market that has suddenly raised its standards to shower earnings upgrades on companies, some internals of YES Bank’s performance was underwhelming.
For example, the sharp rise in the restructured loan book of the company in the quarter or the disappointing operating performance. If YES Bank wants to command investors’ favour, it will need to deliver even more.
Titan gets a lift from Jhunjhunwala
True, Titan’s September quarter update last month filled investors with optimism. The company is now expecting to report strong numbers in the coming weeks but most of that strong performance has been priced in.
Given the badgering that investors are dishing out to the expensively priced stocks, Titan has luckily escaped it. The reason: Rakesh Jhunjhunwala. The fact that Big Bull raised his stake in the company in the September quarter after many quarters showed investors that perhaps Titan’s high PE is justified. At least, the market thinks so as the stock ended nearly 1 per cent higher in a weak market.
TVS Motor throwing shade
One of the most underrated automobile stocks in the market today threw shade at its more popular rivals as the stock soared over 7 per cent.
The two-wheeler maker reported September quarter earnings that made investors turn their heads. For a company that hardly manages to report quarterly operating margins of 9 per cent, TVS Motor reported an operating margin of 10 per cent for the first time in many quarters in an environment when automakers are dealing with record input cost inflation and semiconductor shortage.
Travel is the safest way
Increasingly, tourism sector companies are proving that betting on the sector is probably one of the safest investments right now. After the strong showing by Taj GVK earlier this week, Mahindra Holidays today posted higher-than-expected September quarter numbers.
In a quarter when the economy had not fully reopened, Mahindra Holidays more than doubled its consolidated net profit and saw a 223 basis points on-year expansion in margins. Going by the September quarter numbers, the December quarter will likely be a blockbuster one for the tourism space.
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