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Mumbai: Small, mid-cap stocks are currently witnessing a major correction as a result of profit selling by domestic institutional investors (DIIs) against record highs in stocks and continued buying by foreign portfolio investors (FPIs) in Indian stock markets. Ahead of the Union Budget presented by Finance Minister Nirmala Sitharaman on Tuesday, July 23, the rapid overvaluation has seen a pause amid positive factors of good monsoon progress and corporate results coming in better than overall expectations. Now the market's focus is on the budget provisions, the Sensex may reach between 81444 and 78888 and Nifty between 24777 and 24040 in the upcoming budget week.
Budget will be agriculture-rural development oriented: Capital gains tax likely to bring negative surprise for stock markets
This time in the Union Budget, the government's focus is likely to be mainly on agriculture and rural development incentives. Along with this, the limit of incentives for the cement-infrastructure sector is also likely to be increased. Interest from Rs 10,000 to Rs 25,000 on deposits in banks is tax free. Along with this, the limit of tax-saving investment under section 80C in personal income tax relief is likely to be increased from the current Rs 1.50 lakh to Rs 2 lakh and mediclaim under 80D is also likely to increase by Rs 50 percent. It will not be surprising if the Finance Minister presents a negative surprise for the stock market class in the budget this time. Short Term Capital Gain Tax (STCG) can be increased from 15 per cent to 20 per cent and Long Term Gain Tax (LTCG) from 10 per cent to 15 per cent. PLI scheme for crop protection sector in agro-fertilizer, chemical sector and production linked incentive-PLI scheme for battery chemical manufacturers may come. In the FMCG sector, excise duty or NCCD duty on cigarettes may be increased. In the power sector, incentives for renewable NG may be increased and focus may be placed on T&D capital expenditure. In the metal-mining sector, there may be a reduction in import duty on raw materials or an increase in basic customs duty on Chinese steel imports. For the automobile industry, the budget may see an increase in FAM-III subsidy allocation and a cut in CNG excise duty. With the presentation of the full Union Budget for the financial year 2024-25 on Tuesday, there is a possibility of major turmoil in the stock markets. Therefore, it is advisable to stay away from futures and options (F&O) casino-gambling.
Arjun's Eyes : Wellcast Steels Ltd.
BSE (504988) listed only, Rs.10 payout, ISO 9001:2015 certified, Established in the year 1972, Wellcast Steels Ltd. is one of India's leading manufacturers of high chrome grinding media balls for cement and mining industries. This MSME company with maximum 74.85% promoter stake of AIA Engineering Ltd. has its manufacturing unit equipped with state-of-the-art equipment for manufacturing, testing and quality control such as induction furnaces, continuous type heat treatment furnaces with automatic oil quenching system, optical emission vacuum spectrometer, photographic arrangement, sand testing equipment and hardness testing machines.
The company has an in-house research and development section which is constantly upgraded with technology to find original solutions to industry problems. Having worked as a grinding media specialist for over four decades, Wellcast has gained vast experience in the cement, mining industry and thermal plants.
Manufacturing Facilities: The company's manufacturing facilities are located in Bangalore. It has a capacity of 42,000 tonnes per annum. In FY2022, the company produced 9,720 tonnes of grinding media, as against 14,562 tonnes in the previous year.
Delisting attempt fails despite bids up to Rs 20,000: The promoter decided to delist the company from the stock exchanges in April 2024 and offered to buy the remaining 25.15 per cent shareholding from shareholders at a floor price of Rs 1550 per share, which the promoter could get by 15. This offer was subject to delisting if it could get a 16 per cent stake. Which was announced on April 30, 2024. For this, the bidding was opened on May 7, 2024 at a floor price of Rs 1550 per share, with 62,099 shares offered at a price ranging from Rs 1550 to Rs 20,000 per share in 197 bids against the required 1,60,500. Shares received The offer was declared failed on May 13, 2024 as no bids were received from public shareholders for the full quantity of 1,60,500 shares required for delisting even at this higher price.
Key Clients: The major clients of the company include Larsen & Toubro, Andhra Cement, Century Cement, UP State Cement Corporation, India Cements, Blue Circle Cement, Nissho Ivei Corp, Raysut Cement Company, etc.
Dividend: 25 percent from March 2023, 25 percent from March 2024
Book Value: Rs 510 in March 2022, Rs 553 in March 2023, Rs 630 in March 2024, Rs 724 estimated in March 2025
Shareholding pattern: Promoter AIA Engineering holds 75 per cent stake, HNIs and trusts hold 5.30 per cent and retail shareholders hold 19.70 per cent.
Consolidated Financial Results:
(1) Full Year April 2022 to March 2023: Earned Net Income of Rs 94.70 crore, Net Profit Margin of 2.81 per cent-NPM reported a net profit of Rs 2.64 crore. Earnings Per Share- EPS of Rs 41.37.
(2) Full year April 2023 to March 2024: Earning a net income of ₹ 94.70 crore, NPM has recorded a net profit up 5.76% to ₹ 5.25 crore and earned earnings per share of ₹ 82.24.
(3) Expected Full Year April 2024 to March 2025: Expected net income of Rs 105 crore at NPM 6.34% Net profit of Rs 6 crore Expected earnings per share is expected to be Rs 94.
Thus (1) The author has no investment in the shares of the above company. Authors may have direct or indirect personal vested interests in the research sources. Consult a qualified investment financial advisor before making any investment decision. The author, Gujarat Samachar or any other person shall not be responsible for any potential loss on investment. (2) 74.85 percent promoter holding of AIA Engineering Limited (4) Expected Full Year April 2024 to March 2025 Earnings Per Share-EPS Rs 94 and Expected Book Value Rs 724. 10 paid up shares are currently available at Rs 1406.70 on 19, AP/E of 15 July 2024 only on BSE.