The auto sector is currently facing inventory challenges, with dealers holding a two-month supply of cars. Vinkesh Gulati of the Federation of Automotive Dealers Association warns that this high inventory level is not sustainable as it exceeds the current demand in the market. The concerns of dealers have been voiced to auto companies for the past few months, urging them to adjust their production volumes to match the demand.
The market, however, seems to be optimistic about the auto sector stocks. Despite the challenges faced by the sector, investors remain upbeat. Kenneth Andrade of Old Bridge mentions that manufacturing is a good space, but the expensive stock prices pose a challenge. Meanwhile, Jefferies predicts a downcycle in the specialty chemicals sector due to weak demand and dumping by Chinese firms, expecting a recovery in demand only by the September quarter.
Investment Outlook for Delta Corp: Mixed Opinions
Delta Corp, which recently reported a 60% drop in net profit for Q3, is facing a bearish sentiment from some experts. The management attributes the weak performance to promotional offers, which are expected to continue in the near future. Additionally, concerns arise due to unprovisioned GST claims that amount to six times the current market capitalization of Delta Corp.
On the other hand, there are bullish arguments surrounding Delta Corp as well. Some investors believe that all the negatives are already priced in, and any positive development on GST claims could boost investor sentiment.
Vedanta Faces Liquidity Challenges but Potential Upside is Seen
Following Moody’s downgrade of its bonds, Vedanta experienced a stock decline. Moody’s views the restructuring of Vedanta’s bonds as a default avoidance measure in distress, raising concerns about the company’s liquidity over the next two years and increasing the risk of default.
However, there are also bullish arguments for Vedanta. Commodity prices are expected to stabilize after a weak period, and the company’s current capital expenditure in aluminum and zinc is projected to generate cash flow. Additionally, the restructuring of $3.2 billion worth of bonds is anticipated to alleviate the immediate need for fundraising.
Eureka Forbes: Trading Range Amidst Growth Prospects
Eureka Forbes has been trading within a range over the past six months. On the bullish side, the company’s CEO, Pratik Pota, who previously worked at Jubilant Foodworks, has been instrumental in driving growth. Eureka Forbes aims to become a leader in the direct-to-consumer “health and hygiene” sector.
However, there are bearish concerns surrounding Eureka Forbes. High commodity prices could potentially impact the company’s performance. Additionally, monitoring the company’s return ratios and any slowdown in product launches will be crucial.
IGL Faces Downgrade and Skepticism in CNG Prospects
The stock of Indraprastha Gas Limited (IGL) fell after a downgrade by UBS, which cited concerns about the company’s future prospects. The shift to electric vehicles in Delhi raises doubts about the long-term viability of IGL’s compressed natural gas (CNG) business.
On the bullish side, the city gas distribution (CGD) sector could benefit from higher demand as competitive liquefied natural gas (LNG) becomes more available.
Uncertainty Surrounds Manappuram Finance’s IPO Plans
Manappuram Finance’s subsidiary firm, Asirvad Micro Finance, has faced a delay in its proposed initial public offering (IPO) due to SEBI’s scrutiny. This delay impacts the temporary boost to earnings and valuation that analysts had anticipated from the sale of shares in Asirvad.
Analysts now question whether the delay will affect the overall valuation and market perception of Manappuram Finance. Investors are advised to monitor the situation closely for any updates on the IPO plans.