DBT Bureau
Pune, 28 June 2024
Prabhudas Lilladher, in its latest BEAT Report – Bluechips Ready to Roll, highlights the top two industry players, Bajaj Finance and Reliance Industries, to watch out for. With a target price of Rs. 8,200 and a stop loss of Rs. 6,850, the current market price of Bajaj Finance is Rs. 7,080. Reliance Industries, on the other hand, is trading at Rs. 2,930, with a target price of Rs. 3,200 and a stop loss of Rs. 2,850.
Bajaj Finance: The NBFC has notified the exchanges that the November 2023 restriction on the approval and disbursement of its digital loans has been lifted by the RBI. These restrictions had temporarily depressed profitability in Q3 FY24/Q4 FY24 (~4% on net income) and lifting them should allow the company to see some improvement in RoA (return on assets) in a seasonally low Q1 driven by better fees. The top end may appear more promising with an increased fee contribution if the company can regain lost ground in Q4.
The scrip is witnessing pre-rollovers at 58% with the option chain strongly favoring the bulls. Put writers are decisively aggressive at 7000PE, adding over 1,200 contracts overall, while call writers are aggressively building positions up to the 7,500 and 8,000 strikes, with more than 2,000 contracts each. The stock has also sustained a breakout above the 6,900-zone monthly, suggesting continued momentum for a sharp upside move.
Reliance Industries: The New Energy giga-factories owned by RIL are anticipated to open in 2024. RIL aims to establish scale electrolyser and solar capacity by using significant captive hydrogen demand as an anchor. In the foreseeable future, investors shouldn’t anticipate significant EBITDA from these projects. On the other hand, better RIL communication on this matter might become a stock driver. Maintaining a net debt to EBITDA ratio of less than 1x, as per the company’s recent guidance, also suggests good free cash flow generation.
The scrip is witnessing pre-rollovers of 54%, with the next series showing aggressive put writers building up their positions convincingly at 2900PE, with more than 4,100 contracts overall. Call writers also hint at upside potential up to 3,200, with maximum fresh additions at 3200CE, with more than 445 contracts. The stock has been consolidating monthly between the 2850-2940 zones. A breach on the upside will likely trigger sharp momentum towards higher targets.
