7 stocks from BSE Smallcap index rally over 50% in July

STOCK MARKET - Parsvnath Developers, GTL Infrastructure, McNally Bharat, Aksh Optifibre, Gujarat NRE Coke, Himachal Futuristic Communications (HFCL) and GVK Infrastructure & Power are the seven stocks from the S&P BSE Smallcap index that have rallied by more than 50% thus far in July.

At 12:05 pm: the S&P BSE Smallcap index was trading at 16,103, gaining 4.5% during the current month. On comparison, the S&P BSE Midcap index up 4.7%, while the benchmark S&P BSE Sensex up 4.9%, set to post its record monthly gain since March 2016 (up 10.2%).

As many as 48 stocks from the smallcap index have surged more than 25% thus far in July. The list includes Tinplate Company, Sterlite Technologies, Saregama India, Thirumalai Chemicals, Rico Auto Industries and Jubilant FoodWorks are among those which soared between 40% and 49%.

Foreign portfolio investors (Rs 2,662 crore) and domestic institutional investors (Rs 3,018 crore) have collectively pumped in net amount of Rs 5,680 crore in equity market, the stock exchange data shows.

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These seven smallcap stocks rally over 50% in one month; Venkys zooms 80%

MARKET NEWS - Venky’s (India), HEG, Graphite India, Bhansali Engineering Polymers, Jaiprakash Associates, B L Kashyap and Sons and Rai Saheb Rekhchand Mohota Spinning & Weaving Mills are among seven stocks from the S&P BSE Smallcap index, which rallied by over 50% in the past one month.

The S&P BSE Smallcap index was up 1.9% as compared to a marginal 0.2% decline in the S&P BSE Sensex.

Venky’s (India) hit new high of Rs 2,248, up 8%, extending its four-session long rally of 47%. The stock of poultry firm has zoomed 80% in past one month from Rs 1,245 on June 5, 2017.

Analyst at Kotak Securities, project 42% compound annual growth rate (CAGR) in earnings through FY17-FY19 for Venky’s (India) and expect significantly improved return ratios and reduction in debt, going forward, which builds a case for greater investor attention/ re-rating.

“Since FY15/16, measures taken by the industry to correct the supply-demand mismatch in poultry have begun to impact chicken prices positively. In addition, the company also stands to gain from external factors - such as restrictions on cow slaughter and decline in raw material prices (soya prices down 30% y/y as of May, corn prices down 10%),” the broking firm said in recent report.

Near-term (FY18) earnings visibility is high, especially following sharp rise in poultry prices already witnessed in 1QFY18, added report.

Graphite India and HEG, engaged in graphite electrode business, have rallied 66% and 54%, respectively, in past one month.

India Ratings & Research (Ind-Ra) affirmed the credit rating of HEG as IND A' with stable outlook.

“With the tightness on the supply side, given the change in the industry structure and demand remaining healthy, the demand supply balance has shifted in the favour of the suppliers. This has resulted in a significant increase in graphite electrode prices to nearly USD 4,000/t from USD 2,000/t in the spot market,” Ind-Ra said in a press release.