STOCK Market Analysis

18/10/2020

*TOWER TALK*

Shakti Pumps made a buyback at Rs. 140/share last year. Its management has good credentials but presently on the back foot due to Covid restrictions. A good share to add.

The demand for 2-wheelers is bouncing back but the desire for safety is tilting the scale in favour of TVS Motors. Buy.

Indiabulls Housing Finance has raised another Rs. 441/- crore through part sale of its holdings in OakNorth. The share commands a AAA rating and must be gradually accumulated

LIC seeking Rs. 320 per Vedanta share punctured its delisting offer clearly establishing that its intrinsic price is much higher than the market price. Add.

Ashok Leyland has reached it 75% of its pre-Covid capacity, which is a good sign. Its share price will surely recover too. Accumulate.

CARE has downgraded the debt instruments of Laxmi Vilas Bank, which is in deep financial crisis. Sell.

ONGC plans to ramp up production and augment the output in 6 to 8 fields to derive marketing and pricing benefits. A good buy at current rates

With automobile sales on the upswing, Castrol India must be added around Rs. 112. The current PE is below 14 and the dividend yield is also around 5%.

Larsen & Toubro Infotech is rising on unconfirmed reports of new orders. Technically the share is looking good for a breakout on the charts. Add.

Indian missile maker and Defence major, Bharat Dynamics, is available below its offer price and recent high. This PSU is also a good dividend play. Accumulate.

Rane Brake Linings plans to buy back its shares. Investors may buy and sell at a higher price during the buyback.

Ramco Systems is on the rise and claims to have launched its aviation software for a leading helicopter OEM. Only risk bearing traders may enter with a strict stop loss.

Financial stocks are trading at their lows. But two Navratna PSUs, REC and PFC, are available at their yearly lows and deserve to be added.

Low priced, small cap tile manufacturer Nitco posted 80% rise in sales volumes in September. The share at half its peak price is a good buy.

Karnataka Bank declared good Q2FY21. Against a book value of about Rs. 177, the current price around Rs. 43 merits buying.

In yet another sign of revival in retail consumption, monthly expenditure through credit cards are reverting to pre- Covid levels. Buy SBI Cards.

Infibeam Avenues has entered into a definitive agreement with JPMorgan Chase Bank N.A., to provide payment solutions for its clients. This share is a good long term buy.

Maruti has decided to launch a variant of its SUV every six months till 2023. It is adamant to recoup its lost ground.

With Wipro about to launch its Rs. 9500 buyback plans on the back of higher revenue estimates, the Company seems to be on a very strong wicket. Add.

Rane Brakes has reported a 55%% jump in its NP for Q2. The auto ancillary industry is on a comeback trail. Add in small quantities.

Apollo Hospitals is gearing to deliver 10 lakh Covid vaccines per day through its extensive network. Although the share looks fully priced, any decline must be bought into.

Smruthi Organics plans to expand its product portfolio in its core therapeutic categories of hypertension and diabetes to drive future growth has notched 35% higher net profit in Q1FY21 is all set to garner an EPS of Rs 30+ in FY21 as against Rs 22 in FY 2020. SOL is entering into dermatology and ophthalmic therapeutic categories, which would drive solid revenue growth. SOL may post an EPS of Rs 32 in FY21. The share is expected to advance by 30%. Buy.

Lincoln Pharmaceuticals (LPL) is the cheapest in the pharma space with a P\E of just 8.0x on it is expected EPS of Rs 30+ in FY21. LPL’s recent European Union (EU) GMP certification from Germany FDA for its manufacturing facility in Gujarat will offer products to EU markets (27 member countries) very soon with its dermatology, gastro and pain management products and gradually expand product portfolio. Gain of about 30% is expected. Buy.

Housing Finance Sector is the most sought for investment in shares after IT and Pharma. Within hosuing companies analysts strongly recommend two fundamentally strong shares

LIC Housing Finance (Likely EPS of Rs 62+) and Repco Home Finance (Likely EPS Rs 50+). These shares are likely to fetch a decent appreciation of 20% going forward. Buy.

Va Tech Wabag has notched an EPS of Rs 16.6 in FY20. As an internationally respected Va Tech as a systems specialist and full-service provider with a focus on the planning, installation and operation of drinking and wastewater plants for local government and industry in the growth markets of Asia, North Africa, Middle East, the Central and Eastern Europe. Analysts expect the share price to appreciate by over 30% in the medium term. Accumulate.

Technocraft Industries, which is into the business of drum closure, scaffolding, form work, yarn & fabrics and engineering and design and having power plant of 15 MW has earned 46% higher net profit in Q1FY21 leading to an EPS of Rs 60 in FY21. The share trading at a forward P\E of 6.8x has potential to touch Rs 510 on a P\E of 8.5x. Buy.

Dyes and Pigments manufacturer Dynemic Products, which is expected to complete the expansion at Dahej in the near future has notched 29% higher net profit in Q1FY21 (EPS of Rs 6.9) compared to 33% higher in FY20 (EPS Rs 23). This will lead to an EPS of Rs 30 in FY21. The share trading at a forward P\E of 6.5x may cross the Rs 300 mark. Buy.

Indian Hume Pipes, having 12 manufacturing plants is doing well. It has about Rs 5, 000 cr. orders on hand. It also owns huge land tracts at Hadaspar near Pune, Badarpur near Delhi, and at Wadala near Mumbai. The share is expected to surge by 40% going forward. Buy.

EID-Parry, Murugappa group sugar major with 43, 400 tcd and 160 MW of power and distillery is on course to notch an EPS of Rs 25. The share is expected to fetch a gain of 15% in the short term. Accumulate.

Karnataka Bank is expected to post an EPS of over Rs 15 in FY21 if half yearly results are anything to go by. Buy.

Expleo Solutions recommended under Best Bet last week at Rs 515 for a target of Rs 750 jumped to fresh 52-week high of Rs 645. Hold on to the scrip.

An Ahmedabad based analyst recommends to buy BCL Industries, Birla Money, IOL Chemicals, India Gelatines, Kopran, Mangalam Drugs, MBL Infra, Prakash Pipes and Deccan Healthcare at CMP of Rs.36 (Last year, its IPO came at Rs.95). On 18 September, 2020, Universal Cables of Birla group has made a fixed capital investment of approx Rs.117 crores and expanded its production capacity of power and control cables from 11000 – 18000 km per annum, LT and HT power capacitors from 1500 – 4500 MVAr per annum. It has also established production capacity of all types of thermoplastic compounds-zero halogen flame compounds by 3600 mt per annum. These expansions have been undertaken to keep pace with the envisaged growth in demand and migrate to the evolving technologies

23/05/2020

TOWER TALK

JK Lakshmi Cement reported an excellent performance for Q4FY20 with PAT rising from Rs.51.71 crore to Rs.248.46 crore and EPS from Rs.4.36 to Rs.21.08. A good buy at CMP of ~Rs.211.

NOCIL has resumed its manufacturing operations. With crude oil prices falling, the stock price is expected to rise. Accumulate.

Sanofi India, which operates from 73 factories in 32 countries, claims that it has come close to developing a COVID-19 vaccine. Buy.

IOL Chemicals & Pharmaceuticals is reportedly faring well on the export front. Although the stock price has risen in the past few weeks, a lot of steam is still left. Add.

Unichem Laboratories has received an Establishment Inspection Report (EIR) from the USFDA for its Active Pharmaceutical Ingredients facility at Roha. A positive for the company. Accumulate.

Jio has roped in General Atlantic to invest Rs.6600 crore in the RIL’s digital unit. It has already raised Rs.67194.75 crore from Facebook, Silver Lake, Vista Equity Partners and General Atlantic in less than four weeks. Add Reliance Industries.

Cipla to raise ~Rs.3000 crore by issue of equity shares through the ADR, GDR or other convertible instruments to augment its capex requirements. Its prospects look bright. Accumulate.

For Q4FY20, Nippon Life India Asset Management posted a 97.54% lower PAT of Rs.3.72 crore on 62.37% lower income of Rs.149.56 crore YoY. Based on its performance, it would be prudent to sell this overpriced stock.

Despite headwinds caused by COVID-19, GlaxoSmithKline Pharmaceuticals performed well in Q4FY20 and has declared a dividend of Rs.40/share (including a special dividend of Rs.20/share). Accumulate slowly.

Maruti Suzuki India is likely to resume its manufacturing at the Gurugram plant, which can be a morale booster to this automobile giant that has ~50% market share in the Indian market. Accumulate in small lots.

KEC International has received new orders worth Rs.1203 crore across its various businesses and territories. A big positive for the company. Accumulate.

For Q4FY20, Apollo Tyres posted a 7.31% lower PAT of Rs.77.86 crore on 16.53% lower income of Rs.3607.74 crore. This was despite the drastic fall in crude oil prices. It would be prudent to sell Apollo Tyres and switch to JK Tyre & Industries.

On the back of COVID-19 related complications, Jubilant FoodWorks reported a 58% drop in PAT of Rs.32.53 crore for Q4FY20. It would be prudent to remain away from this stock for some time.

The financial impetus announced by the Government will benefit the fishery industry. Buy Waterbase, Avanti Feeds and Apex Frozen Food in limited quantities.

The pharma industry is expected to fare well going forward. Buy Take Solutions which is available at half its peak price and far below its book value.

Mahindra & Mahindra shows signs of recovery and is expected to bounce back soon. Also, tractor sales are likely to be better. Accumulate.

Kalpataru Power Transmission intends to buy back its shares worth ~Rs.200 crore at Rs.275/share. CMP is far lower. A good short-term opportunity. Buy.

Aarti Drugs API manufacturing would benefit with anti-China sentiments is the prime candidate for the government’s push in the direction. The share price has the potential to rise from ~Rs.800 to over Rs.1000 in a month’s time. Add.

ITC, which had fallen to new lows is now witnessing higher volumes. Its price is also on the rebound. Add.

Crude oil prices are firming up, Oil and Natural Gas Corporation is likely to be a big beneficiary. The share is available below its multi-year high. A good time to add.

Going by its 9MFY20 results, Cosmo Films is expected to post an EPS of Rs.62-65 for FY20. The share is poised to fetch a decent gain of 30% in the medium-to-short term. Accumulate.

Indian Hume Pipe Co. has 12 manufacturing plants and ~Rs.5000 crore orders in hand. It also owns huge tracts of land at Hadaspar, Badarpur and Wadala. The share is expected to surge by 35-40% going forward. Buy.

Shares of Gujarat Pipavav Port are available at a 45% discount to its 52-week high of Rs.101. It has the potential to appreciate by ~30% on an expected EPS of Rs.6 in FY20 and Rs.8.5 in FY21. The increased container movements between the Far East and within India would lead to its higher capacity utilization. Accumulate.

Va Tech Wabag is an international water systems specialist and full-service provider. Its Rs.11600 crore order book is expected to drive revenue going forward. Analysts expect the share price to appreciate by ~50% in the medium term.

On better working, Dynemic Products is expected to notch an EPS of Rs.19-20 in FY20. The management stated that capacity expansion at Dahej is on track and commercial operations will start soon. The share is poised to fetch a decent gain of ~40% in the medium-to-short term. Buy.

Going by the 9MFY20 results, Kovai Medical Center & Hospital, which has ~1200 bed facilities is likely to notch an EPS of Rs.68-70 in FY20. The share is expected to give 30-40% appreciation in the medium term. Buy.

Welspun India posted a 63% higher PAT for Q3FY20 and an EPS of Rs.4.9 in 9MFY20. Going by its the expansion initiatives, it is set to garner an EPS of Rs.7-7.5 in FY20. Accumulate for decent gains.

Birlasoft, of debt free and cash rich CK Birla group company, has tumbled ~33% from its recent high of Rs.101 and is available at a P/E of 8x. It has 378 active clients and cash of Rs.666 crore as of FY20. Accumulate for hefty gains.

Natco Pharma has announced the successful closure of inspection and an EIR from the USFDA for its drug formulations manufacturing facility at Visakhapatnam (Vizag) Andhra Pradesh. Buy for medium-term gains.

GHCL has revenue of ~Rs.3300 crore and posted an EPS of Rs.8.7 for Q4FY20 and Rs.41 for FY20. Buy for ~50% appreciation in the medium-to-long term.

Lincoln Pharmaceuticals has received the European Union (EU) GMP certification from Germany’s FDA for its manufacturing facility at Khatraj in Gujarat. This will allow it to market its products in all the 27 member countries of the EU and give access to the European Economic Area (EEA) countries. It hopes to enter the EU market with its dermatology, gastro and pain management products and gradually expand product portfolio. A good medium-term buy.

PTC India currently trades at a P/E of 3x and a 12% dividend yield will not affect much with COVID-19 recession. Buy for good returns.

Some analysts strongly recommend Power Finance Co. and REC for medium-to-short term gains. PFC and REC are expected to notch an EPS of Rs.30 and Rs.25 respectively for FY20. Buy.

India may extend anti-dumping duty on carbon black used in rubber industry to protect Indian companies. All carbon black producing companies are likely to benefit.

An Ahmedabad-based analyst recommends Aries Agro, Chembond Chemicals and Kanchi Karpooram.

02/05/2020

TOWER TALK FOR ISSUE DATED 04 MAY 2020

1. Jyothy Labs has launched Margo hand sanitizer. This FMGC deserves a place in every portfolio, especially at current low rates.

2. Bank of Baroda has approved raising up to Rs 13,500 cr. During the year to funds its expansion and business. Worth adding.

3. Clariant Chemicals: Manufacturing units/factories in Maharashtra, Gujarat and Tamil Nadu are back in partial operation with limited capacity. Positive for Company. Add.

4. Granules India has received US FDA approval for Trospium Chloride capsules. The Company is likely to get some more approvals soon. A good long term buy.

5. Sobha which has strong presence in Bangalore, Kerela, Delhi NCR, Chennai, Coimbatore, Mysore and Pune, is being accumulated by knowledgeable circles. Accumulate. The share has the potential to double in less than two years. Buy.

6. Sterlite Technologies is showing strong signs of breakout. The share has the potential to rise by 50% in the next few months. A safe investment idea.

7. Motherson Sumi (automobile componenets giant) is available at half its peak price. Rising volume are suggestive of a big recovery. Accumulate.

8. IB Ventures just refuses to go below Rs. 100/-. Rising volumes aret suggestive of buying at big buying at lower prices. Buy for big gains.

9. Nippon Life Insurance is witnessing big investment interest. The
entire sector is also expected to fare well. Start adding.

10. L&T has reported that it received orders over Rs. 30,000 Cr in the end period of March 20 and that could possibly point to better profitability in time to come. Add.

11. Pfizer (which has declared an interim dividend of Rs. 320/- per share payable on 8 May20) may surprise investors with a bonus issue this year. Its parent company is also close to a Corona virus drug. Add in small lots.

12. Bata India is showing signs of firming up on the bourses.

13. Axis Bank reported a loss of Rs. 1387 Cr in Q4 (v/s a profit of
Rs. 1504 cr in the previous year) on back of higher provisioning and covid related crises. However the bank is set to acquire nearly 30% of Max Life Insurance for Rs around 1,600 cr. Long term prospects remain strong. The bank also plants to raise or borrow Rs. 35,000
cr during the year. Sell now and review later before buying.

14. RIL has planned a massive rights issue, after 29 years to existing shareholders. This mini bonus should not be missed. The
Company is likely to soon become debt free. Add.

15. FMGC major Britannia continues to fare well. The present covid crises is making people add biscuit stocks at their homes and also prefer use of bread in times the flour mills also remaining closed. The share price can appreciate by 25% in the next six
months.

16. Indiabulls Housing Finance is showing signs of a breakout.
The pending court cases are also likely to be decided soon. Contrary to allegations, the Company continues to honor its debt commitments in a timely manner. It would be prudent to start adding in small lots.

17. HESTER Bio has claimed that it very near to making a Covid Vaccine. If it succeeds, it will witness a big bull run. Accumulate.

18. IOL Chemicals, the makers of Brufen, is reporting high
volumes. The entire pharma industry is also faring well. Add.

19. Biocon has the potential of becoming a money spinner. It also owns a chunk Syngene company shares. With so many biosimilars
in the pipeline, this a good share to add.

20. As planned, Polyplex has already started buying back its own
shares from open market, leading to rising prices. Post extinguishment of these shares, EPS will also rise as current workings are also excellent. Add.

21. Laxmi Vilas Bank is showing signs of a rebound amidst reports of strong hands picking up strategic state. The bank has a strong hold in South India. Risk bearing investors may enter cautiously...

25/04/2020

Tower Talk

Facebook has bought a 9.9% stake in Reliance Jio for $5.7 billion. This will help Reliance Industries to significantly cut debt. Add on declines.

GIC Housing Finance is reportedly faring well. It is likely to notch an EPS of ~Rs.15 for FY20, its Dividend payout looks good too. From a high of Rs.281 a year back, it is now available at price of Rs.67. A good investment opportunity.

The RBI announced that banks will not be permitted to pay out dividends for FY19-20 earnings until further notice. A selling pressure is expected in Kotak Mahindra Bank, ICICI Bank, HDFC Bank amongst others. It would be prudent to lighten investments in this sector.

Agriculture inputs manufacturer Sumitomo Chemical India has commenced operations after securing necessary permissions. A positive for the company. Accumulate.

Infosys plans to get its employees back to work soon. It is also looking at setting up COVID-19 testing facilities within in premises subject to availability of testing kits. Accumulate.

Technical charts of Bajaj Finance point towards a big decline in share prices. A selling pressure is mounting. Sell now and buy at lower rates.

Manufacturing operations at Excel Industries have resumed. The worst seems to be over. With normal monsoons around the corner, it would be prudent to add this share.

KEC International resumes operations at a few of its factories in India. A positive for the company. Accumulate.

Amara Raja Batteries partially resumes its manufacturing facilities. Its prospect looks bright. Accumulate.

For Q4FY20, Tata Elxsi posted a 15% higher YoY PAT of Rs.82.08 crore on 8% higher revenue of Rs.438.88 crore. Retain and add.

Larsen & Toubro raises Rs.1250 crore through issuance of non-convertible debentures (NCDs). It plans to resume normal operations soon. Its construction arm has won ‘significant’ contracts for its various businesses. Its prospect looks bright. Start accumulating.

Long term prospects for JMC Projects (India) remain stable as all 4 four Road Project SPVs have resumed the collection of user fee at all fee plazas on National Highways. Normal traffic may resume soon, albeit slowly. Accumulate.

Infibeam Avenues signed a binding agreement to acquire 100% shareholding in AI Fintech, Inc to expand digital payments business in the United States. Its stock prices are on a rise. Investors with a high-risk appetite may enter.

Deepak Nitrite partially commenced production at its manufacturing facilities at Nandesari, Roha, Taloja and Dahej. This bulk Chemicals, Fine and Specialty Chemicals manufacturer has the potential to rise by Rs.100+ in the next one year. Add.

The Schroder Group entities from Hongkong have added ~8.27 lakh shares of The Phoenix Mills from the open market and now have ~5.6% voting rights. For Q3FY20, it posted 30% higher PAT of Rs.91.85 crore on 16.20% higher sales of Rs,511.79. Accumulate.

SBI Life Insurance Company to be included in the F&O segment from May 4. Accumulate.

Nestle India informs that all its manufacturing plants have become operational but at a scaled down level due to ongoing restrictions. Accumulate.

Crude oil prices are falling drastically. Track the sector for opportunities to add ONGC, Oil India, Selan Exploration Technology and Indian Oil Corporation.

Birla Corporation which recently ventured into the construction chemicals is expanding its capacity of cement manufacturing from 15.6 MTPA to 19.5 MTPA along with 40 MW power plant and a 10.6 MW waste-heat recovery. It is expected to notch an EPS of Rs.55 in FY20. The share is poised to move up ~40% in the medium term. Buy.

Bajaj Steel Industries is expected to register an EPS of Rs.75 in FY20. The stock is being split to Rs.5. Buy.

Going by 9MFY20 results, Repco Home Finance is expected to notch an EPS of Rs.50 in FY20. Buy for decent gains in the medium term.

Rushil Decor is available at a discount of 80% from its 52-week high of Rs.705. It is currently undergoing a massive MDF expansion in Andhra Pradesh, which will grow its revenue in future. There are hardly any sellers in the counter.

Accumulate.

Shares of Larsen & Toubro Infotech are being bought by the HNIs and funds on bright long-term prospects. It is expected to notch an EPS of Rs.86 in FY20 on a tiny equity capital of Rs.17.4 crore. Accumulate.

Going by its 9MFY20 performance, Surya Roshni is expected to post an EPS of Rs.20+ in FY20. It has the potential to appreciate by ~50% in the medium term.

The Burman family, promoters of Dabur India have picked up a significant 11.1% stake in Eveready Industries India. A big positive for Eveready Industries. Accumulate.

Welspun Corp a $2.7 billion enterprise has an order book of Rs.10800 crore (domestic Rs.4166 crore). The work on Phase-2 of the Bhopal project (coating plant) is on track and is expected to be commissioned shortly. With a likely EPS of Rs.15 in FY20, the share is available at a discount of 70% from its 52-week high of Rs.234. Accumulate for decent gains.

J Kumar Infraprojects is all set to garner an EPS of Rs.27 in FY20. The share is expected to fetch an attractive gain of ~50%. Accumulate.

Aries Agro is expected to notch an EPS of ~Rs.15 in FY20. The shares are going cheap. Buy.

Kriti Nutrients has attracted fancy investors. On strong fundamentals, the share is expected to gain ~40% going forward. Accumulate.

ISGEC Heavy Engineering (formerly Sarasvati Industrial), which is into Engineering and Sugar business is expected to notch an EPS of Rs.28 in FY20 on a tiny equity of Rs.7 crore. The share is poised to appreciate by ~40% from the current level.

Mahanagar Gas is currently the sole authorised distributor of CNG and PNG in Mumbai and adjoining areas. Its planned Capex in Pen, Uran and Karjat areas along with steady growth in Mumbai provides a strong visibility for volume growth in the medium to long term. Buy for ~20% appreciation.

Srikalahasthi Pipes’ recent installation of backward integrated ferro silicon project and DI Pipes projects will be completed by FY21. It is expected to benefit from the government’s spending on infrastructure and water supply projects worth Rs.12503 crore in Andhra Pradesh. It is all set to garner an EPS of Rs.27+ in FY20. Buy for ~30% gains.

Responding to the fight against COVID-19, Smruthi Organics acquires the manufacturing license for APIS Hydroxy Chlorcquine (HCQ) and Chloroquine Sulphate at its Solapur plant. It will start manufacturing the product shortly. Accumulate.

Sterling & Wilson Solar, a Shapoorji Pallonji Group company, hinted that Q4FY20 is its best quarter both in terms of revenue as well as profits. The share is expected to double from the current level. Buy.

Vindhya Telelinks is expected to notch a consolidated EPS of Rs.220-225 in FY20 on a small equity of Rs.11.8 crore. The share trades at a forward P\E of 2.4x and has a potential to double from the current level. Buy.

Some discerning investors are in the fray to buy the shares of cash-rich Just Dial. With a likely EPS of Rs.42-45 in FY20, the share is poised to advance by 30%s in the medium term. Accumulate.

South Indian Bank is currently trading at an attractive P/E of 3x and 0.2 times its book value. Accumulate the shar with a target price of Rs.10 within a year.

An Ahmedabad-based analyst recommends Anuh Pharma and SMS Pharmaceuticals.

Errata: The People’s Bank of China’s acquiring shares referred to HDFC Ltd. not HDFC Bank as reported in the last issue. The error is regretted.

05/07/2019

Annual budget day special Live profit

19/06/2019

Live trading results

30/01/2019

Live profit running +14,000

06/12/2018

Bank nifty expiry special live profit + 25,000

30/11/2018

30/11/2018

Stock market live profit running = 16,000