Clarification: NMDC
As per some newspaper report, NMDC has scaled down it's target production to 50 million tonnes for 2018-19(next FY). Such half facts give bearish outlook which is not true
1) Production in July month is already up 25%
2) Further NMDC likely to produce 38-40 million tonnes in current year.
Hence *50 million tonnes next year means 25% jump YoY* which will be excellent achievement
*CAN MAKE NEW HIGH:NMDC*
NMDC still available much below it's 52week high of Rs 152. NMDC poised for great show in coming quarters:
1) Q1 Ebidta rose *61% to 1440cr vs 896cr*
2) Q1 PAT rose *89%to 969cr vs 512cr*
ABOVE DESPITE ONE OFF EXP OF 146cr
_Most commendable that Iron ore prices had fallen to 50 dollars during the quarter_
*NOW ORE PRICES HAVE ZOOMED TO 75 DOLLARS. NMDC CAN SOON RAISE ORE PRICES BY 8-10%*
FY17 EPS CAN BE 14-15. PERatio only 9
Motilal Oswal TP 180
Antique TP 150
As per Mr Ahluwalia (Director Finance), NMDC expects to sell its Steel Plant for Rs 14000 Cr. It means *cash inflow of nearly Rs 46-47 per share*
NMDC ALREADY HAS 5300CR CASH
Majority of sale proceeds likely to be used for Dividend distribution.
*TP 148 September expiry* ( May remind that our recommendation JSW Steel at 219 has spurted to 260 in 4 weeks)
BEST BET IN DERIVATIVE SEGMENT FOR SEPTEMBER SERIES
MOST LIKELY MULTIBAGGER
_MAGNUM VENTURES LTD_
Post GST, promoters will be forced to be investor friendly:
1) In hotel industry, it was not uncommon to take CASH payment for banquet functions. It was double whammy for hotel bottom line as F&B purchase in co a/c but revenue nil. Now, it has become nearly impossible. Hence, hotel division of MVL should stop incurring losses
2) Paper Division: Paper industry too had significant cash sales. Now paper division 85000 tonnes of MVL can have hugely improved margins
3) Paper plant has 10acres land, of which only 5acres is occupies
4) Finally, once transfer of debt to ARC and 50% haircut is formally announced by co, stock will stand RERATED
Current mktcap is half of 2017 high and tiny by any yardstick
We will not be surprised if MVL quotes in 3 digits in 2019(Investors may be reminded that we had advised buy on Star Paper at Rs 7 in 2014)
BIG BREAKING NEWS
_NMDC LTD_
As per Mr Ahluwalia (Director Finance), NMDC expects to sell its Steel Plant for Rs 14000 Cr. It means *cash inflow of nearly Rs 46-47 per share*
NMDC ALREADY HAS 5300CR CASH
Majority of sale proceeds likely to be used for Dividend distribution.
NMDC, as per CPSE norms, is also bonus candidate
TP 146-148 September expiry
Top bet in derivative segment
Favourable winds for NMDC stock
*IRON ORE PRICE ZOOM 50% FROM JUNE LOW*
ANTIQUE TP 150
MOTILAL OSWAL TP180
After seeing a steep correction between February and June, the NMDC stock has rebounded. More gains are likely. While the stock's correction was due to declining iron ore prices, recovery in prices and strong June quarter performance lifted sentiment. From highs of $90 a tonne in February, iron ore prices had *fallen to $50 levels by June-end. The price is now close to $75 a tonne*. Despite a correction in iron ore prices during the June quarter, profitability of NMDC improved(
*EBIDTA surged 55% YoY, 71% QoQ. PAT up 37% YoY, 89% QoQ*)
http://www.business-standard.com/article/companies/favourable-winds-for-nmdc-stock-117081801537_1.html
AGRITECH INDIA LTD
Co is implementing some food park. However revenue from same should start only in CY19. Till then, co has zero business
However stock is being promoted that _Agritech has reported huge EPS and stock trading at very low PE_
However truth is entirely different
In FY16, co had EPS of 21.90 but it was *only due to one time gain from land sale* Without same, co would have shown small loss
Similarly in Q1,there is EPS of 27. This too is *only due to one time gain from sale of Nath Bio shares* Without same, EPS would be zero
Hence investors should take decision after considering above facts
Q1EPS 18.73: MOST UNDERVALUED SUGAR STOCK
_Combo of Sugar, TyreCord, Fine Chemicals, API_
DCM SHRIRAM *IND* LTD: TP 700
BseCode 523369 (10FV)
Rationale for Recommendation:
1. Diversified Product range
2. Highly profitable Boom in All divisions
3. *FY17 EPS 70*
4. *FY18EEPS 77*
DSIL is diversified conglomerate engaged in production of SUGAR, TYRECORD, API, FINE CHEMICALS
A. _Daurala Sugar_ : One of the oldest sugar Mills and well-known name in U.P., sugar factory produces Premium Packages Sugar, Sugar Cubes, Sugar Sachets and Pharma grade Sugar. Also has 45000 KL distillery to produce Liquor, ENA
B. _Shriram Rayon's_ : Again one of the oldest and most well known name in Tyre industry, produces Rayon Tyre Yarn/Cord/Fabrics and Nylon yarn
C. _Daurala Organics_: This division produces Organic/Inorganic Chemicals and Drug Intermediates
FY17. FY16
Sales. 1506. 1216
PBT. 152 40
PAT. 122 34
Equity. 17.40
EPS Rs *70.19. 19.60*
DSIL reported exceptionally good nos forFY17 with NP of 122cr vs 34cr. Such performance was possible not only due to boom in sugar prices but TYRECORD division too performed much better due to robust demand from tyre industry and improved performance of Chemicals. In fact, *tyre cord industry has become seller mkt with strong pricing power*
_Finance cost is just 2% of Sales which should come down further with increased earnings_
FY18E
Sales. 1550
NP. 134
EPSRs. 77.
DSIL is available at extremely attractive Valuations:
1) *Tdg @ 4.40xFY17eps*
2) *Avlbl @ 4.10xFY18Eeps*
3) BValue Rs 210
Even if DSIL gets modest PERATIO of 9, stock should be 700
( *We repeat Bse code no is 523369*)
Five Star Hotel+85000ton Paper: Mktcap 52cr
MAGNUM VENTURES LTD
Delhi based MVL is in business of hospitality and paper mfg.
1) Hotel Division: Co owns and operates 5 star hotel *Country Inn*with 212 rooms which also has 4 restaurants and coffee shop. Located in Sahibabad , outskirts of Delhi
2) Paper Division: Spread over 10 acres, it has 85000 tonnes capacity
MVL doesn't have good track record. However co appears on cusp of turnaround. Stock price can go up multiple times, hence buy recommendation.
FY17
Sales. 212
Depreciation. 23.87
Loss. -26.34
Exceptional. 129.50
Gain
Profit 103
MVL made loss of 26.34 from its business operations. _Since co provided 23.87 cr for depreciation, Cash loss was 2.50cr_ . Due to One Time Gain of 129.50cr, MVL showed profit
Q1FY18. Q1FY17
Income 65. 60
NP. 0.24. -(11.42)
MVL has reported better nos for Q1 with *NP of 24 Lacs Vs LOSS of 11.42cr YoY*
MAJOR DEVELOPMENT: Major portion of MVL is under restructuring wherein ARC is acquiring debt of MVL (likely haircut 50%) and payment of same by MVL can be spread over 8 years *interest free*. It will lead to substantial write back which will make MVL Networth+
Reduction of debt will lead to better Operating margins in current year
Although we are not able to estimate financial for FY18 ( MVL will report profit, no Loss) still MVL appears risk free buy considering:
HOTEL ITSELF COULD BE WORTH MORE THAN 300 CRORES
PROSPECTS OF PAPER DIVISION MAKING PROFIT ARE QUITE BRIGHT
MKTCAP OF 52 CR IS
PEANUTS
Stock can be 30 in 1 year. If MVL can continue improving its financials, stock can be REAL MULTIBAGGER in 2-3 years
Compared to recent high of Rs 24, stock is attractive buy at CMP
Buying recommended
*CPC PRICE LIFETIME HIGH*: RAIN INDUSTRIES
CPC, CTP, Chemicals & 3.5 mn Ton cement
Huge Assets/Value: Mktcap Tiny
The key takeaways from Rain Industries call Q2CY17 Result
1. Demand for CPC and CTP continues to improve
2. Company hopeful of *raising margins* in Carbon segment;
Chemicals segment *EBITDA should likely to improve* from Q3CY17.
3. Aluminium demand positive; prices rising with lower inventories . Some western world smelters likely to restart smelters which will futher improve demand of CPC and CTP
4. Tightness in supply of GPC too, but Rain well-poised to get supplies given its long-term relationships with suppliers
5. For Russian JV, they will source raw material from their partner Severstal Steel
6. Refinancing likely post- January to lower interest costs further
COMMENTS OF DoW
_Rain is LARGEST producer of CPC in the world with 2.5million ton_ and biggest beneficiary of CPC boom
In concall, conservative mgtmnt is (1st time) is so bullish. *Order booking of CPC for H2 at lifetime high prices. H2 EPS can be 13*
TP 200 Dec2017
Barring unforeseen, stock has potential to be 450 in 24-30 months
KSCL:To bounce back sharply
As estimated by DoW, KSCL has reported *whopping 31% rise in NP QoQ, also beating all Street estimates*
Q1 EPS is 29.31
NP margin 34.27%vs 31.25%
_Stock has come down ONLY due to selling of margin funded shares_
CASH IN HAND 658CR
MKT VALUE OF LANDBANK 800+CR
STOCK TDG AT JUST 14XFY18EEPS
Almost all brokerages should upgrade KSCL as BUY
*PEER COMPARISON: KSCL CHEAPEST*
Name. PERatio
DuPont 31
Monsanto 25.3
Syngenta 36
Monsanto india 32
Bayer. 31
*KSCL. 14*
_HUGE SCOPE FOR UPGRADE_
Worst is over and KSCL can make new high
Update:Jaypee Infratech
We advise our followers not to get demoralised by sensation being created in various sections of media
JIL has 6175 acres of land bank, Yamuna expressway and 2 hospitals. Hospitals itself are worth more than its mktcap. Co spent 13000cr on making Expressway which today will cost 25000+Cr
JIL is in trouble at present but Will come out triumphant
There are media reports that _Govt will sell its assets to deliver homes to home buyers_. Legally, DoW feels it is not possible under existing laws. If it were so, there would not have been hundreds of defaulting builders and govt could very well do same against other builders. And govt could apply such law against rogue industrialists whose NPAs have driven PSBs on brink of sickness
We reiterate our TP in 3 digits
( DoW had recommended Star Paper at Rs 7 and Mangalam Drugs at Rs 6, I G Petrol at Rs 18-20)
*BY THE TIME TRUTH PUT ITS BOOTS ON, LIE HAD ALREADY TRAVELLED HALF THE WORLD*
_Jaypee Infratech Ltd_
This is what happened with JIL when almost every electronic channel screeching loudly in spreading lies about JIL's alleged insolvency
DoW was only channel which did its best to clear fog from investors' minds. JIL suffered few lower circuits. However finally TRUTH has smothered media lies and Jaypee Infratech is UC with huge volumes
We once again advise investors to remain invested for multiple gains in coming year(s)
Morgan Stanley picks
THE “FUTURE” MEGA CAP LIST
JSW STEEL ONLY STEEL STOCK IN THE LIST
Cummins India
*JSW Steel*
Lupin
M&M Financials
Petronet LNG
UPL
Zee Entertainment
*CLSA on JSW Steel: BQ Maintain Buy with TP of Rs 300*
Costs rose sequentially partly due to higher-cost coking coal inventory
Management positive on demand, pricing and cost outlook
Price hikes, lagged benefit of input cost decline and higher volumes to drive JSW’s margins
Better pricing/margin visibility due to anti-dumping duties
Tightening Indian steel demand-supply post FY19
Large value-accretive Dolvi expansion coming up in FY21
*Credit Suisse on JSW Steel: BQ Maintain Outperform; TP hiked to Rs 265 from Rs 240*
Results beat on strong performance from subsidiaries
Export prices rising and domestic prices still at a discount
FY18E/FY19E EPS rise 1%/3% due to result beat and higher steel prices
Remain constructive on the back of improving global steel prices
Q1 Update: Panchmahal
DoW had estimated NP for Q1. However co has reported Loss of 2.19cr. Although this figure is lower than Loss of 4.85 Cr in Q1/FY17.
For Q1 Sales have increased to 112cr Vs 105cr QoQ. Only reason for Loss is Other Expenses are 9.49cr Vs 4.44cr, increase of 5 Cr. And Other Expenses have increased only due to ISO18001 exercise. Panchmahal has recently obtained ISO18001 which is mandatory for exports to Europe. Hence investors not to panicked as Q3 onwards, results should be positive with substantial profits
*With mktcap of less than 100cr, Panchmahal is most Undervalued Steel stock*
Can add more
RAIN INDUSTRIES: Q2CY17 Result:
The key takeaways from Rain Industries call:
1. Demand for CPC and CTP continues to improve
2. Company hopeful of *raising margins* in Carbon segment;
Chemicals segment *EBITDA should likely to improve* from Q3CY17.
3. Aluminium demand positive; prices rising with lower inventories . Some western world smelters likely to restart smelters which will futher improve demand of CPC and CTP
4. Tightness in supply of GPC too, but Rain well-poised to get supplies given its long-term relationships with suppliers
5. For Russian JV, they will source raw material from their partner Severstal Steel
6. Refinancing likely post- January to lower interest costs further
COMMENTS OF DoW
In concall, conservative mgtmnt is (1st time) is so bullish. *Order booking of CPC for H2 at lifetime high prices. H2 EPS can be 13*
Barring unforeseen, stock has potential to be 450 in 24-30 months
My reading of the market is that, it's still early days to comment on change of trend. The broader uptrend is still intact as long as the Nifty holds on to, say, 8950. Till then, the market will gyrate up & down and every correction of say 5% (like now) will be a "buy on dips" opportunity. Except geo-political factors, there is no major change in/concern to the economic fundamentals both in the U.S. & India. Further, liquidity is in surfeit and RBI is not proactive to sterilize the excess liquidity in the economy. As a result, equity still remains "the best in class" asset/ investment. What we see in India today is deflation and it may take some time for the tide to turn around. The informal economy (about 40%) is in a moribund state due govt.'s drive on black money and the economy is undergoing a much needed structural change. Anticipating this, the market has moved up much ahead of the fundamentals. Given the above, the present correction is long overdue from a valuation perspective. In the short-term, I expect the market to stabilize around 9750 in the Nifty and trade sideways in the 9600-10,000 zone.
Contributed by Sh G R Chari
Smear Campaign against Jaypee Infratech:
Since last 2 days, various media channels engaged in mud- slinging against Jaypee Infratech saying that co HAS BEEN declared Insolvent. There is not grain of truth in such ill-informed lies.
NCLT has only admitted petition of lenders and insolvency professional has been appointed to oversee the insolvency proceedings. Various parties including lenders, promoters, other secured unsecured creditors will be invited for their submissions. If no resolution is found in 90+180 days, only then jaypee infra can be declared insolvent.
Company has huge assets and main beneficiary of upcoming Jewar airport. Jaypee will offer part of land parcels to settle entire debt and it is highly highly unlikely that it will be tagged as insolvent
*WEB OF DECEIT?*
_FiberWeb India_
This BSE listed co claims to be in biz of nonspun bonded fabrics. Have a look at latest Consolidated no's of Q1:
1) Revenue 54cr Vs 13cr, *up 400% YoY*
2) Finance Cost 99lac Vs 101lacs
3) Other Expenses 2.66 Cr Vs 3.48cr
4) Employees Cost 1cr Vs 1cr
5) *Raw Material Cost 77.50% Vs 42%*. R/M cost 41.6cr( sales 53.7) Vs 5.5cr(sales 13cr)
When Sales go up _BY 310%, employees cost stagnant, finance cost down and OTHER Expenses decline_
Co *claims* to drive 70% revenue from exports but no bifurcation of domestic/export sales. No Forex Gain/Loss
FY 17 sales gallop nearly 100% YoY but *R/M cost 71% Vs 56%* and Employee cost stagnant at 4.20cr and Other Expenses decline by 1cr
AMAZING ACCOUNTING TECHNOLOGY
SEBI FINANCE MINISTRY SHOULD ORDER FORENSIC AUDIT TO FIND OUT REAL SHELL COMPANY
Rain Industries:TP 450
Rain is the largest mfr of CPC in the world and 2nd largest for CTP , apart from 3.5 million ton cement
Today co has to declare Q1 result. Looking at uptrend in prices of its products, Rain can report HIGHEST EVER quarterly PAT
Rain is also setting up 5 lac ton green field project for CPC in India to meet increased demand
Recently CPC prices have touched all time high. Rain can report STEEP rise in H2 profits
There can be many triggers in offing in coming months
Our TP(barring unforeseen)
175-200 by Dec 17
450-500 in 24-30 months
OUR TOP PICK
Jaypee Infratech:Update
1) There are media reports that JIL has been declared insolvent, creating wrong impression. This is not correct terminology used by not-so-knowledgeable guys.
Fact is that NCLT has admitted application of lenders for insolvency proceedings. Insolvency professional has been appointed to conduct proceedings. Now, various sides including lenders, promoter will be invited for their submissions. Co can be declared insolvent only if promoter not offering any solution. However JIL has 6175 acre land bank valued at 50000+crores. Like JP Associate, in case of JIL, promoter don't want to cheat, not asking for haircut. Promoter will offer part of land parcels to settle debt. And lenders will have no option but to accept this fair proposal. JIL will be 1st co to come out of NCLT. Nothing to worry
We reiterate TP 100 and TP(2) 200
*4800cr Turnaround:PFC*
PFC has plummeted from 169 due to LOSS of 3409cr in March quarter caused by 4479cr provision of NPAs
However, as per our estimates, PFC can report spectacular Turnaround in Q1
*Q1 NP CAN BE 1400CR VS LOSS OF 3409CR IN Q4*. This turnaround 4800 Cr possible as PFC is likely to upgrade several NPA accounts, leading to Asset quality improvement
Provision in Q1 can be as *low as 500 Cr Vs 4479cr in Q4*
_Book Value of Rs 138 means Bonus Shares Issue may be liberal_
PFC CAN DISBURSE 30,000+CR TO DISCOMS IN Q2/Q3
Appears that Q4 loss was one-time blip and PFC should report *profit in all quarters of FY18*
Can PFC make new 52 week high!
PFC ( 134.30 ) - Triangle Breakout. *Supp @ 130. *Pattern Target 143*
Abv That Extended Tgts 147 & 152.
KSCL:Result Update Q1
As estimated by DoW, KSCL has reported *whopping 31% rise in NP QoQ, also beating all Street estimates*
Q1 EPS is 29.31
NP margin 34.27%vs 31.25%
Stock has come down due selling of margin funded shares.
CASH IN HAND 658CR
MKT VALUE OF LANDBANK 800+CR
STOCK TDG AT JUST 16XFY18EEPS
Stock is out of ban. Almost all brokerages should upgrade KSCL as BUY
Worst appears over and stock should bounce back
ADD MORE
*Huge 30% growth YoY*
KSCL:Q1 Result today
DoW estimates Q1 NP at _203 Cr Vs 154 Cr_. KSCL likely to best all Street estimates including CNBC by big margin
Further KSCL has introduced highly profitable Micronutrients which can add 30cr to its bottom line from FY19
*FY18 NP is estimated at 240-260 Cr Vs 87cr in FY17*
Stock price can be 775 August expiry
POISED FOR BIG IMPROVEMENT:
PANCHMAHAL STEEL
1) For Q1, PSL can report PBT of 2.90 Cr Vs LOSS of 4.85 Cr, *turnaround of nearly 8 Crores*
2) PSL has obtained ISO 18001 recently. It makes PSL eligible for Exports to Europe
3) GST has served big blow to unorganized sector competitors and PSL _stands to benefit immensely from GST_
*Extreme Confidence*
PANCHMAHAL STEEL LTD
Promoter has increased his stake to 72.62% vs 70.79% QoQ
Many times promoters increase their stake when their stake is on lower side, say 40-50%.
However PSL promoter already held 70.79% and still buying another 2% from open market means that PSL HAS GREAT FUTURE
Moreover, _floating stock slowly drying up as 2 institutions holding 17.70 lac shares have completely exited_
With mktcap of just 110cr, PSL is CHEAPEST STEEL STOCK
*Intrinsic Value 1300cr:Mktcap 60cr*
NTC INDUSTRIES LTD is engaged in manufacture and
exports of cigarattes. In fact, incorporated in 1931 and earlier known
as National Tobacco Industries Ltd, NTC had pioneered manufacture of
85mm Filter cigarettes in India and also 1st company to introduce
Mentholated cigarettes. Main brands of NTC are;
Regent
COOL
No 10
National Gold Flake
Fine Cut
MayPole
Jaipur
General
Its licensed capacity is 2250 million sticks per annum.
However, financial performance of NTC is small. Cigaratte industry in
India and globally is dominated by Global Giants with ultra-strong
brand presence in all countries. In such a scenario, NTC did not and
does not have financial muscle to spend huge amounts to create brand
awareness of its brands. Therefore, company is utilizing miniscule
portion of its licensed capacity as company is able to sell its
cigarettes in North Eastern states and also do exports to Middle East
S America, Africa also (but here again margins are not good in these
markets).
FINANCIAL PERFORMANCE:
2016-17
Rs/Cr
Sales 27
PAT 3.30
Equity 10.75
EPS Rs 3.07
For FY17 , NTC's sales stood at 27crores and Rs 3 EPS
RATIONALE FOR RECOMMENDATION:
NTC is not being recommended for
investment from its current (or near future) financial performance.
But scrip is being recommended as it has HUGE HUGE INTRINSIC value
which has potential to be unlocked in future. It may be clarified that
unlocking of this intrinsic value may not take place in near future
and in fact, can take few years. But current market cap is MINISCULE
compared to potential of the company:
1. *NTC has 20 acres of land in Calcutta.* Its cigarette factory
occupies only small portion of this entire land.MARKET VALUE OF THIS
LAND SHOULD BE OVER *Rs 300 crores.* At present, NTC do not have plans
to sell the surplus portion of land. Instead, company is gradually
building/constructing (from internal accruals) offices/warehouses
which are being leased to ensure annuity type of income every
quarter/year. If NTC succeeds in building/constructing
warehouse/office complex on ENTIRE SURPLUS Land of its factory in next
4-5 years, NTC
MAY GET MORE THAN Rs 15 CRORE AS ANNUAL RENTAL INCOME. NTC is not
resorting to borrowings to expedite the construction on surplus land.
Company is following conservative path of internal accruals.
2. CIGARETTES DIVISION: This division may literally prove to be
Goldmine for NTC. Investors may be aware that in India, issuance of
new license for cigarette manufacturing has been banned and even
capacity expansion to existing companies is banned. In nutshell, due
to pollution and health hazards when govt is trying to discourage
consumption of tobacco/based products, there CAN NOT be new players in
cigarette industry and there CAN NOT be new capacity additions.
Conservatively, CIGARETTE LICENSE/CAPACITY OF NTC IS VALUED AT OVER Rs
1000 CRORES.
Management still has not crystallized any plans whether
any branded foreign cigarette company can be roped in as JV partner
for producing/selling cigarettes as NTC has inhouse manufacturing
facility and adequate capacity license. Or, will company be able to
find a buyer whom it can sell its Cigarette division.
Thus, market value of its Land in Calcutta and its cigarette
license/division can be over *Rs 1300 crores*. However, current market
cap of NTC is just Rs 60 crores.
Investors who have patience of 2-5 years can buy NTC in BIG quantity.
Investors looking for gains in short term may make nominal gains
as no possibility of value unlocking in near future. However, if
investors hold the scrip for 2-5 years, appreciation (depending on
when value unlocking takes place) can be anywhere between 300% to
500%.
Earlier, _all-time price of NTC was Rs 327_ when negotiations had started for
selling its cigarette license (which did not materialise). Current
market cap is just 5% of its estimated intrinsic value. Even if sale
of cigarette license is ignored and NTC develops entire surplus land
for Commercial/Industrial Park etc, lease rental alone, after few
years, can translate into PBT of more than 15 crores. Worst
scenario is that investors may LOSE upto 10-20% or GAIN from 300% to
500% in 3-5 years.
Promoter holding is 67.43% and finally, Debt-free
TO TAKE OFF SOON:
*TFCI*
DoW had done Breaking News about disinvestment of IFCI stake in TFCI through eAuction in favour of private sector. We had estimated disinvestment to conclude by July. However, it didn't happen. Reason was that IFCI didn't had chairman
Now, as per our fully reliable source, file for selection of IFCI chairman is in PMO which can be cleared anytime soon. And new Chairman can assume office in next 1-2 weeks. Hence, now *TFCI disinvestment can definitely happen latest by September 2017*
AND IT IS ALMOST CERTAIN THAT DISINVESTMENT WILL HAPPEN AT 140+, FOLLOWED BY OPEN OFFER.
Investors can add more now
MOST UNDERVALUED SUGAR STOCK
_Combo of Sugar, TyreCord, Fine Chemicals, API_
DCM SHRIRAM *IND* LTD: TP 700
BseCode 523369 (10FV)
Rationale for Recommendation:
1. Diversified Product range
2. Highly profitable Boom in All divisions
3. *FY17 EPS 70*
4. *FY18EEPS 77*
DSIL is diversified conglomerate engaged in production of SUGAR, TYRECORD, API, FINE CHEMICALS
A. _Daurala Sugar_ : One of the oldest sugar Mills and well-known name in U.P., sugar factory produces Premium Packages Sugar, Sugar Cubes, Sugar Sachets and Pharma grade Sugar. Also has 45000 KL distillery to produce Liquor, ENA
B. _Shriram Rayon's_ : Again one of the oldest and most well known name in Tyre industry, produces Rayon Tyre Yarn/Cord/Fabrics and Nylon yarn
C. _Daurala Organics_: This division produces Organic/Inorganic Chemicals and Drug Intermediates
FY17. FY16
Sales. 1506. 1216
PBT. 152 40
PAT. 122 34
Equity. 17.40
EPS Rs *70.19. 19.60*
DSIL reported exceptionally good nos forFY17 with NP of 122cr vs 34cr. Such performance was possible not only due to boom in sugar prices but TYRECORD division too performed much better due to robust demand from tyre industry and improved performance of Chemicals. In fact, *tyre cord industry has become seller mkt with strong pricing power*
_Finance cost is just 2% of Sales which should come down further with increased earnings_
FY18E
Sales. 1550
NP. 134
EPSRs. 77.
DSIL is available at extremely attractive Valuations:
1) *Tdg @ 4.40xFY17eps*
2) *Avlbl @ 4.10xFY18Eeps*
3) BValue Rs 210
Even if DSIL gets modest PERATIO of 9, stock should be 700
( *We repeat Bse code no is 523369*)
CREDIT SUISSE ON LUPIN
*Cuts target to Rs 920*
Maintain Underperform
Q1 weak with disappointment in US sales and India impacted by GST
Fortamet as a molecule continues to lose market share to Glucophage
Lupin's share is down from 70% to 50% now in Glumetza
Inventory days in India halved to 20 days during GST
R&D expense to stay high as Tiotropium DPI Inhaler trials started
*Deterioration:PNB Q1*
Today PNB can report disappointing financials with all-round deterioration in ASSET Quality
1) *Gnpa should be 13.90% YoY 12.25,%*
2) *Fresh slippage can be 6650cr Vs mkt estimate of 5000cr*
3) GROSS NPA CAN BE 57700+CR
4) _Actually Loss from operations. Small Profit possible only due to Tax write back_
Overall results should be poor than estimates and YoY
Outlook not encouraging as *CAG in its report has observed that PNB has made much less provision than required under RBI guidelines*
FUTURE PROVISIONS CAN INCREASE DUE TO AGEING AND FOR CASES REFERRED TO NCLT UNDER IBC
*CLSA on JSW Steel: BQ Maintain Buy with TP of Rs 300*
Costs rose sequentially partly due to higher-cost coking coal inventory
Management positive on demand, pricing and cost outlook
Price hikes, lagged benefit of input cost decline and higher volumes to drive JSW’s margins
Better pricing/margin visibility due to anti-dumping duties
Tightening Indian steel demand-supply post FY19
Large value-accretive Dolvi expansion coming up in FY21
*Credit Suisse on JSW Steel: BQ Maintain Outperform; TP hiked to Rs 265 from Rs 240*
Results beat on strong performance from subsidiaries
Export prices rising and domestic prices still at a discount
FY18E/FY19E EPS rise 1%/3% due to result beat and higher steel prices
Remain constructive on the back of improving global steel prices
Excellent Buy:TFCI
TFCI has reported good nos for Q1
Q1 PAT stands at 22 Cr Vs 17.20cr
EPS is 2.73
*Q1 NP is highest ever*
TFCI CAN REPORT EPS OF 13 FOR FY18
*STOCK IS TRADING @ PERATIO OF 8.15 AND 1.49XBOOK*
Most Undervalued NBFC
Stock still trading below 52week high of 118
Disinvestment by IFCI has been delayed a bit but is on course ( should happen next month)
TFCI TP Rs 250-300 in 2018
