Board of Directors of Indiabulls Real Estate Limited at its meeting held on October 11, 2019 has approved a proposal of Rs. 500 Crores of buyback of upto 5 Crore fully paid-up Equity Shares, representing approx. 11% of its total existing paid-up equity capital at Rs. 100/- per Equity Share
Other Information about the Buyback
•The Entire procedure might take approximate 3-4 months. •Please note the stock pice is highly volatile and under tremendous selling pressure on account of negative news flows surrounding management. Above, analysis is based on present CMP which may not hold in course of time. Actual stock price may be much lower than present value, leading to all calculation going haywire.
Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document. This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis report Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh Kant Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter:
INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time. Research Analyst has not served as an officer, director or employee of Subject Company One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)
Posted by Mehul Kothari | Published on 15-OCT-2019
Diwali Picks 2019 – Top 5 Investment Ideas
In the present environment of global trade wars, macro-economic uncertainty, and slowing domestic economy, we tried to discover investment ideas that can not only withstand this turbulence but will also likely be first movers when the tide turns.
A stable government, aggressive policy reforms of far-reaching consequences, lower interest rate trajectory, good monsoons, stable rupee and range-bound crude oil prices are seeds for economic revival. We expect the economy to be back on track from FY21 onwards as benefits of the recent tax reforms will play out in full throttle.While identifying investment picks, we followed under mentioned rationales:
Emphasis on steady businesses
Top & bottom line compounding in excess of 10% for the last 5 years
Healthy return ratios (ROE over 10%), low or negligible debt, and insignificant promoters’ pledge
Valuation comfort with respect to fair value
Performance Highlights of ‘Diwali Picks’ 2018We are pleased to highlight the performance of our Diwali picks in 2018. As on 14th October, the portfolio has returned 16.58% on equal weight basis, while Nifty50 and Nifty500 clocked 7.42% and 3.20%, respectively.Hero MotoCorp LimitedInvestment Rationale:
Hero MotoCorp is the largest two-wheeler maker in the country and has maintained its leadership position over last several years.
Its ability of adapt and quickly sense customer preferences has been instrumental in its holding on to the leadership position irrespective of economic cycles. From selling 33 lakh in FY08 to 78 lakh units in FY19, it has come a long way.
Its foray into scooters, overseas markets, premium segment, and e-vehicles is not only helping it to negotiate the present automobile downturn, but is also preparing it to capitalize on the future turnaround better than its peers.
Strong financials, high return ratios, stable operating margins, steady cash flows, capacity enhancement, and a line-up of new product offerings makes the company better placed to tackle industry cycle changes.
The company stands to gain from corporate tax cuts announced by the Government of India. The company stands increase its net profit by ~8% on availing the revised tax structure.
The valuation looks attractive, as the stock has corrected almost 30% from peak levels. Historically, it trades at a PER of 18x (TTM basis) while it is now available at a PER of ~14x (TTM). Risk-reward ratio appears favourable from hereon.
The monetary policy has been accommodative. RBI has cut interest rates by 135 basis points so far. The prevailing repo rate is 5.15%, just shy of the 10-year low of 4.75%. Good monsoons and favourable government policies are laying the foundation for an economic revival. We are optimistic of an economic turnaround happening sooner rather than later.
ValuationWe believe the management conviction of growth picking up from H2FY20 will hold. Lower interest rate scenario, good monsoons and stable input prices augur well. The entry into e-vehicle and premium segment will be a blended realization accretive. Conservatively valuing the company at a PER of 16x FY21e, we arrive at a target price of Rs3,376, implying an upside of around 27% from current levels. We recommend ‘Accumulate’ on HeroMotoCorp.Financial SummaryAbout the CompanyOverview
Hero MotoCorp has been at the forefront of designing and developing technologically advanced motorcycles and scooters for customers around the world. It became the world’s largest two-wheeler manufacturer in 2001, in terms of unit volume sales in a calendar year, and has maintained the coveted title for the past 18 years.Manufacturing FacilitiesThe company has 5 manufacturing facilities in India and two overseas (Colombia and Bangladesh). The company has commenced construction of a new manufacturing facility at Chittoor, which once operational, will take the overall installed capacity to about 11 million units.In addition, the company has an R&D centre at Jaipur with key focus on building a premium portfolio, enhancing scooter offerings, addressing regulatory changes (viz. BS VI), and preparing for EVs.
JK Paper LimitedInvestment Rationale
The paper industry is undergoing a paradigm shift on usage as volume growth shifts from printing and writing copiers to packaging and boards.
E-commerce has been the chief consumption driver aided by environmental concerns over single-use plastics as packaging material.
The company has been a turnaround story from reporting losses in FY14 and FY15 to a profit of around Rs425 crore in FY19.
Paper industry in India is poised for significant growth as annual paper consumption per capita is merely ~13kg in comparison to ~200kg in North America and global average of ~58kg.
Acquisition of Sirpur Paper Mills will significantly enhance its capacity from ~4,55,000 tonnes per annum (TPA) to 5,91,000 TPA. Operating leverage and benefits of the same started accruing from Q1FY20. Before the acquisition of Sirpur Paper Mills, it was operating at 100% capacity utilisation.
To capture growing demand for virgin fibre boards (VFB) the company is enhancing its capacity further to 2,70,000 TPA from 90,000 TPA, which is likely to be completed in the next 2 years. After this, it will become second-largest producer of VFB in the country.
Online retail, FMCG, Food & Beverage, Pharmaceutical and Textile sectors are demanding packaging paper more than off-sets. Also, due to the advent of the digital era, the usage of printing, writing, newsprint, and speciality papers has reduced.
ValuationThe company is trading at a PER of 4.30x on a TTM basis. Healthy balance sheet, considerable reduction in debt along with improving operating margins makes the risk-reward ratio quite favourable. Operating margins have improved to 27% (FY19) from 8% in FY14. Debt/equity ratio has reduced to 0.76x in FY19 from 2.42x in FY14. We expect revenue of 15% CAGR for the next couple of years. Conservatively valuing the company at a PER of 6x FY21E, the target price is Rs174 per share, with an upside of around 50% from current levels. The company has scope for potential re-rating. We recommend ‘Accumulate’ on JK Paper.About the CompanyJK Paper Ltd. has two large integrated paper manufacturing units:
JK Paper Mills, Rayagada, Odisha
Central Pulp Mills, Songadh, Gujarat
It is the market leader in branded copier paper segment and among the top two players in coated paper and high-end packaging boards. Its products are sold through an extensive distribution network of 188 wholesalers, 10 depots and 4 regional marketing offices, covering nearly 4,000 dealers. It offers a wide product range and its brands are synonymous with premium quality paper. JK Paper has a Wide Product Portfolio:
Office papers - JK Cedar, JK Copier, JK Easy Copier, JK Sparkle, JK Copier Plus and JK Excel Bond. New brands 'JK CMax' and JK Max have established presence in the market.
Packaging boards - JK TuffCote, JK Ultima, JK TuffPac, and JK IV Board
Printing & writing papers - JK Cote, JK Ledger, JK SHB, JK Evervite, JK Finesse, JK Elektra, JK Lumina, JK Ultraprint, and JK Esay Draw
Speciality papers - MICR cheque paper, parchment, and cedar digital
Escorts LimitedInvestment Rationale
The company staged a remarkable turnaround in the last 10 years and has been gaining market share since then.
A focused product offering, high emphasis on cost control, better operating synergies, happy dealerships and enabling business policies are key factors for the turnaround.
The management has been able to tackle the recent slowdown well. It delivered 2.24% YoY growth in tractor sales for the month of September when competitors are seeing de-growth.
It has strong positioning in north India where monsoons were good. There are chances of a 7% hike in the minimum support price for the Rabi crop. The recommendation for the same has been made by Ministry of Agriculture to the Cabinet.
The company stands on strong financials. The balance sheet is almost net-debt free, has healthy return ratios and operating margins, and ROE is in excess of 20%.
Lower interest rate cycle, good monsoons and benign input prices augur well.
Recent corporate tax rate cut by the Government of India is likely to benefit it by adding around 9% to net profits.
ValuationEscorts is trading at a PER of around 16x on TTM basis. It usually trades at a higher multiple of 25-27x on TTM basis. We believe the company will not gain market share from its competitors but is also well placed to capitalize on the future economic revival. It appears poised for a re-rating. Valuing the company at a PER of 18x FY21E, target price is Rs810 per share, implying an upside of around 35% from current levels. We recommend ‘Accumulate’ on Escorts.About the Company
Escorts Limited is one of India’s leading engineering companies for farming and construction equipment in the country. For seven decades, Escorts has had presence three segments:Agri machineryEscorts Agri Machinery has, in the last seven decades, committed itself to enhancing India’s agricultural productivity and adding value to the farmer’s life. Escorts currently provides technologically superior range of 22 HP to 80 HP tractors under two brands: Farmtrac and Powertrac.Construction equipmentEscorts provides equipment for material handling, road building, earth moving and other services, addressing the large national opportunity with a comprehensive basket of products.Material handling equipment and railway equipmentEscorts Railway Equipment Division (RED) possesses rich, multi-decade experience in the manufacturing of critical railway components. The division (operationalised in 1962) is one of the oldest such units in the country, partnering with the Indian Railways in its modernization journey.
Godrej Consumer Products Ltd.Investment Rationale
Godrej Consumer Products is a niche play on consumption. Its products like Good Night, Hit, Cinthol, and Godrej Expert have been household names for decades.
Household insecticides, hair colour, personal care (soaps) have been the mainstay of its product stable. A concentrated product portfolio and strong brand equity and recall have been the mantra of its remarkable journey of over 100 years. The top 10 brands contribute 70% of the revenue.
Geographical diversification has delivered healthy dividends to business. Around 46% of the top line contribution comes from rest of the world, primarily from African countries, Indonesia, Latin America and the Middle East, which serves as a natural hedge against slowdown in the domestic economy.
In the last 10 years, revenue has grown at 25% CAGR and net profit at 31%. Equitable distribution of revenue comes from personal care, home care and household insecticides. Air fresheners and incense sticks are gaining traction.
Wet hair products have been hugely successful in African countries.
Healthy balance sheet, high return ratios, robust cash flows, and high operating margin provide much needed margin of safety in times of economic slowdown.
ValuationThe stock is presently trading at a PER of 30x on TTM basis. Usually, it trades at a PER of 40-45x (TTM basis) during the last 5 years. We expect FY20 to end with de-growth of around 3-5% on top and bottom line. However, a pick up in revenue and profitability is expected from the onset of FY21. Conservatively valuing the company at a PER of 35xFY21E, we arrive at a target price is Rs875 per share, implying an upside of around 26% from current levels.About the Company
Godrej Consumer Products is a leading emerging markets company. As part of the over 122-year old Godrej Group, the company has a proud legacy built on the strong values of trust, integrity and respect for others.
Godrej ranks among the largest household insecticide and hair care players in emerging markets.
In household insecticides, Godrej is the leader in India, the second-largest player in Indonesia and is now expanding its footprint in Africa.
Godrej is the leader in hair extensions in Africa, the number 1 player in hair colour in India and Sub-Saharan Africa, and among the leading players in Latin America.
Godrej rank number 2 in soaps in India and is the number one player in air fresheners and wet tissues in Indonesia.
LIC Housing FinanceInvestment Rationale
A strong HFC player, promoted by LIC of India, has been in business for over 30 years.
Primarily, it is a provider of housing loans to individuals. Its loan portfolio is in excess of Rs1.94 lakh crore. Having pan-India presence, it employs over 2,300 people, who have serviced over 26 lakh customers till date.
The company has strong financials and return ratios. It has ROA of ~1.34, ROE of ~16, CAR of ~16%, and impeccable asset quality. GNPA at 1.54% and NNPA at 1.08% as at 31 March 2019 in a tough economic environment speak volumes about the strong fundamentals of the company.
Lower interest-rate cycle and easing liquidity measures are likely to be margin accretive for the company. During CY19, liquidity for NBFCs was a concern which resulted in lower NIMs. However, now the environment is more stable and most of the concerns have been addressed by the RBI.
In the last 5 years, PAT has grown at over 15% CAGR while the loan portfolio is around 16%. Affordable housing loans constitute major part of the loan book.
The present market capitalization is at Rs18,700 crore, BV is at Rs322, FY19 PAT stood at Rs2,430 crore, while that of Q1FY20 was at Rs610 crore. The stock had hit an all-time high of Rs765 and is now trading at Rs370, down almost 50% from the peak.
Given the thrust on ‘Housing for all’ by the Government of India and the management’s focus, we expect the company to regain its earnings momentum.
ValuationThe stock is presently available at a P/BV ~1.15x on TTM basis. Usually, it has traded at a P/BV 1.5 to 1.75x (TTM basis) during the last 5 years. We expect a profit CAGR of over 20% for the next couple of years. Conservatively valuing the company at P/BV of 1.5x on FY21E, we arrive at a target price of Rs 681 per share, implying an upside of around 84% from current levels.About the Company
Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) is one of the largest housing finance companies in India having the key objective of providing long-term finance to individuals for the purchase or construction of house/flat for residential purposes. It is being promoted by LIC of India.
LICHFL also provides finance on existing property for business/personal needs and gives loans to professionals/builders for purchase/construction of clinics/nursing homes/diagnostic centres/office space and equipment.
The company provides finance to builders and developers engaged in the business of construction of houses or flats for residential purpose and to be sold by them.
Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document.This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis reportEach of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh KantFollowing table contains the disclosure of interest in order to adhere to utmost transparency in the matter:INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time.Research Analyst has not served as an officer, director or employee of Subject CompanyOne year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)IndiaNivesh Securities LimitedResearch Analyst SEBI Registration No. INH000000511Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013.Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007.Tel (Board): 022 6240 6240 | Fax: 022 6240 6241e-mail: research@indianivesh.in | Website: www.indianivesh.in
)
Posted by Mehul Kothari | Published on 15-OCT-2019
IndiaBulls Ventures Limited BuybackBoard of Directors of Indiabulls Ventures Limited at its meeting held on October 11, 2019 has approved a proposal of Rs. 1,000 Crores of buyback of upto 6,66,66,666 Fully Paid-up Equity Shares, representing 12.61% of its total existing fully paid-up equity capital at Rs. 150/- per Equity ShareOther Information about the Buyback
The Entire procedure might take approximate 3-4 months.
Please note the stock pice is highly volatile and under tremendous selling pressure on account of negative news flows surrounding management. Above, analysis is based on present CMP which may not hold in course of time. Actual stock price may be much lower than present value, leading to all calculation going haywire.
Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document. This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis report Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh Kant Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter:
INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time.Research Analyst has not served as an officer, director or employee of Subject CompanyOne year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)IndiaNivesh Securities LimitedResearch Analyst SEBI Registration No. INH000000511Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013.Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007.Tel (Board): 022 6240 6240 | Fax 022 6240 6241E-mail: research@indianivesh.in | Website: www.indianivesh.in
)
IndiaBulls Real Estate Limited Buyback 2019 Overview
Board of Directors of Indiabulls Real Estate Limited at its meeting held on October 11, 2019 has approved a proposal of Rs. 500 Crores of buyback of upto 5 Crore fully paid-up Equity Shares, representing approx. 11% of its total existing paid-up equity capital at Rs. 100/- per Equity Share
Other Information about the Buyback
•The Entire procedure might take approximate 3-4 months.
•Please note the stock pice is highly volatile and under tremendous selling pressure on account of negative news flows surrounding management. Above, analysis is based on present CMP which may not hold in course of time. Actual stock price may be much lower than present value, leading to all calculation going haywire.
Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document. This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis report Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh Kant Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter:
INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time.
Research Analyst has not served as an officer, director or employee of Subject Company
One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)
IndiaNivesh Securities Limited
Research Analyst SEBI Registration No. INH000000511
Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013.
Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007.
Tel (Board): 022 6240 6240 | Fax 022 6240 6241
E-mail: research@indianivesh.in | Website: www.indianivesh.in
Previous Story
Diwali Stock Picks 2019 – Top 5 Investment Ideas
Diwali Picks 2019 – Top 5 Investment Ideas In the present environment of global trade wars, macro-economic uncertainty, and slowing domestic economy, we tried to discover investment ideas that can not only withstand this turbulence but will also likely be first movers when the tide turns. A stable government, aggressive policy reforms of far-reaching consequences, lower interest rate trajectory, good monsoons, stable rupee and range-bound crude oil prices are seeds for economic revival. We expect the economy to be back on track from FY21 onwards as benefits of the recent tax reforms will play out in full throttle.While identifying investment picks, we followed under mentioned rationales: Emphasis on steady businesses Top & bottom line compounding in excess of 10% for the last 5 years Healthy return ratios (ROE over 10%), low or negligible debt, and insignificant promoters’ pledge Valuation comfort with respect to fair value Performance Highlights of ‘Diwali Picks’ 2018We are pleased to highlight the performance of our Diwali picks in 2018. As on 14th October, the portfolio has returned 16.58% on equal weight basis, while Nifty50 and Nifty500 clocked 7.42% and 3.20%, respectively.Hero MotoCorp LimitedInvestment Rationale: Hero MotoCorp is the largest two-wheeler maker in the country and has maintained its leadership position over last several years. Its ability of adapt and quickly sense customer preferences has been instrumental in its holding on to the leadership position irrespective of economic cycles. From selling 33 lakh in FY08 to 78 lakh units in FY19, it has come a long way. Its foray into scooters, overseas markets, premium segment, and e-vehicles is not only helping it to negotiate the present automobile downturn, but is also preparing it to capitalize on the future turnaround better than its peers. Strong financials, high return ratios, stable operating margins, steady cash flows, capacity enhancement, and a line-up of new product offerings makes the company better placed to tackle industry cycle changes. The company stands to gain from corporate tax cuts announced by the Government of India. The company stands increase its net profit by ~8% on availing the revised tax structure. The valuation looks attractive, as the stock has corrected almost 30% from peak levels. Historically, it trades at a PER of 18x (TTM basis) while it is now available at a PER of ~14x (TTM). Risk-reward ratio appears favourable from hereon. The monetary policy has been accommodative. RBI has cut interest rates by 135 basis points so far. The prevailing repo rate is 5.15%, just shy of the 10-year low of 4.75%. Good monsoons and favourable government policies are laying the foundation for an economic revival. We are optimistic of an economic turnaround happening sooner rather than later. ValuationWe believe the management conviction of growth picking up from H2FY20 will hold. Lower interest rate scenario, good monsoons and stable input prices augur well. The entry into e-vehicle and premium segment will be a blended realization accretive. Conservatively valuing the company at a PER of 16x FY21e, we arrive at a target price of Rs3,376, implying an upside of around 27% from current levels. We recommend ‘Accumulate’ on HeroMotoCorp.Financial SummaryAbout the CompanyOverview Hero MotoCorp has been at the forefront of designing and developing technologically advanced motorcycles and scooters for customers around the world. It became the world’s largest two-wheeler manufacturer in 2001, in terms of unit volume sales in a calendar year, and has maintained the coveted title for the past 18 years.Manufacturing FacilitiesThe company has 5 manufacturing facilities in India and two overseas (Colombia and Bangladesh). The company has commenced construction of a new manufacturing facility at Chittoor, which once operational, will take the overall installed capacity to about 11 million units.In addition, the company has an R&D centre at Jaipur with key focus on building a premium portfolio, enhancing scooter offerings, addressing regulatory changes (viz. BS VI), and preparing for EVs. JK Paper LimitedInvestment Rationale The paper industry is undergoing a paradigm shift on usage as volume growth shifts from printing and writing copiers to packaging and boards. E-commerce has been the chief consumption driver aided by environmental concerns over single-use plastics as packaging material. The company has been a turnaround story from reporting losses in FY14 and FY15 to a profit of around Rs425 crore in FY19. Paper industry in India is poised for significant growth as annual paper consumption per capita is merely ~13kg in comparison to ~200kg in North America and global average of ~58kg. Acquisition of Sirpur Paper Mills will significantly enhance its capacity from ~4,55,000 tonnes per annum (TPA) to 5,91,000 TPA. Operating leverage and benefits of the same started accruing from Q1FY20. Before the acquisition of Sirpur Paper Mills, it was operating at 100% capacity utilisation. To capture growing demand for virgin fibre boards (VFB) the company is enhancing its capacity further to 2,70,000 TPA from 90,000 TPA, which is likely to be completed in the next 2 years. After this, it will become second-largest producer of VFB in the country. Online retail, FMCG, Food & Beverage, Pharmaceutical and Textile sectors are demanding packaging paper more than off-sets. Also, due to the advent of the digital era, the usage of printing, writing, newsprint, and speciality papers has reduced. ValuationThe company is trading at a PER of 4.30x on a TTM basis. Healthy balance sheet, considerable reduction in debt along with improving operating margins makes the risk-reward ratio quite favourable. Operating margins have improved to 27% (FY19) from 8% in FY14. Debt/equity ratio has reduced to 0.76x in FY19 from 2.42x in FY14. We expect revenue of 15% CAGR for the next couple of years. Conservatively valuing the company at a PER of 6x FY21E, the target price is Rs174 per share, with an upside of around 50% from current levels. The company has scope for potential re-rating. We recommend ‘Accumulate’ on JK Paper.About the CompanyJK Paper Ltd. has two large integrated paper manufacturing units: JK Paper Mills, Rayagada, Odisha Central Pulp Mills, Songadh, Gujarat It is the market leader in branded copier paper segment and among the top two players in coated paper and high-end packaging boards. Its products are sold through an extensive distribution network of 188 wholesalers, 10 depots and 4 regional marketing offices, covering nearly 4,000 dealers. It offers a wide product range and its brands are synonymous with premium quality paper. JK Paper has a Wide Product Portfolio: Office papers - JK Cedar, JK Copier, JK Easy Copier, JK Sparkle, JK Copier Plus and JK Excel Bond. New brands 'JK CMax' and JK Max have established presence in the market. Packaging boards - JK TuffCote, JK Ultima, JK TuffPac, and JK IV Board Printing & writing papers - JK Cote, JK Ledger, JK SHB, JK Evervite, JK Finesse, JK Elektra, JK Lumina, JK Ultraprint, and JK Esay Draw Speciality papers - MICR cheque paper, parchment, and cedar digital Escorts LimitedInvestment Rationale The company staged a remarkable turnaround in the last 10 years and has been gaining market share since then. A focused product offering, high emphasis on cost control, better operating synergies, happy dealerships and enabling business policies are key factors for the turnaround. The management has been able to tackle the recent slowdown well. It delivered 2.24% YoY growth in tractor sales for the month of September when competitors are seeing de-growth. It has strong positioning in north India where monsoons were good. There are chances of a 7% hike in the minimum support price for the Rabi crop. The recommendation for the same has been made by Ministry of Agriculture to the Cabinet. The company stands on strong financials. The balance sheet is almost net-debt free, has healthy return ratios and operating margins, and ROE is in excess of 20%. Lower interest rate cycle, good monsoons and benign input prices augur well. Recent corporate tax rate cut by the Government of India is likely to benefit it by adding around 9% to net profits. ValuationEscorts is trading at a PER of around 16x on TTM basis. It usually trades at a higher multiple of 25-27x on TTM basis. We believe the company will not gain market share from its competitors but is also well placed to capitalize on the future economic revival. It appears poised for a re-rating. Valuing the company at a PER of 18x FY21E, target price is Rs810 per share, implying an upside of around 35% from current levels. We recommend ‘Accumulate’ on Escorts.About the Company Escorts Limited is one of India’s leading engineering companies for farming and construction equipment in the country. For seven decades, Escorts has had presence three segments:Agri machineryEscorts Agri Machinery has, in the last seven decades, committed itself to enhancing India’s agricultural productivity and adding value to the farmer’s life. Escorts currently provides technologically superior range of 22 HP to 80 HP tractors under two brands: Farmtrac and Powertrac.Construction equipmentEscorts provides equipment for material handling, road building, earth moving and other services, addressing the large national opportunity with a comprehensive basket of products.Material handling equipment and railway equipmentEscorts Railway Equipment Division (RED) possesses rich, multi-decade experience in the manufacturing of critical railway components. The division (operationalised in 1962) is one of the oldest such units in the country, partnering with the Indian Railways in its modernization journey. Godrej Consumer Products Ltd.Investment Rationale Godrej Consumer Products is a niche play on consumption. Its products like Good Night, Hit, Cinthol, and Godrej Expert have been household names for decades. Household insecticides, hair colour, personal care (soaps) have been the mainstay of its product stable. A concentrated product portfolio and strong brand equity and recall have been the mantra of its remarkable journey of over 100 years. The top 10 brands contribute 70% of the revenue. Geographical diversification has delivered healthy dividends to business. Around 46% of the top line contribution comes from rest of the world, primarily from African countries, Indonesia, Latin America and the Middle East, which serves as a natural hedge against slowdown in the domestic economy. In the last 10 years, revenue has grown at 25% CAGR and net profit at 31%. Equitable distribution of revenue comes from personal care, home care and household insecticides. Air fresheners and incense sticks are gaining traction. Wet hair products have been hugely successful in African countries. Healthy balance sheet, high return ratios, robust cash flows, and high operating margin provide much needed margin of safety in times of economic slowdown. ValuationThe stock is presently trading at a PER of 30x on TTM basis. Usually, it trades at a PER of 40-45x (TTM basis) during the last 5 years. We expect FY20 to end with de-growth of around 3-5% on top and bottom line. However, a pick up in revenue and profitability is expected from the onset of FY21. Conservatively valuing the company at a PER of 35xFY21E, we arrive at a target price is Rs875 per share, implying an upside of around 26% from current levels.About the Company Godrej Consumer Products is a leading emerging markets company. As part of the over 122-year old Godrej Group, the company has a proud legacy built on the strong values of trust, integrity and respect for others. Godrej ranks among the largest household insecticide and hair care players in emerging markets. In household insecticides, Godrej is the leader in India, the second-largest player in Indonesia and is now expanding its footprint in Africa. Godrej is the leader in hair extensions in Africa, the number 1 player in hair colour in India and Sub-Saharan Africa, and among the leading players in Latin America. Godrej rank number 2 in soaps in India and is the number one player in air fresheners and wet tissues in Indonesia. LIC Housing FinanceInvestment Rationale A strong HFC player, promoted by LIC of India, has been in business for over 30 years. Primarily, it is a provider of housing loans to individuals. Its loan portfolio is in excess of Rs1.94 lakh crore. Having pan-India presence, it employs over 2,300 people, who have serviced over 26 lakh customers till date. The company has strong financials and return ratios. It has ROA of ~1.34, ROE of ~16, CAR of ~16%, and impeccable asset quality. GNPA at 1.54% and NNPA at 1.08% as at 31 March 2019 in a tough economic environment speak volumes about the strong fundamentals of the company. Lower interest-rate cycle and easing liquidity measures are likely to be margin accretive for the company. During CY19, liquidity for NBFCs was a concern which resulted in lower NIMs. However, now the environment is more stable and most of the concerns have been addressed by the RBI. In the last 5 years, PAT has grown at over 15% CAGR while the loan portfolio is around 16%. Affordable housing loans constitute major part of the loan book. The present market capitalization is at Rs18,700 crore, BV is at Rs322, FY19 PAT stood at Rs2,430 crore, while that of Q1FY20 was at Rs610 crore. The stock had hit an all-time high of Rs765 and is now trading at Rs370, down almost 50% from the peak. Given the thrust on ‘Housing for all’ by the Government of India and the management’s focus, we expect the company to regain its earnings momentum. ValuationThe stock is presently available at a P/BV ~1.15x on TTM basis. Usually, it has traded at a P/BV 1.5 to 1.75x (TTM basis) during the last 5 years. We expect a profit CAGR of over 20% for the next couple of years. Conservatively valuing the company at P/BV of 1.5x on FY21E, we arrive at a target price of Rs 681 per share, implying an upside of around 84% from current levels.About the Company Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) is one of the largest housing finance companies in India having the key objective of providing long-term finance to individuals for the purchase or construction of house/flat for residential purposes. It is being promoted by LIC of India. LICHFL also provides finance on existing property for business/personal needs and gives loans to professionals/builders for purchase/construction of clinics/nursing homes/diagnostic centres/office space and equipment. The company provides finance to builders and developers engaged in the business of construction of houses or flats for residential purpose and to be sold by them. Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document.This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis reportEach of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh KantFollowing table contains the disclosure of interest in order to adhere to utmost transparency in the matter:INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time.Research Analyst has not served as an officer, director or employee of Subject CompanyOne year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)IndiaNivesh Securities LimitedResearch Analyst SEBI Registration No. INH000000511Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013.Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007.Tel (Board): 022 6240 6240 | Fax: 022 6240 6241e-mail: research@indianivesh.in | Website: www.indianivesh.in )
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IndiaBulls Ventures Limited Buyback 2019 Overview
IndiaBulls Ventures Limited BuybackBoard of Directors of Indiabulls Ventures Limited at its meeting held on October 11, 2019 has approved a proposal of Rs. 1,000 Crores of buyback of upto 6,66,66,666 Fully Paid-up Equity Shares, representing 12.61% of its total existing fully paid-up equity capital at Rs. 150/- per Equity ShareOther Information about the Buyback The Entire procedure might take approximate 3-4 months. Please note the stock pice is highly volatile and under tremendous selling pressure on account of negative news flows surrounding management. Above, analysis is based on present CMP which may not hold in course of time. Actual stock price may be much lower than present value, leading to all calculation going haywire. Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document. This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis report Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh Kant Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter: INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time.Research Analyst has not served as an officer, director or employee of Subject CompanyOne year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart)IndiaNivesh Securities LimitedResearch Analyst SEBI Registration No. INH000000511Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013.Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007.Tel (Board): 022 6240 6240 | Fax 022 6240 6241E-mail: research@indianivesh.in | Website: www.indianivesh.in )