Академический Документы
Профессиональный Документы
Культура Документы
RETAIL RESEARCH
We present herewith two set of stocks (Better known Medium risk and Lesser known stocks High Risk), which investors, based on their risk profile, can look at for
investing from a medium term perspective in a systematic investment way (SIP).
While the frontline indices have corrected from recent highs due to global and local macro factors, mid and small caps have done well (though they too have come
under pressure lately). While a further correction will not be entirely unexpected, using a SIP or averaging policy may be advisable (for aggressive investors, this may be
in addition to an initial lumpsum investment, if they so choose). This will enable lowering the average entry level due to expected fall in prices (in line with the expected
fall in these stocks).
SIP investments will give good returns only if the average entry price is lower (due to the initial fall expected). In case the stock price first rises and then falls, SIP
investment may not generate attractive returns. One of the criteria for choosing these stocks is that there is a good chance that they could first fall for some
weeks/months and then rise so that the full benefit of averaging is available.
Systematic Investment Plans, or SIPs, are expected to curb volatility, both on the upside as well as downside. This is done by cost averaging since the investments are
made on a periodic basis, and not in a lump sum. Though the investment amount is fixed, more units are purchased when the market/stock trends down, and fewer
units are purchased when the market/stock moves up.
If compared with lump-sum investing, cost averaging does not work to the investors benefit in a rising market. While cost averaging cushions your investment during a
downside, it also irons out gains made in a bull run to some extent. But to be effective, it needs to be sustained over a long time frame or at least an entire market cycle.
In case, at any time during the period of SIP, the stock price moves up sharply (compared to the average entry price) to attain the probable upside level or a good
return above the average entry price depending on the period of investment, capitalization and volatility of the individual stocks, then it would be a good idea to stop
the SIP and sell the stocks booking the profits accrued.
Bajaj Auto expects its volume for exports to be around 16 lacs units for FY17 and looks forward sale 2.5mn units in current financial year. Company has the right mix
to maintain its growth for the second half by launching new bikes. However, short-fall in exports volume continues to haunt company in near term. Margins are also
set to remain stable. Companys differential offering, superior mileage and performance as compared to existing product in the segment is a game changer.
Export volumes continue to be under pressure mainly due to lower availability of dollar and a local depreciating currency in its largest exporting countries.
Demonetisation related impact on demand is expected to get over in the next 1-2 months; failing which its topline growth and margins could remain affected.
OIL, IOCL & BPRL have jointly acquired 23.9% and 29.9% stakes in Vankorneft and Taas Yuryakh, Russia. Total acquisitions cost is US$ 3.14bn (OILs Share 33.5%). The
acquisition would be value accretive for the company in the long run.
The upstream oil companies have demanded a reduction on oil cess levied on domestic crude production and the petroleum ministry is also in favour of the same.
Oil cess was changed from fixed levy of Rs 4500 per tonne to ad-valorem rate of 20% in budget of 2016-17 to provide relief to upstream oil companies. However,
above $44/bbl the levy works out to more than Rs 4500.
OILs stock performance will move in tandem with the crude prices. If the OPEC and non-OPEC members do not stick to the announced production cuts, crude prices
will again start falling. This could impact OILs margins and stock price.
Adverse Regulatory policy changes could hurt OILs revenues and margins.
In line with managements earlier guidance of pruning loans and advances to related parties, APSEZ has cut the exposure by INR 10bn.This helped prune net working
capital and reduce net debt by INR 13bn in H1FY17.
The strong results posted by Adani Ports in September 2016 quarter reiterate the earnings recovery trend which started in the June quarter. Results exceeded
expectations, led by volumes rising 18 per cent year-on-year to 43 million tonnes. Net revenues increased 21 per cent year-on-year to Rs.2,183 crore, while net profit
expanded 61 per cent to Rs.1,091 crore.
The company is targeting 4MT of coastal cargo and is on track to achieve the same. Margin profile for coastal movements is similar to EXIM cargo.
The company has a strong portfolio of projects on the Indian west coast other than the flagship Mundra port. The projects are a mix of brown-field port
development i.e. currently at Dahej & Hazira and as terminal operator at the major ports i.e. coal terminal under development at the Murmagao port. Such projects
would help the company gain a pan India presence. While the company is looking at setting up a large port on the east cost of India, it has also been scouting for
opportunities to go global and has recently evinced interest in port development projects in Australia and Indonesia, in line with its long-term strategy.
Since cargo at ports is contingent on international trade, any slowdown in it could affect Mundra Port as well.
Any changes in the form of reversal of current tax benefits to units under the SEZ umbrella will significantly undermine incentives for industries to setup units in the
SEZ, hampering current plans of land sale.
Capital Firsts loan book spans under-penetrated credit categories such as consumer durables, 2Ws and MSME business loans (which provide growth, yields and
granularity) as well as anchor segments like MSME LAP (including home loans) that impart scale (~52% of the book). The company employs digital technology to
lower turnaround time and drive up operating efficiency while keeping asset quality benign.
The company has advanced analytical systems, which allows credit appraisal turnaround for consumer durable loans within 15-30 seconds and 2W in 4-5 hours.
Increased cross-selling in CD and 2W segments will improve efficiencies and result in better cost-income (47.6%) going forward.
With the shift to MCLR and the rising proportion of lower cost debentures (11% vs. 4% in FY15), we expect CAFLs CoF is likely to decline in the coming years. CAFL
has a stable long-term credit rating that got upgraded from A+/AA- in FY11/12 to AA+.
As per regulatory requirements, CAFL recognises NPLS at 150DPD. However, it conservatively provides at 90DPD. Thus, the shift to 90DPD over three years will
optically elevate reported GNPAs by 60-70bps without having any impact on earnings. It has exited from gold loans (in FY15), property services and
securities/commodities broking (in FY14) to focus on the core retail lending business.
Higher-than-expected delinquencies in the unseasoned unsecured lending book, slowdown in economic activity could result in higher stress in MSME LAP book and
higher than expected increase in costs may impact ROAAs.
In the international market, during FY16, economic situation was close to stagnation in the major EU countries due to which the company incurred losses even in
high margin markets UK and Russia. In July 2016, external restructuring expert/advisor (Ernst & Young) was hired by the company to explore various strategic and
financial alternatives to enhance the shareholders' value.
There is intense competition among players leading to higher advertisement spends and lesser pricing power, thereby lowering margins. While market leaders in the
various categories are feeling secure, the other companies are finding that it is a tough going. Other factors like fluctuations in prices of raw materials especially
Aluminium, Copper and Sheet Metal could lead to erosion of margins as well as rising competition that could have a detrimental effect on the sector/company.
Sharda Cropchem has a portfolio of 68 products, of which 38 are present in all geographies while balance 30 products penetration to all geographies is expected
going forward. Further, it has a launch pipeline of 12-14 new products over the next 3 to 4 years
Sharda Cropchem's unique and asset-light business model ensures its focus on increasing the number of registrations going forward. Company's targets 18% revenue
growth over FY16- 18 with stable margins.
Adverse weather can trigger pest infestations as well as affect demand for crop-protection products, thereby negatively affecting the company's sales.
We, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We
also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its
Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research
Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or
arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of
warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information
purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer
or solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality,
state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HDFC Securities Ltd or its
affiliates to any registration or licensing requirement within such jurisdiction.
If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be
reproduced, distributed or published for any purposes without prior written approval of HDFC Securities Ltd .
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from
them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HDFC Securities Ltd may from time to time solicit from, or perform broking, or other services for, any
company mentioned in this mail and/or its attachments.
HDFC Securities and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies)
mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other
related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action
taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or
income, etc.
HDFC Securities Ltd and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or
may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
HDFC Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other
assignment in the past twelve months.
HDFC Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for
services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific
transaction in the normal course of business.
HDFC Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research
report. Accordingly, neither HDFC Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not
based on any specific merchant banking, investment banking or brokerage service transactions. HDFC Securities may have issued other reports that are inconsistent with and reach different
conclusion from the information presented in this report.
Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have
not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC Securities Ltd. is a SEBI Registered Research Analyst having
registration no. INH000002475."
RETAIL RESEARCH P a g e | 10