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T I M E S
A TIME COMMUNICATIONS PUBLICATION
VOL XXVII No.1 Monday, 6 12 November 2017 Pgs.23 Rs.18

Markets resilient; Nifty eyes Money Times to cost Rs.20 per copy w.e.f.
10500 1st January 2018
To partially set off the rising cost of operations,
By Sanjay R. Bhatia MONEY TIMES Weekly will be priced at Rs.20 per
The anticipated correction remained elusive on the bourses last copy w.e.f. 1st January 2018.
week. Although marginal dips were witnessed, a major Consequently, the new subscription rates will be
correction has not yet panned out on the back of fluid fund 1 year: Rs.1000; 2 years: Rs.1900; 3 years: Rs.2700
flows. The markets continued to touch fresh historic highs last
week amidst stock-specific action. The news of India jumping 30 ranks in the ease of doing business perked up the
market sentiment.
The FIIs remained net buyers in the cash and derivatives segments. However, the DIIs turned sellers during the week.
The breadth of the market remained positive amidst high volumes, which is a positive sign for the markets. The earnings
season has largely been in line with expectations. Crude oil prices inched higher moving close to the two-year high with
Brent crude price surpassing as the outlook remained upbeat
as the OPEC-led supply cuts have tightened the market and Believe it or not!
drained inventories. The Bank of England raised interest B. L. Kashyap & Sons recommended at
rates for the first time since 2007, from 0.25% to 0.5%. Rs.42.60 in TT last week, hit a high of Rs.62
Technically, the prevailing positive technical conditions fetching 46% returns in just 1 week!
helped the markets touch fresh historic highs. The Stochastic, Remson Industries recommended at Rs.75.50
MACD, KST and RSI are all placed above their respective in TT last week, zoomed to Rs.88.80 fetching
averages on the daily and weekly charts. Moreover, the Nifty 18% returns in just 1 week!
is placed above its 50-day SMA, 100-day SMA and 200-day Graphite India recommended at Rs.455.35 in
SMA. The Niftys 50-day SMA is placed above its 100-day and FF on 23 October 2017, hit a high of Rs.575 last
200-day SMA, its 100-day SMA is placed above its 200-day week fetching 26% returns in just 2 weeks!
SMA indicating a golden cross breakout. These positive Conart Engineers recommended at Rs.54.70
technical conditions could lead to regular buying support. in TT on 23 October 2017, hit a high of
The prevailing negative technical conditions, however, still Rs.64.90 last week fetching 19% returns in just
hold good. The Stochastic and RSI are placed in the 2 weeks!
overbought zone on the daily and weekly charts, which could Kiri Industries recommended at Rs.392.80 in
lead to intermediate bouts of profit-booking and selling SW (Part II) on 25 September 2017, hit a high
pressure especially at higher levels. of Rs.624 last week fetching 59% returns in 6
The +DI line is placed above the ADX line and the -DI line and weeks!
also above 30 on the daily chart, which indicates that the
buyers are gaining strength. The ADX line is still languishing (FF Fifty: Fifty; SW Sectoral Watch; TT Tower Talk)
around the 22 mark, which indicates that the current market This happens only in Money Times!
trend lacks strength and a choppy trend is likely to pan out. Now in its 27th Year

A Time Communications Publication 1


Though the markets witnessed odd days of marginal correction, the Nifty managed to sustain above the 10400 mark.
This smart resilience against profit-booking and selling pressure was due to the fluid fund flow situation viz SIP money
and FIIs turning buyers in the cash segment. It is important that the Nifty consolidates above the 10400 level for follow-
up buying support to emerge and in order to test the 10500 mark or move higher. Intermediate bouts of profit-booking
and selling pressure are likely due to overbought conditions.
On the downside, 10124 remains an important support level
followed by 9955, which is also a crucial support level.
In the meanwhile, the markets will take cues from the
earnings season, global markets, Dollar-Rupee exchange rate
and crude oil prices.
Technically on the upside, the Sensex faces resistance at the
33750, 34000 and 34500 levels while it seeks support at the
33300, 33000, 32325, 32000, 31610, 30921, 30680 and
29365 levels. The resistance levels for the Nifty are placed at
10462, 10500 and 10575 while its support levels are placed
at 10400, 10325, 10270, 10200, 10138, 10100, 10000, and
9955.

BAZAR.COM

Improving Indias global image Thank you, Readers


The disconnect between polity and economy is a distant happening. Yet, the With this issue, MONEY TIMES
promotion of India by 30 ranks on ease of doing business is a matter not to be enters the 27th year of publication
overlooked. If we Indians remain critical of the little pains for bigger gains, dedicated to the welfare of investors
global outcomes like this are there to reassure us. in equity markets
The consolidation of the market even at these levels is ample proof of the large appetite the DIIs and retail investors
have for sharing the creation of wealth. Surely, five years is too short a period for the PM and his team to bring reforms
like demonetisation and GST to their logical end. Surely, the pain in both shall easily take two more years to subside and
during this journey, NaMo may seek a second term to continue the reforms and battle corruption.
Last week, we had raised questions whether the current rally will last the Gujarat/Haryana test. The market dismissed
this hesitancy in its moves in the last eight sessions. The market moved up selectively and the demand for select stocks
was seen. It is this rising flow of retail money flowing into equity both directly and through mutual funds which is
deciding the market moves.
Apart from politics and the battles therein, the government is preparing to do its best in the ensuing budget. The budget
this January may be the last budget by this government. Next year, if the elections are held in May 2019, then only vote
on account will follow and the new FM shall present the budget in his new avatar. Thus, the BJPs last full budget will
see the social sector getting 30% higher allocation. We may also see increased allotment for agriculture, rural
development, education, infrastructure, etc.
Official sources say that traditionally, pre-election Union Budgets are populist where fiscal prudence goes for a toss. But
the government also has to do the balancing act to ensure that the growth momentum is retained in the economy after it
fell to 5.7% in the April-June 2017 quarter. This has to be done in tandem with mobilising adequate funds to finance
schemes that affect a large section of the vote bank and help the government get a positive pro-welfare image.
To balance the additional expenditures, the government is working out ways to raise non-tax revenues like dividends,
PSU profits, revenue receipts and spectrum auction receipts to keep the next years fiscal deficit within the target of 3%
even on higher expenditure, sources said. The increase in infrastructure spending by the government is another vital cog
in the next budgets wheel.
The Diwali lights may have faded by now but some sectors like
realty will enjoy continued festivity. The growing confidence Now follow us on Instagram, Facebook &
among home buyers has made realty stocks climb as much as Twitter at moneytimes_1991 on a daily basis
18% on the first day following Diwali. This is indicative as to to get a view of the stock market and the
what could be in store for this sector from hereon to next Diwali. happenings which many may not be aware of.

A Time Communications Publication 2


Realty developers with a good track record like Kolte Patil Developers, Sunteck Realty, Purvankara and Sobha registered
fresh 52-week highs while stocks like Arihant Superstructures, Ansal Buildwell, DLF, Anant Raj, Godrej Properties and
Peninsula Land also joined in the rally rising 3-8%.
Mutual Funds and HNIs at Dalal Street see Pharma stocks on
the recovery path. Both categories of investors are seen buying Market Cap Category 2017 2012 2007
Pharma companies believing that the worst in terms of Rs.2 lakh crore and above 11 4 1
regulatory and competition concerns have been priced in. Rs.1 lakh crore 2 lakh crore 15 6 6
Rakesh Jhunjhunwala raised his stake in Lupin by 0.13% to Rs.50000 crore 1 lakh crore 22 10 9
1.89% in the September quarter. Mutual Funds have raised Rs.10000 crore 50000 crore 109 65 56
stake in Lupin, Sun Pharmaceutical Industries, Torrent Rs.5000 crore 10000 crore 90 54 48
Pharmaceuticals, Cadila Healthcare and Natco Pharma. FIIs Rs.1000 crore 5000 crore 236 195 231
have played a mix of cutting stakes in Lupin, Sun Less than Rs.1000 crore 524 673 656
Pharmaceutical Industries, Aurobindo Pharma, Torrent
Pharmaceuticals, Cadila Healtchare and Natco Pharma and simultaneously raised stakes in Biocon, Jubilant Life Sciences,
Divis Laboratories and Glaxosmithkline Consumer Healthcare. From the long-term perspective, pharma looks
interestingly attractive.
E-vehicles have been in the news and strategy to identify companies which may have a busy schedule in this transition is
on. MOIL is one such stock which comes to the mind given the booming prospects of manganese.
Market indices may be steading around 33K Sensex and 10.3K Nifty but a re-look at the market cap club makes an
interesting study.
If a $2.5 trillion GDP is heading for $7 trillion by 2023, we leave the market cap and creation of wealth figures to your
imagination.

TRADING ON TECHNICALS

Broad market indices dominate


By Hitendra Vasudeo
Sensex Daily Trend DRV Weekly Trend WRV Monthly Trend MRV
Last Close 33685 Up 33023 Up 31606 Up 29878
Last week, the Sensex provided the follow-up rise to the breakout witnessed two weeks back above 32700. The expected
level of 33600 was tested last week. The Sensex opened at 33260.10, attained a low at 33164.28 and moved to a high at
33733.71 before it closed the week at 33685.55 and thereby showed a net rise of 528 points on a week-to-week basis.
Daily Chart
The daily chart shows the uptrend, which becomes clear if one observes the line chart. The candle at times provides
more quality information of the price behavior but volatility could disturb the mind. The candle shows the Hanging Man,
which suggests that immediate support is at 33527. A fall below 33527 can bring about minor intra-week correction to
weekly support levels.
Overall, the uptrend is expected to continue with intra-day
or intra-week corrections to show strong candles overall on
the weekly chart.
Weekly Chart:
The higher range for the week could be 33891-34460.
Support during the week will be at 33527-33321-33164.
The 161.8% retracment of the fall from 32686 to 31081
was tested and therefore, intra-week correction could
happen.
On a further sustained rise and close above 33733, expect
the rise to test the weeks higher range. But the objective
could be to move towards the 261.8% retracement of the
fall from 32686 to 31081.
The 261.8% retracement level is at 35215.

A Time Communications Publication 3


Yearly Chart:
In the January and February 2017 issues, we had forecast the yearly levels for the Sensex. The levels indicated were
29637 and 36220. Currently, the Sensex is at 33685 and is now chasing 36220 by December 2017.
The years 2016 and 2015 were indecisive candles after the bull run in 2014. The year 2017 is the continuity of the same
bull run as a breakout above 30024 as seen on the yearly chart.
On the monthly chart, the October 2017 is a breakout above its higher top of 32686, which suggests continuation of the
momentum of the higher top and higher bottom formation from 22494.
The Sensex is potentially looking to test 36220Yearly Level 4 by December 2017.
Assuming the year end now, the year 2018-First level, which is Yearly Level 3, will be at 36130. Yearly Level 4 by
December 2018 is 43417. During the year 2018, if a correction is witnessed, then the Yearly Center point is at 31288 and
Yearly Level 2 is 28843. The focus is more on the higher levels. Expect the Yearly 2018 to show higher low and higher
high at the end of 2018 with a positive yearly candle.
Trend based on Rate of Change (RoC)
Daily chart: Profitrak Weekly
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Weekly chart: Resistance
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3-Week trend - Up 1) Weekly Market Outlook of -
8-Week trend - Up Sensex
Nifty
Monthly chart: Bank Nifty Features
1-Month trend - Up 2) Sectoral Review
3-Month trend - Up Outperforming, Market Performing and Under
Performing
8-Month trend - Up Stand Alone Weekly Signal for Up Trend and Down Trend
Quarterly chart: Stock Wise New Addition and Follow Up Chart Comments
1-Quarter trend - Up Selection Process Based on Multi Time Frame Trend and
RS
3-Quarter trend - Up
3) Multi Time Frame Yearly Chart
8-Quarter trend - Up Stock Filtration
Yearly chart: One Annual In Jan-Dec
1-Year trend - Up From March running Yearly Filtration- March to March
4) Sectoral View of Strong/Weak/Market Perfomer indices
3-Year trend - Up 5) Weekly Trading Signals
8-Year trend - Up 6) Stock Views and Updates every week
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The expected level of 16824 is almost attained
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the current level for a couple of weeks before For more details, contact Money Times on
the next rally. 022-22616970/4805 or moneytimes.support@gmail.com.
Alternatively, the rally will have to get sharp
and vertical to notch up 17898.

A Time Communications Publication 4


The overall support will be at 16426-16379
BSE Small-Cap Index
1-Week trend - Up
3-Week trend - Up
8-Week trend - Up
Expect a rally to 18234. A reversal for deeper correction can be below 17300 and till then, a correction is an opportunity
to accumulate.
Relationship of Mid-Cap/Small-Cap/Sensex
BSE Small-Cap BSE Mid-Cap Sensex/ Sensex/ Mid-Cap
Year Sensex
(Small-Cap) (Mid-Cap) Small-Cap Mid-Cap /Small-Cap
2007 13348 9789 20286 1.52 2.07 0.73
2008 3683 3235 9647 2.62 2.98 0.88
2009 8357 6717 17464 2.09 2.60 0.80
2010 9670 7802 20509 2.12 2.63 0.81
2011 5550 5135 15454 2.78 3.01 0.93
2012 7379 7112 19426 2.63 2.73 0.96
2013 6551 6705 21170 3.23 3.16 1.02
2014 11087 10372 27499 2.48 2.65 0.94
2015 11836 11143 26117 2.21 2.34 0.94
2016 12046 12031 26626 2.21 2.21 1.00
2017 17856 16713 33685 1.89 2.02 0.94
From the year 2007 to 2013 broadly, we can see that the Sensex had outperformed. From 2014 to 2017, the Mid-Cap and
Small-Cap indices improved their performance relatively. The Mid-Cap and Small-Cap indices are on par with little to
separate. The role of Mid-Cap and Small-Cap indices is getting dominant and is likely to continue unless a catastrophic
fall is witnessed, which looks unlikely till Yearly Level 4 of 2017 (36220) on the Sensex is not attained.
Strategy for the week
Traders long can revise the stop loss to 33100. Expect the higher range of 33891-34460 to be tested. Intra-week support
point of 33527-33321 can be used for buying if the lower levels are attained first. Maintain the stop loss of 33100.

WEEKLY UP TREND STOCKS


Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with whatever low
registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits as
the opportunity arises. If the close is below Weekly Reversal Value then the trend will change from Up Trend to Down Trend. Check on
Friday after 3.pm to confirm weekly reversal of the Up Trend.
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above

Weekly Up
Scrip Last Level Level Center Level Level Relative
Reversal Trend
Close 1 2 Point 3 4 Strength
Value Date
Weak Demand Demand Supply Supply
below point point point point
GUJARAT ALKALIES 768.00 708.0 712.7 763.3 818.7 924.7 79.6 697.3 18-08-17
MEGHMANI ORGANICS 121.45 106.0 110.5 117.0 128.0 145.5 78.9 106.2 06-10-17
KRBL 661.00 625.0 633.0 653.0 681.0 729.0 77.3 623.7 18-08-17
GRAPHITE INDIA 575.05 453.5 494.0 534.5 615.6 737.1 75.5 483.4 03-11-17
RELIANCE INDUSTRIES 946.00 931.0 932.3 944.7 958.3 984.3 74.7 915.5 06-10-17

*Note: Up and Down Trend are based of set of moving averages as reference point to define a trend. Close below
averages is defined as down trend. Close above averages is defined as up trend. Volatility (Up/Down) within Down
Trend can happen/ Volatility (Up/Down) within Up Trend can happen. Relative Strength (RS) is statistical
indicator. Weekly Reversal is the value of the average.

A Time Communications Publication 5


WEEKLY DOWN TREND STOCKS
Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with whatever high
registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short
positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up Trend.
Check on Friday after 3.pm to confirm weekly reversal of the Down Trend.
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above

Weekly Down
Scrip Last Level Level Center Level Level Relative
Reversal Trend
Close 1 2 Point 3 4 Strength
Value Date
Demand Demand Supply Supply Strong
point point point point above
APOLLO HOSPITALS ENT. 1023.00 983.7 1011.7 1028.3 1039.7 1045.0 37.52 1044.75 27-10-17
GREAVES COTTON 127.90 119.6 125.6 129.3 131.6 133.0 29.35 130.36 15-09-17
FORTIS HEALTHCARE 142.75 135.4 140.8 144.3 146.2 147.7 38.38 146.64 19-10-17
INFOSYS 927.00 874.7 911.7 933.3 948.7 955.0 47.65 933.25 03-11-17
CUMMINS INDIA 899.00 849.3 884.3 904.7 919.3 925.0 48.11 901.75 19-10-17

*Note: Up and Down Trend are based of set of moving averages as reference point to define a trend. Close below
averages is defined as down trend. Close above averages is defined as up trend. Volatility (Up/Down) within Down
Trend can happen/ Volatility (Up/Down) within Up Trend can happen.

EXIT LIST
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above
Scrip Last Close Supply Point Supply Point Supply Point Strong Above Demand Point Monthly RS

JAYANT AGRO-ORGANICS 414.45 420.18 423.80 427.42 439.15 389.5 41.45


BLUE STAR 692.00 734.31 748.00 761.69 806.00 618.3 44.17
AARTI INDUSTRIES 934.00 939.55 942.50 945.45 955.00 914.6 46.11
MANGALORE REFINERY & PETROCHEMICALS 136.10 139.38 140.55 141.72 145.50 129.5 48.98

BUY LIST
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above
Scrip Last Close Demand point Demand point Demand Point Weak below Supply Point Monthly RS

UNITED BREWERIES 1120.00 1097.92 1084.00 1070.08 1025.00 1215.9 70.04


MEP INFRASTRUCTURE DEVELOPERS 106.00 105.22 103.90 102.58 98.30 116.4 69.84
WELSPUN CORP 157.90 156.43 154.25 152.07 145.00 174.9 68.99
HEXAWARE TECHNOLOGIES 315.20 304.52 299.08 293.63 276.00 350.7 68.34
ESAB INDIA 989.00 947.25 932.50 917.75 870.00 1072.3 63.9
BANNARI AMAN SUGARS 2581.00 2498.32 2470.00 2441.68 2350.00 2738.3 57.74
HOUSING DEVELOPMENT FINANCE CORPORATION 1775.00 1756.77 1746.50 1736.23 1703.00 1843.8 57.73
EXCEL CROP CARE 2015.60 1971.58 1926.03 1880.47 1733.00 2357.6 57.53
BRIGADE ENTERPRISES 277.25 275.17 272.33 269.48 260.25 299.3 54.68

PUNTER PICKS
Note: Positional trade and exit at stop loss or target whichever is earlier. Not an intra-day trade. A delivery based trade for a possible time frame
of 1-7 trading days. Exit at first target or above.
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above, RS- Strength

Weak RS-
Scrip BSE Code Last Close Demand Point Trigger Supply point Supply point
below Strength
KALYANI INVESTMENT COMPANY 533302 2167.05 2077.00 2180.00 1954.60 2319.3 2544.7 71.14
GTPL HATHWAY 540602 152.20 148.00 153.10 140.10 161.1 174.1 70.49
VALIANT COMMUNICATION 526775 76.55 73.90 78.00 67.75 84.3 94.6 65.9
BRIGADE ENTERPRISES 532929 277.25 269.00 284.40 260.25 299.3 323.5 63.43
MCDOWELL HOLDINGS 532852 41.75 40.55 42.85 39.15 45.1 48.8 63.43
UNIVERSAL AUTOFOUNDRY 539314 64.00 62.75 65.00 52.00 73.0 86.0 61.63

A Time Communications Publication 6


MAHINDRA CIE AUTOMOTIVE 532756 252.05 248.60 255.50 242.30 263.7 276.9 51.53
INDIA STEEL WORKS 513361 4.30 4.08 4.63 3.41 5.4 6.6 50.97

TOWER TALK
Little known speciality chemical manufacturing company Amal is going great guns and is now in the fold of the
Lalbhai group. Buy for bumper returns.
LIC Housing Finance disappointed the market by reporting higher NPAs. Its NIM was also the lowest in the last 11
quarters. Stay away from this counter till some clarity is received.
As per the new debt repayment plan, Reliance Communications envisages equity sway from some its lenders of
~Rs.100 crore apart from sale of certain assets worth Rs.17500 crore. Steps to cut down the debt (asset
monetisation) may excite investors with a risk appetite.
The government is aggressive about converting all its automobiles into e-vehicles over the next few years. PSUs will
follow suit. A good time to buy Tata Motors and Mahindra & Mahindra.
Max Life Insurance is keen to acquire up to 10% stake in Lakshmi Vilas Bank. The stock could surge if that
happens.
Debottlenecking at IG Petrochemicals is over. With all its plants functioning well, the stock could take a big leap any
time. Buy immediately.
USFDA is likely to lift its ban on the import alert on Divis Laboratories Vizag plant. The company should be on a
comeback trail very soon. Buy.
Torrent Pharmaceuticals is reportedly buying out Unichem for ~Rs.3250 crore, which will place it amongst the
coveted pharma companies in India. It makes sense to buy.
Transmission giant Power Grid Corporation of India continues to report sustainable growth. A stable long-term
investment bet.
The demand for copper is likely to double by 2020. Hindustan Copper can be bought for stellar gins.
Rama Steel Tubes has won two orders worth Rs.288 crore for the supply and erection of transmission lines for
rural electrification in its JV company Pir Panchal Construction from Uttarkhand Power Corporation and Himachal
Pradesh Electricity Board for execution in 24 months.
Sanco Industries, manufacturer of PVC pipes & allied
products is in limelight on reports of major expansion and
likely export order. Relative Strength (RS)
The Cabinet has approved the sale of government's entire signals a stocks ability to perform in a
73.47% stake in Dredging Corporation of India. A bumper dynamic market.
dividend may be announced. A good buy even at the current Knowledge of it can lead you to profits.
level.
ITC is pursuing to re-launch some of its prestigious and high POWER OF RS - Rs.3100 for 1 year:
margin personal care products and brands. Keep accumulating What you get -
in small lots.
SRF, a manufacturer of refrigerants, has signed a deal to buy Most Important- Association for 1 year
Mexichems HFC, which is into zero ozone depleting at just Rs.3100!
hydrocarbons. A big positive for the company. Buy. 1-2 buy / sell per day on a daily basis
Merchant banker, Devonshire Capital, plans to buy 51% stake 1 buy per week
in Ruchi Soya Industries for ~Rs.4000 crore. A positive for its
1 buy per month
shareholders.
1 buy per quarter
Transport Corporation of India posted excellent results for
1 buy per year
Q2. The management is confident of better figures in H2FY18.
A good buy. For more details, contact Money Times on
Tech Mahindra reported good numbers for Q2 with 30% 022-22616970/4805 or
moneytimes.support@gmail.com.
higher PAT. It has added 1,250 employees, which is indicative
of better business in the coming few quarters. A safe bet.

A Time Communications Publication 7


Alembic Pharmaceuticals has completed its acquisition of US-based Orit. The next few months are likely to be good
for the entire pharma sector. Buy for sure shot gains.
Asian Granito India has formed a JV with a Gujarat-based company to set up a greenfield plant. The affordable
housing sector is booming and this company should benefit by this move.
There is no stopping for Hero Motorcorp (Indias largest two-wheeler maker), which posted PAT of Rs.1010 crore
for Q2FY18. Buy for the long-term.
TVS Motor Company posted good Q2 results with 20% higher PAT. Its future looks equally good. The stock can still
be accumulated.
Tata Steel has shown strong investment support on the back of declining risks in Corus, which is on a comeback
trail. Accumulate in small lots.
With oil prices slowly rising, the demand for rigs will also rise. It would make sense to buy Aban Offshore at the
current beaten down share price.
United Breweries Ltd (UBL) has moved up from Rs.840 to Rs.1140 within a month. But its holding company,
McDowell Holdings, which holds 61 lakh shares of UBL, has not moved yet. Buy for 50% returns in the short-term.
Be cautious on Sai Baba Investment & Commercial Enterprises, which is being circulated as mass SMS by
operators. There is nothing in the companys fundamentals.
An Ahmedabad-based analyst recommends Amal, Mindteck (India), IOL Chemicals & Pharmaceuticals, Kushal,
Lactose (India), Sun Pharmaceutical Industries and Tanla Solutions. From his past recommendations, Super
Crop Safe recommended at Rs.153.20 on 23 October 2017, zoomed to Rs.180 last week; Chandni Textiles &
Engineering Industries recommended at Rs.39.30 on 23 October 2017, zoomed to Rs.60.7 last week; Sree
Rayalaseema Alkalies & Allied Chemicals recommended at Rs.30.3 on 28 August 2017, zoomed to Rs.59.80 last
week; Ultramarine & Pigments recommended at Rs.173.65 on 26 June 2017, zoomed to Rs.282.90 last week;
Meghmani Organics recommended at Rs.46.2 on 19 June 2017, hit a high of Rs.123.5 last week.
The latest grey market premium for Reliance Nippon Life Asset Management Co. IPO is Rs.45-47; Mahindra
Logistics IPO is Rs.3-4 and HDFC Standard Life Insurance Co. is Rs.14-15.

BEST BET

Kotak Mahindra Bank


(BSE Code: 500247) (CMP: Rs.1015.60) (FV: Rs.5) Free 2-day trial of Live Market Intra-day Calls
By Amit Kumar Gupta A running commentary of intra-day trading
recommendations with buy/sell levels, targets, stop loss
Kotak Mahindra Bank operates through the following
on your mobile every trading day of the moth along with
segments - Treasury, Balance Sheet Management Unit
pre-market notes via email for Rs.4000 per month.
(BMU) and Corporate Centre, which includes dealing in
Contact Money Times on 022-22616970 or
debt, equity, money market, forex market, derivatives and
moneytimes.support@gmail.com to register for a free trial.
investments and primary dealership of Government
Securities; Retail Banking, which includes lending and credit cards; Corporate/Wholesale Banking, which includes
wholesale borrowings and lending; other related services like Vehicle Financing, which includes retail vehicle finance
and wholesale trade finance; Other Lending Activities, which includes financing against securities and other loans;
Broking, which is engaged in market transactions done on behalf of clients; Advisory and Transactional Services, which
provide financial advisory and transactional services; Asset Management, which manages investments on behalf of
clients and funds; and Insurance, which provides life insurance and general insurance.
The Bank reported a healthy performance in Q2FY18 as both standalone and consolidated net profit recorded a healthy
growth. Standalone PAT grew 22.3% YoY and 8.9% QoQ to Rs.9.9 bn on the back of healthy growth in customer assets
(+20.7% YoY and +6.1% QoQ), best-in-class NIMs (4.3%) and strong growth in core fee income (+28.6% YoY and +0.6%
QoQ). Consolidated PAT surged by 20% YoY and 7% QoQ to Rs.14.4 bn backed by strong bottom-line growth recorded
by Kotak Prime (+15.4% YoY and 13.6% QoQ to Rs.1.5 bn), Kotak Life (+57.7% YoY and -2.9% QoQ to Rs.1 bn) and Kotak
Securities (+22.9% YoY and -5.6% QoQ to Rs.1.2 bn). Customer assets growth was aided by 17.5% YTD and 6.4% QoQ
growth in Corporate portfolio, 17.1% YTD and 13% QoQ growth in small business and personal loans and 12.7% YTD
and 6.7% QoQ growth in CV/CE portfolio. Notably, the Bank has started benefitting from the full integration of erstwhile
ING Vysya Bank (IVB) especially post demonetisation.

A Time Communications Publication 8


The Bank has completed the process of buying back the remaining 26% stake in Kotak Life from Old Mutual. Under the
deal, Kotak Life was valued at Rs.48.9 bn. CASA ratio improved by 390 bps QoQ to a record high of 47.8% led by 61.9%
YoY and 21.5% QoQ growth in saving deposits. Strong growth in SA deposit was led by acquisition of new customers and
some large government business.
The Bank will launch its consumer finance (CF) business through its NBFC subsidiary i.e. Kotak Prime, which will help
the Bank to optimally utilise the excess capital available at Kotak Prime. With the positive initial response to the Banks
Digital 811 Account, the management believes that the traction will continue in FY18 as well. However, standalone opex
was partially impacted due to higher advertising cost. The Bank has not received any materially adverse observation
from the RBI in its annual supervision audit for FY17.
The Bank has undoubtedly proven its competitive edge over its Key Financials: (Rs. in mn)
private sector peers with higher fee based income generation, Particulars FY16 FY17 FY18E FY19E
asset quality management and effective management of financial NII 69004 81261 102157 125778
business subsidiaries. It continues to witness moderation in SMA-2 P/E (x) 89.4 55 43.2 34.6
balance, which clearly suggests a stable asset quality trend. Adj. BV (Rs.) 130.6 150 193.2 221.7
Looking ahead, we expect the strong traction in earnings to P/Adj. BV (x) 7.8 6.8 5.3 4.6
continue owing to the robust growth in loan book, moderate credit
cost and healthy margins. We value the standalone entity at 4xFY19E adjusted BV and expect subsidiaries to fetch
Rs.257/share after deducting holding company discount of 15%.
Technical Outlook: The stock looks very good on the daily chart for medium-term investment. It is making a higher
high and higher low pattern on the daily chart and is moving with a strong uptrend. The stock trades above all important
DMA levels on the daily chart.
Start accumulating at this level of Rs.1015.60 and on dips to Rs.965 for medium-to-long-term investment and a possible
price target of Rs.1150+ in the next 12 months.

STOCK WATCH
By Amit Kumar Gupta

Zee Entertainment Enterprises Ltd


(BSE Code: 505537) (CMP: Rs.539.75) (FV: Re.1) (TGT: Rs.600+)
Zee Entertainment Enterprises Ltd (ZEEL) is a media and entertainment company that provides broadcasting services. It
operates through two segments - Content and Broadcasting. It offers content in multiple languages and offers ~38
international and 30+ domestic channels. It has a library that houses over 2,22,703 hours of television content. It holds
rights to ~3,820 movie titles. Its brands include Zee TV, Zee Cinema, Zee Action, Zee Classic, Zee Anmol, Zee Cafe, Zee
Studio, Zee Salaam, Zing, ETC Bollywood, Zee Q and Zindagi. Its range of offerings in the regional language domain
include channels such as Zee Marathi, Zee
Talkies, Zee Bangla, Zee Bangla Cinema, Zee
Telugu, Zee Kannada, Zee Tamil and Sarthak
TV. Its high definition offerings include Zee
FOR WEEKLY GAINS
TV HD, Zee Cinema HD, & TV HD, Zee Studio
HD, Zee Cafe HD, & pictures HD, Ten 1 HD
Fast...FocusedFirst
and Ten Golf HD. It operates in 170+ Fresh One Up Trend Weekly
countries. A product designed for short-term trading singling out one stock
ZEELs ex-sports revenue rose 7% YoY led by to focus upon.
domestic ad and subscription revenues. Fresh One Up Trend Weekly (formerly Power of RS Weekly) will
Consolidated revenue fell 7% YoY to Rs.15.8 identify the stop loss, buy price range and profit booking levels
bn. Consolidated EBITDA stood at Rs.4.9 bn along with its relative strength, weekly reversal value and the start
(flat YoY, 4% beat) with a 31% margin (+210 date of the trend or the turndown exit signals. This
recommendation will be followed up in the subsequent week with
bps YoY) despite lower revenues, led by 25%
the revised levels for each trading parameter.
YoY savings in content cost. PAT surged
148% to Rs.5.9 bn (est. of Rs.3 bn). PAT, after Subscription: Rs.2000 per month or Rs.18000 per annum
adjusting for Rs.1.3 bn exceptional gains Available via email
For a free trial call us on 022-22616970 or email at
from sports, Rs.1.6 bn other income from moneytimes.support@gmail.com
equity revaluation and reversal of Rs.81 mn

A Time Communications Publication 9


interest provision, jumped 21% YoY to Rs.2.9 bn (7% miss).
Domestic ad revenue grew 6% YoY (ex-sports, RBNL and IWPL) to Rs.9.3 bn, impacted by the GST. Overall ad growth
was a meagre 3% YoY to Rs.9.9 bn due to 34% fall in international ad revenues on currency appreciation and region-
specific issues. Domestic subscription revenue ex-sports grew 7% to Rs.4 bn as TRAI tariff order delayed contract
renewals. Overall subscription revenue fell 14% YoY to Rs.5 bn (est. of Rs.4.8 bn).
With the onset of the festive season, domestic ad growth rebounded strongly to the normal level with broad-based
recovery including FMCGs and e-commerce. The companys strong ratings should be maintained with an increase in
original content of the flagship channel to 32 hours from 28 hours by Q4FY18E. We expect 15% ad revenue growth in
H2FY18 and 16% in FY19E. Subscription revenue should grow at 12%/14% in H2FY18/FY19E.
We broadly maintain our ex-sports revenue growth of 11%/16% for FY18/19E. High original content, launch of OTT
app Z5 and rebranding Zee TV should reduce the room for operating leverage. Thus, we cut EBITDA margin by ~300
bps to 32.6% in FY19E. This is still above the managements guidance of 30%+ margin, building operating leverage from
high revenue growth and & TV breakeven in two quarters. We have assigned 35x P/E on September 17 EPS v/s 32x
earlier, given the company's steady improvement in viewership share and a strong recovery in the ad market.
Technical Outlook: The ZEEL stock looks very good on the daily chart as a medium-term investment pick. It is moving
in the trading range of Rs.480-540. A close above Rs.560 with volumes will lead the rally to Rs.575-590 on the daily
chart. The stock trades above all important DMA levels on the daily chart.
Start accumulating at this level of Rs.539.75 and on dips to Rs.510 for medium-to-long-term investment and a possible
price target of Rs.600+ in the next 12 months.
********

Ambuja Cements Ltd


(BSE Code: 500425) (CMP: Rs.282.25) (FV: Rs.2) (TGT: Rs.345+)
Ambuja Cements Ltd (ACL) is a holding company engaged in the manufacture of clinkers, cement and related products. It
offers a range of products to the business to business (B2B) and retail markets. Its product, Ambuja plus Roof Special, is
suited for constructing roofs and slabs. It also offers to install rooftop rainwater harvesting technology. Its products also
include Ambuja Powercem, which caters the ready-mix (RMX) sector; Ambuja Railcem, which is designed for railways;
and Ambuja Buildcem, which serves the requirements of the mass housing segment. It also co-owns two brands in the
micro materials category i) Alccofine, which includes a range of micro slag materials; and ii) Dirk Pozzocrete, which
includes superfine fly ash. Alccofine Micro Materials are used in construction projects such as metro rail, dams, roads,
flyovers, bridges and tunnels.
ACLs EBITDA grew 15% YoY to Rs.3.54 bn translating into a margin of 15.3% (-7.5 pp QoQ, flat YoY). EBITDA/tonne
rose 5% YoY to Rs.706, but fell by Rs.367 QoQ due to a 43% QoQ rise in raw material cost/tonne due to higher prices of
flyash and the kiln shutdown of the Bhattapara unit. Power and fuel cost/tonne rose 4% QoQ due to higher prices of
petcoke and fuel. Other expenses declined 6% YoY due to the reversal of DMF charges of Rs.446 mn in the quarter. PAT
grew 10% YoY to Rs.2.7 bn.
ACL plans to add 1.7 MMT of clinker capacity by end CY19. The associated grinding capacity is likely to be added beyond
CY20, which will keep its volume growth under check in the medium-term. Volumes grew 10% YoY to 5.02 MMT led by a
favorable base. Q3CY17 standalone revenue of Rs.23.2 bn (+15% YoY) marginally exceeded our estimate of Rs.22.9 bn,
led by realizations of Rs.4621, which were up 5% YoY, but lower by 2% QoQ on weak pricing in the northern markets.
Also, realizations were lower upto Rs.75/tonne in Q3CY17, as VAT incentive of Rs.380 mn was not recognized.
ACLs RoE/RoCE profile is likely to remain subdued at sub 10% even after factoring in the benefits from an improvement
in industry pricing. We expect ACL to lose market share due to capacity constraints over the next 2-3 years as peers like
Ultratech and Shree Cement are adding capacity by over 25% by way of organic growth or acquisitions.
Technical Outlook: The ACL stock looks very good on the daily chart for medium-term investment. The stock is moving
in the trading range of Rs.260-290. A close above Rs.300 with volumes will lead the rally to Rs.350 on the daily chart.
The stock trades above all important DMA levels on the daily chart.
Start accumulating at this level of Rs.282.25 and on dips to Rs.262 for medium-to-long-term investment and a possible
price target of Rs.345+ in the next 12 months.

A Time Communications Publication 10


EQUITY MARKETS THE NEW GOLD!

Equity Markets The new Gold! REVIEW


By Laxmikant Bhole
Century Enka recommended at Rs.358.45 last
A couple of months back, there was mayhem on the perception of
week, hit a high of Rs.404.70 fetching 13%
an economic slowdown with extreme pessimism across the nation
returns in just 1 week.
as multiple television debates fueled it further. However, the
recently published strong economic data has shut the mouth of Uflex recommended at 386.70 on 14 August
critics as the economy seems to be reviving post demonetisation 2017, zoomed to Rs.478.80 last week fetching
and GST, which is extremely encouraging. 24% returns in 2.5 months.
Markets the world over are hitting record highs. Last week, Japan's Triveni Engineering Industries recommended at
Nikkei recorded a new high since 1996 followed by the US, 76.05 on 17 July 2017, hit a high of Rs.98.05
European and Brazilian markets. The Indian markets, too, touched last week fetching 29% returns in 2.5 months.
record highs. The Rupee also remains strong against the USD on
the back of robust IIP data for August and lower retail inflation of DCM Shriram recommended at Rs.367.70 on 12
3.28% for September 2017. Exports registered a healthy growth of June 2017, hit a high of Rs.543.95 last week
over 25% in September to $28.61 bn as all major commodities also fetching 48% returns in 4.5 months.
recorded growth. Core sector output grew to 5.2% in September. Deepak Nitrite recommended at Rs.141.85 on
Many analysts who were bearish earlier have turned positive on 15 May 2017, hit a high of Rs.228.25 last week
the economy and the equity markets after the release of the latest fetching 61% returns in 5.5 months.
economic data. However, I have constantly maintained my bullish Marathon Nextgen Realty recommended at
stance on the economy and the equity markets for long now in Rs.265.50 on 10 April 2017, hit a high of
view of the solid structural changes that the government is Rs.509.40 last week fetching over 92% returns
carrying out. This is proven by the fact that Indias ranking in Ease in less than 7 months.
of Doing Business released by the World Bank has improved
substantially by 30 ranks to 100. In view of the various reforms, Panasonic Carbon India Company
the bull-run in the equity markets is likely to remain intact going recommended at Rs.440.30 on 27 March 2017,
forward but consolidation and minor corrections in between are zoomed to Rs.667 last week fetching 51%
not ruled out. returns in 7 months.
The festive season witnessed good retail spending which will further boost the economy. The earnings season is the next
booster for the economy as Maruti Suzuki, Hindustan Unilever and HDFC initiated a splendid start to this season. The
trade deficit, too, narrowed in September by 0.95% to $8.98 bn as the import growth rate was slightly lower than the
export growth with gold imports declining 5%.
The government's surgical strike on black money is also bearing results with an enlarged tax payer base and higher tax
collections. Personal tax collections grew 21.4% in 2016-17, the highest in the last 9 years, while overall tax collections
grew 14.5% touching Rs.8.49 lakh crore-the highest in the last 7 years!
To further fuel the growth and reduce the impact of GST and demonetisation, the FM announced Rs.2.11 lakh crore of
recapitalization for PSU banks to help them lend more. This is a real growth booster for the economy and for the banking
sector. The markets gave a big thumbs up to this announcement last week as the Sensex and the Nifty touched record
highs the next day. The earlier announced Rs.70K crore recapitalization package was felt to be inadequate by many,
which is why the government allocated a sufficiently large recapitalization package this time. While the common man
might feel that this is a good money chasing bad money kind of phenomena, this was a long awaited reform for the
Indian banking sector and the economy, the effect of which will be seen only after a couple of years. This will enable PSU
banks to lend more, which will lead to industry growth and job creation. While everybody is concerned about its impact
on fiscal deficit, FM indicated that 64% of the recapitalization amount i.e. Rs.1.35 lakh crore will be in the form of
recapitalization bonds and the balance through budgetary allocation and the market. The government made a smart
move by using the recapitalization bonds route whereby it will issue additional equity of the banks that can help them
raise more capital from the market as well. To curb the impact on fiscal deficit, the government may use another set of
PSUs to issue these bonds instead to avoid any shelling out of money directly without putting the fiscal deficit target in
jeopardy. This is probably one of the best moves by the government to put the Indian economy back on the growth
trajectory. However, it is important to note that such a bailout will not be appropriate as an on-going basis and the
government must take stringent steps to curb such hefty stimulus in future. Recognizing this fact, the FM also
announced that this move will be followed up by reforms in the banking sector.

A Time Communications Publication 11


Indian household savings have witnessed some massive structural shifts of late. Demonetisation seems to have boosted
household savings. Households in India have historically been quite risk-averse and wary of investing their savings into
risky assets. Traditionally, Gold was always a preferable asset class for the Indian middle class. However, this trend
seems to have changed in the last few months especially post demonetisation. Earlier, the Indian stock markets were
heavily dependent on FII inflows. But since the last one year, the Indian markets have inched higher despite lower FII
inflows. The Nifty advanced from the 7900 level in November 2016 to 10300 in October 2017. The primary reason for
this 30% appreciation is the change in peoples mindset as mentioned above. DIIs were net buyers over this period and
Mutual Funds witnessed record inflows from investors on a monthly basis. This clearly indicates the rising interest and
awareness about the equity markets and Mutual Funds. The key reasons for this shift in mindset are the contained
inflation which helped the RBI to lower the interest rates (resulting in lower rates on bank deposits) and the downturn
in the real estate market, which in turn pushed investors to look for other asset classes like the equity markets for better
returns. And the markets have rewarded investors significantly.
Assets under Management (AUM) by Mutual Funds recorded an all-time high of over Rs.17.5 trillion by end-March 2017,
which further increased to Rs.20 trillion by end-July 2017. Gross savings grew to 11.8% (provisional) of GNDI (gross
national disposable income). All these changes make equity asset class attractive for investors for the next few years and
investors should take advantage of this opportunity.
The Indian economy is at an inflection point and is
expected to remain on the growth trajectory buoyed by For the busy investor
the governments push for reforms and strong economic
parameters. Equity savings in India as a percentage of Fresh One Up Trend Daily
financial savings even today is very low at around 5-6%. Fresh One Up Trend Daily is for investors/traders who are
But the Indian investor shifting gear to the equity keen to focus and gain from a single stock every
markets from other asset classes is very encouraging. trading day.
India is well placed on the macros such as inflation, fiscal With just one daily recommendation selected from
and current account deficit and the government is rightly stocks in an uptrend, you can now book profit the same
working on the supply side constraints, which augurs day or carry over the trade if the target is not met. Our
well for the equity markets in the long-term. Although
review over the next 4 days will provide new exit levels
the market is fairly valued now, the fundamental
while the stock is still in an uptrend.
strength of the Indian economy and sustained liquidity
in the market will help the equity markets hit new highs This low risk, high return product is available for online
in coming years. A systematic investment strategy in subscription at Rs.2500 per month.
equity with the right set of fundamentals can fetch Contact us on 022-22616970 or email us at
investors multibagger returns in the coming years.
moneytimes.suppport@gmail.com for a free trial.
Happy Investing!

MARKET REVIEW

Market scales record high


By Devendra A Singh
The Sensex advanced 528.34 points to settle at 33685.56 while the Nifty gained 129.45 points to close at 10452.50 for
the week ending Friday, 3 November 2017.
On the macro-economic data, Indias fiscal deficit was at Rs.4.99 lakh crore for April-September 2017 or 91.3% of the
budgeted target for the current fiscal year that ends on 31 March 2018. Net tax receipts in the first six months of FY18
were Rs.5.42 lakh crore.
India's annual infrastructure output in September 2017 surged 5.2% from a year ago, driven by higher production of
coal and refinery products. During April-September 2017, the annual output growth was 3.3%.
Coal production grew 10.6% in September 2017 from a year ago while refinery products output grew 8.1%. India's eight
infrastructure sectors include coal, crude oil, natural gas, refinery products, electricity, steel, cement and fertiliser,
accounting for ~40% weight in the index of industrial production.
India is likely to stick to its fiscal deficit target of 3.2% of GDP and may accelerate sales of government stakes in lenders
and other companies as part of its effort to recapitalise banks, an adviser to the India's PM stated.

A Time Communications Publication 12


The government has already used up nearly all of its budget for the current fiscal year and tax revenues are expected to
fall far short of initial expectations. At the same time, economic growth has slowed, sparking calls for more stimulus.
Mr. Surjit Bhalla, a member of the Prime Ministers Economic Advisory Council (PMEAC), stated that the government had
stuck to its fiscal deficit targets over the past three years and is expected to do so this year as well.
The central bank has warned that missing the fiscal deficit target could lead to a spike in inflation, hurting the macro-
economic stability.
Indian stocks slid last month on reports that a stimulus package of up to Rs.500 bn ($7.7 billion) might be in the works -
one that would widen the deficit to 3.7% of GDP.
Economic growth slipped to its lowest level in three years in the first quarter, logging an annual rate of 5.7%. But Bhalla
said that there were signs of recovery. I am more optimistic on the economy than I was two weeks ago, adding that last
week's industrial output and export data suggested that the fears about a slowdown were exaggerated.
He also said that the GDP growth could be close to 6.5% for the fiscal year although the forecast is lower than the central
bank's latest estimate of 6.7%.
Last week, new estimates were released by SBIs Economic Research Department. While there could be a shortfall of
Rs.1.1 lakh crore in the revenue receipts, disinvestments receipts worth Rs.72500 crore and expenditure cuts are likely
to offset the impact.
We estimate that the government may cut about Rs.70000 crore from the capital expenditure, the report said.
However, it noted that budgeted disinvestment receipts are on track to realizing Rs.72500 crore.
Further, the report observed that the government has accumulated Rs.40491 crore in the National Small Savings Fund
during the first five months of this fiscal. It could thus receive Rs.1 lakh crore in small savings in FY18 and would be able
to do a buyback of Rs.75000 crore, which was contingent upon that. This in turn implies that the government would be
able to meet its net borrowing target of Rs.3.48 lakh crore, it added.
Out of the total estimated shortfall of Rs.1.1 lakh crore in revenue receipts, around Rs.77,000 crore shortfall may be from
tax revenue on account of reduction in excise duty on petroleum products, tax refunds under GST and revenue
compensation to states for GST implementation. The non-tax revenue may decline by Rs.38000 crore because of lower
spectrum proceeds among others, the SBI report
said.
On the US front, President Donald Trump tapped What TF+ subscribers say:
Federal Reserve Governor Jerome Powell to
become head of the US central bank, breaking Think Investment Think TECHNO FUNDA PLUS
with precedent by denying Ms. Yellen a second Techno Funda Plus is a superior version of the Techno Funda
term but signalling a continuation of her cautious column that has recorded near 90% success since launch.
monetary policies.
Mr. Trump said, If we are to sustain all this Every week, Techno Funda Plus identifies three fundamentally
progress, our economy requires sound monetary sound and technically strong stocks that can yield handsome
returns against their peers in the short-to-medium-term.
policy and prudent oversight. We need strong and
steady leadership at the US Federal. He will Most of our recommendations have fetched excellent returns to
provide exactly that. our subscribers. Of the 156 stocks recommended between 11
Key index moved up on Monday, 30 October January 2016 and 2 January 2017 (52 weeks), we booked profit
2017, on buying of equities on positive cues. The in 125 stocks, 27 triggered the stop loss while 4 are still open
Sensex gained 108.94 points (+0.33%) to settle at and are in nominal red.
33266.16. Of the 126 stocks recommended between 9 January 2017 and 23
Key index edged lower on Tuesday, 31 October October 2017 (42 weeks), we booked 7-37% profit in 94 stocks,
2017, on profit-booking. The Sensex was down 20 triggered the stop loss of 2-12% while 12 are still open.
53.03 points (-0.16%) to settle at 33213.13.
Key index surged on Wednesday, 1 November
If you want to earn like this,
2017, on consolidated buying by foreign funds. subscribe to TECHNO FUNDA PLUS today!
The Sensex advanced 387.14 points (+1.17%) to For more details, contact Money Times on
settle at 33600.27. 022-22616970/22654805 or moneytimes.support@gmail.com.
Key index fell on Thursday, 2 November 2017, on Subscription Rate: 1 month: Rs.2500; 3 months: Rs.6000;
selling of equities. The Sensex was down 27.05 6 months: Rs.11000; 1 year: Rs.18000.
points (-0.08%) to close at 33573.22.

A Time Communications Publication 13


Key index settled higher on Friday, 3 November 2017, on positive buying of equities by FIIs. The Sensex gained 112.34
points (+0.33%) to settle at 33685.56.
Events like national and global macro-economic figures as well as the earnings season will dictate the movement of the
markets and influence investor sentiment in the near future.
On Indias macro-economic data, the HSBC Manufacturing PMI and HSBC Services PMI for October 2017 is scheduled for
release in the first week of November 2017.
On the inflation data, the government is scheduled to release data based on WPI and CPI for October 2017 for urban and
rural India by mid-November 2017.
USAs macro-economic data for October 2017 is scheduled for release in the first week of November 2017.

MARKET OUTLOOK

Nifty in decisive range 10400-10500


Rohan Nalavade
Last week, the Nifty moved in a tight range of 10350-10450 with volatility. It got strong support at 10400 and faced
strong resistance at 10500. Only a close above 10500 will take the Nifty to 10700 in the November series. On a close
below 10400, the Nifty could slip to 10200 in the November series contract.
An important W.D. Gann date (7 November 2017) lies in the next week and therefore, the markets will witness big
moves next week, which will set the trend till the end of the series. The US Federal meet indicated a rate hike in
December. On the domestic front, Gujarat elections will be held in December. So, the outcome of the elections will have a
huge impact on the markets for the short-term. If the BJP loses, a 1000-2000 point movement can be seen on the
downside but if it wins, a strong upside movement is likely as the Gujarat elections will set the stage for 2019 election.
Among stocks,
Tata Motors is a Buy at Rs.447 for upside levels of Rs.453-456 (SL: Rs.440)
Vedanta is a Sell below Rs.338 for downside levels of Rs.333-328 (SL: Rs.345)
Nifty Index At spot price - Buy above Rs.10470 for upside levels of Rs.10500-10550; Sell below Rs.10440 for
downside levels of Rs.10400-10350-10300.

PRESS RELEASE

HDFC Standard Life Insurance IPO opens on 7th November


HDFC Standard Life Insurance Co. (HDFC Standard Life), a subsidiary of mortgage lender HDFC, plans to raise Rs.8700
crore through its IPO in the price band of Rs.275-290 for its Rs.10 paid-up equity share. The IPO is an offer for sale (OFS)
comprising 191,246,050 equity shares by HDFC Standard Life and up to 108,581,768 equity shares by UK-based
Standard Life. The issue closes on Thursday, 9 November 2017.
HDFC Standard Life is one of the most profitable life insurers in India based on value of New Business (VNB) margin. It
has a pan India presence through 414 branches and spokes across India as at 30 September 2017, supported by a
workforce of 16,544 employees. Its product portfolio comprises 32 individual and 10 group products besides 8 optional
rider benefits.
*******

ANI Integrated Services IPO opens on 8th November


Mumbai-based manpower staffing company, ANI integrated Services Ltd (ANI), plans to raise Rs.25.66 crore through its
IPO priced at Rs.100/share for its Rs.10 paid-up equity share. The issue consists of a Fresh Issue of 16,87,200 equity
shares and an Offer for Sale (OFS) of 8,78,400 equity shares. The issue closes on Friday, 10 November 2017.
Backed by a team of 1,200+ professionals, ANI provides technical staffing solutions, qualified engineers to various
verticals like Electrical-Instrumentation Services, Erection & commissioning, Operations & Maintenance, etc.

A Time Communications Publication 14


STOCK BUZZ
By Subramanian Mahadevan

FIEM Industries Ltd: Powerful lamp!


(BSE Code: 532768) (CMP: Rs.917.05) (FV: Rs.10)
Haryana-based FIEM Industries Ltd (FIEM) is an auto component manufacturing company and a leading manufacturer
of automotive lighting and signaling equipment and rear view mirrors. It is among the first companies in India to
introduce LED lights in two-wheelers. Majority of its revenue comes from two marquee clients in the two-wheeler
segment - HMSI (45%) and TVS Motors (26%). It offers a wide range of lighting systems and rear view mirrors, sheet
metal parts and plastic components for two and four-wheelers. Its product portfolio includes head lamps, tail lamps, roof
lamps, wheel covers, warning triangle, mudguards, LED Display Panels, etc.
FIEM launched its Rs.59 crore IPO in September 2006 priced at Rs.145/share to finance its expansion plans and to set up
an additional manufacturing facility. It has neither reported losses nor expanded its equity ever since its IPO, which
reflects a slow-but-steady consistent growth in the top-line and bottom-line year after year with regular dividend
payouts to shareholders. Its revenue has grown 6x whereas PAT has grown ~9x over the last 8 years. It has some
aggressive business plans lined up ahead with an aim to become a Rs.2000 crore company by 2020. Therefore, buy the
stock on every decline for assured double-digit returns.

STOCK SCAN

I G Petrochemicals Ltd
(BSE Code: 500199) (CMP: Rs.710.40) (FV: Rs.10)
By Dildar Singh Makani
Company background: Incorporated in 1988 and promoted by the renowned Dhanuka group, Mumbai-based I G
Petrochemicals Ltd (IGPL) is an established market leader and the lowest cost producer of Phthalic Anhydride (PAN)
with strong recognition and plant facilities of international standards. Equipped with one of the largest capacities at a
single location, IGPL caters to the local as well as international markets.
Product: PAN is used in the manufacture of plasticizers, which are most essential in making PVC products, shoe soles,
cables, pipes and hoses, leather cloth, films for packaging and other products. It is also used to manufacture alkyd resins
used in paints and in the production of unsaturated polyester resins for building materials, plastic products, textile
industries and printing ink.
Plants: IGPL has three state-of-the-art manufacturing facilities in technical collaboration with Germany-based Lurgi. Its
plants are located at MIDC, Taloja in Maharashtra.
Financial Parameters: For FY17, IGPLs achieved a turnover of Rs.1040.29 crore with PAT of Rs.101.56 crore fetching
an EPS of Rs.32.98 v/s Rs.19.6 in FY16 and Rs.2.89 in FY15. The figures for the first two quarters also look very exciting
and point towards much higher earnings.
With increasing cash liquidity (due to rising profits), interest expenses have fallen from Rs.38.17 crore in FY15 to
Rs.22.67 crore in FY16 and further to Rs.18.05 crore in FY17. This indicates IGPLs financial strength and is indicative of
the lesser use of debt.
With an equity capital of Rs.30.79 crore and reserves of Rs.362.58 crore, IGPLs share book value works out to Rs.127.74.
Credit Ratings: IGPL continues to get better credit ratings of A+ and A1+ for its long-term and short-term financial
requirements, which reflects a stable outlook. These high ratings enable it to access debt at lower interest rates, as and
when the need arises.
Current year working: The demand for PAN in the Asia Pacific region is expected to grow at ~7% for the next 2-3
years. During Q1FY18, it posted PAT of Rs.38.86 crore and an EPS of Rs.12.69. During Q2FY18, it posted PAT of Rs.33.41
crore v/s Rs.20.23 crore in Q2FY17. Its profitability improved despite the fact that one of its plants remained shut due to
debottlenecking process and change of catalyst. The EPS for H1FY18 works out to Rs.23.61. We expect H2FY18 earnings
to improve significantly and in all probability IGPL is likely to notch an EPS of ~Rs.55 for FY18.
Recent Acquisition: IGPL recently acquired the Maleic Anhydride (MA) business of Mysore Petro Chemicals Ltd (MPCL)
on a slump sale basis for Rs.74.48 crore payable over 5 years. MA is a chemical intermediary used in every field of

A Time Communications Publication 15


industrial chemistry. MPCL is the only manufacturer of MA in India while IGPL is a leading manufacturer of its raw
material - wash water. Both the plants of IGPL and MPCL are at a common location in Taloja. Therefore, this acquisition
is likely to yield greater synergy benefits for IGPL along with enhanced presence in the domestic market. The benefits of
this acquisition will be reflected during the current financial year.
On-going expansion: In 2015, IGPL had entered into a JV with Dubai Natural Oil Company to set up 45,000 TPA MA
unit, which is likely to be operational in FY19. This integration will boost IGPLs top-line as well as bottom-line. The
management recently approved the expansion of its 53,000 TPA PA plant and to foray into downstream products. The
expanded capacities will be
commissioned in FY19. MID-CAP TWINS
A multibagger in the offing: A Performance Review
While the IGPL stock had a Have a look at the grand success story of Mid-Cap Twins launched on 1st August 2016
stellar run in the last few Sr. Scrip Name Recomm. Recomm. Highest % Gain
quarters, its valuation still No. Date Price (Rs.) since (Rs.)
looks attractive and there is 1 Mafatlal Industries 01-08-16 332.85 374.40 12
room for a further rise. IGPL
2 The Great Eastern Shipping Co. 01-08-16 335.35 477 42
is on the right track by
investing in greenfield and 3 India Cements 01-09-16 149.85 226 51
brownfield expansions in 4 Tata Global Beverages 01-09-16 140.10 203 45
order to boost growth and 5 Ajmera Realty & Infra India 01-10-16 137.00 252.20 84
margins that stand to 6 Transpek Industry 01-10-16
support earnings.
447.00 1269 184
7 Greaves Cotton 01-11-16 138.55 178 28
As against the per capita
plastic use of 108-140 kg in 8 APM Industries 01-11-16 67.10 76.85 15
developed countries like USA, 9 OCL India 01-12-16 809.45 1319.40 63
Europe and Japan, Indias per 10 Prism Cement 01-12-16 93.25 129.80 39
capita plastic consumption is 11 Mahindra CIE Automotive 01-01-17 182.50 260.35 43
just 10 kgs. The government
12 Swan Energy 01-01-17 154.10 203.45 32
aims to push this to 20 kg by
the end of 2020, which is still 13 Hindalco Industries 01-02-17 191.55 244.80 28
very low compared to the 14 Century Textiles & Industries 01-02-17 856.50 1291.50 51
global average per capita 15 McLeod Russel India 01-03-17 171.75 196.25 14
plastic consumption of 45 kg.
16 Sonata Software 01-03-17 191.00 195 2
IGPL is the largest
17 ACC 01-04-17 1446.15 1842 27
manufacturer of PAN
controlling 47% of Indias 18 Walchandnagar Industries 01-04-17 142.25 191.80 35
production capacity followed 19 Oriental Veneer Products 01-05-17 222.30 401 80
by Thirumali Chemicals 20 Tata Steel 01-05-17 448.85 640 43
(~40%). The benefits of Thus Mid-Cap Twins has delivered excellent results since its launch within 10 months with
captive power and proximity majority of stocks gaining over 30%.
to ports help IGPL to keep its
costs low and make it the Latest edition of Mid-Cap Twins was released on 1st November 2017.
lowest cost producer which
Attractively priced at Rs.2000 per month, Rs.11000 half yearly and Rs.20,000 annually,
enjoys 11.3% operating
Mid-cap Twins will be available both as print edition or online delivery.
margin as against 10.7%
operating margin of
Thirumalai Chemicals.
The size of the Indian PAN market is ~3.5 lakh tonnes, of which ~85,000 tonnes of domestic requirements are met
through imports. Gradually, the share of imports is expected to come down as IGPL expands capacity.
Shareholding pattern: The promoters hold 72.22% of the equity capital, which leaves 27.78% stake with the investing
public. None of the promoter holding is pledged, which is a positive. Foreign Portfolio Investors (FPIs), Mutual Funds
(MFs) and banks collectively hold ~1.33% stake while ~2.22% stake is held by bodies corporate and ~1.7% stake by
NRIs. This effectively means that the floating stock is limited to 22.53%. Currently, there is no warrant pending, which
implies that there wont be any dilution in the near future.

A Time Communications Publication 16


Dividend and Bonus: IGPL has consistently increased its dividend pay-out over the last three years. For FY17, it paid
30% dividend. IGPL is at an inflection point. Its equity is small compared to its sales and profitability. The management
is quite liberal. It is a sellers market as far as IGPL is concerned. With the huge on-going expansion plans, IGPLs future
looks bright and its profitability is set to take a big jump. Also, there is a distinct possibility of a healthy rise in dividend
rate.
If the profits of the current year are added to the already bulging reserves, IGPLs share book value at the end of this year
may hover around Rs.182-184. Therefore, chances of a Bonus issue in future cannot be ruled out.
Price Projections: Commodity prices are on the rise and IGPLs volumes are growing on account of the rising demand.
The industry enjoys a P/E of ~27x. On a conservative FY18E EPS of Rs.55, the stock could touch Rs.1320 within a year. If
the forward earnings for FY19 are visualised, we certainly see greener pastures.
While making these projections, the expected income from the ongoing expansions has been ignored as the
commissioning of such projects will materialize only in the next financial year. Therefore, this stock is a screaming buy.
More so, because the companys working in the next 2-3 years is expected to be exemplary.

STOCK ANALYSIS

W.H. Brady & Company Ltd


(BSE Code: 501391) (CMP: Rs.270.20) (FV: Rs.10)
By Rahul Sharma
W.H. Brady & Company Ltd (WHBRADY) commenced operations in India in 1895 under the leadership of Mr. Pavan G
Morarka, Chairman and Managing Director. It is engaged primarily in the marketing of material handling equipments,
textile machinery and stores etc. It also rents space in buildings. It offers systems and solutions for the aviation and
highways sectors. It also offers various infrastructure services including pre-sales support and due diligence, project
management, project execution, logistics and after sales support. It continues to make significant contribution to the
countrys core sectors. It has signed agreements with leading European majors in aviation support services for catering
to the growing demands of the Indian aviation industry.
WHBRADY is a promoter company of Brady & Morris Engineering Company Ltd (BMEL) and Brady Services Pvt Ltd
(BSPL). It has been involved in the trading of standardized Material Handling Equipment since the last 20 years. Its
client base ranges from Africa to South East Asia. In India, its products are mostly sold through BMELs dealership
network.
Some of its products include:
BRAD Chain Pulley Block ranging from 500 kgs to 10 tons;
BRAD Ratchet Lever Hoist ranging from 750 kgs to 6 tons;
BRAD Hydraulic Pallet Truck
Its services include:
Aviation (Cargo Handling, Terminal Building, Airport Interiors, Air Traffic Control, Maintenance, Repair Overhaul
Unit).
Highways (Advanced Traffic Management Systems, Intelligent Traffic Management Systems for Urban Traffic,
Electronic Toll Collection, Passive Safety Gantries and Masts).
Trading activities (Mechanical lifting equipments, High precision textile machinery and auxiliaries, Metals,
Specialized transportation equipments).
The Aviation industry is
Financials: (Rs. in mn)
rapidly growing.
Government initiatives like Particulars Q1FY18 Q4FY17 Q1FY17 YoY (%) FY17 FY16 YoY (%)
Smart Cities will lead to Total Income 41.2 65.1 53.3 -22.7% 496.1 467.5 6.1%
infrastructure EBITDA 12.2 13.4 10.8 12.9% 78.9 86.3 -8.5%
development, highways Profit before 8.4 9.2 6.1 37.7% 36.8 41.4 -11.1%
being a core sector, which Exceptional items
is a positive for WHBRADY. PAT 5.5 7 6.8 -19.1% 32.1 31.2 2.8%
WHBRADYs clientele EPS 2.16 3.60 2.67 -19.1% 15.90 15.80 0.6%

A Time Communications Publication 17


includes renowned names like Airports Authority of India, GMR Delhi International Airport, GMR Hyderabad
International Airport, GVK Mumbai International Airport, GVK Bengaluru International Airport, Pawan Hans Ltd, etc.
In Q1FY18, its total revenue was Rs.41.2 mn, EBITDA was Rs.12.2 mn (up 13% YoY) and PAT was Rs.5.5 mn. It is
expected to report strong numbers going ahead.
At the CMP of Rs.270.20, the stock trades at a P/E of 17.6x on its EPS (TTM) of Rs.15.39. The stock is available at a
discount compared to the Industry P/E of 53.4x, S&P BSE Small-Cap P/E of 86.4x and Nifty Small-Cap 250 P/E of 82.5x.
Therefore, we have a Buy on the stock with a price target of Rs.500 in long-term basis.

EXPERT EYE
By Vihari

Bhagyanagar India Ltd: Underpriced metal stock


(BSE Code: 512296) (CMP: Rs.33.15) (FV: Re.2)
Incorporated in 1985 and controlled by the Surana group, Bhagyanagar India Ltd (BIL) manufactures non-ferrous metal
products like copper rods and lead sleeves. It forayed into wind power generation in 2007. It started its copper division
through a takeover of two units - India Extrusion and Gangappa Industries. Its product profile includes enamelled and
paper-covered copper strips used by Lucas, Bosch India, TVS, BHEL, Crompton Greaves and Sahney Paris. It embarked
on forward integration of its copper division to manufacture jelly-filled telephone cables and later enhanced its capacity
to meet the rising demand. It also set up a unit to manufacture field coils. During the 1990s, it commissioned a new unit
to manufacture jelly filled cable with a capacity of 6 LCKM at IDA Nacharam. Currently, its total capacity for Jelly Filled
Telephone Cable stands at 49 LCKM. In the metal-copper division, it manufactures copper rods, copper foils, copper
pipes, copper sheets, annealed bare copper strips, paper insulated copper conductors and insulated copper coils (Field
Coils). Its products find extensive applications in the OEM segments of Telecommunications, Power & Distribution
Transformers, Heat Exchangers, Switchgears, Solar Panels and Auto Ancillaries.
Bhagyanagar Metals is a 100% subsidiary whereas BIL holds 72.4% in Solar Dynamics Pvt Ltd (SDPL). Its associate
companies include Globecom infra Ventures India Pvt Ltd (50% stake), GMS Realtors Pvt Ltd (50% stake), Bhagyanagar
Entertainment & Infra Devel Co Pvt Ltd (47% stake), Bhagyanagar Infrastructure Ltd (22% stake), Surana Solar Ltd
(SSL) (24% stake) and Bhagyanagar Cables Pvt Ltd (26% stake).
BIL currently has an installed capacity of 9 MW comprising 7 wind turbines in Karnataka and 6.4 MW comprising 5 wind
turbines in Tamil Nadu through its subsidiary viz. Solar Dynamics Pvt Ltd. It recently demerged its solar and real estate
divisions into separate listed entities. BIL holds investments in SDPL and SSL. Since both the companies are engaged in
the Solar industry, these investments are also being transferred to SDPL.
BIL holds interest in the real estate segment through three subsidiaries - Bhagyanagar Properties Pvt Ltd (BPPL),
Scientia Infocom Pvt Ltd and Metropolitan Ventures Pvt Ltd. Its subsidiaries hold 25 acre land at Gachibowly in
Hyderabad. Huge funds are required to develop such a large property and hence, it plans to identify a strategic investing
partner for joint development. Debt for this project will be taken exclusively by its subsidiary so that BILs existing cash
flow is not affected.
BIL has invested in the equity capital of these companies and given them unsecured loans as well. These investments
and loans are being demerged to BPPL, which shall be a listed company with mirror image share-holding as that of BIL.
Since BIL supplies major copper and allied products to the auto ancillary industry, it now plans to foray into the
manufacture of automotive components as OEM products.
For FY17, BILs net profit zoomed 108% to Rs.5.2 crore (Rs.10.8 crore before exceptional expenses) on marginally
higher sales of Rs.326.8 crore fetching an EPS (without exceptional expenses) of Rs.3.6. During Q1FY18, net profit
jumped 27% to Rs.1.4 crore on 13% higher sales of Rs.107 crore (excluding MAT credit of Rs.1 crore in Q1FY17)
fetching an EPS of Re.0.4.
With an equity capital of Rs.6.4 crore and reserves of Rs.97.5 crore, BILs share book value works out to Rs.32.4. Net debt
of Rs.75.6 crore gives it a DER of 0.73:1. The value of its net block is Rs.72.4 crore. The promoters hold 74.8% of the
equity capital, FIs hold 0.3%, DIs hold 4.6%, the government holds 0.3% and PCBs hold 1.5%, which leaves 18.5% stake
with the investing public.
The size of the Indian copper industry is ~5,00,000 tonnes, which as a percentage of the world copper market is just 3%.
Copper is a ~$8 bn industry in India growing at 5-7% CAGR per annum. In the domestic market, growth in copper

A Time Communications Publication 18


consumption was strong at 8% during the current financial year. Moreover, domestic production remained strong,
driven by higher production by the domestic custom smelters. India has a huge growth potential in copper consumption
for the next 20-25 years given the governments focus on smart cities, rapid urbanization and investments in
infrastructure.
India is expected to be the 6th largest copper market by 2020 with major consumption sectors being Electrical,
Transport and Telecommunications. The electrical and power sectors account for nearly one-third of the refined copper
consumption. Demand from other industries such as transport, consumer and electronic goods and industrial machinery
is also expected to remain strong on the back of growing end-user demand and increasing investments. The user
industries namely the Telecommunications, Power & Distribution, Transformers, Heat Exchangers, Switchgears, Solar
Panels and Auto Ancillaries are doing extremely well following the infrastructure push by the government. Therefore,
BILs products will be in good demand.
BIL is one of the oldest industrial houses in India with diverse business streams (manufacturing of various copper
products, non-conventional energy (Wind and Power). Based on its current going and bright industry prospects, BIL is
set to notch an EPS of Rs.5 in FY18 and Rs.6.5 in FY19. At the CMP of Rs.33.15, the stock trades at a forward P/E of 6.6x
on FY18E and 5.1x on FY19E earnings. A reasonable P/E of 8.5x will take its share price to Rs.42.5 in the medium-term
and Rs.55.25 thereafter.

TECHNO FUNDA
By Nayan Patel
REVIEW
Pressman Advertising Ltd Conart Engineers recommended at Rs.55.25
(BSE Code: 509077) (CMP: Rs.63.90) (FV: Rs.2) last week, zoomed to Rs.64.90 appreciating 17%
in just 1 week!
We had recommended this stock earlier at Rs.35.65 on 30 November
2015, where-after it zoomed to Rs.67.35. We recommend this stock Dynamic Industries recommended at Rs.70.85
on 18 September 2017, zoomed to Rs.109.85
once again on account of its excellent Q2FY18 results. last week appreciating 55% within 1.5 months!
Incorporated in 1983, advertising agency Pressman Advertising
Orient Abrasives recommended at Rs.34.2 on
Ltd (PAL) specializes in media planning and buying, design, digital 11 September 2017, zoomed to Rs.48 last week
and public relations. It offers corporate, brand/product, financial appreciating 40% within 2 months!
and government advertising services. PAL also provides public
Sakuma Exports recommended at Rs.70.05 on
relations consultancy services such as corporate communications, 19 June 2017, zoomed to Rs.216.75 last week
marketing communications, financial communications, media appreciating 209% within 4.5 months!
relations, analyst relations, crisis communications and digital
Hisar Metal Industries recommended at Rs.50
communications. on 5 June 2017, zoomed to Rs.130.10 last week
PAL has an equity capital of just Rs.4.70 crore supported by appreciating 160% within 5 months!
reserves of Rs.25.93 crore. It is a debt-free company. The Weizmann Forex recommended at Rs.524.20 on
promoters hold 47.19% of the equity capital, which leaves 52.81% 17 April 2017, zoomed to Rs.1125 last week
stake with the investing public. appreciating 114% within 6.5 months!
For Q1FY18, PAT soared 54% to Rs.1.88 crore from Rs.1.22 crore Dynemic Products recommended at Rs.57.1 on
in Q1FY17 on higher income of Rs.12.07 crore fetching an EPS of 13 June 2016, zoomed to Rs.184 last week
Re.0.8. During H1FY18, PAT jumped 43% to Rs.4.09 crore from appreciating 222% within a year and half!
Rs.2.86 crore in H1FY17 on marginally lower income of Rs.22.35 PPAP Automotive recommended at Rs.151.50
crore fetching an EPS of Rs.1.74. on 9 May 2016, zoomed to Rs.454.15 last week
appreciating 200% within a year and half!
PAL is a regular dividend-paying company and it paid 65%
dividend for FY17. PAT has grown at 19.3% CAGR over the last three years.
Currently, the stock trades at a P/E of 18.85x. It PEG ratio
is 1x, which is comfortable in this bull market. Sinclairs Financial Performance: (Rs. in crore)
Hotels Ltd is a group company of PAL, which currently Particulars Q2FY18 Q2FY17 H1FY18 H1FY17 FY17
trades at around Rs.366.9. Sales 12.08 11.28 22.35 23.61 50.12
Based on its performance parameters, the PAL stock PBT 2.59 1.84 5.65 4.28 9.96
looks quite attractive at the current level. Investors can Tax 0.71 0.62 1.55 1.42 3.22
buy this stock with a stop loss of Rs.57. On the upper PAT 1.88 1.22 4.09 2.86 6.74
side, it could zoom to Rs.85-90 levels in the medium- EPS (Rs.) 0.80 0.52 1.74 1.22 2.87

A Time Communications Publication 19


term.
******

Gokul Agro Resources Ltd


(BSE Code: 539725) (CMP: Rs.31.40) (FV: Rs.2)
Gokul Agro Resources Ltd (GARL), the de-merged entity of Gokul Refoils & Solvent Ltd (Gandhidham unit), is a leading
FMCG company with international presence and state-of-the-art manufacturing and processing facilities for various
kinds of Edible and Non-Edible oils and meals. It has a subsidiary in Singapore in order to cater its international trading
operations in the key parts of the world. Its extensive marketing and distribution network reaches out to 20 States in
India. It cater these sates with products such as Soya bean oil, Cottonseed oil, Palm oil (Palmolein), Sunflower oil,
Groundnut oil, Vanaspati, etc.
GARL is engaged in the manufacture and exports of industrial products viz. castor oil of various grades and its
derivatives. It has one of the largest manufacturing facilities to produce various grades of castor oil, castor de-oiled
cakes, etc. It supplies its products to USA, South Korea, European Union, China, Singapore, Indonesia, Malaysia, Russia
and Vietnam. Its state-of-the-art production facility in Gandhidham is equipped with the latest equipment and
technology.
GARL has an equity capital of Rs.26.38 crore supported by Financial Performance: (Rs. in crore)
reserves of Rs.180.08 crore. It is debt-free company. The
Particulars Standalone Consolidated
promoters hold 72.52% of the equity capital, which leaves
27.48% stake with the investing public. Q1FY18 Q1FY17 FY17 FY16
Sales 1079.47 956.19 4303.79 3634.87
For FY17, GARL posted 120% higher PAT of Rs.20.68 crore on
PBT 7.26 5.34 31.45 14.66
18% higher sales of Rs.4303.79 crore fetching an EPS of
Rs.1.57. During Q1FY18, PAT jumped 35% to Rs.4.81 crore Tax 2.45 1.79 10.77 5.25
from Rs.3.55 crore on 13% higher sales of Rs.1079.47 crore PAT 4.81 3.55 20.68 9.41
fetching an EPS of Re.0.36. EPS (Rs.) 0.36 0.27 1.57 0.71
Currently, the stock trades at a P/E of 19.26x. Recently, we had seen a huge spurt in stocks belonging to this sector like
Sanwaria Agro, Guj Ambuja Export, Ruchi Soya, etc. Based on its performance parameters, the GARL stock looks quite
attractive at the current level. Investors can buy this stock with a stop loss of Rs.24. On the upper side, it could zoom to
Rs.42-45 levels in the medium-term.

BULLS EYE

Orient Cement Ltd


(BSE Code: 535754) (CMP: Rs.175.35) (FV: Re.1)
By Pratit Nayan Patel
Company Background: Incorporated in 1979, New-Delhi based Orient Cement Ltd (OCL) manufactures and sells
cement. Formerly, it was a part of Orient Paper & Industries Ltd and was demerged in 2012. OCLs plant at Devapur in
Telangana commenced cement production in 1982. In 1997, it set up a split-grinding unit at Jalgaon, Maharashtra. In
2015, it started commercial production at its integrated cement plant at Chittapur in Karnataka. Last year, it announced
its intention to acquire 74% stake in Bhilai Jaypee Cement Ltd with an integrated capacity of 2.2 MMTPA and a separate
grinding unit in Nigrie (2 MMTPA capacity) for Rs.1946 crore. This acquisition is expected to enhance its total cement
manufacturing capacity to 12.2 MMTPA along with its entry into the central and eastern markets of India. In addition, it
has captive power plants of 50 MW.
OCL sells cement predominantly in Maharashtra, Telangana, Karnataka, Andhra Pradesh and Madhya Pradesh besides
Chattisgarh, Gujarat, Goa and Tamil Nadu. It produces two cement varieties (Ordinary Portland and Pozzolana Portland
Cement) marketed under the Birla A1 Premium flagship brand. Its facilities are ISO 9001:2008, ISO 14001:2004 and
OHSAS 18001:2007 certified. It won the Total Plant Maintenance (TPM) Excellence award from JIPM, Japan and is the
second company in India to earn this distinction.
Financials: OCL has an equity capital of Rs.20.49 crore supported by huge reserves of Rs.966.69 crore (47x its equity).
The promoters hold 37.5% of the equity capital, Mutual Funds hold 20.77%, FPIs hold 6.63%, LIC and NIC hold 4.41%,
Private Insurance companies hold 2.52%, which leaves 26.95% stake with the investing public and non-institutions. Big
bull Rakesh Jhunjhunwala holds 1.22% stake in the company.

A Time Communications Publication 20


Performance Review: For FY17, OCL posted higher sales of Rs.1875.14 crore v/s Rs.1509.19 crore in FY16 but
reported a net loss of Rs.32.1 crore v/s net profit of Rs.62.24 crore in FY16. However, it reported strong growth for
H1FY18 with net profit of Rs.49.07 crore v/s loss of Rs.36.95 crore in H1FY17 on 24% higher sales of Rs.1179.57 crore.
It posted an EPS of Rs.2.4.
Dividend: OCL is an investor- Performance Review: (Rs. in crore)
friendly company. In spite of Q2FY18 Q1FY18 Q2FY17 FY17 FY16
Particulars
reporting a loss in FY17, it paid
50% dividend on Re.1 paid-up for Total Income 523.07 568.23 384.84 1875.14 1509.19
the fiscal year. It paid 100% Consumption of Raw 62.98 69.66 57.48 264.61 210.75
dividend for FY16, 175% for FY15, Materials
150% for FY14 and 200% for Increase/ Decrease in -9.89 -7.81 -5.49 9.09 -1.91
FY13. Stocks
Industry Overview: Indias Power & Fuel 131.39 137.56 122.74 526.39 398.44
cement industry is expected to Employees Cost 35.73 34.97 29.69 121.29 90.37
expand its manufacturing capacity Depreciation 31.83 31.03 31.19 121.54 76.33
at a slower rate going forward, as
the industry looks to better utilize Other Expenses 228.26 216.98 163.84 775.66 628.18
existing large and unused P/L Before Other Inc., Int., 42.77 85.85 -14.61 56.58 107.02
capacities profitably before Excpt. Items & Tax
investing further in clinkerisation. Other Income 8.54 6.31 2.09 12.28 7.55
The countrys grinding capacity P/L Before Int., Excpt. Items 51.32 92.16 -12.52 68.85 114.58
would continue to grow as the & Tax
industry seeks to collectively Interest 33.64 33.29 36.25 135.34 54.36
increase its reach into new
markets profitably. Most M&As in P/L Before Tax 17.68 58.87 -48.77 -66.48 60.22
the cement sector appear to have Tax 7.52 19.94 -19.37 -34.38 -2.02
been completed this year with Net Profit 10.15 38.92 -29.39 -32.10 62.24
most available assets acquired by
EPS (in Rs.) 0.50 1.90 -1.43 -1.57 3.04
stronger players. The successful
integration of these assets with existing operations and increasing overall asset utilization levels are likely to be the two
main themes for the sector going forward.
Recently, the government announced Rs.6.92 lakh crore for highway projects, which is highly beneficial for Indias
cement industry. The Indian cement industry is expected to grow 4-5% YoY in FY18, driven largely by infrastructure
growth and a rural housing revival.
Conclusion: In FY17, OCL sold 26% more cement
Major Shareholders:
compared to FY16, utilizing its new plant to establish its
brand in new markets. This enabled it to outperform the Shareholders Name % stake
1.3% contraction in the countrys cement sector in FY17. ICICI Prudential Multicap Fund 1.15
Average sales realization at Rs.3371/tonne was 2.1% ICICI Prudential Long Term Equity Fund Tax Savings 1.66
higher than in FY16. Its revenue grew 28% to
HDFC Prudence Fund 3.96
Rs.2171.27 crore in FY17 following an improvement in
sales volumes. EBIDTA stood at Rs.190.4 crore Reliance small Cap Fund 2.15
compared to Rs.193.1 crore in FY16. Interest cost Franklin India High Growth Companies Fund 2.44
increased to Rs.135.34 crore from Rs.54.36 crore in Reliance Growth Fund 1.31
FY16 due to a large investment in the greenfield
India Capital Fund Ltd 2.51
capacity at Chittapur in Karnataka. Due to higher
interest cost, it reported a loss in FY17. Government Pension Fund Global 2.09
The management expects OCLs bottom-line to improve Life Insurance Corporation of India 2.06
in FY18. This C.K. Birla group company stock currently National Insurance Company Ltd 2.06
trades at a P/E of 66.67x, which will come down Jhunjhunwala Rakesh Radheshyam 1.22
drastically with FY18 numbers. Based on its financial
parameters, the OCL stock looks quite attractive at the HDFC Standard Life Insurance Company Ltd 1.05
current level. We are very bullish on this stock and it is ICICI Prudential Life Insurance Company Ltd 1.47
our top pick in the cement sector. Investors can

A Time Communications Publication 21


accumulate this stock on every dip with a stop loss of Rs.150 for a price target of Rs.225-230 in the next 12-15 months.
The stocks 52-week high/low is Rs.182/114.8. Its market cap stands at Rs.3592.37 crore.

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