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T I M E S
A TIME COMMUNICATIONS PUBLICATION
VOL XXVII No.20 Monday, 19 – 25 March 2018 Pgs.25 Rs.20

Nifty to test 200-day SMA Now follow us on Instagram, Facebook &


By Sanjay R. Bhatia Twitter at moneytimes_1991 on a daily basis to
get a view of the stock market and the
The markets opened the week on a good note and recorded happenings which many may not be aware of.
handsome gains. However, lack of follow-up buying support and
sustained bouts of profit-booking along with selling pressure turned the markets weak leading to a carnage on Friday,
16 March 2018.
The FIIs remained net buyers in the cash and derivative segments on the TCS stake sale by Tata Sons. The DIIs also
remained net buyers during the week but were seen selling occasionally. The breadth of the market remained positive
amidst high volumes, which indicates broad-based buying support in mid-cap and small-cap stocks but selling pressure
in key pivotals.
The US markets remained rangebound ahead of the Federal
Reserve meet next Wednesday. Crude oil prices remained Believe it or not!
choppy between $61-65 as the International Energy Agency
indicated that the global demand for oil is expected to pick  Lambodhara Textiles recommended at Rs.71.50
up this year, but also warned of increased supply. On the in TT last week, zoomed to Rs.79.75 fetching 12%
domestic front, the markets remained weak as the BJP lost a returns in just 1 week!
few Lok Sabha seats and on concerns of the proposed ‘No  Godrej Agrovet recommended at Rs.655.50 in BB
Confidence Motion’ against the government at the Centre. last week, zoomed to Rs.707.35 fetching 8%
Technically, the prevailing negative technical conditions returns in just 1 week!
weighed on the market sentiment. The Stochastic, KST and  Shree Pushkar Chemicals & Fertilisers
RSI are placed below their respective averages on the daily recommended at Rs.225.70 in SW last week,
and weekly charts. Further, the MACD is placed below its zoomed to Rs.240 fetching 6% returns in just 1
average on the weekly chart. The Nifty is placed below its week!
50-day SMA and 100-day SMA, which is a short-term  Samrat Pharmachem recommended at Rs.143.20
negative. These negative technical conditions could lead to in TT last week, zoomed to Rs.152 fetching 6%
further selling pressure especially at the higher levels. returns in just 1 week!
The prevailing positive technical conditions still hold good.  Sahyadri Industries recommended at Rs.266.95
The MACD is placed above its average on the daily chart. in BE last week, zoomed to Rs.279.85 fetching 5%
Moreover, the Stochastic is placed in the oversold zone on returns in just 1 week!
the weekly chart. The Nifty is placed above its 200-day SMA.
The Nifty’s 50-day SMA is placed above its 100-day and (BB – Best Bet; BE – Bull’s Eye;
SW – Stock Watch; TT – Tower Talk)
200-day SMA, its 100-day SMA is placed above its 200-day
SMA indicating a ‘golden cross’ breakout. These positive This happens only in Money Times!
technical conditions could lead to short-covering and Now in its 27th Year
buying support at lower levels.

A Time Communications Publication 1


The -DI line is placed above the +DI line and is also placed above the 34 level, which indicates that the sellers are once
again gaining strength. The ADX line is placed above 24. The market sentiment remains weak and the Nifty is on the
verge of testing its 200-day SMA, which is the long-term average placed at 10161. With no positive triggers in sight and
alliances within the NDA looking shaky ahead of the Lok Sabha polls next year, the markets are likely to remain under
pressure.
The Nifty continues to trade below the 10270 level, which
does not augur well for the markets. It is important that the
Nifty holds above its 200-day SMA. Otherwise, further selling
pressure is likely to be witnessed and the Nifty could slip
further to test the 10000 mark.
In the meanwhile, the markets will take cues from the news
flow in the Parliament session, on banking NPAs, global
markets, corporate earnings, Dollar-Rupee exchange rate and
crude oil prices.
Technically, the Sensex faces resistance at the 33700, 34000,
34342, 34700 and 35221 levels and seeks support at the
33055, 32991, 32565 and 31833 levels. The resistance levels
for the Nifty are placed at 10161, 10270, 10325, 10423,
10461 and 10493 while its support levels are placed at
10074, 10044, 10000 and 9735.

BAZAR.COM

Political headwinds dampen fundamentals


A consecutive fall in seven out of eight sessions prior to Monday, 12 March 2018, and the negativity in the market due to
the ongoing scams and frauds and the rising interest rate scenario in USA were responsible for the week starting with a
big bang. Beyond a point, the market could have looked attractive and investors could have rushed to cover their shorts
as well, hence the surge on Monday. Heavyweights like Reliance Industries, HDFC Bank, ITC and Infosys contributed to
the rise. Positive data of February 2018 in auto and FMCG sales were responsible for the surge. PSU Bank Index was the
only benchmark which remained in the red despite such a mammoth rise all over.
The market was in the cooling zone on Tuesday, which was treated as a profit-booking time. Political fireworks were at
play on Wednesday with the BJP led NDA losing out at the by polls in the Indian heartland. Already 10% correction has
occurred from the all-time highs and another 10% fall could be in the offing thanks to the political headwinds, rising
bond yields, tightening liquidity conditions, fear of inflation and adverse market reactions due to the Union Budget.
Although the bull market remains intact, the catch up in earnings have still to gather momentum but the banking frauds
keep the sentiment low. The paralysis in Parliament functioning at the crucial budget session, the unfavorable by polls
and results of Karnataka, Chhattisgarh, Rajasthan and Madhya Pradesh weigh heavily on the market sentiment.
2019 general elections may be at a distance from hereon but the way the political scenario unfolds, the market fears a
weak coalition to take the place of the firm BJP. Such a political upheaval and a hung parliament could be derailed in
coming months.
The silver lining, however, is the little green shoots in the credit off takes and the booming auto segment that are fuelling
the economy.
Shell Company, a new word coined, needs a deeper meaning as suggested by a parliamentary panel headed by former
Corporate Affairs Minister, M. Veerappa Moily. The distinction between companies guilty of fraud and those irregular
with filings be made. This becomes pertinent because both types of companies can’t be measured by one yardstick!
The government may crack down on companies not carrying out business activities for long as well as such entities
being allegedly used for illicit fund flows. In the panel’s report tabled on 9 March 2018, the panel seeks a clear definition
and the attributes of a shell company under The Companies Act. "To prevent corporate misfeasance/malfeasance, there
should be real time data sharing amongst the Ministry of Corporate Affairs and other regulatory enforcement agencies
such as CBI, ED, DRI, CBDT, SFIO, Department of Financial Services, Financial Intelligence Unit, Central Economic
Intelligence Bureau and SEBI" the panel said.

A Time Communications Publication 2


The passage of the Finance Bill 2018-19 has left a lot to desire. For the first time, a Finance Bill has been cleared in the
Lok Sabha without any debate by a voice vote amidst a din of protests. 21 amendments were moved and approved by
the voice vote. The wake-up call to the BJP by the defeats at the by-polls in U.P. and Bihar on back of the banking scams
remain on the opposition's agenda. The Long-Term Capital Gains (LTCG) proposed may hardly raise any revenue but it
will harm the economy was the argument by many parliamentarians but it fell on the deaf ears! However, one of the
amendments provided for inflation indexation of the cost of unlisted shares.
Democracy is all about discussion and engagement. Protests, or the act of expressing objection or dissatisfaction is
central to it. However, protest cannot become an end in itself. Members must question, object and suggest an alternative
course of action and do so through reasoned and persuasive argument.
The Voice of Asia Report by Deloitte predicts a faster-than-expected growth of the Indian economy against the backdrop
of the increasing crude price and volatile market conditions. Growth is picking up and will maintain a strong momentum
in 2018, retaining India's leadership as the fastest growing large economy in the world. Displaying signs of recovery, the
Indian economy recorded a five quarter high growth of 7.2%in Oct-Dec 2017 thanks to agriculture, construction and
manufacturing.
The infra spending in the new fiscal and increased outlay on the rural economy will add momentum to the demand pick-
up and give a kick start to the economy. Little wonder, mutual funds see value in mid-caps where there is revenue
growth visibility. The infra and consumer spending is the guiding theme. They find great value in Crompton Greaves
Consumer Electricals, a company with a dominant presence in fans, pumps and lighting. The company expects
25% CAGR between FY18 and FY21 and is poised to ride on superior returns and cash flows. Colgate falling in line with
Dabur and Patanjali is giving the ayurvedic touch to its products. This may enhance its market share in various
segments. Dilip Buildcon, a company with superior execution of projects remains on the buy list of HDFC MF. Its
Rs.12400 crore order book augurs well for times to come and with the government's focus on infrastructure projects
such as Bharatmala. NCC another road construction and irrigation projects company is a favorite of Aditya Birla MF and
may be another winner in the infra segment. Ashok Leyland with its improved Q3 and Blue Star in a bid to capture rural
AC markets could be the other money spinners in coming times.
The 500 points decline on Friday, 16 March 2018, was more in response to the political headwinds. Hence, let
fundamentals perform and call the shots and watch the new political equations develop.

TRADING ON TECHNICALS

Critical support around 200-day EMA/SMA


By Hitendra Vasudeo
Sensex Daily Trend DRV Weekly Trend WRV Monthly Trend MRV
Last Close 33176 Down 34145 Down 33427 Up 31209
Last week, the Sensex opened at 33468.16, attained a high at 34077.32 and moved down to a low of 33119.92 before it
finally closed the week at 33176 and thereby showed a loss of 131 points on a week-to-week basis.
Daily Chart
The peak formed at 32686 on 02/08/2017 was crossed on
25/10/2017. The Sensex rallied further to 33865 on
07/11/2017. A correction was seen to test back 32686,
which was the earlier breakout point. The same breakout
point offered support on 15/11/17, 06/12/2017 and
18/12/2017. The lows on these dates were 32683, 32565
and 32595.
The Gujarat election results low was 32595.
The earlier resistance offered support to the Sensex on the
daily chart at 32686. A big rally to 36443 was witnessed. A
correction is happening and eventually may test the
earlier support/resistance point of 32686.
The 200-day EMA and SMA are placed at 32786 and
32811.

A Time Communications Publication 3


So, along with support/resistance of the earlier top and bottom of 32686, the
Sensex
200-day averages will play an important role. A balance is likely to be
Year Election Low
maintained between the major bull and bear markets at the 32686 level.
1951-52 1st Lok Sabha -
The 38.2% retracement of the rise from 25753 to 36443 is at 32382.
1957 2nd Lok Sabha -
At first instance, support will be tested and a bounce is expected from the
lower level mentioned above. Further, the intensity of the bounce will decide 1962 3rd Lok Sabha -
on a new rally or the lower top formation in times to come. 1967 4th Lok Sabha -
Once the breakdown is sharp and vertical, expect a correction that extends for 1971 5th Lok Sabha -
long. Whenever a deeper correction or a bear market is witnessed, the time 1977 6th Lok Sabha -
span has been 9-12 months and on some occasions 18 months. Since the peak
was formed in the first week of February 2018, 9-12 months would mean 1980 7th Lok Sabha 118.16
January 2019 and 18 months would mean August 2019. 1984 8th Lok Sabha 233.1
The election years have made the lows and if we connect the lows made in 1989 9th Lok Sabha 625.32
election years then it is way up post-election for the benchmarks whichever 1991 10th Lok Sabha 947.1
government comes to power as the data below suggests. Yes, lows are made in 1996 11th Lok Sabha 2713
the election year before the new government.
1998 12th Lok Sabha 2741
We had 4 governments during 1989-1999, which indicated political
uncertainty. Post 1999, we had 5-year term governments and the Sensex 1999 13th Lok Sabha 3042
rallied from 3042 to 36443. Currently, we are in the process of a correction 2004 14th Lok Sabha 4227
and the Sensex is also critically poised as described above. A change from the 2009 15th Lok Sabha 8047
bull market to the bear market could happen if the support mentioned is
2014 16th Lok Sabha 19963
violated.
25000.00

20000.00

15000.00

10000.00 Series1

5000.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Weekly Chart
The weekly resistance will be at 33795-34752-34610. The weekly lower range can be 32838-31880.
Yearly Chart
The Centre Points for all the indices must be watched as they could be the likely supports during the year for intra-day/
year corrections and for consolidation.
From the yearly chart perspective, it seems that the Sensex and the Nifty are keen to test the Yearly Centre Point of
31547 and 9739 respectively in the near-to-short-term. Consolidation must happen near the Yearly Centre Point in
order for a breakout attempt to sustain above the Yearly Level 3 (L3) as shown in the table. At this point, the indices are
in a correction mode.
Index Dec-17 Level 1 Level 2 Centre Point Level 3 Level 4
Nifty 50 10531 6507 8926 9739 11344 13763
Nifty Bank 25539 12140 20262 23108 28385 36508
S&P BSE Sensex 34057 21266 28957 31547 36648 44338
S&P BSE Mid-Cap 17822 8095 13937 15894 19779 25622
S&P BSE Small-Cap 19231 7268 14452 16857 21636 28820

A Time Communications Publication 4


Trend based on Rate of Change (RoC)
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8-Week trend - Down 1) Weekly Market Outlook of -
 Sensex
Monthly chart:
 Nifty
1-Month trend - Down  Bank Nifty
3-Month trend - Down 2) Sectoral Review
8-Month trend - Up  Outperforming, Market Performing and Under Performing
 Stand Alone Weekly Signal for Up Trend and Down Trend
Quarterly chart:  Stock Wise New Addition and Follow Up Chart Comments
1-Quarter trend - Down  Selection Process Based on Multi Time Frame Trend and RS
3-Quarter trend - Up 3) Multi Time Frame Yearly Chart
 Stock Filtration
8-Quarter trend - Up  One Annual In Jan-Dec
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1-Year trend - Down 4) Sectoral View of Strong/Weak/Market Performer indices
5) Weekly Trading Signals
3-Year trend - Up
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8-Year trend - Up 7) Winners for trading and investing for medium-to-long-term till
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a recovery is not witnessed in the next few
days/weeks from the current level or from
32686.
BSE Mid-Cap Index
Weekly chart:
1-Week trend - Up
3-Week trend - Down
8-Week trend - Down
The Harami candle formed last week is critical and, therefore, the 2-week low of 15805 and 15776 are critical.
A reversal is above 17014 and till this level is not crossed, use any rise to exit long. A correction down to 15700, 14880
and 14080 is likely to be witnessed if 17014 is not quickly crossed. Long-term investors may look for 15700, 14880 and
14090 for accumulation. Accumulation means a waiting period and returns may not be seen immediately considering
that the market correction could continue for 9-12 months if it sustains below the 200-day averages.
The 200-day average is at 16080. A sustained down-move below 16080 will mean a bear market phase, which could last
for some time. Therefore, it is a critical time for the overall market from the long-term angle.
BSE Small-Cap Index
Weekly chart:

A Time Communications Publication 5


1-Week trend - Down
3-Week trend - Down
8-Week trend – Down
The Harami candle formed last week is critical and therefore, the 2-week low of 17063 and 16994 are critical.
The 200-day averages are at 17061 and 17118. The last bottom was at 16944.
Expect a deeper correction below 16944. A reversal must happen sooner from the lower level or from the current level.
Alternatively, a bear market phase is likely to happen for 9-12 months.
Strategy for the week
Exit long and sell on a rise to 33457-33795 with a stop loss of 34100.
Expect the lower range of 32838-31880 to be tested.
Long-term investors may look at the Yearly Center Point to accumulate or at retracement levels and at the 200-day
EMA/SMA mentioned above. Accumulations at retracement means a waiting period and gestation. It also means that
returns may not be seen immediately and investments may go through a lot of pain. A strong bounce and recovery to
create a new high may release the pain for short-to-medium-term investors.

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
TECH MAHINDRA 634.65 613.2 614.6 633.2 653.3 692.1 69 621.4 23-02-18
KPIT TECHNOLOGIES 228.10 210.5 215 223.6 236.8 258.6 63.4 214.8 23-02-18
CHOLAMANDALAM
INVESTMENT AND FINANCE
COMPANY 1462 1393 1405.7 1449.3 1505.7 1605.7 60.8 1434 09-02-18
TV18 BROADCAST 66.60 62.7 63.1 66.3 69.8 76.6 60.4 62.3 23-02-18
BHARAT FINANCIAL
INCLUSION 1059.90 1040 1040.8 1059.1 1078.2 1115.7 58.9 1030.7 01-03-18

*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.

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
MAX FINANCIAL SERVICES 446.70 396.5 433.5 457.2 470.5 481 25.69 478.27 12-01-18
POWER FINANCE
CORPORATION 88.10 77.1 84.9 89.4 92.6 94 25.85 97.85 19-01-18
FORCE MOTORS 2772 2614.3 2728.3 2798.7 2842.3 2869 30.79 2875.25 09-03-18
JAMMU & KASHMIR BANK 59.05 50.6 56.4 59.6 62.2 62.8 31.27 63.18 19-01-18
BEML 1073 965.3 1043.3 1091.7 1121.3 1140 31.91 1161.75 12-01-18

A Time Communications Publication 6


*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

TVS MOTOR COMPANY 631 646.21 654 661.79 687 580.2 37.64
PETRONET LNG 235 235.07 237.25 239.43 246.50 216.6 37.73
DCM SHRIRAM 476.10 512.98 525.78 538.57 580 404.5 40.96
MARUTI SUZUKI INDIA 8690 8719.32 8771 8822.68 8990 8281.3 42.28
TATA STEEL 600 628.76 639.50 650.24 685 537.8 42.34
RAJESH EXPORTS 761 786.76 797.50 808.24 843 695.8 42.74

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

TECH MAHINDRA 634.65 633.22 627.45 621.68 603 682.1 69.7

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
- - - - - - - - -

TOWER TALK
 Talbros Automotive Components has won orders worth Rs.35 crore from Dana Spicer India. For Q3FY18, it
clocked a 51% higher PAT and is an attractive buy.
 Bharat Heavy Electricals has secured an order worth Rs.736 crore for nuclear steam generators. A good long-term
buy.
 Goa Carbon announced that the direction by the Goa State Pollution Control Board to suspend operations stands
revoked. A positive for the company. Buy.
 Bank of India has recovered Rs.777 crore worth standby LOC and expects another Rs.2000 crore to be recovered in
the next two months. Buy selectively.
 Dilip Buildcon has again emerged as the lowest bidder for a project worth Rs.1004 crore in Madhya Pradesh. Its
share price may jump. A good buy.
 Yes Bank has recently sold 2.17% stake in Fortis Healthcare. Others may follow suit. Sell.
 Himachal Futuristic Communications is reportedly planning an investment of ~Rs.300 crore to put up an optical
fibre manufacturing facility in Telangana. Patient investors may buy for the long-term.
 Bharti Airtel plans to raise Rs.16500 crore via NCDs and Bonds including $1 bn foreign currency bonds to refinance
loans and pay for spectrum and raise its market share by ~5%. A big positive.
 Purvankara is contemplating a housing project in Goa at an investment of ~Rs.500 crore, which will boost its
profitability. Buy.
 Billionaire Paul Singers Elliot Management Corporation has bought 1.8555 mn ADRs (~0.4% of capital) of Wipro.
This may act as a morale booster for the company. Buy.
 PNB Housing Finance is considering a Rs.8000 crore debt issue to fund its expansion programs. A positive for the
company.

A Time Communications Publication 7


 Larsen & Toubro has obtained orders worth Rs.2597 crore from the transportation, infrastructure and water
treatment sectors.
 Rakesh Jhunjhunwala has bought 3 crore shares of Jaiprakash Associates at Rs.18.30/share. This debt-ridden
company seems to have bottomed out. Investors may park limited funds here.
 Unconfirmed reports suggest that I G Petrochemicals may take a big leap as all its divisions are working full
throttle and its results for FY18 are expected to be excellent. Buy.
 Maruti Suzuki India plans to overtake M&M in the utility vehicles space. There is no stopping this company. A good
buy at any price.
 Kridhan Infra is faring well and its current beaten down share price merits a buy.
 Ishan Dyes & Chemicals, which is into speciality chemicals, is expected to post good numbers for FY18. The stock is
stagnant at Rs.47-48 levels. Buy for around 60% appreciation within a year.
 ICICI Securities plans to raise Rs.4000 crore via an OFS and ICICI Bank will be the biggest beneficiary. Buy.
 MMTC intends to issue a bonus, which is sentimentally a positive. The stock may rise further. Buy.
 The government’s decision to extend subsidy to fertilisers till 2020 is a positive for the entire industry. Buy
Coromondel International and Rashtriya Chemicals & Fertilizers.
 Strides Shasun has received USFDA approval for its generic Efavirenz tablet used to treat HIV+. A big positive for
the company.
 L&T Finance Holdings has raised another Rs.1000 crore through a QIP at a price of Rs.158.60. A good long-term
buy.
 Gravita India has obtained an order worth Rs.300 crore from a Singapore-based company. Its Q3 results were also
up by around 34%. A good buy.
 Morganite Crucible (India), a 75% subsidiary of UK-based Morgan Metal, is evaluating to start trading/ selling De-
gassing machines to end customers where the parent Morgan’s Degassing Rotor is used. For this purpose, it has
signed a Purchase Framework Agreement with Febtech Industries for a period of two years to diversify the product
in the domestic as well as overseas market. A good long-term buy.
 With a likely EPS of Rs.40-42 in FY18, Star Paper Mills is the cheapest share in the paper space with a forward P/E
of 5.6x. The stock has the potential to touch Rs.340 on a reasonable P/E of 8.5x.
 Buy Rico Auto Industries for decent gains in the medium-term as the on-going capex is likely to be substantially
EPS accretive. Analysts project a share price of over Rs.110.
 Vindhya Telelinks is the cheapest share in the infra space. 75% of its revenue is derived from its EPC division. It
has ventured into lucrative sewage projects and expects good volumes through this vertical. It is likely to notch a
consolidated EPS of Rs.88 in FY18 and Rs.96 in FY19 post expansion. The stock is poised to touch Rs.1500.
 KSE is set to garner an EPS of Rs.220 in FY18 on a small equity capital of Rs.3.2 crore. The stock trades at a forward
P/E of 10.6x against the industry average P/E of 40x and it has the potential to double.
 Nandan Denim has posted excellent Q3 results with
57% higher PAT despite the subdued markets. It may For the busy investor
post an EPS of Rs.14 in FY18 and Rs.20 in FY19. The
stock is poised to touch Rs.200. Its 52-week high is
Fresh One Up Trend Daily
Rs.187. Fresh One Up Trend Daily is for investors/traders who are
keen to focus and gain from a single stock every
 Virinchi could notch an EPS of Rs.13 in FY18 and
Rs.18 in FY19. It recently diversified into the hospital trading day.
business and has 550-bed hospitals across three With just one daily recommendation selected from
locations in Hyderabad and plans to expand to 700 stocks in an uptrend, you can now book profit the same
beds. The stock has the potential to touch Rs.200. day or carry over the trade if the target is not met. Our
 An Ahmedabad-based analyst recommends Chandni review over the next 4 days will provide new exit levels
Textiles Engineering Industries, Gufic while the stock is still in an uptrend.
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Lambodhara Textiles, Sical Logistics, Shilp subscription at Rs.2500 per month.
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A Time Communications Publication 8


BEST BET

LIC Housing Finance Ltd


(BSE Code: 500253) (CMP: Rs.514.50) (FV: Rs.2)
By Bikshapathi Thota
Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) is one of the largest housing finance companies (HFCs) with the
key objective to provide long-term finance to individuals for the purchase or construction of residential properties. It
also provides finance on an existing property for business or personal needs and also gives loans to professionals for
buying office space and equipment. It provides finance to persons engaged in the business of construction and the sale of
residential properties. It provides loans for homes, construction activities and corporate housing schemes. Individual
loans constitute ~84% of its overall loan portfolio. Its outstanding loan amounted to ~Rs.1,56,000 crore as at Q3FY18. It
has 9 regional offices, 23 back offices and 249 marketing offices across 450 locations. LIC India holds 40% stake in the
company while FIIs hold 35% stake.
LICHFL, being a leading housing financier, will be a key beneficiary of our optimistic stance on the mortgage finance
sector given the emerging opportunities and the government’s thrust on ‘affordable housing’ and ‘Housing for All’
initiatives. Although the core mortgage segment’s profitability is soft, higher profitability of the non‐core segments is
expected to cushion its overall profitability. Further, asset quality risks are limited in the mortgage segment, especially
for LICHFL, where loans against property (LAP) are also tilted in favor of the salaried segment. Despite the near-term
revenue headwinds, LICHFL continues to remain a 17%+ RoE model with limited asset quality risk.
Outlook: India is passing through significant positive shifts in terms of income levels, aspirations, standard of living and
credit awareness. With the government’s focus on affordable, this sector has seen a healthy growth with transparency
and orderliness. Given the positive push by the government, housing finance is perceived as the most lucrative sector
currently, which is elevating the competition from within the sector.
To capitalize on this opportunity, LICHFL plans to leverage its extensive reach in the country to connect with the
customer. It plans to use digitization to plug the gaps to enhance customer experience and increase operational
efficiency. It continues to focus on due diligence in line with its policy of ‘zero tolerance for non-performing assets
(NPAs)’. Its future priorities is to expand its network and visibility to maintain its market leadership position by creating
consumer-friendly products to target new customers, ensuring access to low-cost and diversified sources of funds,
fortifying its operating processes and risk management systems and strengthening its balance sheet to ensure financial
flexibility.
Thesis of high competition in the mortgage business has played out leading to margin pressure. LICHFL had faced
pressure owing to high-salaried borrowers (83%) and a higher yield book. However, with the majority of assets being
re-priced, we expect net interest margin (NIM) to stabilise and improve hereon. With LICHFL’s incremental borrowing at
7.23% (compared to 8.37%), re-pricing of liabilities will support NIMs.
Further, LICHFL has a low-risk business model as ~82% of its loans are disbursed to salaried customers. Loans to
individuals account for 87.5% of its outstanding loan book. LAP accounts for 10.4% and loans to developers account for
3.3% of its total outstanding loan book. The incremental average ticket size of its loans stood at ~Rs.20 lakh while the
average cumulative ticket size stood at ~Rs.12 lakh.
Its Borrowing mix has moved more towards market instruments and bank borrowing now stands at ~9% of the total
borrowing resulting in lower cost of funds to the company. Consequently, NIMs even under increasing competition have
improved to 2.7% on lower cost of funds and changing product mix. Asset quality for LICHFL has stayed stable (GNPA
0.4%). Being a leading housing financier, LICHFL will be the key beneficiary given the emerging opportunities and
government's thrust on 'affordable housing' and 'housing for all' initiatives by 2022, with support of the Pradhan Mantri
Awas Yojana and more smart cities to be notified in coming years.
Valuation: LICHFL’s core retail portfolio continues to be sluggish Financials: (Rs. in crore)
growing by less than 10%. However, other segments like LAP and Particulars FY16 FY17 FY18E FY19E
Developer loans are driving the growth for LICHFL. With lower Net Income 3178 3848 4093 4764
interest rates and interest subvention schemes by the government, PBDT 2710 3237 3421 3995
we expect growth for housing to rebound in coming quarters. This
Net profit 1660 1931 2002 2352
will help LICHFL in recording loan book CAGR of 17% over FY18-
EPS (Rs.) 33 38 40 47
22E, translating into earnings CAGR of 17% over the same period.

A Time Communications Publication 9


The LICHFL stock currently trades at 2x its FY18E BV and looks attractive given the bright industry prospects. Hence, we
have a Buy on the stock with a price target of Rs.705 (15x to FY19E earnings) within a year.

STOCK WATCH
By Amit Kumar Gupta

Kotak Mahindra Bank


(BSE Code: 500247) (CMP: Rs.1061) (FV: Rs.5) (TGT: Rs.1150+)
Kotak Mahindra Bank Ltd provides a range of banking and financial services to small and medium enterprises,
corporates and high net worth individuals in India. The company's Treasury, BMU and Corporate centre segment
engages in dealing in debt, equity, money market, forex, derivatives, and investments; and the primary dealership of
government securities and balance sheet management unit responsible for asset liability management. Its Retail Banking
segment offers commercial vehicle finance, personal loans, home loans, agriculture finance, and other loans/services.
This segment also provides savings, current, and term deposit accounts; branch banking network/services, including
distribution of financial products; and credit cards.
The company's Corporate/Wholesale Banking segment provides wholesale borrowings and lendings and other related
services to the corporate sector. Its Vehicle Financing segment offers retail vehicle finance and wholesale trade finance
products. The company's Other Lending Activities segment provides financing against securities, securitization, and
other loans/services. Its Broking segment offers brokerage on market transactions done on behalf of clients, interest on
delayed payments, and forex broking services; and distributes financial products. The company's Advisory and
Transactional Services segment provides financial advisory and transactional services, such as mergers and acquisition
advice and equity/debt issue management services, as well as it acts as a professional clearing member. Its Asset
Management segment engages in the management of investments on behalf of clients and funds. The company's
Insurance segment offers life insurance and general insurance products. As of 31 March 2017, the company had 1,369
branches and 2,163 ATMs in 689 locations. Kotak Mahindra Bank Limited was founded in 1985 and is headquartered in
Mumbai.
The banking system, especially PSU banks, is struggling with asset-quality woes for quite some time now. There are
large-scale checks and data verification exercises underway at PSU banks. Just like demonetisation, this is a priority-
level exercise and one can assume that an opportunity exists for well-run private banks to gain clientele and market
share. In addition, with the rising bond yields and cost of funds, NBFCs are likely to weaken in the stiff competition that
they were offering to banks, providing a greater opportunity.
Most PSBs burdened with NPLs are unlikely to go
for aggressive credit growth. Most of the bank
recapitalisation infusion is likely to be used as FOR WEEKLY GAINS
regulatory capital itself, with little available for
growth. Kotak Mahindra Bank (KMB) has not only Fast...Focused…First
maintained an impressive asset-quality
performance so far, but has arguably a full bouquet Fresh One Up Trend Weekly
of products and service offerings that can be utilised A product designed for short-term trading
by the bank to capitalise on the opportunity. singling out one stock to focus upon.
KMB has been ramping up its retail business as well,
Fresh One Up Trend Weekly (formerly Power of RS Weekly)
as witnessed in the savings account (SA) trajectory
will identify the stop loss, buy price range and profit
(up 51.6% y-o-y and 9.3% q-o-q), helped by its zero booking levels along with its relative strength, weekly
balance 811 accounts. Its insurance subsidiaries reversal value and the start date of the trend or the
(Kotak Mahindra Life Insurance) is ramping up well, turndown exit signals. This recommendation will be
with Individual Regular NBP growing at 37.9% y-o-y followed up in the subsequent week with the revised levels
(9MFY18) and individual renewal premium growing for each trading parameter.
by 27.3% y-o-y, while Kotak Securities is also
growing well, with Q3FY18 PAT growth of 81% y-o- Subscription: Rs.2000 per month or Rs.18000 per annum
Available via email
y and 30.5% q-o-q.
KMB is available at 5.5x and 4.6x its FY19E and For a free trial call us on 022-22616970 or email at
moneytimes.support@gmail.com
FY20E book value per share (BVPS), which we
believe is attractive for a bank that has strong

A Time Communications Publication 10


growth momentum as well as an attractive business franchise. We recommend a Buy with a target price of Rs.1250.
Technical Outlook: The Kotak Mahindra Bank stock looks very good on the daily chart, for medium-term investment.
The stock has formed a saucer pattern on the weekly chart and has tested the nekline with strong support of 50 DMA on
the daily chart and it trades above important 200 DMAs on the daily chart.
Start accumulating at this level of Rs.1061 and on dips to Rs.1006 will be a good start for medium-to-long-term
investment and possible target of Rs.1150+ in the next 12 months.
******

Future Consumer Ltd


(BSE Code: 533400) (CMP: Rs.59.10) (FV: Rs.6) (TGT: Rs.80+)
Future Consumer Ltd (FCL) provides loans. It specializes in acquiring and investing in emerging consumption-led
sectors with a focus on food and FMCGs, rural distribution, urban distribution, mega food parks, food distribution,
fashion and other design services, and edutainment sectors. It is involved in developing, acquiring, and partnering in
fashion apparel and accessories and food processing. Future Consumer Ltd, formerly known as Future Ventures India
Ltd, was incorporated on 10 July 1996 and is based in Mumbai.
We see a huge opportunity in the Indian branded FMCG space. From USD 65 bn in 2015, the category is expected to grow
in size to reach USD 220-240 bn by 2025, implying 13-14% CAGR, according to a joint study by BCG and CII. With the
category itself likely to grow by ~3.5x over this 10-year period, we expect significant pockets of higher and even
spectacular growth among its constituents.
Modern trade, which constitutes ~12% of FMCG sector sales in India, has been witnessing tremendous growth over the
past year, led by a multitude of factors like customer convenience, a wider variety of products on offer, rapidly evolving
business models, and growing trend towards cashless transactions. Reforms like demonetisation and Goods & Services
Tax (GST), too, have also taken away the edge that wholesale-led general trade had earlier, due to the need to adhere to
stricter compliance norms. We believe all this augurs well for businesses operating under the modern retail and modern
wholesale (cash and carry businesses) models.
FCL – a separately listed brands business of the Future Group, is a promising play on (a) rapidly expanding store
footprint of the Future Group (the largest pan-India retailer in India), which had set a target at the end of FY17 to open
10,000 Easy Day stores by 2022 (611 stores as on 31st December 2017) and 350 Big Bazaar stores over the next 3-5
years (257 stores as on 31st December 2017) and (b) increasing proportion of FCL’s brands in Future Retail stores to
~60% from ~20% now.
Around 95% of FCL’s sales are derived from the brands portfolio. Over the past three years (FY14-17), while the overall
FMCG sector has seen a muted CAGR of 5%, FCL has reported sales CAGR of 37%. Notably, sales growth has been even
higher at 39% YoY in YTDFY18. While it can be argued that the base was low a few years ago, we note that FCL’s
absolute sales of Rs.21 bn (~USD 327 mn) in FY17 were in line with mid-tier FMCG companies. In our view, sales could
increase further to ~ Rs.29.5 bn (USD 458 mn) in FY18, higher than mid-size FMCG companies like Emami (our estimate:
Rs.25.7 bn or USD 396 mn).
Branded staples and fruits & vegetables, which form the bulk of its overall portfolio and are relatively low-margin
categories, should see healthy growth but the overall margin expansion will be driven by the high-margin processed
food and HPC products. We expect an overall sales CAGR of 39% over FY18-22, particularly led by 60% CAGR in the
high-margin categories. In the traditional FMCG channels, distribution costs account for ~20% of sales and advertising
costs, too, contribute around 10-15%.
Favorable macro factors and initiatives by the company and the parent Future Group make FCL a highly attractive
investment. Opportunities are immense, and FCL is at the forefront to maintain or even accelerate its already impressive
growth rate. Sales – which are already higher than those of mid-tier FMCG companies – should continue growing at a
rapid pace in the years to come driven by the tremendous opportunity for brands using modern retail methods of
distribution. Advice to Buy with a target Rs.75.
Technical Outlook: Future Consumer Ltd is very good on the daily chart, and is good for medium-term investment. The
stock has formed downward channel pattern on the daily chart and breakout with good volumes @ Rs.56 can move the
stock to higher levels. The stock trades above all important 200 DMAs on the daily chart.
Start accumulating at this level of Rs.59.10 and on dips to Rs.50 will be a good start for medium- to-long-term
investment and possible target of Rs.80+ in the next 12 months.

A Time Communications Publication 11


SHRIMP INDUSTRY SET TO PROSPER
By Dildar Singh Makani
The domestic shrimp industry is growing at a rapid pace. The rising demand for shrimps makes all the companies in this
sector work full throttle. It is also a foregone conclusion that the rising demand and rising product prices will ensure
better operating profitability.
Shrimp is the most popular seafood in America, which imports ~6,00,000 tonnes of seafood per annum. India, Thailand,
Indonesia, China and Vietnam are some of the prominent suppliers to USA.
Interesting facts:
1. As per a recent CRISIL report, Indian shrimp exports are set to double to $7 bn by 2022 driven by the strong
demand, high quality, improved product mix and an increase in the aquaculture area in several states including
Andhra Pradesh, Gujarat, Odisha and West Bengal.
2. The global shrimp industry is estimated at $30 bn and India's market share is estimated at 13% in value terms.
3. India became the biggest shrimp exporter in FY16 with exports of $3.8 bn. Indian exporters in the past few years
have emphasised on lower-density shrimp farms to control diseases while maintaining quality across the value
chain. The use of resilient specific pathogen free (SPF) brood-stock imported from USA also helped the industry
significantly.
4. Typically, the shrimp industry has operating margins of ~13-15%. India has a lot of unutilised and idle land
suitable for shrimp culture.
5. Rs.10000 crore was allocated in the latest fiscal, which will give a big boost to the aquaculture industry. The
government strongly believes that given the good quality and reputation that the Indian shrimp industry enjoys in
the world markets, there is ample scope for this industry to progress further.
6. Large Indian exporters are expanding in order to cater the rising demand for value-added products from global
retail chains and restaurants. Strong volume growth and higher proportion of value-added products will bolster the
operating profitability of exporters.
7. “Healthy accretions and the absence of major debt-funded capex will reduce leverage and further strengthen the
credit profiles of shrimp manufacturers,” said Rahul Guha Director at CRISIL.
8. Production in Vietnam has declined 40% from the peak level due to shortage of fresh water, salinity intrusion and
illegal shrimp farming. Thailand, which was once the top exporter, has now fallen to the 5th position due to a decline
in production levels.
9. China's shrimp production has fallen by 60% over the last
two years even though its consumption has more than
doubled, rendering it a marginal exporter. It also faced Relative Strength (RS)
significant quality challenges. In spite of attempts to improve signals a stock’s ability to perform in a
hatchery procedures, it will take time to sort out quality dynamic market.
issues and that is what gives India a clear cut edge. Knowledge of it can lead you to profits.
10. China is struggling with both structural issues and surging
domestic demand. Consequently, India's primacy in shrimp POWER OF RS - Rs.3100 for 1 year:
exports is unlikely to be seriously challenged over the
What you get -
medium-term.
Current scenario: Currently, there are three listed companies in Most Important- Association for 1 year
this sector: a) Avanti Feeds Ltd [AFL]; b) Apex Frozen Foods Ltd at just Rs.3100!
[AFFL]; and c) Waterbase Ltd. Some other companies like Devi
Foods Ltd, Sandhya Marines Ltd and Nekkanti Sea Foods Ltd are 1-2 buy / sell per day on a daily basis
expected to float their public issues soon to raise funds for 1 buy per week
expansion. With improving prospects of the aquaculture industry, 1 buy per month
more companies may soon join the fray and hit the capital 1 buy per quarter
markets. 1 buy per year
Company-specific information: For more details, contact Money Times on
Avanti Feeds Ltd (BSE Code: 512573) (CMP: Rs.2351.20) (FV: 022-22616970/4805 or
Rs.2): AFL, the largest shrimp feed company, is rapidly expanding moneytimes.support@gmail.com.
its shrimp processing business. It recorded mindboggling Q3

A Time Communications Publication 12


results with revenues of Rs.706.43 crore v/s Rs.535.22 crore in the previous corresponding quarter. Finance expenses
declined in spite of higher depreciation on account of machinery addition and expansion. Operating profit zoomed to
Rs.161.82 crore from Rs.68.98 crore. Tax outgo more than doubled to Rs.56.31 crore. Its bottom-line was extremely
healthy at Rs.105.07 crore v/s Rs.46.01 crore in the previous corresponding period. Its EPS was higher at Rs.23 v/s
Rs.10 in the previous corresponding quarter. During 9MFY18, it posted an EPS of Rs.83.5.
If the current trend is any indication, AFL is likely to notch an EPS of over Rs.106 for FY18. A conservative P/E of 35x will
take its share price to Rs.3710. AFL has a small equity capital of Rs.9.08 crore backed by reserves of Rs.631.38 crore. If
the profits of 9MFY18 are added, its share book value of Rs.2 paid-up share works out to Rs.162.76. If its future
prospects are considered, one can safely assume that a bonus issue is around the corner.
Apex Frozen Foods Ltd (BSE Code: 540692) (CMP: Rs.652.85) (FV: Rs.10): AFFL is an integrated producer and
exporter of shelf stable quality aquaculture products. Its ready-to-cook products cater to food companies, retail chains,
restaurants, clubs, stores and distributors across the developed markets of USA, UK and various European countries. Its
brands include Bay Fresh, Bay Harvest and Bay Premium.
AFFL hit the capital markets just a few quarters back. Although past information is selectively available, its Q3FY18
results beat market expectations. During the quarter, it recorded revenues of Rs.262.83 crore. During 9MFY18, its
revenues grew 48% from Rs.535.1 crore to Rs.795.54 crore while PAT zoomed to Rs.58.15 crore from Rs.15.72 crore in
the previous corresponding period. EPS jumped from Rs.6.55 to Rs.21.36.
Industry trends indicate that the EPS for FY18 is likely to be around Rs.32. A conservative P/E of 35x will take its share
price to Rs.1120 within a year. AFFL has planned capex of Rs.90.2 crore of which Rs.18.4 crore was utilised till December
2017 end. The structural work is nearing completion and orders for machineries have already been placed. It expects the
expanded capacity to be operational by Q2FY19.
Waterbase Ltd (BSE Code: 523660) (CMP: Rs.295.65) (FV: Rs.10): A part of the renowned Karan Thapar group,
Waterbase is engaged in the Aquaculture business since over 20 years. It recently amalgamated with its promoter group
company - Pinnae Feeds Ltd, with the aim to get access to higher capacities without increasing its capital funding.
During Q3FY18, Waterbase recorded turnaround with healthy profits. Continued strong demand from existing
customers and increased product acceptability across new markets drove volume growth during 9MFY18. Its
profitability was elevated by benign raw material prices and contribution from ancillary products. Income from
operations stood at Rs.277 crore (up 3%). PAT jumped three-fold to Rs.27 crore.
Commenting on the results, the CEO stated that Waterbase is gaining foothold in newer markets after multiyear efforts
to enhance its distribution network. It is set to declare its highest ever profit in any single year. Its products launched
under the brand name ‘Baylife’ have been positively accepted by customers. One must note that the company produced
its best ever results in spite of onetime costs incurred for machine breakdown and procurement of shrimps for exports,
which suppressed the profits in Q3. This means that the path ahead is a better pasture.
The stock zoomed to Rs.421 after being recommended in Money Times. It’s not out of place to expect the stock to break
this level again while racing to a target of Rs.512 in the next six months.
Concerns: There are no major concerns.
1. The US Department of Commerce recently suggested raising the duty structure on Indian shrimps by a little over
1%. Given the current status of the industry, this may practically not have any impact on the profitability of the
companies involved in this business.
2. India (~60% market share), Vietnam and Thailand are major exporters of shrimps to USA.
Conclusion: Investors of late have gained interest in Aquaculture related stocks. The market has sensed the industry
prospects. Until sometime back, the industry P/E hovered around 120x. But with the publication of Q3 results, this
figure has come down dramatically. Investment in this industry is definitely bound to give compounded returns of
around 30-50% over the next few years. To get the most of the investments that you make here, remember the law of
compounding and retain your holdings for not less than three years.

PRESS RELEASE

Blue Star launches 40 new air conditioners


Blue Star Ltd has launched 40 new models of highly energy-efficient 3-star and 5-star inverter split air conditioners. This
range promises up to 30% extra cooling power resulting in powerful cooling, faster temperature pull-down and extra

A Time Communications Publication 13


energy savings; extra comfort with precise temperature setting in steps of 0.1°C and 0.5°C; extra quiet performance with
a ‘soundproof’ acoustic jacket for the compressor; and extra purification technology for healthier air. These air
conditioners meet the 2018 BEE energy-efficiency norms providing the right match for cooling requirements across
residential, commercial and institutional segments.
******

Benara Bearings & Pistons IPO opens on 20th March


Benara Bearings & Pistons Ltd (Benara) plans to raise Rs.34 crore through its SME-IPO in the price band of Rs.60-63 for
its Rs.10 paid-up equity share. It proposes to utilize the IPO proceeds for (i) expansion by opening retail stores for
automobile parts; (ii) funding its working capital requirements; (iii) funding the working capital requirements of its
subsidiary– Benara Solar Pvt. Ltd; and (iv) general corporate purposes. The issue closes on Thursday, 22 March 2018.
Benara manufactures engine bearings, bushes, pistons, piston pin, piston rings, cylinder liners and sleeves and engine
valves. It also markets products like ball bearings, spark plugs, rocker arms, timing chains, connecting rods, valve guides,
valve seals and batteries under its own brand which it sources through third party contract manufacturing. For FY17,
Benara derived revenues of Rs.4.64 crore and Rs.72.66 crore from the OEM (original equipment manufacturer) and
Parts Replacement market respectively.
******

ICICI Securities IPO opens on 22nd March


ICICI Securities Ltd (I-Sec), the brokerage and investment banking arm of ICICI Bank Ltd, plans to raise over Rs.4000
crore through its IPO in the price band of Rs.519-520 for its Rs.5 paid-up equity share. The IPO is an offer for sale (OFS)
of up to 77,249,508 equity shares by the selling shareholders and hence, no proceeds of the issue will go the company.
The issue closes on Monday, 26 March 2018.
Incorporated in 1995, I-Sec offers financial services such as retail and institutional broking, financial product
distribution, investment banking, merchant banking and advisory services to financial institutions, corporates, retail
investors and high net-worth individuals (HNIs). For FY17, I-Sec reported 25% higher revenue of Rs.1403 crore with
43% higher PAT of Rs.337.61 crore.

STOCK BUZZ

Take Solutions Ltd: Niche player


(BSE Code: 532890) (CMP: Rs.163) (FV: Re.1)
By Subramanian Mahadevan
Incorporated in 2000, Chennai-based Take Solutions Ltd (TAKE) is a global technology solutions and service provider
with significant focus across two principal business areas – Lifesciences and Supply Chain Management. Its 1,000+
employees cater to 400+ marquee clients across 12 countries.
In 2015, TAKE had let go around 100 low margin clients while realigning its business model to focus on high margin
clients, which is now yielding good traction. Further, it acquired Bangalore-based Ecron Acunova (EA), a leading clinical
research organization, for Rs.115 crore which helped it to expand its market to $30 bn and significantly enhance its
presence in Europe and Nordic countries. It has made three acquisitions since 2006.
TAKE’s revenues have grown from Rs.46 crore in FY06 to Rs.1344 crore in FY17 on a small equity capital of Rs.13.11
crore. It raised $40 mn recently through a preferential allotment to promoters to drive acquisitions in the North
American and European markets. During Q3FY18, its revenues grew 19% YoY from Rs.343 crore to Rs.408 core. EBITDA
grew 15.2% YoY from Rs.69.3 crore to Rs.79.8 crore while PAT grew 11% from Rs.37 crore to Rs.41.1 crore.
TAKE is eyeing firms that will enable it to enhance its global footprint in North America and increase its capability in
therapeutic areas and in niche technologies. Its Vision 2021 is to hit the $500 mn revenue mark by March 2021 from the
current $200 mn. The management expects the acquisition to fetch revenues of ~$100-150 mn. Even without the
acquisition, it can easily earn revenues of $350 mn.
TAKE currently has an order book of $163 mn of which $151 mn relates to lifesciences while $12 mn relates to supply
chain management, which takes at least 7-9 months to execute. The promoters hold 63% of the equity capital. Its strong
track record of profitability, visionary management, rich dividend payout, excellent profit margins and huge cash
reserves are big positives. Buy on every decline for multibagger returns.

A Time Communications Publication 14


MARKET REVIEW

Sensex corrects MID-CAP TWINS


A Performance Review
on Friday Have a look at the grand success story of ‘Mid-Cap Twins’ launched on 1st August 2016
By Devendra A Singh Sr. Scrip Name Recomm. Recomm. Highest % Gain
The Sensex declined 131.14 No. Date Price (Rs.) since (Rs.)
points to settle at 33176 1 Mafatlal Industries 01-08-16 332.85 374.40 12.48
while the Nifty closed at 2 Great Eastern Shipping Co. 01-08-16 335.35 482.40 43.85
10195.15 losing 31.7 3 India Cements 01-09-16 149.85 226 50.82
points for the week ending 4 Tata Global Beverages 01-09-16 140.10 328.80 134.69
Friday, 16 March 2018. 5 Ajmera Realty & Infra India 01-10-16 137.00 365.65 166.90
On India’s macro-economic 6 Transpek Industry 01-10-16 447.00 1493 234.00
data, the seasonally adjusted 7 Greaves Cotton 01-11-16 138.55 178 28.47
Nikkei India Services 8 APM Industries 01-11-16 67.10 84.40 25.78
Business Activity Index fell 9 OCL India 01-12-16 809.45 1620 100.14
from 51.7 in January to 47.8
10 Prism Cement 01-12-16 93.25 158.95 70.46
in February 2018, its lowest
level since August 2017. The 11 Mahindra CIE Automotive 01-01-17 182.50 270.05 47.97
seasonally adjusted Nikkei 12 Swan Energy 01-01-17 154.10 235 52.50
India Composite PMI Output 13 Hindalco Industries 01-02-17 191.55 283.95 48.24
Index dropped from 52.5 in 14 Century Textiles & Industries 01-02-17 856.50 1471.85 71.84
January 2018 to 49.7 in 15 McLeod Russel India 01-03-17 171.75 248.30 44.57
February 2018 as the fall in 16 Sonata Software 01-03-17 191.00 366 91.62
service sector activity 17 ACC 01-04-17 1446.15 1869 29.24
outweighed the upturn in 18 Walchandnagar Industries 01-04-17 142.25 272.90 91.85
manufacturing production. 19 Oriental Veneer Products 01-05-17 222.30 645 190.15
New orders rose for the 20 Tata Steel 01-05-17 448.85 792.55 76.57
fourth consecutive month in 21 Sun Pharmaceuticals Industries 01-06-17 501.40 608.55 21.37
the manufacturing sector. 22 Ujjivan Financial Services 01-06-17 307.45 423 37.58
According to anecdotal 23 Ashok Leyland 01-07-17 93.85 151.55 61.48
evidence, improved 24 KSB Pumps 01-07-17 759.55 936 23.23
underlying demand was the
25 IRB Infrastructure Developers 01-08-17 224.95 260 15.58
key reason behind greater
26 JTL Infra 01-08-17 70 208 197.14
volumes of new business.
The level of new business 27 Stock ‘A’ 01-09-17 187.40 308.90 64.83
placed with Indian services 28 Stock ‘B’ 01-09-17 271.20 326.10 20.24
firms fell in February 2018 29 Stock ‘C’ 01-10-17 73.65 97.50 32.38
thereby ending a two-month 30 Stock ‘D’ 01-10-17 74.10 91.35 23.28
period of expansion. 31 Stock ‘E’ 01-11-17 206 223.15 8.33
On the inflation front, the 32 Stock ‘F’ 01-11-17 38 57.90 52.37
consumer price index (CPI) 33 Stock ‘G’ 01-12-17 194.65 196.80 1.10
based inflation eased to a 34 Stock ‘H’ 01-12-17 71.80 82.50 14.90
four-month low of 4.44% in 35 Stock ‘I’ 01-01-18 59.25 71.90 21.35
February 2018 from 5.07% 36 Stock ‘J’ 01-01-18 72.85 82.20 12.83
in January 2018 as consumer 37 Stock ‘K’ 01-02-18 234.90 291.85 24.24
food price index softened to 38 Stock ‘L’ 01-02-18 164.25 180 9.59
3.26% as against 4.7% in 39 Stock ‘M’ 01-03-18 575.15 588 2.23
January as retail prices of
40 Stock ‘N’ 01-03-18 211.80 216.80 2.36
pulses, sugar and spices
Thus ‘Mid-Cap Twins’ has delivered excellent results since its launch.
contracted.
Next edition of ‘Mid-Cap Twins’ will be released on 1 April 2018.
Aditi Nayar, Principal
Economist at ICRA, said that Attractively priced at Rs.2000 per month, Rs.11000 half yearly and Rs.20,000 annually,
the sharp dip in retail ‘Mid-cap Twins’ will be available both as print edition or online delivery.

A Time Communications Publication 15


inflation in February 2018 has reinforced the expectation that the monetary policy committee (MPC) will keep the repo
rate unchanged in the policy review in April, which may prompt further easing of bond yields in the immediate term
warning that inflation may spurt in coming months.
Further on the macro-data, the provisional figures of Direct Tax collections up to February 2018 show that net
collections are at Rs.7.44 lakh crore, which is 19.5% higher than the net collections in the previous corresponding
period. The net direct tax collections represent 74.3% of the revised estimates of Direct Taxes for FY18 at Rs.10.05 lakh
crore. Gross collections (before adjusting for refunds) rose 14.5% to Rs.8.83 lakh crore during April 2017 to February
2018. Refunds amounting to Rs.1.39 lakh crore were issued during April 2017 to February 2018.
Assocham Secretary, General DS Rawat, said that the 7.2% growth in GDP for Q3 highlights an improvement in
investment, manufacturing and construction thereby giving hope for a good pace of economic growth in the next fiscal as
the stage is now set in FY18.
“However, the gross value addition (GVA) which is net of taxes is not as good as GDP underscoring the fact that much
more needs to be done in terms of sustainable growth”, Rawat added.
The growth for the second quarter (July-September) has been revised upwards to 6.5% from 6.3% estimated earlier by
the CSO.
Economic Affairs Secretary, Subhash Chandra Garg, said that the 7.2% expansion in the economy during the October-
December 2017 quarter has put the country in one of the highest growth brackets in the world and recovery will
continue to be sharp going ahead. The Q3 growth of 7.2% was the highest in five quarters. The previous high was
recorded at 7.5% in the July-September quarter of FY17. In the first quarter of the current fiscal, the GDP grew at 5.7%
while the second quarter growth stood at 6.5%.
S&P Global Ratings agency said that the US President Donald Trump’s decision to hike duties on steel and aluminum
could result in retaliatory action from European Union (EU) and China triggering a trade war hurting American
exporters, global trade and global economic growth. It said that the overall economic impact of the tariffs on the US in
the near term is likely to be minimal with a mixed impact on corporates. The US had raised import duties on steel and
aluminum products to 25% and 10% respectively.
In a report titled, ‘Global Trade at a Crossroad: US Steel and Aluminium countries raise risk of retaliatory spiral’, S&P
said that the direct or first-round macroeconomic impact of these tariffs is likely to be negligible, the overall impact is
less certain. It will depend on the response of other major US trading partners, namely, the EU, China and South Korea.
“Many US trading partners have already signaled their concern at the announcement and have stated that they are
prepared to retaliate with their own tariffs on goods imported from the US”, the rating agency said.
“More important are the potential second-round effects on consumer and business confidence and spending, which will
ultimately drag down GDP”, S&P added.
S&P Global Ratings economist, Paul Gruenwald, said that “Although we don’t expect a full-scale trade war, such an
outcome is not assured. The initial US tariffs could lead to an escalation of punitive, retaliatory tariffs by trading partners
despite the known welfare damaging effects. The tariff hike will encourage US production of steel and aluminum raise
utilization rates and keep domestic prices elevated over the next 2-3 years”.
Key index rallied on Monday, 12 March 2018, on consolidated buying by the FIIs. The Sensex was up 610.80 points
(+1.83%) to close at 33917.94.
Key index fell on Tuesday, 13 March 2018, on modest selling. The Sensex was down 61.16 points (-0.18%) to close at
33856.78.
Key index fell on Wednesday, 14 March 2018, on extended selling. The Sensex was down 21.04 points (-0.06%) to close
at 33835.74.
Key index plunged on Thursday, 15 March 2018, on US policy cues. The Sensex was down 150.20 points (-0.44%) to
close at 33685.54.
Key index settled lower on Friday, 16 March 2018, on profit-booking. The Sensex was down 509.54 points (-1.51%) to
close at 33176.
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.
The RBI’s monetary policy review is scheduled for release and policy decisions are to be taken by the apex bank next
month. On Asian front, Caixin China’s Services PMI for February 2018 is scheduled for release this week. On the global
front, United States macro data for February 2018 is scheduled for release in the coming weeks of March 2018.

A Time Communications Publication 16


MARKET OUTLOOK

Nifty in downtrend
By Rohan Nalavade Another successful year for TF+ subscribers…
In March 2018 so far, the Nifty has moved
downward from 10600 to 10200. Since the Nifty What TF+ subscribers say:
has closed below 10260, we may see new lows of
“Think Investment… Think TECHNO FUNDA PLUS”
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The market is volatile and hence good trading
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The Nifty shows strong resistance and a reversal our subscribers. Of the 156 stocks recommended between 11
sell from 10430 to 10300. Below 10260, it will test January 2016 and 2 January 2017 (52 weeks), we booked profit in
125 stocks, 27 triggered the stop loss.
fresh monthly lows. 10150, being the 200-day
moving average, is a critical level. 10050 has acted Of the 156 stocks recommended between 9 January 2017 and 1
as a major support level over the last six months. January 2018 (52 weeks), we booked 7-41% profit in 124 stocks,
Nifty below 10350 offers shorting opportunities. 28 triggered the stop loss of 2-18% while 4 are still open. Out of 4,
2 stocks are in green & 2 stocks are in nominal red
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sentiment and another 91 cases are expected to
For more details, contact Money Times on
come out soon. Thus, the market is bearish and the
022-22616970/22654805 or moneytimes.support@gmail.com.
overall trend is down. Hence, trading in line with
the trend will be beneficiary. Subscription Rate: 1 month: Rs.2500; 3 months: Rs.6000;
6 months: Rs.11000; 1 year: Rs.18000.
Among stocks,
 Sell Hindalco Industries below Rs.224-225
for a target of Rs.220.213 (SL: Rs.227)
 Sell State Bank of India below Rs.254 for a target of Rs.250-245-240 (SL: Rs.259)
 Sell Vedanta below Rs.315 for a target of Rs.310-305-300 (SL: Rs.319)
 Sell Axis Bank below Rs.528-529 for a target of Rs.504-500-495 (SL: Rs.532)
 Sell Larsen & Toubro below Rs.1285-90 for a target of Rs.1265-1250 (SL: Rs.1300)
Learn to trade at tops and bottoms in our upcoming W.D. Gann Price Trading session on Friday, 30 March 2018. To know
more, please contact us on 9769212176 and book your seats.

EXPERT EYE
By Vihari

Eimco Elecon (India) Ltd: Money miner


(BSE Code: 523708) (CMP: Rs.431) (FV: Rs.10)
This stock is currently available at 36% discount from its 52-week high of Rs.700 recorded in June 2017. The stock is
expected to regain its lost ground soon as this material equipment firm is set to produce excellent results given the
bright industry prospects. In addition, its spares business, which is a high margin business, provides a stable cash flow
and contributes ~50% to overall sales. Further, introduction of new products and entry into open cast mining products
will act as a key catalyst for growth. The Company has a strong balance sheet with liquid investment of Rs.280/share.
Eimco Elecon (India) Ltd (EEL) was incorporated in 1974 and went public in 1992. Its 15 acre manufacturing plant is
situated at Vallabh Vidyanagar in Anand district of Gujarat. Its product range includes mining and construction

A Time Communications Publication 17


equipment developed with indigenous technology as well as through collaboration/joint venture agreements with
leading manufacturers of the world. Its product portfolio includes Side Dump Loader, Load Haul Dumper, Coal Hauler,
Universal Drill Machine, Articulated Wheel Loader, Low Profile Dump Truck, Rocker Shovel Loader and Chair Lift Man
Riding System.
EEL was the first to introduce the intermediate technology of Side Dump Loaders (SDLs), Load Haul Dumpers (LHDs)
and Rocker Shovel Loaders to partially mechanize underground coal and metalliferrous mines and continues to be the
market leader since then. It is ISO 14001:2004 and BS OHSAS 18001:2007 certified.
For FY17, EEL posted 51% higher PAT of Rs.25.09 crore on 23% higher sales of Rs.171.1 crore fetching an EPS of Rs.43.5
and a dividend of 50% was paid. During Q3FY18, it posted 23% higher PAT of Rs.5.8 crore on 32% lower sales of Rs.35.3
crore fetching an
EPS of Rs.10.
During 9MFY18, ‘BEAT THE STREET 6’
PAT fell 21% to An eye-catching performance in any kind of market
Rs.7.7 crore on
38% lower sales 19th edition of ‘Beat the Street 6’ published on 11/12/17
of Rs.73.6 crore Scrip Name Recomm. Rate Rs.) Highest since (Rs.) % Gain
fetching an EPS Larsen & Toubro 1219.30 1469.60 21
of Rs.13.4. Mahindra & Mahindra 1388.95 1571.15 13
EEL usually Torrent Power 272.45 306.95 13
performs well in Jamna Auto Industries 66.80 91.35 37
the last quarter Godawari Power & Ispat 187.60 623 232
of a fiscal year as Mastek 392.45 532 36
mining
equipment 18th edition of ‘Beat the Street 6’ published on 11/09/17
orders are Scrip Name Recomm. Rate (Rs.) Highest since (Rs.) % Gain
mainly received Dilip Buildcon 593.90 1059 78
and executed in DCM Shriram 431.05 628.05 46
this quarter. Ashok Leyland 115.05 142 23
During Q4FY17, Bharat Forge 1161.60 1290 11
PAT soared 72% Tata Sponge Iron (ABP) 893.80 1239 39
to Rs.15.2 crore H T Media 102.30 118.50 16
on 20% higher
sales of Rs.52.3 17th edition of ‘Beat the Street 6’ published on 12/06/17
crore fetching an Scrip Name Recomm. Rate (Rs.) Highest since (Rs.) % Gain
EPS of Rs.26.4. Purvankara 66.70 182 173
EEL is a zero- Cholamandalam Inv. & Fin. Co. 1043.40 1475.95 41
debt company. Reliance Industries 1335.50 1665 25
With a small Manappuram Finance 94.80 126.40 33
equity capital of
Voltamp Transformers 1292.95 1340.05 4
Rs.5.7 crore and
Karnataka Bank (ABP) 173.55 SL -
reserves of
Rs.275.8 crore,
its share book The Indian stock market offers an excellent opportunity to grow your investments. We are
value works out in the middle of a long-term bull run and the recent correction gives a good opportunity to
to Rs.488. The enter or reshuffle your portfolio. 2018 will be extremely difficult to make money as
value of its gross macros are against the bulls. But many companies have declared fantastic numbers in
block is Rs.101 9MFY18 while many have improved their operating performance.
crore. Cash and This is the right time to pick up good quality stocks before the next leg of rally!
loans given were The latest issue of ‘Beat the Street 6’ was published on 12 March 2018.
Rs.12.3 crore
while We have selected 6 strong stocks that could yield handsome returns in coming days.
investments So don’t wait, subscribe to ‘Beat the Street 6’ today.
were Rs.150.3 Subscription Rate: 1 Qtr: Rs.2000, 2 Qtrs: Rs.3500, 3 Qtrs: Rs.5000, 4 Qtrs: Rs.6500.
crore, which For payment details, refer to the subscription form.
together work

A Time Communications Publication 18


out to Rs.280/share. The Indian promoters hold 49.1% of the equity capital. Sandvik Asia holds 25% stake, DIs hold
4.8% and PCBs hold 2.2%, which leaves 18.9% stake with the investing public.
The global underground mining industry is expected to grow at ~7% CAGR over the next three years. The global
underground mining equipment market is expected to grow to $24 bn by 2019 on the back of proactive changes in
energy efficiency regulations undertaken by various governments across the globe. This has given an impetus to mining
companies to adopt energy efficient underground mining equipments.
India is focused on transforming the ailing coal sector. The government has announced plans to boost Coal India’s
annual production to 1 billion tonnes by 2019 and this requires significant investment in mechanization of existing
mines and fast tracking mine development activity in newer mines.
Since infrastructure acts as a catalyst in the industrial and the overall growth of the nation, this sector has always been
on the priority agenda of the government. With the government’s renewed impetus on infrastructure, the construction
equipment industry is poised for tremendous growth in the years to come. The need for timely execution of
infrastructure projects and emphasis on qualitative approach will act as growth drivers for the construction equipment
market. Growing urbanization and rising affordability will further spur the demand and availability of financing
construction equipments.
The government has proposed $1 trillion of investment in infrastructure projects in the 12th Five Year Plan. Based on
the recent projections, the Earthmoving and Construction Equipment (ECE) market is expected to grow 15-20% over the
next few years.
EEL’s improved distribution network will help spread new products across the nation. A higher capacity Loader AL-520
with bucket capacity of 1.9–3 cum has also been launched commercially.
Since EEL is into coal loading machinery, its major customer is Coal India (90% of its business is generated from them).
Going forward, the economy is likely to remain in good shape in view of the large infra spending by the government and
as such Coal India will be able to improve its performance tremendously, which in turn will enormously benefit EEL.
When EEL sells machines, it also enters into contracts for their maintenance as well as for spare parts. The rising top-
line from spare parts, which is a high margin business, can fetch a regular annuity business with higher margins.
Higher demand for loaders will boost EEL’s business though it will face tough competition from global players. EEL also
plans to introduce Skid Steer Loader, a highly versatile machine with growth potential and used primarily in industrial
material handling and infra projects. Also, a recommendation by a reputed market survey agency, which conducted a
market survey, EEL will add additional product lines in the Construction Equipment Segment. It is also exploring the
export potential of construction equipments in South East Asia and Africa. The immediate beneficiary of infrastructure
and road developments will be EEL, which is expected to do well in line with the infra spend.
Based on the current going, EEL is likely to post an EPS of
Rs.35 in FY18 and Rs.42 in FY19. Moreover, its strong Free 2-day trial of Live Market Calls
share book value may tempt the management to declare a A running commentary of intra-day trading
liberal bonus this year. At the CMP of Rs.431, the stock recommendations with buy/sell levels, targets, stop loss
trades at a forward P/E of 12.3x on FY18E and 10.2x on on your mobile every trading day of the moth along with
FY19E earnings. A reasonable P/E of 17.5x on FY18E will pre-market notes via email for Rs.4000 per month.
take its share price to Rs.612 in the medium-term and Contact Money Times on 022-22616970 or
Rs.735 thereafter. Its 52-week high/low is Rs.700/430.10. moneytimes.support@gmail.com to register for a free trial.

TECHNO FUNDA
By Nayan Patel

Gujarat Themis Biosyn Ltd


(BSE Code: 506879) (CMP: Rs.46.85) (FV: Rs.5)
We had recommended this stock at Rs.42.55 on 3 July 2017 where-after it appreciated to Rs.67.80 in December 2017. Due to
the current volatility in the markets, the stock is again available at an attractive level.
Incorporated in 1981, Vapi-based Gujarat Themis Biosyn Ltd (GTBL) manufactures and sells bulk drugs on a job work
basis. Job work contributed almost 80-85% to its revenue. Its products include Rifamycin-S (an intermediate for the
treatment of tuberculosis) and Lovastatin.

A Time Communications Publication 19


GTBL has an equity capital of Rs.7.26 crore. The promoters hold 74.99% of the equity capital, which leaves 25.01% stake
with the investing public.
During Q3FY18, GTBL posted PAT of Rs.0.99 crore on Financial Performance: (Rs. in crore)
sales of Rs.9.83 crore fetching an EPS of Re.0.68. Particulars Q3FY18 Q3FY17 9MFY18 9MFY17 FY17
During 9MFY18, it posted higher sales of Rs.28.85 Sales 9.83 8.50 28.85 25.26 35.69
crore v/s Rs.25.26 crore in 9MFY17. Its tax outgo PBT 1.27 1.18 3.61 3.37 4.70
more than doubled to Rs.0.74 crore because of which Tax 0.28 0.12 0.74 0.35 0.45
PAT declined to Rs.2.87 crore from Rs.3.02 crore in PAT 0.99 1.06 2.87 3.02 4.25
9MFY17. EPS (in Rs.) 0.68 0.73 1.98 2.08 2.92
Currently, the stock trades at a P/E of just 16.85x.
Based on its financial parameters, the stock looks quite attractive for investment at the current level. It finds strong
support at around Rs.40. It has taken support at this level six times after July 2015 without breaking it. Investors can buy
this stock with a stop loss of Rs.39. On the upper side, it could zoom to Rs.65-70 in medium-to-long term. The stock’s all-
time high is Rs.90.
*******

RTS Power Corporation Ltd


(BSE Code: 531215) (CMP: Rs.54.75) (FV: Rs.10)
Incorporated in 1947, Kolkata-based RTS Power Corporation Ltd (RTS) manufactures and sells power and distribution
transformers, cables and conductors for generation, transmission and distribution (T&D) of electricity. It operates
through three segments: Transformers; Cable Conductors; and Wind Energy. It offers extra high voltage (EHV) and dry-
type transformers and a compact sub-station. It also provides repair and re-engineering services for damaged
transformers. It serves state electricity boards (SEBs), EPC contractors, railways, telecom companies, public sector units
(PSUs) and private utilities as well as the defence, construction, sugar, steel, mining, agro-processing, infrastructure, tea
and jute industries. It also exports to Bangladesh, Nepal, Myanmar and the Gulf countries.
With an equity capital of Rs.8.17 crore and reserves of Rs.40.41 crore, RTS’ share book value works out to Rs.57.2 as at
31 March 2017. The promoters hold 67.25% of the equity capital, which leaves 32.75% stake with the investing public.
Castle commodities Pvt Ltd holds 13.96% stake in this company.
RTS reported fantastic turnaround numbers for
Q3FY18 as well as 9MFY18. During Q3FY18, it recorded Financial Performance: (Rs. in crore)
PAT of Rs.1.02 crore v/s a loss of Rs.0.57 crore in Particulars Q3FY18 Q3FY17 9MFY18 9MFY17 FY17
Q3FY17 on 30% higher sales of Rs.45.04 crore. It Sales 45.04 34.55 115.80 78.70 105.32
posted an EPS of Rs.1.25. During 9MFY18, PAT PBT 1.30 -0.54 3.66 1.18 2.33
skyrocketed 360% to Rs.2.67 crore from Rs.0.58 crore Tax 0.28 0.03 0.98 0.60 0.47
in 9MFY17 on 47% higher sales of Rs.115.8 crore
PAT 1.02 -0.57 2.67 0.58 1.86
fetching an EPS of Rs.3.27. Its 9MFY18 PAT was 44%
EPS (in Rs.) 1.25 -0.75 3.27 0.71 2.28
higher than the PAT recorded for FY17.
Currently, the stock trades at a P/E of just 11.06x. Based on its financial parameters, the stock looks quite attractive for
investment at the current level. Investors can buy this stock with a stop loss of Rs.45. On the upper side, it could zoom to
Rs.85-90 levels in the medium-to-long term. The stock’s all-time high is Rs.307.75.

BULL’S EYE

Samrat Pharmachem Ltd


(BSE Code: 530125) (CMP: Rs.149.75) (FV: Rs.10)
By Pratit Nayan Patel
Company Background: Incorporated in 1992, Samrat Pharmachem Ltd (SPL) produces and sells pharmaceutical
chemicals. It manufactures Iodine and Bromine salts and offers one of the widest ranges of Iodine derivatives. Its
finished products are used in various industries like Pharmaceuticals, Chemicals, Food, Fertilizer, Salt, etc. It owns over
50,000 sq.ft. of constructed area. Its manufacturing unit and test laboratory is situated in Ankleshwar. It was awarded
the GMP Compliance Certificate in 2015.

A Time Communications Publication 20


Financials: With an equity
Performance Review: (Rs. in crore)
capital of Rs.3.09 crore and
reserves of Rs.12.23 crore, its Particulars Q3FY18 Q2FY18 Q3FY17 9MFY18 9MFY17 FY17 FY16
share book value works out to Total Income 25.08 20.77 18.11 66.07 58.03 71.07 61.86
Rs.49.59. The promoters hold PBT 2.02 0.65 0.94 3.67 1.88 2.49 0.45
48.32% of the equity capital,
which leaves 51.68% stake with Tax 0.61 0.14 0.29 1.16 0.57 0.93 0.15
the investing public. The PAT 1.41 0.51 0.65 2.51 1.32 1.57 0.30
promoters increased their stake EPS (in Rs.) 4.56 1.65 2.10 8.14 4.26 5.07 0.97
by 1.13% over the last two
years. Lloyds Securities Overseas Ltd (an FPI) holds 3.24% stake in the company. HNIs like Mala Bhavnani, Sharad Shah
and Subramanian P. hold 5.2%, 1.62% and 4.14% stake in this company respectively.
For FY17, SPL’s PAT zoomed to Rs.1.57 crore from Rs.0.3 crore in FY16 on 15% higher sales of Rs.71.07 crore fetching
an EPS of Rs.5.07. During Q3FY18, PAT zoomed 117% to Rs.1.41 crore from Rs.0.65 crore in Q3FY17 on 38% higher
sales of Rs.25.08 crore fetching an EPS of Rs.4.56. During 9MFY18, PAT soared 90% to Rs.2.51 crore from Rs.1.32 crore
in 9MFY17 on 14% higher sales of Rs.66.07 crore fetching an EPS of Rs.8.14. 9MFY18 PAT was 60% higher than PAT
recorded for FY17.
Industry Overview: The pharmaceutical and chemical industry is growing rapidly. By 2020, the pharmaceutical market
is anticipated to more than double to $1.3 tn with the E7 countries i.e. Brazil, China, India, Indonesia, Mexico, Russia and
Turkey accounting for around one-fifth of the global pharmaceutical sales. Further, the incidence of chronic conditions in
the developing world will increasingly resemble the developed world. SPL has taken effective measures to improve the
quality of products and its productivity to outwit competitors from the domestic as well as overseas markets.
Conclusion: SPL is a niche player that offers high quality specialized products. Improving profit margins and export
revenues ensures that the company is on the right track. The management intends to double its turnover in a short
period of time. It plans to widen the product range and thereby enlarge its customer base and sales.
At the CMP, the stock trades at a P/E of 16.75x. Based on its financial parameters, the stock looks quite attractive for
investment at the current level. Investors can accumulate this stock with a stop loss of Rs.120 for a price target of
Rs.185-210 in the next 9-12 months. The stock’s 52-week high/low is Rs.170.40/49 and its market cap stands at
Rs.46.27 crore.

A Time Communications Publication 21


A Time Communications Publication 22
A Time Communications Publication 23
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Disclaimer: Investment recommendations made in Money Times are for information purposes only and derived from sources that are deemed to
be reliable but their accuracy and completeness are not guaranteed. Money Times or the analyst/writer does not accept any liability for the use of
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A Time Communications Publication 24


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A Time Communications Publication 25