TOWER TALK

Money Times - - Tower Talk -

 Bio­con’s re­cent man­age­ment meet with Ste­wart In­vestors is in­dica­tive of fur­ther ex­pan­sion plans. Ac­cu­mu­late the stock at ev­ery de­cline.  Coal In­dia has ap­proved an in­terim div­i­dend of Rs.7.25/share for FY19. Buy for the long term.  In­fibeam Av­enues has col­lab­o­rated with IBM (In­dia) to de­velop, im­ple­ment and pro­mote Blockchain ap­pli­ca­tions for clients in In­dia on Lin­uxOne. The stock is avail­able at rock bot­tom lev­els. An ex­cel­lent con­trar­ian buy.  The gov­ern­ment’s de­ci­sion to in­fuse an­other Rs.41000 crore into the bank­ing sys­tem may boost the share price of Pun­jab Na­tional Bank. Buy.  In­dian Hume Pipe Co. has re­ceived a Let­ter of Ac­cep­tance (LoA) for a con­tract worth Rs.502.89 crore from Andhra Pradesh Drink­ing Wa­ter Sup­ply Cor­po­ra­tion. Its fu­ture prospects look good. Buy.  Bank of In­dia plans to sell 28.96% stake in Star Union Dal-ichi Life In­sur­ance for ~Rs.1200 crore to meet its work­ing cap­i­tal re­quire­ments. A pos­i­tive for the Bank. Buy.

 To raise funds, the gov­ern­ment has asked In­dian Oil Cor­po­ra­tion to pay a high div­i­dend. Apart from good div­i­dend yield, the work­ings of IOC are also im­prov­ing. Buy.  Oil & Nat­u­ral Gas Cor­po­ra­tion’s Rs.4000 crore buy­back has started. A high in­terim div­i­dend is also a pos­si­bil­ity. Al­though the buy­back is just 2% of its to­tal eq­uity, the re­sul­tant EPS will rise. A good op­por­tu­nity to ac­cu­mu­late the stock.

 In spite of alu­minium stocks tank­ing on con­cerns of USA lift­ing sanc­tions on Rus­sian com­pany Rusal, Na­tional Alu­minium Co. is worth ac­cu­mu­lat­ing at the cur­rent level.  Al­though crude oil prices are fall­ing, Se­lan Ex­plo­ration Technology is still a good buy. This cash-rich com­pany is plan­ning a buy­back.

 The pop­u­lar ‘Jawa’ mo­tor­bike launched by Mahin­dra & Mahin­dra (M&M) will give Eicher a tough fight in the mar­ket. Fur­ther, the two-wheeler mar­ket is set to grow 8-10% this year. Buy M&M.

 An arm of Sun Phar­ma­ceu­ti­cal In­dus­tries has re­ceived re­lief from a US court in a patent in­fringe­ment case. A pos­i­tive for the com­pany. Ac­cu­mu­late.  Siemens will ben­e­fit from the gov­ern­ment’s thrust on in­fra­struc­ture spend­ing. The com­pany has beaten in­dus­try av­er­ages even in times of cri­sis. Buy.  J.B. Chem­i­cals & Phar­ma­ceu­ti­cals, which cur­rently trades at a dis­count to its peers, presents a good in­vest­ment op­por­tu­nity on the back of pos­i­tive cash flows and debt-free sta­tus. The stock may rise by 50% within a year.  Cipla, which was fac­ing sup­ply con­straints at one of its US plants, seems to have over­come the hur­dles. Its sales in USA are bound to im­prove. Ac­cu­mu­late.

 The gov­ern­ment is tak­ing se­ri­ous steps to bring the NBFCs out of their fi­nan­cial tight­ness. It may be pru­dent to buy L&T Fi­nance Hold­ings.  Vedanta plans to set up a 4.5 MMTPA steel plant in Jhark­hand. This brown­field plant, at Bokaro will help the com­pany en­hance its ca­pac­ity and prof­itabil­ity. Buy.  USA based Black­stone group has signed a de­fin­i­tive agree­ment with In­di­abulls Real Es­tate to buy 50% stake in its Udyog Vi­har (Delhi) prop­erty for ~Rs.464 crore. Its prospects look good. Buy.

 ITC has ex­panded its dairy port­fo­lio with the launch of Sun­feast Won­derz Milk. This lu­cra­tive step will prove ben­e­fi­cial for the com­pany. Buy.

 Maruti Suzuki’s ‘Swift’ model seems to be on a come­back mode. This ev­er­green share de­serves a place in ev­ery port­fo­lio. Ac­cu­mu­late in small lots.

 The fall­ing crude oil prices will ben­e­fit tyre com­pa­nies the most. Buy J.K. Tyre & In­dus­tries for big gains.  Rico Auto In­dus­tries is ex­pected to notch an EPS of Rs.6.5 in FY19 and Rs.9 in FY20 post ex­pan­sion and im­prove­ment in mar­gins. Buy for around 40% re­turns in the medium-to-long term.  Hin­duja Global So­lu­tions is ex­pected to notch an EPS of Rs.95-100 in FY19 and Rs.105 in FY20. The stock is likely

to touch Rs.800.  Kriti Nu­tri­ents is ex­pected to notch an EPS of Rs.4.5 in FY19 based on its H1FY19 re­sults. A rea­son­able P/E of 10x will take its share price to Rs.45 in the medium term.  Lin­coln Phar­ma­ceu­ti­cals, which posted 92% higher con­sol­i­dated PAT for H1FY19, plans to en­hance its ca­pac­ity. Based on its FY19E EPS of Rs.30, the stock has the po­ten­tial to cross Rs.300.  Chen­nai Pe­tro­leum Cor­po­ra­tion is ex­pected to post ex­cel­lent re­sults for FY19 on ac­count of fall­ing crude oil prices. Buy for around 50% re­turns in the medium-to-long term.  Data­mat­ics Global Ser­vices is ex­pected to notch an EPS of Rs.14 for FY19. With a share book value of Rs.98.85, its P/BV works out to just 1.07x. The stock is likely to touch Rs.147-150 on a rea­son­able P/BV of 1.6x and P/E of 10.5x in the medium term.  Eimco Ele­con (In­dia), which re­ported 316% higher con­sol­i­dated PAT for H1FY19, is likely to post an EPS of Rs.40 for FY19. The stock may cross Rs.600.  Vind­hya Telelinks is ex­pected to notch a con­sol­i­dated EPS of Rs.225+ for FY19. The stock is poised to touch Rs.3000.

 An Ahmed­abad-based an­a­lyst rec­om­mends Ack­nit In­dus­tries, Ajanta Pharma, Cupid, Gu­jarat State Fer­til­iz­ers &

Chem­i­cals and Su­per Crop Safe.

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