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T I M E S
A TIME COMMUNICATIONS PUBLICATION
VOL XXVIII No.11 Monday, 14 – 20 January 2019 Pgs.19 Rs.20

Follow-up buying support Now follow us on Instagram, Facebook &

Twitter at moneytimes_1991 on a daily basis
needed to get a view of the stock market and the
By Sanjay R. Bhatia happenings which many may not be aware of.
The domestic markets saw a steady rise last week on the back of
positive global and domestic cues. Buying was concentrated in key pivotals while the broader markets remained flat to
neutral. The breadth of the market remained weak amidst low volumes, indicating index management as buying was
concentrated in index heavyweights.
The FIIs once again turned net buyers in the cash and derivatives segment. The DIIs remained net buyers and were seen
supporting the markets. On the domestic front, the government continued to tinker with GST rates and laws.
On the global front, the US markets moved higher on expectations of
USA and China resolving their trade disputes. However, the US
shutdown is likely to affect the market sentiment in near future as Believe it or not!
President Trump cancels his visit to the annual meeting of the World
Economic Forum at Davos. Crude oil prices rose to a monthly high on  Empire Industries recommended at Rs.1074.10
account of output cuts agreed by major oil exporters. However, in BB last week, jumped to Rs.1201 appreciating
concerns over the global economic outlook and high inventory are 12% in just 1 week!
likely to weigh on the prices. On the domestic front, the earnings  Trident recommended at Rs.66.65 in TT last
season has begun on a subdued note. TCS’ margin slipped QOQ due to week, jumped to Rs.71.70 appreciating 8% in just
scarce visa availability and talent crunch in USA. 1 week!
Technically, the prevailing positive technical conditions helped the  Manaksia recommended at Rs.41.70 in EE last
markets move higher. The Stochastic is placed above its average on week, jumped to Rs.45 appreciating 8% in just 1
the daily chart. Further, the MACD and RSI are placed above their week!
respective averages on the weekly chart. Moreover, the Nifty is placed  RACL Geartech recommended at Rs.61.05 in TT
above its 50-day SMA. These positive technical conditions could lead last week, jumped to Rs.65.75 appreciating 8% in
to regular buying support. just 1 week!
The prevailing negative technical conditions, however, still hold good.  Gujarat Fluorochemicals recommended at
The MACD, KST and RSI are all placed below their respective averages Rs.909.80 in BE last week, jumped to Rs.974.70
on the daily chart. Further, the Stochastic and KST are placed below appreciating 7% in just 1 week!
their respective averages on the weekly chart. The Stochastic has (BB – Best Bet; BE – Bull’s Eye;
moved in the overbought territory. The Nifty is still placed below its EE – Expert Eye; TT – Tower Talk)
100-day SMA and 200-day SMA. Moreover, the Nifty’s 50-day SMA is
also placed below its 100-day SMA and 200-day SMA signaling a This happens only in Money Times!
‘Death Cross’ breakdown. All these negative technical conditions could Now in its 28th Year
lead to profit-booking and selling pressure, especially at the higher
levels.

A Time Communications Publication 1

The -DI line is placed above the +DI line and above 29. But it has come off its recent highs, which indicates that the
sellers are covering shorts regularly. But the ADX line is still languishing below 14, which indicates that the markets lack
a secular trend and the current trend has no strength.
The Nifty has managed to sustain above 10756, which augurs well for the markets. The Nifty needs to sustain above this
level for selling pressure to ease and to move higher to test 10843. If it fails to sustain above 10756, then selling
pressure may emerge and the markets could fall further to test the support range of 10625-10589.
Currently, the markets are stuck in a broad range of 10500-
10985. The sentiment continues to remain tentative and
indecisive. Positive news flow is needed along with regular
follow-up buying support at the higher levels for the Nifty to
move higher and test the psychologically important level of
11000. Stock-specific action is likely to continue due to the
ongoing earnings season. Meanwhile, the markets will take
cues from the earnings season, Dollar-Rupee exchange rate,
global markets and crude oil prices.
Technically, the Sensex faces resistance at the 36350,
36602, 37165, 37490 and 38125 levels and seeks support at
the 35606, 35400, 35187, 34748, 34344, 33723 and 33349
levels. The resistance levels for the Nifty are placed at
10843, 10942, 11008, 11146 and 11350 while its support
levels are placed at 10756, 10710, 10625, 10589 and 10534.

BAZAR.COM

2019: Great year to pick stocks

The year 2018, which was one of the most eventful in recent times, ended on a mixed note. Though the Sensex after
scaling all-time highs could barely manage a 5% YoY rise. What the markets had gained till September was lost in two
months from mid-September to early November. The large-caps, small-caps and mid-caps bled profusely. Though the
large-caps found a way to stabilize, the mid-caps and small-caps did not find the same support. While the S&P BSE 200
and S&P BSE 500 indices closed 2018 with 1% and 3.65% losses respectively, the S&P BSE Mid-Cap and S&P BSE Small-
Cap indices lost 15% and 25% respectively. The end of the eventful year points to the worst being over. The outlook for
2019 seems bright and considering that the worst is over, the experts expect a turnaround in fortunes now.
Stock prices seem to have bottomed out. Since most of the domestic and global stress has already been factored in, there
is not much worry left. The Indian equity markets witnessed low earnings growth in 2018. The earnings growth in
Q3FY19 will also not be good because of inventory losses caused by the fall in commodity prices. However, things are
likely to improve in 2019 led by large corporates banks. The system-wide NPA issues have peaked out. Once the NPA
write-offs reduce, these banks are likely to report normal profitability. Finance as a sector has around 41% weightage in
the Sensex and just the earnings normalization of three large corporate banks i.e. ICICI Bank, Axis Bank and State Bank
of India can generate sufficient push to grow earnings at over 20% in 2019-20. Little wonder, of late the banking sector
in general and such banks in particular are showing signs of a great revival.
The year 2018 had begun on an optimistic note with the mid-caps and small-caps quoting significantly higher than the
large-caps. But these segments also saw the deepest cuts in the second half of 2018. Market pundits are not yet fully
positive on these segments. Although the valuation gap has come down, it is still not at realistic levels. Therefore, it may
be prudent to go with the large-caps or select mid-caps and keep a safe distance from the small-caps. Historically, mid-
caps and small-caps have traded at a discount to large-caps. But they are still at a premium even after the recent
correction. Therefore, till the premium vanishes, large-caps remain a better bet.
Sector wise, IT was the best performer of 2018. Though the sector has some steam left, it may not be the best performer
now. On the contrary, signs of fatigue are noticeable. The FMCG sector may continue to report decent growth in 2019 as
well. A rural push in the election year, sops to rural population by farm loan waivers and other benefits will fuel rural
demand. Automobiles after a lull may develop a plateau of demand and margins.
Interest rates for 2019 are likely to remain at the current level with an upward bias. Do not expect a rate cut anytime
soon. If at all, it may happen in the second half of 2019. The interest rate for the Senior Citizen’s Savings Scheme is still as
high as 8.7%. The bonds issued in the first quarter of calendar year 2019 offer a neat 8.75-9.10% and substantial money

A Time Communications Publication 2

shall flow in here. Public Provident Fund (PPF) or Employee Provident Fund (EPF) remains a good option. Also, yields in
corporate bonds are still high. So debt funds focused on this segment are likely to earn good returns in 2019. Debt fund
investors now should restrict short-to-medium term funds because the volatility here will be low and therefore, the risk
adjusted returns will be high.
In 2019, the equity markets will revolve around fuel prices and political fever. The election year gives tremendous
opportunity to pick up select stocks at abysmally low levels amid the poll outcome fear. A hung parliament could melt
stock prices and investors must use the opportunity to accumulate stocks at beaten down levels. Insecurity at the
political level is not a permanent feature and therefore, buying during such meltdowns will need guts and patience of the
highest order. Returns of such investments in absolute term will be very high.

TRADING ON TECHNICALS

An upside breakout may resume above 36555

Sensex Daily Trend DRV Weekly Trend WRV Monthly Trend MRV
Last Close 36009 Up 35691 Up 35786 Up 33282
Start Date - 04-01-19 - 11-01-19 - 31-05-16 -
Start Level - 35695 - 36009 - 26667 -
Gain/Loss (-) - 314 - 0 - 9342 -
% Gain/Loss (-) - 0.88 - 0.00 - 35.03 -
Sideways volatility continued on the daily and weekly charts. The Sensex has closed in opposite directions on alternate
weeks since 30-11-2018. Last week, an In Bar was formed on the weekly chart, which means that the movement was
within the range of the previous week’s high and low indicating sideways market.
The volatility band remains 34400-37000.
Last week, the Sensex opened at 35971.18, registered a high at 36269.30 and fell to a low of 35753.49 before it finally
closed the week at 36009.84 and thereby showed a net rise of 314 points on a week-to-week basis. The weekly candle is
an indecisive doji candle, which suggests sideways movement.
Daily Chart
The daily chart bands have narrowed down and we may witness a major directional swing soon. The narrower band is
35382-36269. On the daily chart, a breakdown will resume below 35382. An upside breakout will continue to draw
resistance. An upside breakout on the daily chart is possible above 36285 with further resistance from the lower top and
supply zone of 36381-36555.
Weekly Chart
The resistance levels are placed at 36268-36285-36555 while the support levels are placed at 35752-35010-34462.
Resistance will continue at the higher range. Selling/ supply/ profit-booking will emerge until a breakout and weekly
close above 36555 is witnessed at the end of the week.
A downside slide with support levels of 35752-35010-34462 with volatility is likely.
Half Yearly Chart
For calendar year 2018, the second half of the yearly chart shows higher low and higher high since the low of 22494.
The last 6 months range is 33291-38989.
In calendar year 2019, the movement will be within the
range of 33291-38929 for the first six months and the lower
range may attract support. A breakout from this six months
range may be witnessed in the second half of the year.
The two half yearly lows are 33291 and 32483. Expect
support and buying whenever the support range of 33291-
32483 is attained.
BSE Mid-Cap Index
Weekly chart:
The resistance levels are placed at 15360-15481 while the
support levels are placed at 15027-14907. A breakdown
may emerge below 14907.
The overall objective remains to exit long positions till the
lower top of 15601 is not crossed.

A Time Communications Publication 3

BSE Small-Cap Index
Weekly chart:
Contraction of movement continues and the band of movement is 14855-14225. The next directional movement is
outside the band.
Strategy for the week
Traders who are long can maintain the stop loss of 35300. Broadly, the general objective should be to book profits until
the Sensex crosses 36555 on a weekly closing basis.

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: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & S2- Support

Weekly Up
Scrip Last Relative
S1 S2 - R1- R2- Reversal Trend
Close Strength
Value Date
Weak Demand Demand Supply Supply
below point point point point
ICICI BANK 378.55 366.6 369.0 376.2 385.8 402.6 66.2 364.6 28-12-18
LINDE INDIA LTD 790.00 676.0 712.3 753.7 831.3 950.3 64.9 708.8 11-01-19
PVR 1642.90 1575.6 1596.2 1622.3 1669.0 1741.8 64.7 1591.1 30-11-18
BATA INDIA 1155.00 1114.0 1122.0 1147.0 1180.0 1238.0 62.7 1131.3 30-11-18
TITAN INDUSTRIES 958.00 933.0 937.7 953.3 973.7 1009.7 61.7 928.0 28-12-18

*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: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & S2- Support

Weekly Down
Scrip Last Relative
S1 S2 - R1- R2- Reversal Trend
Close Strength
Value Date
Demand Demand Supply Supply Strong
point point point point above
SUN PHARMA ADVAN. RE 183.80 168.7 179.4 185.6 190.0 191.8 23.78 192.04 21-09-18
NILKAMAL 1410.00 1299.3 1377.3 1422.7 1455.3 1468.0 27.83 1476.75 28-12-18
APL APOLLO TUBES 1112.15 912.6 1046.7 1115.4 1180.9 1184.2 29.83 1141.79 21-12-18
RAIN INDUSTRIES 116.75 96.2 111.1 120.5 126.1 129.8 31.40 128.50 04-01-19
SAIL (STEEL AUTHORIT 52.20 48.1 51.1 53.0 54.1 55.0 31.64 53.26 11-01-19

*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.
BUY LIST
Note: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & WB- Weak Below
Scrip Last Close S3 S2 S1 WB R1 Monthly RS

AARTI INDUSTRIES 1552.00 1507.28 1491.00 1474.72 1422.00 1645.3 51.63

PRAJ INDUSTRIES 151.80 141.56 135.40 129.24 109.30 193.8 66.2

A Time Communications Publication 4

 EXIT LIST
Note: R1- (Resistance), R2- (Resistance), R3- Resistance, S1- Support & SA- Strong Above
Scrip Last Close R1 R2 R3 SA S1 Monthly RS

VINATI ORGANICS 1572.00 1597.29 1608.50 1619.71 1656.00 1502.3 49.77

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 Supply Supply RS-

Scrip BSE Code Last Close Demand Point Trigger
below point point Strength
DIKSHA GREENS 542155 79.80 76.80 79.80 73.00 84.0 90.8 79.78
GNA AXLES LTD 540124 371.30 368.40 376.05 357.25 387.7 406.5 59.09
TOURISM FINANCE CORP 526650 127.15 126.05 127.50 122.00 130.9 136.4 50.18
TRANSPORT CORP.OF IN 532349 303.35 286.20 310.00 280.55 328.2 357.7 58.85

TOWER TALK
 Although Reliance Industries and other oil marketing companies stare at huge inventory losses on account of a
drop in prices, Chennai Petroleum Corporation looks attractive at the current beaten down levels.
 Sun Pharmaceutical Industries has acquired Japan-based Pola Pharma. This acquisition will improve the
company’s performance in the dermatology segment globally. Buy.
 Future Enterprises has raised Rs.750 crore by allotting 10.5% NCDs (non-convertible debentures) on private
placement basis. A positive for the company. Buy.
 Union Bank has raised Rs.600 crore worth ESOPs (employee stock ownership plan) to strengthen its banking
activities. Buy.
 The dwindling oil prices could benefit Indian tyre companies. Buy J.K. Tyre & Industries and Ceat.
 NMDC has cut the selling price of iron ore, which may affect its top-line. However, the proposed buy back will
benefit investors. Buy.
 Its time to bet on Yes Bank. The name of the new CEO is about to be declared. The Bank’s workings are also stable.
 The assets of Dewan Housing Finance Corporation remain intact and its Q3 results are likely to be in line with
expectations. A big bounce in its share price is possible after Q3 results are declared.
 JSW Steel has released its steel production data for December 2018, which shows higher revenue and profitability.
Buy.
 Biocon looks strong in this weak market scenario. It has lined up many molecules related to diabetes and oncology
drugs and this share deserves a permanent place in every portfolio. Accumulate.
 Analysts are sceptical about Bandhan Bank and Gruh Finance. However, the workings of both the companies
remain strong. Their beaten down share prices merit a buy.
 Allsec Technologies has signed a partnership with Oman-based Bahwyn Cybertech to offer platform-based
services in the Middle East. A positive for the company. Buy.
 The government has permitted Oil & Natural Gas Corporation and Oil India to induct foreign partners in oilfields
to boost output and will also give incentives to make their discoveries in difficult areas viable. A positive for both
companies. Buy.
 Maruti Suzuki (India) plans to launch two new models shortly. This auto major, which has ~52% market share, is
an excellent investment bet. Buy on every decline.
 Lupin has received USFDA approval to market its Lurasadone Hydrochloric tablets used for treating schizophrenia.
A big positive for the company. Buy.
 Aditya Birla Capital, which trades around 2x its book value, has multiple business verticals. A safe investment bet
for the long term.
 Endurance Technologies has acquired Italy-based Fonpresmetal (a die-casting company). This acquisition is
likely to boost the company’s revenue and profitability significantly. Buy.
 The Managing Director of Mercedes Benz (India) has categorically stated that the company is on a solid growth
path. It then makes sense to buy Force Motors.
 The management of Eicher Motors is positive on the company’s workings and has assured investors that the
recent slowdown in sales was just a passing phase. Buy.

A Time Communications Publication 5

 Bajaj Corp has reported 9% higher PAT for Q3FY19. New products are also in the pipeline. Buy for the long term.
 Through its subsidiary in South Korea, Glenmark Pharmaceuticals has entered into a licensing agreement with
Yuhan Corp for commercializing Ryaltris (a nasal spray). A positive for the company. Buy.
 Bombay Realty, a subsidiary of Bombay Dyeing & Manufacturing Co (Bombay Dyeing), is expected to generate
~Rs.24000 crore of revenue from two projects based in Mumbai. Buy Bombay Dyeing for multi-fold returns. Its
market cap stands at Rs.2447 crore.
 Zuari Agro Chemicals is available at 58% discount to its 52-week high of Rs.564. The stock has the potential to
cross Rs.500 again.
 NCC is seen as the junior L&T of India. The stock has the backing of big bull Rakesh Jhunjhunwala. Buy for good
returns in the medium-to-long term.
 Mastek is likely to notch an EPS of Rs.43 for FY19. A reasonable P/E of 15x will take its share price to Rs.645.
 An Ahmedabad-based analyst recommends Acknit Industries, IOL Chemicals & Pharmaceuticals and
Technofab Engineering. From his last week’s recommendations, Indraprastha Medical Corp jumped 6% from
Rs.39 to Rs.41.5 while Bajaj Corp jumped 4% from Rs.382 to Rs.396 in just 1 week!

BEST BET

Procter & Gamble Hygiene & Health Care Ltd

(BSE Code: 500459) (CMP: Rs.10011.95) (FV: Rs.10)
By Amit Kumar Gupta
Founded in 1964, Mumbai-based Procter & Gamble Hygiene & Health Care Ltd (P&G) manufactures and sells branded
packaged fast moving consumer goods (FMCG) in the femcare and healthcare businesses. It offers ayurvedic products
and sanitary napkins and is also involved in the manufacture, trade and marketing of health and hygiene products. Its
brands include Duracell, Gillette, Head & Shoulders, Oral-B, Pampers, Pantene, Tide, Vicks, Wella, Whisper, etc. Its
product portfolio comprises ointments and creams, cough drops, tablets, personal products and toilet preparations, etc,
which are sold through retail operations including mass merchandisers, grocery stores, membership club stores, drug
stores, department stores and high frequency stores.
The management has been aggressive in the recent quarters on increase in ad spends, new launches and price cuts,
wherever required. Arresting the dip in Whisper’s market share, it achieved growth in this segment over the past six
months. The distribution of Vicks and Whisper increased to 3.5 million outlets and 2 million outlets respectively, from 2
million and 1.4 million outlets four years ago. Vicks has continuously gained market share. Its new product ‘Vicks Baby
Rub’ which was launched in FY18 is also doing very well.
The recent change at the CEO level has made P&G more dynamic than in Financials:
the recent past. P&G intends to launch its sanitary napkin recycling Particulars FY18 FY19E FY20E
program in 10 major cities across the world by 2030 with India being Book Value (Rs.) 248.2 298.1 357.5
one of the priority countries with launch in 2019. It also aims to use RoE (%) 56.3 59 58.5
100% renewable or recyclable materials for its products and packaging,
RoCE (%) 60.2 60.4 60.2
cut greenhouse gas emissions by half, power its plants with 100%
P/E (x) 84.4 63.3 51.9
renewable energy and source at least 5 billion liters of water from
circular sources and design products. P/BV (x) 40.1 33.3 27.8
While we wait to see if 20% sales growth witnessed in Q1FY19 is sustainable, there seems little doubt that revenue and
earnings growth prospects of the company are seeing a revival after a couple of tepid years. While valuations of 51.7x
FY20 EPS implies that the near-term upside is limited, two factors make P&G an attractive long-term core holding: (1)
huge category growth potential in the Feminine Hygiene segment (~67% of sales) and potential for market share
growth because of its considerable moats; and (2) potentially huge margin gains from premiumization in Feminine
Hygiene over the longer term. Increasing pace of distribution expansion, continuing strong pace of category
development efforts in schools to boost awareness and growth, rising ad spends after a lull in preceding years, healthy
pipeline of new products and willingness to take price cuts whenever required to boost growth are all encouraging
developments that should aid rapid growth for P&G over the long term.
Technical Outlook: The P&G share looks good on the daily chart for medium-term investment. It has broken out of the
ascending triangle pattern formed on the daily chart. The stock trades above all important moving averages like the 200
DMA level on the daily chart. Start accumulating at this level of Rs.10011.95 and on dips to Rs.9500 for medium-to-long
term investment and a possible price target of Rs.10250+ in the next 6 months.

A Time Communications Publication 6

 STOCK WATCH
By Amit Kumar Gupta

Bank of Baroda
(BSE Code: 532134) (CMP: Rs.120.95) (FV: Rs.2)
Incorporated in 1908, Vadodara-based Bank of Baroda (BoB) offers various banking products and services to individual
and corporate customers. It offers current, fixed, recurring and savings deposit products as well as NRI account deposits
and foreign currency deposits. It also provides various types of loans such as home loans, education loans, vehicle loans,
debit card EMI loans, etc, as well as advances against securities and jewellery and loans for public issues/IPOs. It offers
capital expenditure, bridge and short-term corporate loans as well as loans for micro, small and medium enterprises
(MSMEs). It provides working capital finance, term finance, commercial vehicle finance, export and import finance, bill
finance, lines of credit, loans against rent receivables, term finance, loans for takeover of accounts, foreign currency
credit, supply chain finance, etc; overdrafts and non-fund based services; and debit, prepaid and credit cards. In addition,
it offers pensions and other government schemes to rural and agricultural customers; insurance products; mutual fund
products; merchant banking, cash management, remittance, collection, electronic clearing, correspondent banking,
treasury, wealth management and capital market services as well as digital banking services. As at 31 March 2018, it
operated 5,467 branches in India and 106 branches abroad.
BoB’s board has approved the merger with
Dena Bank and Vijaya Bank with the following
share swap ratios: (a) 402 equity shares of BoB One more successful year for
for every 1,000 equity shares of Vijaya Bank; TF+ subscribers…
and (b) 110 equity shares of BOB for every
1,000 equity shares of Dena Bank. While the “Think Short-Term Investment…
process of merging multiple entities will present Think TECHNO FUNDA PLUS”
its own set of challenges in the near term, in our
Techno Funda Plus is a superior version of the Techno Funda column
view BoB stands to benefit over the long term.
that has recorded near 90% success since launch!
In our view, the swap ratio is favorable to BoB
shareholders. Based on the share price on the Every week, Techno Funda Plus identifies three fundamentally
day of the merger announcement, the proposed
sound and technically strong stocks that can yield handsome returns
swap ratios imply a discount of ~30%/~11% to
against their peers in the short-to-medium-term.
Dena Bank/Vijaya Bank. While the swap ratio
appears fair in respect to Dena Bank owing to
the multiple challenges faced by the bank, we Most of our recommendations have fetched excellent returns to our
believe Vijaya Bank shareholders have nothing subscribers. Of the 156 stocks recommended between 11 January
to gain from this merger. 2016 and 2 January 2017 (52 weeks), we booked 2-43% profit in 125
stocks, 28 triggered the stop loss of 1-21%.
The book value of the combined entity rose
8.2% to Rs.184 in Q2FY19. The merged entity
Of the 156 stocks recommended between 9 January 2017 and 1
will have a tier 1 ratio of 10.1% with a total CAR
(capital adequacy ratio) of 12% (11.9% for BoB January 2018 (52 weeks), we booked 7-41% profit in 124 stocks, 30
standalone). The capitalization level will be triggered the stop loss of 2-18%.
aided further by the likely capital infusion,
which will provide adequate support for Of the 99 stocks recommended between 8 January 2018 and 20
growth. August 2018 (33 weeks), we booked 3-41% profit in 61 stocks, 11
triggered the stop loss of 4-8% while 27 stocks are still open.
The merger will create the third largest lender
in the country, with an advances and deposits
If you want to earn like this,
market share of 6.9% and 7.4% respectively.
Retail book of the merged entity will increase to subscribe to TECHNO FUNDA PLUS today!
~20% of the total loans (~16% for BoB For more details, contact Money Times on
standalone) due to Vijaya Bank’s retail book. 022-22616970/22654805 or [email protected].
The combined entity will have a CASA (current Subscription Rate: 1 month: Rs.2500; 3 months: Rs.6000;
account, savings account) mix of 33.6%, with a 6 months: Rs.11000; 1 year: Rs.18000.
CD (cash deposit) ratio of 70.7% (71.4% for BoB

A Time Communications Publication 7

standalone).
While BoB has a widespread network, Dena Bank and Vijaya Bank are more regional-focused banks. This will help BoB
to strengthen its presence in the western, southern and north-eastern regions. The branch count of the combined entity
will increase to 9,511 (second largest amongst all banks). The employee base will rise to 86,473 v/s 94,907 of HDFC
Bank (the second largest lender).
BoB has shown early signs of turnaround in recent quarters and the management's focus on cleaning up the balance
sheet and improving provisioning coverage has further laid the foundation for sustainable growth. Such a large-scale
merger will present its own set of challenges in the near term, but the recovery in the NPL (non-performing loans) cycle,
credit growth and the prospects of adequate capital infusion from the government will aid smoother integration and
help in returning to normal operations. The purging of bad loans over the past few years has considerably improved
transparency levels, and thus, will preempt any post-merger shocks for BoB. Therefore, we expect BoB to benefit from
the merger in the long term. We will look to revise our estimates on attainting more clarity on the growth and earnings
trajectory.
Technical Outlook: The BoB share looks good on the daily chart for medium-term investment. It has broken out of the
downward channel pattern formed on the daily chart. The stock trades below all important moving averages like the
200 DMA level on the daily chart.
Start accumulating at this level of Rs.120.95 and on dips to Rs.105 for medium-to-long term investment and a possible
price target of Rs.150+ in the next 12 months.
*****

Marico Ltd
(BSE Code: 531642) (CMP: Rs.381.50) (FV: Re.1)
Incorporated in 1988, Mumbai based Marico Ltd manufactures and markets consumer products such as coconut oil, hair
oils, refined edible oils, anti-lice treatments, fabric care, functional and other processed foods, hair creams and gels, hair
serums, shampoos, shower gels, hair relaxers and straighteners, deodorants and other related consumer products and
by-products. It markets its products under the following brands: Parachute, Nihar, Saffola, Hair & Care, Revive, Mediker,
Livon, Set-wet, Fiancée, Hair Code, Caivil, Hercules, Black Chic, Code 10, Ingwe, X-men, Thuan Phat, etc. Its distribution
network comprises regional offices, carrying and forwarding agents, redistribution centers and distributors.
The overall demand environment in Q3FY19 was good with market share gains across key portfolios. The positive
sentiment during the quarter was led by festive season and expectations of a stimulus from favourable government
initiatives. The rural segment continues to do well on the back of good demand. Meanwhile, growth in urban areas was
driven by newer channels. During the quarter, Parachute grew healthily while Saffola remained subdued. Its new
portfolios i.e. Premium Hair Nourishment, Male Grooming and Healthy Foods grew in line with expectations. It launched
a couple of new products during the quarter like ‘Hair & Care Dry Fruit Oil’ and ‘Saffola FITTIFY Gourmet’.
Marico’s international business saw decent growth led by portfolio diversification in Bangladesh and enhanced GTM (go-
to-market) initiatives in Vietnam, supported by reasonable growth in MENA (Middle East and North Africa).
Three factors underpin our confidence on Marico’s earning prospects: (a) likely benign raw material environment over
the next 18-24 months (Copra accounts for 40-50% of the material cost); (b) strong performance of Parachute volumes
in recent quarters and healthy growth prospects in the VAHO segment; and (c) good traction being witnessed on new
product development. Crucially, at a time when both sector multiples as well as ability of peers to pass on the emerging
material cost pressures are under question, Marico provides far higher visibility compared to its peers. Moreover, with
over 30% of sales coming from rural (management’s target is 40%) and particularly with its technological edge over
peers, Marico is emerging as an interesting play on rural growth.
Technical Outlook: The Marico share looks good on the daily chart for medium-term investment. It has broken out of
the spike pattern formed on the daily chart. The stock trades near its all-time high and above all important moving
averages like the 200 DMA level on the daily chart.
Start accumulating at this level of Rs.381.5 and on dips to Rs.350 for medium-to-long term investment and a possible
price target of Rs.450+ in the next 12 months.

A Time Communications Publication 8

 STOCK BUZZ

JHS Svendgaard Laboratories Ltd

(BSE Code: 532771) (CMP: Rs.31.90) (FV: Rs.10)
By Subramanian Mahadevan
JHS Svendgaard Laboratories Ltd (JHS) started as a toothbrush manufacturer in 1997 and gradually ventured into
toothpastes and other oral products with manufacturing locations in North India. It is primarily engaged in the
manufacture of oral care products such as toothpaste, toothbrushes, whitening gels, whitening mouth rinse and
effervescent tablets. Its anchor-free technology enabled toothbrush machine has been imported from Belgium while
state-of-the-art toothpaste manufacturing machinery has been imported from Korea and Sweden.
JHS hit the capital market in
2006 with its IPO priced at
Rs.58/share, which was The new ratnas at Panchratna!
oversubscribed two times. In After the sad demise of Mr. G. S. Roongta on 2nd July 2017, we were at a loss to
terms of sectoral opportunity, replace our crown jewel. But so good is our team of analysts that their first five
the total size of the Indian oral issues of Panchratna have already clocked in results.
care market is ~Rs.9000 crore
is dominated by toothpaste Given below is their maiden score
(75% share, Rs.6750 crore) and and we are sure this team will improve as we go along.
toothbrush (17% share,
Sr. Date Scrip Name Recom. Highest % Gain
Rs.1500 crore). The toothpaste
No. Rate (Rs.) since (Rs.)
segment is dominated by key
1 October 2017 Stock A 74.50 147.80 98
incumbents – Colgate (55.6%
Stock B 37.05 44.10 19
market share), HUL (19.2%) Stock C 90.95 100 10
and Dabur (15.5%). With over Stock D 77.70 94.40 21
300 million Indians without any Stock E 41.70 83.85 101
access to oral care products, 2 January 2018 Stock F 74.80 86 15
Colgate has cornered this Stock G 42 44.80 7
population by reaching out to Stock H 60.85 63.90 5
125 million school children Stock I 90.45 713.70 689
across the country. Second Stock J 57.30 59.70 4
movers like JHS will largely 3 April 2018 Stock K 54.55 63.10 16
benefit from the huge Stock L 29.95 37.75 26
groundwork undertaken by Stock M 65.65 81.85 25
Colgate to develop and expand Stock N 99.70 125 25
this category. Stock O 143.05 186 30
From a near-death experience 4 July 2018 Stock P 76.60 86 12
and litigation issues resulting in Stock Q 59.05 66.40 12
a one-time settlement with Stock R 46.20 52.20 13
Procter & Gamble, JHS has Stock S 48.45 54.50 12
emerged stronger over the last Stock T 82.10 99.05 21
decade and has reinvented 5 October 2018 Stock U 33.25 45 35
itself in a new avatar by Stock V 69.70 79.30 14
launching its own branded Stock W 70.70 96.30 36
products to garner a larger pie Stock X 97.20 114.80 18
in the oral care segment. It has Stock Y 55.45 68.15 23
won multi-year marquee clients
like Dabur, Patanjali, etc. It has The latest edition of ‘Panchratna’ was released on 1 January 2019.
enhanced its toothpaste So hurry up and book your copy now!
manufacturing capacity to 175 Subscription Rate: Rs.2500 per quarter, Rs.4000 for two quarters & Rs.7000 per annum.
million tubes from 90 million You can contact us on 022-22616970, 22654805 or [email protected].
tubes, which is now aligned
with its manufacturing cum
packaging capacity of 28,000 TPA.

A Time Communications Publication 9

Investors should participate in the growth cum turn-around story of JHS considering the tailwinds of the secular oral
care sector growth, improving market share of the company and capacity expansion. Buy on every decline for good
double-digit returns in the next two years.

MARKET REVIEW

Macro-data will dictate market trend

By Devendra Singh
The Sensex advanced 314.74 points to settle at 36009.84 while the Nifty gained 67.6 points to close at 10794.95 for the
week that ended on Friday, 11 January 2019.
On macro-economic data, the Nikkei Manufacturing Purchasing Managers’ Index (PMI) compiled by IHS Markit plunged
to 53.2 in December 2018. The government estimates gross domestic product (GDP) growth at 7.2% in FY2018-19 as
against 6.7% in FY2017-18.
Growth in real GVA at basic constant prices (2011-12) was expected at 7% in FY2018-19 as against 6.5% in FY2017-18.
The sectors that are estimated to register over 7% growth include electricity, gas, water supply and other utility
services, construction, manufacturing, public administration, defence and other services.
The ‘January 2019 Global Economic Prospects’ report released by the World Bank forecasts India’s GDP to grow at 7.3%
in FY2018-19 and 7.5% in the following two years attributing it to an upswing in consumption and investment. China’s
economic growth is projected to slow down to 6.2% in 2019 and 2020 and 6% in 2021. In 2018, the Chinese economy is
estimated to have grown by 6.5% v/s India’s 7.3%.
“In 2017, China with 6.9% growth was marginally ahead of India’s 6.7% mainly because of the slowdown in the Indian
economy resulting from demonetisation and implementation of the GST,” the report said.
“India’s growth outlook is still robust. India is still the fastest growing major economy,” said Ayhan Kose, World Bank
Prospects Group Director.
“The fact that the Indian economy is able to deliver growth slightly above its potential is a very good sign. India’s growth
performance is quite impressive. Year after year, it has delivered strong numbers around its potential growth,” he added.
Private consumption is projected to remain robust and investment growth is expected to continue as the benefits of
recent policy reforms begin to materialize and credit rebounds. Strong domestic demand will widen the current account
deficit (CAD) to 2.6% of GDP next year. Inflation is projected to rise somewhat above the midpoint of the RBI’s target
range of 2-6%, mainly owing to energy and food prices.
According to the ‘PwC-FICCI India Manufacturing Barometer: Building Export Competitiveness’ survey, the GST is a step
in the right direction and will usher in growth and investment in the country. It expects the Indian economy to grow at
an average rate of 7% or more in the coming year.
Mohammad Athar, Partner and Leader, Industrial Infrastructure at PwC, said “GST is an enabler of growth which will
impact both domestic markets and export growth. Despite the initial implementation hurdles, India Inc. is positive and
will improve with time and benefit in the long run.”
Puneet Dalmia, Chairman of FICCI Manufacturing Committee and Managing Director, said “Despite being the sixth
largest economy in the world soon to take over the UK to be the fifth, India over relies on its domestic markets. India is a
very large domestic market, very small portion is export and people invest in India primarily to cater to the domestic
market. That should change over time. India is still under 2% of global exports and we need to have a larger market
share in exports.”
K Georgieva, World Bank CEO, said “At the beginning of FY2018, the global economy was firing on all cylinders but it lost
speed during the year and the ride could get even bumpier in the year ahead.”
USA and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for
months. The two economies have imposed tit-for-tat duties on each other’s goods although there were signs of progress
as the two countries prepared to enter talks in Beijing last week. According to the World Bank, growth in USA is likely to
slow down to 2.5% in 2019 from 2.9% last year.
The World Bank projects emerging market economies to grow at 4.2% in 2019 and advanced economies to grow at 2%.
Key index rallied on Monday, 7 January 2018, on positive buying of equities. The Sensex closed 155.06 points higher at
35850.16.

A Time Communications Publication 10

Key index gained on Tuesday, 8 January 2019, ahead of Q3 results of companies. The Sensex closed 130.77 points higher
at 35980.93.
Key index surged on Wednesday, 9 January 2019, on extended buying by market participants. The Sensex closed 231.98
points higher at 36212.91.
Key index fell on Thursday, 10 January 2019, on US government shutdown cues. The Sensex closed 106.41 points lower
at 36106.5.
Key index settled lower on Friday, 11 January 2019, on global cues. The Sensex closed 96.66 points lower at 36009.84.
National and global macro-economic figures will dictate the movement of the markets and influence investor sentiment
in the near future. On the Rupee scenario, market participants will closely watch the Indian rupee trend against the US
Dollar.
The government will release data based on WPI and CPI for urban and rural India for December 2018 by mid-January
2019. The RBI’s next monetary policy review meet is scheduled on 5 February 2019.

EXPERT EYE

SagarSoft (India) Ltd: Undervalued IT stock

(BSE Code: 540143) (CMP: Rs.111.40) (FV: Rs.10)
By Vihari
Promoted by Sreekanth Reddy Sammidi in 1996, Sagarsoft (India) Ltd is an Information Technology (IT), Consulting and
next generation Digital Solutions company that offers business, technology and related services to global enterprises. It
delivers critical applications targeted at Retail, Pharmaceutical, Entertainment, Digital Marketing, Financial Services, E-
Commerce, IT and Insurance industries. It primarily operates through Onsite, Offsite, Offshore and Hybrid delivery
models. Its services span mobile competency, enterprise web application, in-depth research and data mining, social
media, analytics and business intelligence (BI), testing and quality assurance, workforce solutions, support solutions and
technology footprint. It hit the capital markets through its IPO in June 2000.
For FY18, Sagarsoft reported 469% higher PAT of Rs.6 crore on 127% higher revenue of Rs.37 crore and an EPS of Rs.11.
During Q2FY19, it reported 195% higher PAT of Rs.1.8 crore on 59% higher revenue of Rs.10.3 crore and an EPS of
Rs.3.2. For H1FY19, it reported 221% higher PAT of Rs.3.1 crore on 64% higher revenue of Rs.20.2 crore and an EPS of
Rs.5.5. It paid 25% dividend for FY18.
With an equity capital of Rs.5.6 crore and reserves of Rs.11.5 crore, Sagarsoft’s share book value works out to Rs.33. It is
a debt-free company. The value of its gross block is Rs.15 crore. Cash and loans given are Rs.6 crore. The promoters hold
52.1% of the equity capital, DIs hold 7.4%, PCBs hold 8.6% and foreign entities hold 0.2%, which leaves 31.7% stake
with the investing public.
Sagarsoft’s future looks exciting and positive as the IT industry is evolving dramatically in terms of scale and complexity.
The sector will leverage its collaboration, innovation, technology shifts and build a transformational agenda for India.
The IT sector continues to impact India’s economic growth through job creation, foreign exchange earnings, exports and
positions India as a global partner.
Sagarsoft’s strategy for long-term growth is to strengthen its relationship with existing clients through a customer-
centric approach and expand its market by diversifying into newer businesses and services. It has successfully navigated
through technology cycles, adapted to build relevant new capabilities and helped clients realise the benefits of the new
technology.
The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is a
preferred sourcing destination across the world, accounting for ~55% of the $185-190 billion global services sourcing
business in 2017-18. Indian IT and ITeS companies have set up over 1,000 global delivery centres (GDCs) in about 80
countries across the world.
The Indian IT & ITeS industry grew to $167 billion in 2017-18. Indian IT exports grew to $126 billion in 2017-18 while
domestic revenues (including hardware) grew to $41 billion. IT sector spending in India is expected to grow over 9% to
$87.1 billion in 2018. The digital segment is expected to constitute around 38% of the forecasted $350 billion industry
revenue by 2025.
SagarSoft is a rapidly growing company that operates across various domains serving a unique and diverse portfolio of
Fortune 500 companies and premium clientele. It blends its execution methodologies and engagement models to suit

A Time Communications Publication 11

different project needs and deliver software through a globally interlinked process model. It has vast experience in
mobility, high technology application suites, cross platform, cloud service delivery across Linux, Windows and Analytic
frameworks, best of breed open source, web centric and social media. Its consistent track record of successful projects
deployed in different industry sectors serves as a strong foundation for defining a project plan that suits specific
business needs and adheres to defined constraints and infrastructure and resource limits.
Based on its current going, SagarSoft is expected to notch an EPS of Rs.16 in FY19. At the CMP, the stock trades at a
forward P/E of 7x. A conservative P/E of 9x will take its share price to Rs.144 in the medium term. The stock’s 52-week
high/low is Rs.198/64.

STOCK PICK
DCM Shriram Ltd
(BSE Code: 523367) (CMP: Rs.351.85) (FV: Rs.2)
By Laxmikant Bhole
Company Overview: DCM Shriram Ltd (DCM) is a leading business conglomerate with a group turnover of ~Rs.7000
crore. It operates through the following business segments: (i) Agri-Rural (Fertilizers, Sugar, Farm Inputs Marketing,
Crop Care Chemicals, Hybrid Seeds); (ii) Chlor-Vinyl (Caustic Soda, Chlorine, Calcium Carbide, PVC resins, PVC
Compounds, Power, Cement); and (iii) Value-Added Products (Fenesta Building Systems - UPVC Windows and Doors). It
has manufacturing facilities for Fertilizers, Chloro Vinyl and Cement in Rajasthan and for Chlor-Alkali in Gujarat. It
operates coal-based captive power facilities in Rajasthan (133 MW) and in Gujarat (115 MW). Its Urea plant has a
production capacity of 3,79,000 TPA and Chlor-Alkali capacity of 4,50,000 TPA. Its Sugar factories at Ajbapur, Rupapur,
Hariawan and Loni in Uttar Pradesh have a combined installed capacity of 33,000 TCD (tonnes crushed daily) and
power-generating capacity of 115 MW. Its Hybrid seed operations (Bioseed), which started in Hyderabad, have a global
footprint with presence in Vietnam, Philippines and Indonesia. Its Fenesta window fabrication units are located in
Mumbai, Hyderabad and Chennai. All its main line locations/products are ISO:9001, ISO:14001 and OHSAS:18001
certified.
DCM is on an expansion spree. It plans to enhance its cane crushing capacity from 33,000 TPD to 38,000 TPD, power
generation capacity from 111 MW to 141 MW and overall distillery capacity from 150 KPD to 350 KPD. Its new power
plant, which is likely to be commissioned in October 2019, will reduce power costs and the additional power and
distillery capacity will provide stability to its sugar business. Its ethanol sales are progressing satisfactorily. In its
Chemical business, it plans to add 332 TPD capacity at its Caustic Soda plants in Kota and Bharuch and 60 TPD capacity
at its Aluminum Chloride plant.
Key Positives:
1. Diversified business model with most segments showing excellent growth
2. Market leader in most of its products
3. Encouraging industry outlook in most of its business segments
Concerns:
1. Higher cane sugar crushing and lower realization for this year
2. Selling prices of caustic soda are firm in line with international prices. However, low prices of Chlorine and currency
appreciation will impact the overall price realization.
3. Currency fluctuations
4. Coal prices are on the rise since a few months, which creates some margin pressure in its chemicals business.
Performance Review: DCM reported an EBIDTA of Rs.660.68 crore in H1FY19 v/s Rs.648.37 crore in H1FY18 with an
EPS of Rs.24. Its Chlor-Vinyl segment constituted 30% / 71% of the total revenue/ PBDIT; sugar business 28% / 13%;
Agri-Input business 32% / 12%; and other businesses 11% / 4%. Its Chlor-Vinyl business reported 25% higher revenue
while its sugar business de-grew 4%. Shriram Farm Solutions (SFS) de-grew 14%, the Bioseeds segment de-grew 5.6%
while the fertilizers segment grew 30.3%.
During Q2FY19, revenue from the Plastics segment dropped by 7% due to lower volumes resulting from a 10-day plant
shut-down. PBIT fell 60% on account of lower volumes, higher input costs and shut-down expenses. Rising input costs
may put margins under pressure going forward.

A Time Communications Publication 12

During the quarter, sugar revenues
fell 23% while its distillery
operated at full capacity. SFS’ MID-CAP TWINS: New promise & hope!
earnings have improved now on
Mid-Cap Twins is now steered by Mr. Dildar Singh Makani,
account of higher volumes and
a stock market veteran of over 30 years and an avid corporate watcher.
better margins of value-added
He has several profitable investment ideas to his credit.
products. The management expects
value-added products to boost A fundamental analyst, Mr. Makani will hopefully reinvigorate Mid-Cap Twins to
revenue and profitability in the the high level Money Times products are known for.
medium term.
Here’s the performance review of the stocks recommended since January 2018
Despite Q2 being an off-season for
the Bioseeds business, DCM Sr. Scrip Name Recomm. Recomm. Highest % Gain
reported 19% higher sales of Rs.69 No. Date Price since (Rs.)
crore in this segment, led by Corn (Rs.)
and Hybrid Paddy. However, its 1 Stock A 01-01-18 59.25 71.90 21
international business revenue was 2 Stock B 01-01-18 72.85 82.20 13
down 38% at Rs.14 crore. Its 3 Stock C 01-02-18 234.90 302.90 29
Fertilizers business reported 26% 4 Stock D 01-02-18 164.25 335 104
growth in revenue while its Fenesta 5 Stock E 01-03-18 575.15 635.25 10
business reported 18% growth in 6 Stock F 01-03-18 211.80 216.80 2
H1FY19. The overall order booking
7 Stock G 01-04-18 45.80 58.20 27
was up 16% YoY. Its Cement
8 Stock H 01-04-18 51 57.35 12
business reported 10% lower sales
in Q2FY19. 9 Stock I 01-05-18 107.55 117.70 9
10 Stock J 01-05-18 320.45 360 12
DCM is an investor-friendly
11 Stock K 01-06-18 46.9 76.60 63
company with an excellent dividend
track record of more than a decade 12 Stock L 01-06-18 71.25 72.2 1
and a good 20% dividend payout 13 Stock M 01-07-18 109.05 116 6
ratio. 14 Stock N 01-07-18 248.6 348 40
DCM recently bought back 15 Stock O 01-08-18 433.4 433 -
64,73,841 shares 16 Stock P 01-08-18 312.7 372.55 19
17 Stock Q 01-09-18 575.5 667.75 16
priced at Rs.386/share. As a result,
the promoter stake increased from 18 Stock R 01-09-18 252.2 257.75 2
63.88% to 66.53%. None of the 19 Stock S 01-10-18 84 92.85 11
promoter holding is pledged, which 20 Stock T 01-10-18 236.4 368.35 56
shows their confidence in the 21 Stock U 01-11-18 233.4 257.4 10
company. DCM exhibits a strong 22 Stock V 01-11-18 951.25 1008 6
balance sheet with a small equity
capital of Rs.31.47 crore, reserves of
The latest edition of ‘Mid-Cap Twins’ was released on 1 January 2019.
Rs.3145 crore and a comfortable Happy reading & happier money making
debt:equity ratio of 0.5. With its
as Mid-cap Twins enters its third year!
chemicals business now
contributing significantly to the Attractively priced at Rs.2000 monthly, Rs.11000 half yearly and Rs.20000 annually,
overall business, its P/BV ratio of ‘Mid-cap Twins’ will be available both as print edition or online delivery.
1.8x seems attractive.
Common Sense Analysis: DCM’s primarily operates through three segments. Its agri business has huge potential with
FY19 being an election year as the government is likely to increase the budget for agri spend. Also, the sugar exports
permission granted by the government is a big positive for DCM since it is a leader in this space.
Since the consumption of fuel in India is rising each day, the government has already approved mixing a higher
proportion of Ethanol with petrol. This is another positive trigger for DCM’s growth.
Further, the promoters have bought additional ~2.65% stake over the last 6 months from the open market at nearly 9%
higher price than the CMP. This clearly shows that the stock is undervalued with respect to the company’s business
potential.

A Time Communications Publication 13

Summary: DCM reported a satisfactory operational performance for FY18 and H1FY19, driven by the robust
performance of its Chemicals and Plastics business. Sugar prices are a cause of concern. However, its distillery business
provides stability to the Sugar division. A better monsoon this year will augur well for the Agri input industry in India,
especially Urea.
DCM is focused on turning around its international Bioseeds business. Given its robust cash generation, strong balance
sheet and diversified business model, DCM is expected to do perform well in future.
The stock has fallen sharply from its recent high of Rs.484 recorded in September 2018. However, looking at the strong
fortune of the company, investors should accumulate this stock from a long-term perspective. The stock’s 52-week
high/low is Rs.628/ Rs.222.5.
Conclusion: With FY19E EPS of Rs.48 and a conservative P/E of 8x or 9x, the stock is likely to fetch around 20% returns
in the next 12-18 months. Investors can buy this stock on dips in a staggered manner for a price target of Rs.410-420.
Hold the stock with conviction for good returns.
Courtesy: www.profitpokket.com

TECHNO FUNDA
By Nayan Patel

Dynamic Industries Ltd

(BSE Code: 524818) (CMP: Rs.97.05) (FV: Rs.10)
Founded in 1989, Dynamic Industries Ltd (DIL) manufactures and sells dyes, chemicals and pigments. It is situated at
Gujarat Industrial Development Corporation (GIDC), Vatva in Ahmedabad. Its product palette primarily includes acid,
direct and reactive dyes, which are a benchmark in quality. It exports to Germany, USA, South Korea, China, Taiwan,
Italy, Turkey, Switzerland, Russia, Pakistan, Spain, Brazil and Argentina.
With an equity capital of Rs.3.03 crore and reserves of Rs.40.35 crore, DIL’s share book value works out to Rs.136 and its
P/BV ratio stands at 0.7x, which is attractive for this sector. The promoters hold 48.43% of the equity capital, which
leaves 51.57% stake with the investing public. Renowned small-cap investor Subramanian P. holds 4.68% stake in the
company.
For Q2FY19, DIL reported 171% higher PAT of Rs.1.35 Financial Performance: (Rs. in crore)
crore on 44% higher sales of Rs.18.39 crore and an EPS Particulars Q2FY19 Q2FY18 H1FY19 H1FY18 FY18
of Rs.4.5. For H1FY19, it reported 123% higher PAT of Sales 18.39 12.8 39.54 27.01 59.06
Rs.2.61 crore on 46% higher sales of Rs.39.54 crore and PBT 1.82 0.8 3.56 1.7 4.28
an EPS of Rs.8.6. It paid 15% dividend for FY18. Tax 0.47 0.3 0.95 0.53 1.28
Currently, the stock trades at a P/E of 6.6x and at around PAT 1.35 0.5 2.61 1.17 3
32% discount to its 52-week high of Rs.142. The stock EPS (in Rs.) 4.46 1.65 8.61 3.87 9.91
looks attractive at the current level based on its
performance parameters. Investors can buy this stock with a stop loss of Rs.80. On the upper side, it could zoom to
Rs.150-175 in the medium-to-long term.
*****

Akar Auto Industries Ltd

(BSE Code: 530621) (CMP: Rs.43.80) (FV: Rs.5)
Incorporated in 1989, Aurangabad-based Akar Auto Industries Ltd (AAIL) manufactures and sells hand tools, auto leaf
springs, parabolic springs and commercial automotive forgings. It offers spanners such as open-ended jaw, ring and
combination spanners; carpenter/striking tools including pincers and tin cutters, striking tools, planes and T-bar cramps
and saws; and leather tool aprons. It also provides automotive/construction tools comprising vices, chisels, clamps,
hacksaws, lubricating tools, tubular box spanners, bearing pullers and punches; wrecking bars and nail pullers; pipes,
wheels and filter wrenches; packaging products; electrical tools such as pliers, screw drivers; and electronic and surgical
tools. It exports to Europe, USA, Japan, Australia and other countries worldwide. Its marquee clients include Ashok
Leyland, Bajaj Auto, BHEL, Force Motors, Tata Motors, Mahindra & Mahindra, Kirloskar, Piaggio, Greaves, etc.

A Time Communications Publication 14

With an equity capital of Rs.5.39 crore and reserves of Rs.25.03 crore, AAIL’s share book value works out to Rs.26 and its
P/BV is reasonable at 1.7x. The promoters hold 73.06% of the equity capital, which leaves 26.94% stake with the
investing public.
For Q2FY19, AAIL reported 44% higher PAT of Rs.1.41 Financial Performance: (Rs. in crore)
crore on 33% higher sales of Rs.82.48 crore and an EPS Particulars Q2FY19 Q2FY18 H1FY19 H1FY18 FY18
of Rs.1.3. For H1FY19, it reported 55% higher PAT of Sales 82.48 61.99 150.57 107.56 241.45
Rs.2.46 crore on 40% higher sales of Rs.150.57 crore PBT 1.93 1.56 3.41 2.48 4.97
and an EPS of Rs.2.3. Its EPS has grown at 23% CAGR Tax 0.53 0.58 0.95 0.90 1.77
over the last five years! It paid 11% dividend for FY18. PAT 1.41 0.98 2.46 1.59 3.20
Its PEG (P/E to growth) ratio is just 0.5x, which is very EPS (in Rs.) 1.31 0.91 2.28 1.47 2.97
attractive.
Currently, the stock trades at a P/E of 12x and is available at around 47% discount to its 52-week high of Rs.82.8. The
stock looks attractive at the current level based on its performance parameters. Investors can buy this stock with a stop
loss of Rs.33. On the upper side, it could zoom to Rs.75-80 in the medium-to-long term.

BULL’S EYE

KEI Industries Ltd

(BSE Code: 517569) (CMP: Rs.356.80) (FV: Rs.2)
By Pratit Nayan Patel
Company Background: Incorporated in 1968, New Delhi based KEI Industries Ltd (KEI) manufactures and supplies
power and other industrial cables. It is ranked amongst the top three cable manufacturing companies in India. It
operates through the following segments: Cables; Stainless Steel Wire; and Turnkey Projects. It offers extra high voltage
(EHV) cables; high and medium voltage (HMV) cables; high tension (HT) and low tension (LT) cables; control and
instrumentation cables; speciality cables; flexible and house wires; submersible cables; marine and offshore cables; solar
cables; thermocouple extension/compensating cables; PVC/poly wrapped winding wires; stainless steel wires; and
winding wires. It also provides rubber cables, battery cables, panel wiring, fire wires, motor coil leads and low
temperature installations. In addition, it offers integrated design, engineering, material procurement, field servicing,
construction and project management services for project management and control, transmission systems, power
generation projects, substations, cable solutions, overhead transmission lines, infrastructure and civil works. Its
products find application in various industries like power, oil refineries, railways, automobiles, cement, steel, fertilizers,
textiles and real estate.
Financials: With an equity capital of Rs.15.78 crore and reserves of Rs.654.87 crore, KEI’s share book value works out to
Rs.76.7. The promoters hold 45.93% of the equity capital, Mutual Funds hold 11.39%, FPIs hold 10.84% and well-known
investor Ashish Kacholia holds 2.75%, which leaves 29.09% stake with the investing public.
Performance Review: For FY18, KEI reported Performance Review: (Rs. in crore)
55% higher PAT of Rs.144.76 crore on 24% higher
sales of Rs.3503.12 crore and an EPS of Rs.18.5. For Particulars Q2FY19 Q2FY18 H1FY19 H1FY18 FY18
Q2FY19, it reported 45% higher PAT of Rs.41.37 Total Income 996.79 753.81 1880.69 1577.34 3465.5
crore on 32% higher sales of Rs.996.8 crore and an PBT 63.13 41.84 113.4 82.27 204.49
EPS of Rs.5.3. For H1FY19, it reported 31% higher
Tax 21.76 13.33 39.65 26.29 59.7
PAT of Rs.73.55 crore on 19% higher sales of
Rs.1880.69 crore and an EPS of Rs.9. Its bottom- PAT 41.37 28.5 73.55 55.98 144.8
line has grown at 62% CAGR over the last 3 years. EPS (Rs.) 5.27 3.66 9.38 7.19 18.54
It paid 50% dividend for FY18.
Industry Overview: According to IBEF, India is the world’s third largest producer and fourth largest consumer of
electricity in the world. India recorded electric production of 1201.5 billion units (BU) in FY18, up 56% YoY. The power
transmission sector in India is crucial for electricity supply. The recently launched ‘Saubhagya’ scheme, which aims at
electrifying all rural households, coupled with the rising share of renewable capacity demands addition in India’s
transmission infrastructure. The demand for energy is bound to rise in the years to come on the back of sustained
economic growth, rising urbanisation and rising per capita energy consumption.

A Time Communications Publication 15

Over the past decade, the cables and wires industry has evolved from a small-scale to a large-scale industry. The
government’s focus on ‘Power for All’, rural electrification and improving infrastructure coupled with the rising number
of households and improving life-styles has propelled the demand for domestic cables/wires and electrical items. This
segment has grown 13% over the past 5 years and is expected to grow 14.5% over FY17-22. The organised sector, which
currently accounts for ~60% of the cables and wires industry, is expected to rise to 66% by FY22.
Power & Infrastructure:
Infrastructure spending in India Released on 1st January 2019
is estimated at $1 trillion over
the next 5 years. As a result, the
demand for cables is likely to
Winners of 2019
receive a significant boost. The Stocks set to perform with quarterly reviews!
demand for cables is estimated
at $3 billion. Here is the Performance Review of ‘Winners of 2018’
EPC: The EPC industry is Sr. 29-12-17 High of
projected to be a multi-million Scrip 27-12-18 % Gain
No. Closing 2018
dollar industry. The 1 RADICO KHAITAN 293.35 399.70 500.00 70.44
consumption of cables in EPC 2 JSW STEEL 269.70 293.25 427.30 58.44
power projects account for ~20- 3 SONATA SOFTWARE 278.65 300.45 428.75 53.87
25% of the total project cost. 4 TAJ GVK HOTELS & RES 176.00 180.25 263.80 49.89
Building and Construction: 5 JINDAL SAW 140.00 82.70 182.00 30.00
The demand for Urban Premium 6 HAVELL'S INDIA 562.15 685.00 729.00 29.68
Housing is set to grow from 7 ESCORTS 787.00 686.00 1019.00 29.48
$116 billion in FY09 to $757 8 OBEROI REALITY 479.80 453.50 609.40 27.01
billion in FY20. Also, the 9 CITY UNION BANK 163.54 185.15 207.15 26.67
demand for wires is expected to 10 TATA SPONGE IRON 990.00 852.00 1248.00 26.06
witness a tremendous growth of 11 GUJ.ALKALIES & CHE 744.00 526.00 932.00 25.27
13% CAGR over the next 7-8
12 MARICO 322.15 376.70 397.00 23.23
years.
13 ELECTROSTEEL CASTI 37.80 21.25 44.60 17.99
Conclusion: KEI’s order book 14 LARSEN & TOUBRO 1257.00 1423.00 1470.00 16.95
stands at Rs.3401 crore plus L1
15 BIRLA CORPORATION 1150.00 601.00 1290.00 12.17
orders worth Rs.540 crore of
16 TAMILNADU NEWSPR 445.70 251.45 499.00 11.96
EPC, EHV and exports. KEI
17 RAMCO CEMENTS 786.00 641.00 879.00 11.83
continued to maintain its top-
line growth led by a healthy 18 HIMATSINGKA SEIDE 399.60 217.85 444.35 11.20
execution in its EPC division 19 BHARAT FORGE 732.00 501.00 800.00 9.29
and strong retail sales. In the 20 UNITED SPIRITS 734.00 629.00 800.00 8.99
domestic market, it is focused 21 TORRENT POWER 282.55 259.85 306.95 8.64
on expanding its dealer network 22 GODREJ INDUSTRIES 605.00 530.00 657.00 8.60
across the country. KEI’s cable 23 DREDGING CORPORA 853.00 359.00 920.00 7.85
division recorded 18% growth 24 GSFC (GUJ.STATE FER 156.10 108.80 166.30 6.53
in volumes during FY18. Led by 25 JET AIRWAYS 831.30 269.80 883.65 6.30
the government’s focus on 26 E.I.D. PARRY (I) 370.05 204.20 391.95 5.92
power generation, transmission 27 MANAPPURAM FINA 123.30 89.80 130.45 5.80
and distribution sectors, the
28 HINDALCO INDUSTRI 273.70 220.65 283.95 3.74
demand for cables is expected
29 SADBHAV ENGINEERI 425.90 206.55 438.85 3.04
to rise significantly. With
30 INDRAPRASTHA GAS 334.95 265.55 344.20 2.76
favourable government
initiatives such as ‘Housing for 31 CENTURY TEXT.& IN 1435.00 897.00 1472.00 2.58
All’, ‘UDAY’, ‘Power for All’, etc., 32 GUJARAT STATE PETRO 226.60 175.45 229.55 1.30
KEI is likely to benefit
significantly. 2018 has been a difficult year for mid-caps and small-caps but all our 32 stocks
managed to post a gain at their respective highs
The KEI share trades at a P/E of
17x and looks attractive at this For just Rs.6000, book your copy of the 14 th edition and welcome the
New Year in the company of ‘Winners of 2019’!

For subscription details contact us on 022-22616970 or email us at [email protected]

A Time Communications Publication 16

level based on its performance parameters.
Investors can accumulate the stock between Rs.360-330 with a stop loss of Rs.310 for a price target of Rs.525-550 in the
next 15-18 months. The stock’s 52-week high/ low is Rs.494.8/ Rs.248.4 and its market cap stands at Rs.2816 crore.

Early Bird Gains – A Performance Review

Early Bird Gains (EBG), our newsletter specializing in multi-baggers, has performed well for the last 15
years. Here’s the performance review of the 52 stocks featured between 27 th September 2017 and 26th
September 2018.
Issue Date of Recomm. Highest since Gain
Scrip Name
No. Recomm. Price (Rs.) (Rs.) %
1 GHCL 27-09-17 210.55 357.50 70
2 Gitanjali Gems 04-10-17 67.20 104.80 56
3 Vivimed Labs 11-10-17 132.85 137.25 3
4 Mangalam Organics 18-10-17 86 510 493
5 Kriti Nutrients 25-10-17 23 56.95 148
6 Premier Explosives 01-11-17 427.70 536.25 25
7 N.R. Agarwal Industries 08-11-17 297.80 615.85 107
8 Sintex Industries 15-11-17 25.20 28 11
9 Larsen & Toubro Infotech 22-11-17 975.85 1469.60 51
10 KPIT Technologies 29-11-17 177.70 314.80 77
11 Talwalkar Better Value Fitness 06-12-17 302.15 358.05 18
12 Security and Intelligence Services (India) 13-12-17 1261.25 1404.80 11
13 Elnet Technologies 20-12-17 190.40 204 7
14 Kellton Tech Solutions 27-12-17 103.10 137 33
15 Lupin 03-01-18 875.70 986 13
16 International Paper APPM 10-01-18 383.35 591.15 54
17 Star Paper Mills 17-01-18 293.10 318.20 8
18 Steel Strips Wheels 24-01-18 1124.30 1473.70 31
19 Yes Bank 31-01-18 353.45 404 14
20 Lincoln Pharmaceuticals 07-02-18 215.10 314 46
21 Dewan Housing Finance Corporation 14-02-18 524.55 690 31
22 Just Dial 21-02-18 439.30 637.80 45
23 Jindal Poly Films 28-02-18 351.60 362.55 3
24 KSE 07-03-18 2497.55 4000 60
25 Rico Auto Industries 14-03-18 71.60 87.25 22
26 Virinchi 21-03-18 105.60 137 30
27 Honeywell Automation India 28-03-18 16466 24178 47
28 Jay Bharat Maruti 04-04-18 482.85 528.90 9
29 Bodal Chemicals 11-04-18 137.10 156.25 14
30 Simmonds Marshall 18-04-18 125.80 154.90 23
31 Mahanagar Gas 25-04-18 908.35 984.40 8
32 Hinduja Global Solutions 02-05-18 957.05 974.75 2
33 Mishra Dhatu Nigam 09-05-18 135.55 160.40 18
34 Pondy Oxides & Chemicals 16-05-18 414.10 452.70 9
35 Manaksia 23-05-18 54.90 60 9
36 RACL Geartech 30-05-18 65.40 75.50 15
37 Sintex Industries 06-06-18 15.05 17.85 19
38 Natco Pharma 13-06-18 791.95 849 7
39 UFO Moviez India 20-06-18 366.60 396 8
40 Sharda Cropchem 27-06-18 365.45 424 16
41 Vindhya Telelinks 04-07-18 1008.55 1698.80 68

A Time Communications Publication 17

 42 Pix Transmissions 11-07-18 174.40 284.40 63
43 Meghmani Organics 18-07-18 86.80 99.05 14
44 Federal Bank 25-07-18 87.70 92.75 6
45 Everest Industries 01-08-18 486.15 597.50 23
46 Rites 08-08-18 275.25 326.55 19
47 International Paper APPM 15-08-18 459.45 591.15 29
48 Patel Engineering 22-08-18 52.30 53 1
49 Jindal Poly Films 29-08-18 280.15 324.95 16
50 Shreyans Industries 05-09-18 179.30 202.35 13
51 Eimco Elecon (India) 12-09-18 368.65 390 6
52 Jasch Industries 19-09-18 62.30 67 7

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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 18

 Subscription Form
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A Time Communications Publication 19