Stop! Read Before You Invest In These Trending Stock Market Tips
Stop! Read Before You Invest In These Trending Stock Market Tips
Oct 17, 2017 | 02:30 PM IST
Oct 17, 2017 | 02:30 PM IST
Various popular stock market news portals and TV channels discuss trending stocks and provide free tips but without in-depth research. We create well-researched equity analysis on these trending stock tips in a single place so you don't waste your time and avoid wrong decisions with your hard earned money.Disclaimer: The stocks mentioned below shouldn't be looked at as stocks recommendations of Niveza India. Stock recommendations are sent via official channels i.e. SMS and Email, only to our registered subscribers of v360 Stock Picks, m360 Multibagger Stock Picks and Combo Stock Picks.
National Aluminum Company Ltd. ( NALCO): Can be considered(10 Step Process To Confirm If Its A Buy)Valuation: Fairly valued with trailing PE of 25.14x as compare to peers. Reasons to Consider: The company has highest dividend payout ratio of around 65% amongst other PSU companies. The company showing sales growth since last two years on account of uptick in volume and value of aluminum. It is also showing improvement in operating margin since last two years. Drivers: Global demand for aluminum is surging which results in increase in price of Aluminum. The company is positioned well with healthy mining capacity and majority of market share, to get benefit of the global scenario. Financial: Net sales stood at Rs 7543 crores in FY17 vs Rs 6817 crores in FY16. Operating profit stood at Rs 1040 crores in FY17 vs Rs 959 crores in FY16. The company registered PAT of Rs 667 crores in FY17.
Flexituff International (FLRXITUFF): AvoidValuation: Undervalued stock with trailing PE of 16.14x as compare to closed peers. Reasons to Avoid: The company's promoters have pledged 81.26% of their holdings. The company is sitting on high debt with debt to equity ratio of 1.99x. Drivers: High debt of the company is eating out bottom line also pledged share percentage is much higher which does not give a long-term clear picture about the company. Financials: The company posted net sales of Rs.1,467 crores in FY17 vs Rs.1,325 crores in FY16. EBITDA margin stood at 12.59% in FY17 while PAT margin stood at 0.39% in FY17 which is very low.
Intrasoft Technologies (PRAKASH): AvoidValuation: Overvalued stock with trailing PE of 48.68x as compare to closed peers. Reasons to Avoid: The company posted negative sales growth in last two years. Its receivable has increased to 204 days in FY17 which is very high more than two quarters. Drivers: The company's business model based on E-commerce retailing and it is majorly in the USA. On account of this, higher receivables are eating out current cash flow of the company. Financial : On consolidated basis, sales registered de-growth by 58% in FY17. PAT margin compressed to 33.5% in FY17 vs 142.8% in FY16. ROE and ROCE stood at 3.46%/ 4.07% in FY17 vs 41.4% / 42.6% in FY16.
Mahindra Lifespace Developer Ltd. (MAHLIFE): AvoidValuation: Overvalued stock with trailing PE of 23.54x as compared to peers. Reasons to Avoid: The company is not able to maintain operational efficiency since last two years. Drivers: The company possess healthy portfolio of commercial plus housing projects at most of the tier l and ll cities. As per data , growth in reality sector slows down since demonetization. Also, the company is not able to maintain healthy operating margin and sales growth since last two years. Financial: Net sales stood at Rs 762 crores in FY17 vs Rs 1086 crores in FY15. Operating margin stood at 4.95% in FY17 vs 37.46% in FY16.
Voltamp Transformers (VOLTAMP): Can be considered (10 Step Process To Confirm If Its A Buy)Valuation: Undervalued stock with trailing PE of 16.25x which is attractive as compared to peers. Reasons to Consider: The company posted continuous sales growth in last three years. Also, it has improved operating margin in the same period. After the slowdown in transformer and distribution industry, now there is a turnaround on account of electrification wave. In such scenario, the company is sitting on cash of Rs.300 crore which is a positive sign. Drivers: "Saubhagya Scheme" by the government to electrify every corner of the country by Dec FY18, fuels the growth of the company. Also, the stable operating performance and zero debt status of the company supports its growth trajectory. Financials: Revenue stood at Rs.666 crores in FY17 vs Rs.488 crores in FY14 . EBITDA margin improved to 14.6% in FY17 vs 8.54% in FY14. PAT margin also improved to 10.2% in FY17 vs 5.38% in FY14. ROCE and ROE also jumped to 18.16% / 13.5% in FY17 vs 8.28% / 6.30% in FY14.
Prakash Industries (PRAKASH): Can be consideredValuation: Undervalued stock with PE of 15.85x which is significantly reasonable as compared to industry PE of 18.95x. Reasons to Consider: Return ratios are on the stable side with good growth. Debt is flat for the company with better repayment on the Y-o-Y basis. Drivers: Margins have improved two folds since last couple of years. Point of concern for the company is that promoters have pledged more than 60% of their holdings. Investors need to keep an eye on this. Financial: Numbers are on the positive side for the company. Earnings have grown nearly three folds in FY17. Operating profit increased to double-digit this fiscal. (Prakash Industries is one of Rakesh Jhunjhunwala's holdings. We at Niveza follow Rakesh Jhunjhunwala's investment philosophy but this should not be looked at as our stock recommendation. Please read our take on Rakesh Jhunjhunwala stock picks and how investors should perceive them - https://goo.gl/w1zwBV )
Adhunik Industries (ADHUNIKIND): AvoidValuation: Poor valued with PE of 88x. Reasons to Avoid: As compared to industry peers, return ratios are low for the company. Market share is low as well and decreasing on Q-o-Q basis. Most of the times stock remain in the circuit as the volume is too low. Drivers: Even after getting stability in the steel sector, the stock is traveling downward only while most of the closed peers are on the performing side. The company has delivered poor growth in last five years. Financial: Revenue growth is continuously down with stable earning but operating margins are getting hammered with negative operating cash flows. Debt is on increasing side as well.
Nitin Fire Protection (NITINFIRE): AvoidValuation: Poor valuation with negative numbers. Reasons to Avoid: Return ratios are on the negative side. Promoters have pledged more than 30% of their holdings. Contingent liabilities rose to Rs.224 crore. Promoter's stake is decreasing Q-o-Q basis. Drivers: Looking at mutual funds data, few big players were on the selling side of the stock in last 6-8 months. Financial: FY17 was considerably down for the company as earnings came down to the negative region even revenue has shown significant growth. Lack of operational efficiency dragged the numbers down.
Ruchi Infrastructure (RUCHINFRA): AvoidValuation: Poor valuation with negative numbers. Reasons to Avoid: Return ratios are on the negative side. Assets are coming down on the Y-o-Y basis. Numbers are volatile and uncertain throughout. Margins have dried. Drivers: Within the same segment, lot of players are having strong fundamentals and market share of the company is low as well. It is getting difficult for the company to survive in the competition. Financial: Earnings of the company are negative since last few years while debt is increasing significantly. Cash flows are uncertain as well.
Supreme Tex Mart Ltd (SUPREMETEX): AvoidValuation: Poor valuation with negative numbers. Reasons to Avoid:Company is dealing with negative margins. The company is showing lack of efficiency as far as operations are concerned. Debt is increasing continuously where repayment has nearly dried up. Drivers: On the industry level, peers are getting much stronger as compared to the company. Return ratios are on the troubled side. Operating cash is negative as well. It's difficult for a company to survive with such operations. Financial: The last couple of years were in trouble for the company as numbers have come down dramatically. Start from revenue to net profit, negative growth has been seen. Cash profit is negative.
Vedanta (VEDL): Potential BUY (10 Step Process To Confirm If Its A Buy)Valuation: Fairly valued at current level as compared to peers with trailing PE of 20.03x. Reasons To Consider: On the global front, prices of basic metals like lead, aluminum, and zinc are surging due to the shortage of supply. Vedanta is well positioned to benefit from strong zinc and aluminum demand as Hindustan Zinc (HZL) and Bharat Aluminium Company (BALCO) are under its wing. Commodity side is looking for a safer bet considering current demand. Drivers: Strong infrastructure growth in Indian economy, base metal supply shortage, the high market share of the company in the domestic market and global footprint along with strong balance sheet are acting as driving force for the company. On top of that, Industry valuation is already on the lower side. Financial: Vedanta is a cash-rich company with free cash flow of Rs.13,312 crores. The company has reduced gross debt by Rs.4,115 crores in FY17 and has planned to reduce further by Rs.6,200 crores in FY18. The company registered net sales growth of 12.3% to Rs.72,225 crores. Also, it has witnessed growth in EBITDA margin to 39% vs 30% in FY16. The company also paid the highest ever dividend of Rs.7,099 crores in FY17.
Gammon India (GAMMONIND): AvoidValuation: Poor valuation as most of the part in financial statements is negative. Reasons to Avoid: Promoters have pledged more than 90% of their holdings. The contingent liability is on the higher side. The company has delivered poor growth of -1.53% over past five years. Drivers: Company has operations majorly in Asian and African countries. Global presence is low. The company is trying to penetrate in the US and Europe but competition is huge there and strict regulations may hamper entry of the company globally. Financial: Y-o-Y basis, company is continuously delivering negative earnings. Cash flows are negative throughout. Debt is on the increasing side. Reserves and Surplus are negative. Margins are negative as well.
Reliance Communication (RCOM): AvoidValuation: Poor valuation with an unstable business model. Reasons to Avoid: JIO has given a major hit to most of the telecom service providers. The company has already lost its market share and still with most attractive offers JIO is hammering other service providers too. Drivers: Spectrum issues came into the picture again where Reliance Jio, Airtel and Idea are on the gaining side while Reliance Communication will be on paying side. This will add to the existing pile of debt of the company. Financial: The company is already dealing with troubles with their Y-O-Y and Q-o-Q numbers. Also, profit margins are going down because of the heavyweight competitors.
Educomp Solutions (EDUCOMP): AvoidValuation: Poor valuation with unstable operational efficiency. Reasons to Avoid: Promoters have pledged more than 85% of their holdings. The company has a negative return on equity since last few years. Contingent liabilities are increasing on the Y-o-Y basis. Drivers: Working capital management looking down as current ratio and quick ratio both are going up on account of high accounts receivable. The company is facing stiff competition in the industry as it is impacting margins. Financial: Company is posting negative earnings since last few years. Revenues have come down drastically. Cash flows are negative as well.
The Byke Hospitality (BYKE): AvoidValuation: Overvalued with trailing PE of 21.62x. Reasons to Avoid: Operational efficiency of the company is coming under threat. The company registered degrowth in this quarter as compared to last year same quarter by a big margin. Drivers: The company runs its business on the asset-light model which is experiencing tough competition from various online and other organised platforms available in the hotel industry. Debt is growing and repayment has been on the slower side. Financial: In Q1FY18, net sales down by 51% Q-o-Q and 40% Y-o-Y. EBITDA down by 27% Q-o-Q.
Kilburn Engineering (KILBUNENGG): AvoidValuation: Undervalued stock as compared to peers. Currently trading at trailing PE of 15.60x. Reasons to Avoid: The company witnessed flat growth in topline in last three years and at the same time its margins were under pressure. The company has delivered poor growth in last few years. Drivers: Recently company promoters raised stake in the company from 57% to 60% from the open market. As per company management, topline can remain flat for next one year. Financial: Debt is on increasing side. In Q1FY18, net sales down by 40% Q-o-Q to Rs.30 crores. EBITDA down by 50% to Rs.2.66 crores. PAT down by 37% to Q-o-Q to Rs.1.11 crores. Margins came down drastically.
KEC International (KEC): Can we consider? (10 Step Process To Confirm If Its A Buy)Valuation: Fairly valued with trailing PE of 23.67x as compared to close peers Reasons to consider: Government of India recently launched “Saubhagya” scheme which aims at “Power for all” across the country by December 2018. This scheme would be beneficial for the company as it is one of the prominent players in power transmission and distribution. Drivers: The company is sitting on a heavy order book as of date worth approximately Rs.14,500 crores at domestic and international front. Also, the company gets most of the orders form Power Grid Corporation which helps in providing transmission lines to villages. Power Grid Corporation is also the beneficiary of “Saubhagya” scheme. Financial: The company registered growth of 6% Y-o-Y in Q1FY18 in revenue. PAT rose by whopping 104% Y-o-Y to Rs 63 crores. EBITDA margin improved to 9.3% in Q1FY18 vs 8.4% in Q1FY17.
Lakshmi Energy (LAKSHMIEFL): AvoidValuation: Overvalued stock with negative numbers. Reasons to Avoid: The company is having higher debt. The company is witnessing decreasing numbers in sales volume due to increase in competition. Drivers: The company has registered degrowth in sales as of now with low operational efficiency. In last three years, the company has registered two times negative operating margins. Financial: The company has a debt to equity ratio of 2.28x. It has negative earnings in the bottom line. Revenue growth is flat to negative.
Satin Creditcare Network (SATIN): AvoidValuation: Overvalued stock with negative numbers. Reasons to Avoid: Demonetisation in the month of November 2016 has affected most of the businesses of the company. This directly affects its two quarter numbers subsequently i.e. Q4FY17 and Q1FY18. Drivers: Demonetisation has impacted 75% of the territories of the company. Which results in a delay in repayments coming in and has also impacted collection efficiency which the company is trying to improve. Financial: The company registered negative earnings on account of higher operational expenses. PBT is down by 57% on yearly basis and PAT down by approximately 58%.
Axiscades Engineering Technologies (AXISCADES): AvoidValuation: Overvalued with trailing PE of 64.43x as compared to peers. Reasons to Avoid: Operating profit of the company has got impacted due to higher project cost from the US from last one year, which in turn is eating out its net profit. Driver: The company has a global presence in the aerospace engineering sector and one of the niche player. Company's project cost from the US is affecting its margins as per management which is yet to improve. Financial: In Q1FY18, net sales down by 16% Y-o-Y to Rs 53 crores. EBITDA margin stood at 6.2% vs 16.93% in Q1FY17. PAT is negative.
The Byke Hospitality (BYKE): AvoidValuation: Overvalued with trailing PE of 21.62x. Reasons to Avoid: The company registered degrowth in this quarter as compared to last year same quarter by a big margin. Drivers: The company runs its business on the asset-light model which is experiencing tough competition from various online and another organised platform available in the hotel industry. Financial: In Q1FY18, net sales down by 51% Q-o-Q and 40% Y-o-Y. EBITDA down by 27% Q-o-Q.
Deccan Cements (DECCANCE): Can we consider? (10 Step Process To Confirm If Its A Buy)Valuation: Undervalued stock as compared to peers. Currently trading at trailing PE of 17.8x. Reasons to consider: The company is undervalued as compared to close peers. The company has grown by 13.5% in last three years. It also has delivered the return on investment in the range of 15-20% from last two years. It is a low debt company with DE of 0.08x. Drivers: Rising civil infrastructure and sound financial status of the company fuels its growth. Financial: In Q1FY18, net sales grew by 14.6% Y-o-Y to Rs.160 crores. EBITDA grew by 4.7% YoY to Rs.24.54 crores. PAT stood at Rs.11.38 crores.
DLF (DLF): AvoidValuation: Overvalued stock as compared to peers. Currently trading at trailing PE of 56.33x. Reasons to Avoid: The company is overvalued and underperforming as compared to closed peers. Drivers: The company plans to launch project only after obtaining occupancy certificate which can result into weak earnings followed by negative cash flow. Financials: In Q1FY18, net sales down by 8% Q-o-Q to Rs.2,048 crores. EBITDA stood at Rs.903 crores. PAT down by 23% to QoQ to Rs.121 crores.
A2Z Infra Engineering (A2ZINFRA): AvoidValuation: The company is overvalued with negative earnings. Reasons to Avoid: The company posted negative margins and final profit. Also, promoters of the company have pledged 96% of their shares. Drivers: The board of the company approved the issuance of 8 crore equity shares to lenders as a one-time settlement. The company belongs to power sector which is growing slowly as of now. It impacted company's earnings. Financial: In Q1FY18, net sales down by 34% Q-o-Q to Rs.112 crores. EBITDA and PAT witnessed negative numbers.
Dish TV (DISHTV): AvoidValuation: Overvalued stock as compared to peers. The stock is currently trading at trailing PE of 143.86x. Reason to Avoid: The company posted weak earnings and currently overvalued as compared to peers. Drivers: The company is facing the challenge to sustain in the competitive environment which has slowed its growth. Financial: In Q1FY18, net sales down by 14% Y-o-Y to Rs.442 crores. EBITDA down by 74% Y-o-Y to Rs.24.23 crores. PAT witnessed negative growth.
Kilburn Engineering (KILBUNENGG): AvoidValuation: Undervalued stock as compared to peers. Currently trading at trailing PE of 15.60x. Reasons to Avoid: The company witnessed flat growth in topline in last three years and at the same time its margins were under pressure. Drivers: Recently company promoters raised stake in the company from 57% to 60% from the open market. As per company management, topline can remain flat for next one year. Financial: In Q1FY18, net sales down by 40% Q-o-Q to Rs.30 crores. EBITDA down by 50% to Rs.2.66 crores. PAT down by 37% to Q-o-Q to Rs.1.11 crores.
NOCIL (NOCIL): Potential Buy (10 Step Process To Confirm If It's A Buy)Valuation: Undervalued stock with PE of 12.75x. Reasons to Consider: Stock is still undervalued and has great potential as far as valuation and business model is concerned. Optimum utilisation of new plant helped in enhancing earnings. Drivers: Looking at the numbers, 60 65% of the global consumption of rubber is by automotive tyres, with the rest used in - footwear production, latex products, cycle tyres and tubes, and OTR tyres among others. It supplies all domestic tyre manufacturers in addition to several international tyre companies and has around 3,200 clients in the non tyre segment. Financial: In FY17 company had delivered strong growth in term of earnings whereas net income surged by 54%. Q1FY18 was remarkable too with rise of 46% in the net earnings. The company has managed to reduce debt from Rs.150 crore in FY15 to Rs.19 crore in FY17.
Shivam Autotech (SHIVAMAUTO): AvoidValuation: Overvalued stock with unstable operational performance.. Reasons to Avoid: Lack of operational efficiency with increased competition hammered company's over performance. In order to survive in competitive market, company has cut down margins.. Drivers: Demand for the products like different types of gears, transmission shafts, cold and warm forged components are good enough but competition by by small players is too good for the company to increase the profit margin. This has hit the company’s profit margin in last few quarters.. Financial: Even after improved demand, company is posting negative earnings. Company failed to manage their expenses. Profit margins declined significantly. Good demand has been seen in last quarter.Cash flows are on negative side as well..
Repro India (REPRO): AvoidValuation: Overvalued stock with PE of 123x. Reasons to Avoid: Promoter's stake has decreased. Company has delivered a poor growth of -3.8% over last five years. Stock is trading 4 times its book value. Drivers: Peer set is lower valued as compared to the company. Financial: Company has delivered negative earnings in last couple of years while cash flows are negative as well which points out lack of operational efficiency of the company. Falling profit margins with negative return on equity.
JBM Auto (JBMA): AvoidValuation: Overvalued stock with PE of 37.44x. Reasons to Avoid: Competitors have hit the market in numbers. Market share of the company came down last quarter. Drivers: Strong demand has been seen for the products in which the company is dealing in. But small players have disturbed the market for the company by compromising with their margins and ultimately the company has to cut their margins in order to survive in the strong competitive market. Financial: Company reported 61% fall in its earnings for the first quarter ended June, 2017. On Y-o-Y basis, company has shown significant growth which ultimately reflected in the performance of the stock till date.
Emkay Global Finance (EMKAY): AvoidValuation: Overvalued stock with trailing PE of 92x where industry PE is 59x. Stock is trading nearly 6 times of its book value. Reasons to Avoid: Financial numbers are not certain. Lot of uncertainty in operational performance of the company. Financial: Earnings nearly declined by 50% in FY17. Q1FY18 was significantly better as company managed to cut down expenses and it ultimately reflected in earnings. But considering last few quarters, performance is under the shadow of a doubt.
Asian Granito (ASIANTILES): AvoidValuation: Overvalued stock with PE of 40x which is way too high. Reasons to Avoid: Return on net worth is continuously falling, in fact in FY17 was on the negative side.Business model is not clear and revenue realisation is doubtful too. Financial: Revenue dropped by 5% nearly in FY17 while earning showed a dramatic fall of 31.62%. On Q-o-Q basis, earnings in last quarter declined by 31%.
Royal Orchid Hotel (ROHLTD): AvoidValuation: Overvalued stock with troubled operational performance of the company. Reasons to Avoid: Earnings as well as revenue growth both are in the negative territory. Company has delivered poor growth of 0.23% over last five years. Company has return on equity of -0.89 for last three years. Financial: On Y-o-Y basis, company is posting negative growth as far as the revenue and earnings are concerned. Cash flows are negative too. The company lacks operational efficiency.
Jindal Stainless Ltd (JSL): AvoidValuation: Overvalued stock with trailing PE of 31x where industry PE is 18x. Reasons to Avoid: Promoters’ stake has decreased and company has delivered a poor growth of 1.04% in last five years. Promoters have pledged more than 91% of their holdings. Drivers: Jindal Stainless is reportedly planning to establish an incubation center for agriculture technology (agri-tech) startups. The company will set up the same in collaboration with the Japanese company Future Venture Capital Company. In the year of flat earnings, adding cost in incubation center can add debt to the company. Financial: After the disastrous performance of FY16, company managed to deliver in FY17 with positive earnings. Q1FY18 was flat as earnings were nearly zero as compared to negative earnings of same quarter last fiscal.
Vardhman Holding (VHL): AvoidValuation: Undervalued stock with trailing PE of 6.39x as compared to close peers. Reasons to Avoid: Low volume stock with uneven earning trend. In current quarter margins got contracted and earnings are down by 98% Q-o-Q. Drivers: The company earns by investing into debt, equity and real estate asset which is in positive trend at present, still it is not reflecting in the company’s earnings. Financial: In Q1FY18, net sales down by whopping 98% to Rs.3.91 crores Q-o-Q. EBITDA down by 98% Q-o-Q and 56% Y-o-Y. PAT of the company also tanked by 98% Q-o-Q and 61% Y-o-Y to Rs.2.63 crores.
BHEL (BHEL): AvoidValuation: Overvalued stock with trailing PE of 65x as compared to close peers. Reasons to Avoid: The power equipment manufacturing company BHEL has poor growth rate of -9% in last five years. Also the power sector does not see much uptick in the near future. Drivers: The company got order of the Bullet Train which is minuscule as compared to its revenue of ~Rs 30,000 crores. This opportunity can't give much material impact on business. Financial: The company witnessed de-growth in its net sales in past five years i.e.Rs.48,117 crores in FY13 vs Rs.28,222 crores in FY17. EBITDA also stood at Rs.1,827 crores in FY17 vs Rs.10,511 crores in FY13. PAT of the company stood at Rs.496 crores vs Rs.6,615 crores in FY13.
Vedanta (VEDL): Potential BUY (10 Step Process To Confirm If It's A Buy)
Dr. Reddy (DRREDDY): Avoid
Godawari Power & Ispat Ltd (GPIL): Avoid
Jaiprakash Associates (JPASSOCIAT): Avoid
MEP Infrastructure Developers Ltd (MEP): Avoid
Praj Industries (PRAJIND): Avoid
Global Vectra Helicorp (GLOBALVECT): Avoid
Torrent Pharma (TORNTPHARM): Avoid
Wockhardt (WOCKPHARMA): Avoid
Idea Cellular (IDEA): Avoid
NCC (NCC): AvoidValuation: Over valued stock with expensive valuation as compared to closed peers. The stock is trailing at PE of 121, which is too high. Comment: Promoter's holding is just 19.56%. Promoters' have pledged more than 29% of their holdings. Contingent liabilities of the company have reached to Rs.1,673 crores. Company Drivers: Standalone debt of the company has increased substantially to Rs.1794. The slowdown in execution and delay in payments had led to a significant rise in working capital for NCC in last few years. Quarterly Performance: Q1FY18 was significantly stable for the company as compared to last few quarters due to Nagpur metro project. But the company has to work on its execution pace in order to keep revenue visibility improving. Annual Performance: YOY performance of the company is going down since last couple of years. Cash flows are negative whereas de-growth in revenue as well as in earnings has been seen.
Marico (MARICO): AvoidValuation: Company is trailing near the higher end of PE. Little expensive stock. Comment: De-stocking already had hit the performance of the company during last quarter due to GST and it is expected to carry the same momentum in coming couple of quarters. Company Drivers: Within the segments, few products like Saffola Oats and edible oil took a hit during last year on account of high competition and de-stocking due to GST has also hurt the company. Quarterly Performance: June quarter was down by 4.86% compared to the fiscal year. Earnings were also on the down side. VAHO segment's volume declined by 8% last quarter. Annual Performance: All over urban to rural, performance of the company looked weak as most of the segments showed de-growth and decreased market share as well. The Y-O-Y performance was below company's estimates and it is expected to carry the same momentum for next quarter.
India Cements (INDIACEM): AvoidValuation: Expensive at current levels as the stock is trailing near PE of 35 whereas return ratios are decreasing as well. Comment: Promoters' holding is 28.21%. Promoters' have pledged 43.83% of their holdings. Low promoters' holding with pledged shares adds more risk for investors. Company Drivers: Company's business is dependent on south regions, especially AP and Telangana. Last quarter development pace slowed down in both the states, which ultimately hampered the performance of the company. Adding to this, operations of few plants were on hold due to the government circular on increased pollution and violation of norms. Annual Performance: Cash flows were near to zero levels. Net profit was on the declining side as well.
Voltas (VOLTAS): AvoidValuation: Over valued stock with PE on the higher end of the average, i.e. 32. Comment: Promoters' holding is 30% only. AC segment is giving threats to hit profit margins due to intensified competition. Inventory de-stocking is affecting the profitability. The company has a weak share in industry convergence towards inverter ACs. Macro Drivers: Instability in Qatar region hitting the company's account books hard as Qatar accounts nearly 50% of the international order book. Company Drivers: Voltas is willing to lose the market share rather than compromising on margins. Demand usually stands muted during the 2nd quarter of the financial year. Quarterly Performance: Even after better revenue growth, the company posted negative earning in Q1FY18. Geographical performance of the company was on declining side.
JSW Steel (JSWSTEEL): AvoidValuation: Expensive stock as compared to peers. Comment: Promoters' have pledged more than 45% of their holdings. Company Drivers: Consolidated net debt increased steeply due to IND-AS impact and increase in working capital. Quarterly Performance: Q1FY18 quarter was significantly down. Revenue de-growth has been shown by the company while net profit is hit nearly by 50%.
Ujjivan Financial Services (UJJIVAN): AvoidValuation: Over valued stock with PE 71. Closed peers are much better valued. Comment: Company took a major hit post-demonetisation and it is not yet looking comfortable with their on going operations. Company Drivers: Recently CDC group sales stake in Ujjivan Financial Services for over Rs.212 crores. Quarterly Performance: Q1FY18 performance was on poor side as expenses surged way above revenue. Due to higher expenses, net profit of the company came down sharply.
Axis Bank (AXISBANK): AvoidValuation: Over valued stock with expensive valuation as compared to closed peers. The stock is trailing at PE of 35, which is too high. Comment: Slippages by 3.5% in Q1FY18. The doubtful watch list of the loan book. Rise in GNPA at 5.5% as compared to last three years. Company Drivers: Net Interest Income growth reduced to 7.5% in FY17. Axis Bank's exposure limits to 8 accounts out of 12 accounts named by banking regulator which creates dark clouds around its asset quality. Annual Performance: GNPA stood at 5.5x. NNPA stood at 2.3x. The rise in GNPA and NNPA questions the asset quality of the company. PAT showed de-growth of 5.3% to Rs.36792 mn.
Jet Airways (JETAIRWAYS): AvoidValuation: Fairly valued stock with trailing PE of 16.8x as compared to peers. Comment: The company is having high debt with negative net worth (DE -3.31x). Margins of the company got impacted by higher aviation turbine fuel prices. The company is experiencing rising competition from domestic carriers. Annual Performance: Sales are flat at Rs.21,552 crores. EBITDA down by 50% to Rs.1,151 crores. PAT down by 66.73% to Rs.390 crores. EBITDA margin stood at 5.7% in FY17 vs 10.5% in FY16. PAT margin stood at 1.9% in FY17 vs 5.4% in FY16.
Tata Consultancy Services (TCS): AvoidValuation: Over valued stock with expensive valuation as compared to closed peers. The stock is trailing at PE of 18.01x. Comment: Industry headwinds, rupee appreciation and slow down in IT spending is not in favour of the company. Company Driver: TCS's growth momentum slowed down to ~9% in FY17 as compared to 15% in FY16 on account of industry headwinds. Quarterly Performance: Net sales flat at Rs.29,584 crores. EBITDA down by 8.84% QoQ/5.41% YoY to Rs.7,413 crores. PAT down by 10.15% QoQ/ 5.82% YoY to Rs.5,950 crores.
Infosys Ltd. (INFY): AvoidValuation: Undervalued (Fair Price: Rs.846, Current Price: Rs.915). Reasons to Avoid: Infosys is undervalued as compared to closed peers but as of now this is a high risk stock. Macro Drivers: Recent data indicated lack of spending by clients in BFS and Retail verticals. US immigration law is adding threat. Limited market dependency as 80% of company revenue constitutes from North America and Europe. Company Drivers: Now CEO and MD of Infosys Mr.Vishal Sikka resigned. Quarterly Performance: IT giant Infy is posting flat results continuously. During last quarter, margins were impacted by 0.5% on account of INR appreciation and higher variable pay to its employees by 8% to 14%. Annual Performance: Cash flows were negative for FY18 and earnings are moving down as well. More troubles are getting added day after day. Better to avoid as of now.
Apollo Hospitals (APOLLOHOSP): AvoidValuation: Overvalued (Fair Price: Rs.895, Current Price: Rs.1076) Quarterly Performance: Even after posting better results, Apollo Hospitals is in down trend. Stock is trailing at PE of 61. Company Drivers: Promoter's have pledged more than 65% of their holdings, a real threat. Annual Performance: YoY results are continuously down and QoQ is not stable as well. Even after having good expansion plans, revenue visibility is little blur. Increasing debt with falling profit margins. Margins are under pressure due to regulation on 'stent' pricing and higher guarantee fees to the doctors.
Tata Motors (TATAMOTORS): AvoidValuation: Undervalued (Fair Price: Rs.343, Current Price: Rs.383) Annual Performance: Since last couple of years, cash flows of the company were negative. Margins had a hit during last year as production in UK plant was stopped. The stock is in down trend continuously. Company Drivers: Company already has loosed commercial vehicle market share from 60% to 44%, which is a huge fall indeed. Primary reason for ballooned loss for last year was mismanagement with regards to the inventory of Bharat stage III vehicles that were rendered useless by the Supreme court judgement. Better to stay away from this falling knife. Huge investment in JLR can reduce company to cashless position as JLR segment is continuously under-performing.
Bank of Baroda (BANKBARODA): AvoidValuation: Expensive (Fair Price: Rs.126, Current Price: Rs.143) Annual Performance: Bank of Baroda is already troubled with NPAs and NIMs rise. Management is expecting NIMs to find some stability in coming quarters. Quarterly Performance: Last quarter Bank had a disadvantage of couple of very large corporate accounts slipping through Rs.1,800 crores of slippage. This will milk rise in NPAs in coming quarters. Peer set is looking much stable where one can bet on
Punjab National Bank (PNB): AvoidValuation: High risk (Fair Price: Rs.124, Current Price: Rs.143) Quarterly Performance: In Q1, NIIs rose by 4%. Bank is having contingent liabilities of nearly Rs.3,58,610.5 crores. Annual Performance: Return on equity of the bank is 0.62% for last 3 years. Technical trend is down as well. NPAs are on increasing side. NPAs could rise in coming quarters which could clearly trend the stock down side. Hardly any upside could be there as far as next few quarters are concerned.
Religare Enterprises Limited (RELIGARE): AvoidValuation: Overvalued (Fair Price: Rs.43, Current Price: Rs.58) Fundamental Performance: Return on Equity for last few years is on poor side, nearly 0.35% only, which is too low as compared to closed peers. Profit margins are falling while debt is on increasing side. Too much risk is involved. Company Drivers: Promoter's have pledged more than 85% of their holdings. Recently company suffered a cyber attack as well. Promoter's stake is on decreasing side.
Housing Development & Infrastructure (HDIL): AvoidValuation: Overvalued (Fair Price: Rs.55, Current Price: Rs.61) Annual Performance: Company has delivered poor growth of -8% over last five years. Contingent liabilities touched Rs.1,785 crores last year. As compared to closed peers, PE ratio of the company is too high. Fundamental Performance: Cash flows of the company are negative with continuously falling earnings. Return on equity for last three years is around 2.15% which is significantly lesser as compared to closed peers.
Bharat Heavy Electricals Ltd. (BHEL): AvoidValuation: Overvalued (Fair Price: Rs.110, Current Price: Rs.127) Annual Performance: Continuously falling revenue since last four years with increasing debt. Fundamental Performance: Company has low return on equity of 4.13% for last three years. PE is comparatively too high and investment in the stock looks little risky this time. The company has delivered poor growth of -9.22% over past five years. Return ratios are negative.
Niveza Editorial Desk :
We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to pave a smooth road for our clients in the shaky world of stock market. While...
LEAVE A COMMENT
LEAVE A COMMENT
Stock investment has the potential to outperform all the investment instruments be it fixed deposits, real estate or even gold. Stock market, over the years, has made significant contribution in creating wealth for working
The first step of your equity investment is to open your demat account. The demat accounts service is provided by banks e.g. ICICI, SBI etc. and also by independent brokerage firms e.g ShareKhan, Angel Broking, etc. The charges for providing the
Market This Week The market recovered from the bottom and it has succeeded to climb 1,000 points this week as huge buying was seen in almost all the sector especially in
Share Market News – 11 October 2017 The market opened positive but profit booking was seen in the market in an afternoon session and nifty closed below 10000 level but a huge buying was seen in oil and gas sector. Sensex
Share Market News – 10 October 201 The market opened positive and nifty succeed to cross the 10,000 marks in the opening of the market and closed above 10,000. Despite sluggishness in the market the small-cap and midcap