11th Jun 2019 | 13:40 PM IST
11th Jun 2019 | 13:40 PM IST
Free Share Market Tips Today: Stop & Read Before You Invest In Stocks
Free Share Market Tips Today: Stop & Read Before You Invest In Stocks
Various popular stock market news portals and TV channels discuss trending stocks and provide free share market tips based on technical charts and often without in-depth research. Our research desk analyses these trending stock market tips and provides their 360-degree analysis in a single place so you can avoid making wrong decisions with your hard earned money. Here are the share market tips for holding duration of around six months.
Disclaimer: Stocks and opinions below are for informational purposes and shouldn't be taken as a final advice from Niveza India. You shouldn't rely on this free advice solely and do your own research to arrive at the final conclusions. Our final stock recommendations are sent via SMS and Email to paid subscribers of Our Premium Products.
Share Market Tips For June 2019: 2nd Week
Coromandel International Ltd (NSE: COROMANDEL) (Share Price: Rs.422 ): Potential Buy
Valuation:Fairly-Valued stock with TTM PE of 17x.
Reasons to Consider: Coromandel International Ltd reported Q4 FY19 net sales at Rs 2638 crore up 9% YoY. EBITDA reported by the company stood at Rs 259 crore up 40% YoY. EBITDA margin during the quarter was 9.8% as against 7.7% YoY. Sales were largely in line with analyst the bio-pesticides business reported a sales of Rs 167 crore in FY19. Bio-pesticides garner better margins than the conventional crop protection products and it is expected that volume growth could be in double digits. The management has guided for a better FY20 in terms of EBITDA/ton realizations to the tune of Rs 3,000-3,200/ton. We believe that key drivers will be backward integration (Phosphoric acid) and expansion (crop protection) which will drive earning from FY19-21E. In Q4FY19, subsidy: non-subsidy revenues break up was 80:20 (compared to 79:21 in Q4FY18) whereas, In Q4FY19, subsidy: non-subsidy EBITDA break up was 73:27 (compared to 65:35 inQ4FY18).
Key Drivers: Brownfield expansion of Phosphoric Acid plant at Vizag will increase backward integration of raw material by additional 20-25% to a total of 45-50% of requirement. Phos acid spreads are elevated led by, stable rock prices (input costs) on abundant supplies, while strong phosphates demand (& relatively low Chinese exports) has led to acid prices moving to $728/MT. We believe current spreads could remain elevated in the medium term and help for strong profitability and could offset the threat of margin erosion. The new capacity is expected to go live in October 2019. Specialty nutrients division sells micronutrients (Sulfur, Zinc, Boron, etc) and Water soluble fertilizers majorly through the retail and the trade segment. The segment is unregulated with free pricing CRIN has a 30% market share in organic fertilizers which includes compost and bio fertilizers. To propel volume in the segment, the company is partnering with city administration (like Visakhapatnam) for processing of waste into organic manure. The unit focuses on oil cakes, phosgold (compost + rock phosphate), molasses and other by-products. The Organic Bio-Agro Resources Dhan (GOBAR-DHAN) scheme also helped in spreading awareness.
Financial: Total revenue Rs 2639 cr in Q4FY19 vs Rs 2412 cr in Q4FY18 up 9%. PAT at Rs. 110 cr in Q4FY19 vs Rs 90 cr in Q4FY18 up 23%. Ebitda stands at Rs.259 cr in Q4FY19 up 40% vs Rs. 185 cr in Q4FY18.
Rallis India Ltd (NSE: RALLIS) (Share Price: Rs.148): Potential Buy
Valuation: Fairly-Valued stock with TTM PE of 18x.
Reasons to Consider: Rallis reported a subdued financial performance with revenue down 8.5% YoY to Rs 339.7 crore, primarily due to the poor show from the standalone business (down 9% YoY, 94% of consolidated revenue). Revenues from the standalone business were impacted largely due to muted sales growth from the domestic market but decent growth from international market arrested the decline, to some extent. On the other hand, Metahelix reported stable growth of 2.3% YoY to Rs 22.5 crore. Adjusting one-time charge of Rs 7.2 crore towards retirement benefits in employee expenses and Rs 5 crore towards contribution to the electoral fund, standalone EBITDA was at Rs 31 crore (down 27.4% YoY) while Metahelix registered an operational loss of Rs 13 crore against a loss of Rs 7.9 crore in Q4FY18. Higher other income (Rs 11 crore vs. Rs 1.6 crore in Q4FY18) helped the company to maintain its bottom-line performance. But in coming quarters rallies can show good performance overall primarily due to increasing demand in metribuzin along with key products like pendimethalin and acephate are likely to drive international market growth. Further, capital investment in backward integration for some of the active pharma ingredient (API) is expected to improve the operational performance in the medium to long run.
Key Drivers: Rallis has been expanding its capacity in Metribuzin, which is considered one of the major revenue contributors in the companyâ€™s international market. The management highlighted that dicamba and glyphosate have some resistance issue, which translates into better volume growth outlook for Rallis since it holds 12% global Metribuzin market share. Further, the CRAMS business has also been witnessing decent growth, which can aid overall growth in the years to come. Increasing distributors from 3500 currently to 4200 in FY20 along with better incentive scheme from April 2019 are likely to deliver stable/decent growth in the domestic market. Further, increasing presence in Kharif crops for Metahelix can diversify the revenue stream, to a certain extent, in years to come. The company has been developing its portfolio in cotton and vegetable seeds, translating to a better growth outlook for Metahelix in the medium to long run.
Financial: Total revenue Rs 340 cr in Q4FY19 vs Rs 371 cr in Q4FY18 down 8.5%. PAT at Rs. 1.4 cr in Q4FY19 vs Rs 19.6 cr in Q4FY18 down 93%. Ebitda stands at Rs.6.8 cr in Q4FY19 down 80.5% vs Rs. 34.8 cr in Q4FY18.
Dabur India Ltd (NSE: DABUR) (Share Price: Rs.410 ): Potential Buy
Valuation:Over-Valued stock with TTM PE of 50x.
Reasons to Consider: For Q4FY2019, Domestic business grew slower by 5.9% with volume growth of 4.3% during the quarter. The international business reported growth of 1% in constant currency terms impacted by underperformance of MENA region and adverse currency movement. However, the company expects domestic business to grow faster than international business for the next two to three quarters. OTC category is expected to grow fastest in domestic business portfolio. Home and personal care, which contributes 50.5% to sales, posted 6.8% growth. Home care and Skin care segments grew by 16% and 11% respectively driven by strong growth in Odonil, Sanifresh, Gulabari and bleach portfolio. Odomos was impacted due to low incidence of mosquito-led diseases. Oral Care saw 8% revenue growth led by continued growth momentum in Red Toothpaste (17% growth) with Dabur increased its value market share by 45 bps while Meswak grew in low single-digits. Babool sales declined and the company plans to relaunch it in the coming quarter. The market share in juices increased by 540 bps YoY to 56% despite higher competitive intensity.
Key Drivers: The rural market constitutes 45% of the companyâ€™s sales vs 35% for the industry. Domestic FMCG sales growth moderated to 6% due to rural slowdown, liquidity crunch and prolonged winter, which impacted hair care and foods segments. We believe steady focus on expanding direct reach in rural areas would augment the volume growth in future. In rural, company has reach of 44,000 villages and is targeting to reach 51,000 villages out of 66,000 (total villages in country) by end of FY20. Dabur has guided for double-digit growth, driven by high single-digit volume growth with a focus on power brands and Low Unit Price products (LUPs) in FY20. Competitive intensity from Patanjali has subsided significantly resulting in high double digit growth of Dabur Red and Dabur Honey (that competes with Patanjali in the respective category) in H2FY19. We expect Dabur to generate revenue, PAT growth at low double digit CAGR, respectively, on the back of strong volume growth of 7% in FY19-21E.
Financial: Total revenue Rs 2128 cr in Q4FY19 vs Rs 2033 cr in Q4FY18 up 4.8%. PAT at Rs. 371 cr in Q4FY19 vs Rs 397 cr in Q4FY18 down 6.5%. Ebitda stands at Rs.457 cr in Q4FY19 down 5.8% vs Rs. 485 cr in Q4FY18.
Thermax Ltd(NSE: THERMAX) (Share Price: Rs.1126): Potential Buy
Valuation: Over-Valued stock with TTM PE of 48x.
Reasons to Consider: Thermax reported standalone revenues at Rs 1889.6 crore registering robust growth of 44.2% YoY while consolidated revenues grew 43.7% to Rs 2073.7 crore on a YoY basis. EBITDA came in at Rs 175.7 crore, up 17.2% while EBIDTA margins declined 215 bps to 9.3% on a YoY basis owing to more than expected increase in total operating expenses. PAT came in at Rs 112.9 crore, which grew 31.7% YoY while adjusted PAT grew 55.7% to Rs 133.5 crore. The consolidated order inflow for the quarter was at Rs 1157 crore (Rs 1599 crore in Q4FY18) on a YoY basis due to ongoing sluggishness in new investments in several sectors while standalone order inflow was at Rs 717 crore. Consolidated order book was at Rs 5370 crore, down 6.0% YoY.
Key Drivers: For Q4FY19, consolidated order inflows were at Rs 1157 crore, down 28% YoY owing to muted capex in several sectors. For FY19, order inflows comprise energy segment (RS 4476 crore), environment segment (Rs 741 crore) & chemicals segment (Rs 415 crore). For FY19, order inflows were dragged by a decline of 28% in international inflows while domestic order intake was up 1% YoY. Order book was at Rs 5370 crore, down 6.0% YoY. Going ahead, Thermax expects enquiries and order intakes in cement (waste heat recovery), food processing, Textiles, chemicals, paper, auto component OEMs, water treatment and FGD segments. For FY20, Thermax has guided for high single digit revenue growth, flat to marginal order inflow growth and margin to sustain at current level. Company guided Good order inquiries expected in Indonesia, Bangkok, Thailand, Egypt, Kenya, Turkey and few African markets. Also, opportunities exists in South East Asian markets for air cooling, air pollution control, water orders. Thermax holds 80% market share in cooling segment in India. With expected uptick in domestic order inflows and recovery in international order inflows through geographic diversification, order backlog is expected to improve further.
Financial: Total revenue Rs 1889 cr in Q4FY19 vs Rs 1310 cr in Q4FY18 up 44%. PAT at Rs. 113 cr in Q4FY19 vs Rs 86 cr in Q4FY18 up 32%. Ebitda stands at Rs 176 cr in Q4FY19 up 17% vs Rs. 150 cr in Q4FY18.
Sagar Cements Ltd(NSE: SAGCEM) (Share Price: Rs.645): Potential Buy
Valuation: Over-Valued stock with TTM PE of 50x.
Reasons to Consider: Sagar Cements reported a mixed set of Q4FY19 numbers, beating analyst expectation on volume and thereby revenue forecast. However, operating margins were a negative surprise. Revenues for Q4FY19 witnessed 24.1% growth to Rs 358.8 crore led by 23.5% growth in volumes to 0.95 MT. Realisations were broadly in line growing 1.3% YoY to Rs 3875/t. EBITDA margin for the quarter was at 16.9%, expanding 373 bps YoY and EBITDA/t increased 30% YoY to Rs 650/t. EBITDA, however, came in at Rs 61.7 crore and company reported a net profit of Rs 18.7 crore. Over four years i.e. FY16-19, Sagar Cements registered volume growth of 21% CAGR led by strong demand in its major markets and capacity addition. This was led by AP, Telangana region witnessing 40% growth in the recent times which however, is expected to slow down given the high base. The capacity expansion in Madhya Pradesh and Odisha of 2.5 MT, which the company has undertaken would add to volumes only from FY22E as they are expected to be commissioned by March 2021.
Key Drivers: With the current pricing environment in the south improving, the management is also hinting at a shift in focus towards better realisations. Additionally, the company also expects savings 45 cr per year on account of Capitve power plant in Matampally and WHRMS. Along with better capacity utilisation and price hikes taken over February-May increasing price from Rs 245/bag in January to Rs 320/bag in May we expect EBITDA margins to gradually expand from 13.1% in FY19E to 15.2% by FY21E. With limited clinker based additions expected to come up in the southern region in relation to the strong traction of cement consumption backed by IHB segment, real estate and infrastructure spends, increasing presence in the east led by ramping up of the Vizag unit, we believe the company would be able to grow at a healthy pace. It has also Completed acquiring 65% stake in Satguru Cement and 100% stake in Jajpur cement.
Financial: Total revenue Rs 366 cr in Q4FY19 vs Rs 295 cr in Q4FY18 up 24%. PAT at Rs. 18 cr in Q4FY19 vs Rs 4 cr in Q4FY18 up 300%. Ebitda stands at Rs.62 cr in Q4FY19 up 59% vs Rs. 38 cr in Q4FY18.
Share Market Tips For June 2019: 1stWeek
Nestle India Ltd(NSE: NESTLEIND) (Share Price: Rs.11400): Potential Buy
Valuation: Over-Valued stock with TTM PE of 68x.
Reasons to Consider: Net sales for the quarter increased 8.9% YoY to Rs 3,003 crore led by robust domestic volume growth driven by aggressive new launches last year. Operating profit increased 5.9% to Rs 737.7 crore while margins declined 71 bps to 24.6% on a high base. Volume growth in CY18 was 11.1% YoY, led by strong growth in confectionery business at 15% YoY, beverages at 11% YoY and prepared dishes at 14% YoY. Milk products posted a 4.8% YoY volume growth. Given aggressive A&P done by the company behind new launches, we expect lower double-digit volume growth whereas Kit Kat, Milkmaid and Nescafe have been relaunched while more brands are likely to be remodeled, pushing volume growth upwards. It has new offerings in below Rs 10 price point which will help in gaining market share. NIL has announced plans to launch organic food products in the â€˜milk products & nutritionâ€™ segment.
Key Drivers: The â€œout-of-homeâ€� (OOH) business registered volume and value growth in FY18, led by an increase in reach and distribution of KitKat, Maggi & Nescafe across key â€œout-of-homeâ€� channels, such as educational institutes, airlines, railways, offices, and food service channels like hotels and restaurants. Nescafe Classic, Maggi Coconut Milk Powder and Milk Maid performed well driven by new customer acquisitions and increased penetration through stronger customer engagement. NIL has launched 39 products in the past two years and it has launched 13 new products in FY18 which increased its ad spend up 44.4% YoY across all categories. NIL is targeting the youth segment, which has high disposable income, by leveraging the health and wellness platform as it complements their changing and upwardly lifestyle. It has plans to accelerate innovations centered on superior health, nutrition and wellness at appropriate price points which will drive the growth in the future.
Financial: Total revenue Rs 3002 cr in Q4FY19 vs Rs 2757 cr in Q4FY18 up 9%. PAT at Rs. 465 cr in Q4FY19 vs Rs 424 cr in Q4FY18 up 9%. Ebitda stands at Rs.738 cr in Q4FY19 up 6% vs Rs. 697 cr in Q4FY18.
Share Market Tips For May 2019: 5th Week
Elgi Equipments Ltd (NSE: ELGIEQUIP) (Share Price: Rs.265 ): Potential Buy
Valuation:Over-Valued stock with TTM PE of 55x.
Reasons to Consider: Elgi Equipments (Elgi) reported Q4FY19 numbers where its revenue grew 14% to Rs 528 cr and net profit grew 31% to Rs 35 Cr. Overall, Elgiâ€™s domestic operations show a direct correlation and multiplier effect with pace of manufacturing and industrial activity (IIP) in India. It is also a dominant leader with a market share of 40-45% in the garage equipment space for automotive equipment through its subsidiary ATS Elgi. As per the management, the domestic market continues to witness a healthy rate of inquiries for its air compressor products from clients. However, there have been select instances of hesitation in finalizing orders by clients suggesting potential sluggishness in demand, going ahead. India business & direct exports for air compressors contributed Rs 894.5 crore (56%) of overall revenue in FY18. The company has a relatively higher market share in the smaller rated compressors. It recently acquired Australiaâ€™s largest air compressor distributor Pulford Air & Gas.
Key Drivers: Elgi, through acquisitions, has several foreign subsidiaries in key markets such as the US and Europe (Pattonâ€™s in the US) (Rotair in Europe). It has recently acquired â€˜Pulfordâ€™ with an intention to expand into the Australian market. The company has scaled down its operations and rationalized costs in markets like China, Brazil. Over the past two years, Elgi has managed to consistently increase the profitability of foreign subsidiaries (EBITDA margins 7.7% in FY18) and has plans to improve further. With continued traction in key subsidiaries such as Pattonâ€™s and Rotair & newer acquisitions, we expect revenues to grow 24.0% CAGR from FY18-20. Thus, it would also improve the share of foreign subsidiaries in consolidated revenue from 32.3% to 36.2% over FY18-20. Elgi Equipments has continued to strengthen its domestic & international operations for air compressor. It also dominates the automotive equipment segment through ATS Elgi. We believe Elgi is an excellent combination of market leader, robust balance sheet, efficient working capital management, consistent dividends, and clean management.
Financial: Total revenue Rs 528 cr in Q4FY19 vs Rs 462 cr in Q4FY18 up 14%. Net Profit at Rs. 35 cr in Q4FY19 vs Rs 27 cr in Q4FY18 up 31%. Ebitda stands at Rs.64 cr in Q4FY19 up 17% vs Rs. 55 cr in Q4FY18.
Page Industries Ltd (NSE: PAGEIND) (Share Price: Rs.19750 ): Avoid
Valuation:Over-Valued stock with TTM PE of 56x.
Reasons to Avoid: Q4 results significantly below estimates profit declined 20.4 percent YoY. The slump in growth rate is concerning as it comes on a relatively weak base the extent of weakness in the company is very high compared to its peers. The licensee of Jockey International and Speedo in India reported profit at Rs 75 crore in March quarter against 94 crore in the same period last year. The management also attributed weak performance to a slowdown. For the year ended March 2019, inventory jumped 32 percent to Rs 750 crore and borrowing increased 45 percent to Rs 72 crore compared to the previous year.
Financial: In Q4FY19 Net Sales was flat at Rs 607.80 crore vs Rs. 608.4 crore in Q4FY18. Net Profit at Rs. 75 crore in Q4FY19 vs Rs. 94 crore in Q4FY18 down 20%. Whereas, EBITDA stands at Rs. 129 crore in Q4FY19 down 17% from Rs. 154 crore in Q4FY18.
Sun TV Network Ltd (NSE: SUNTV ) (Share Price: Rs.535 ): Avoid
Valuation: Fairly-Valued stock with TTM PE of 16x.
Reasons to Avoid: Company has announced its Q4 result which was weak on operating levels. Its profit slips 2% despite 24% increase in revenue. Muted advertising and subscription revenue growth impacted earnings. Advertisement and subscription growth impacted by the implementation of the New Tariff Order (NTO). Viewership market share of its flagship channel, SUN TV (Tamil), has remained subdued. Advertising revenue growth was flat in Q4FY19 against expectations of 5-7 percent growth. Efforts on forming a digital strategy are still ongoing and the company remains elusive in sharing any details. The delay on that front, along with rising competition with aggressive investments in regional content, remains a concern on the traditional business.
Financial: In Q4FY19 Net Sales was at Rs 889 crore vs Rs. 717 crore in Q4FY18 up 24%. Net Profit at Rs. 283 crore in Q4FY19 vs Rs. 290 crore in Q4FY18 down 2%. Whereas, EBITDA stands at Rs. 675 crore in Q4FY19 up 20% from Rs. 559 crore in Q4FY18.
Dish TV India Ltd (NSE: DISHTV ) (Share Price: Rs.32.50 ): Avoid
Valuation: Fairly-Valued stock with TTM PE of 22x.
Reasons to Avoid: Company reported a consolidated net loss of Rs 1,360 crore for the fourth quarter vs net profit of Rs 118 crore in a year-ago quarter. Dish TV's total expenses were at Rs 1,490.72 crore. Subscription revenue dropped by 5 per cent year on year, while operating revenue fell 8.7 per cent year on year. With, high promoter pledge (84% of promotersâ€™ stake is pledged) is also a cause of concern as we have already seen recent carnage in the stock and the Jio entering in the D2H sector will also be an threat to the company and user are now shifting towards more on OTT platform that will also dent the ARPU's of the company going forward.
Financial: On the financial front in Q4FY19 Net Sales was Rs 1,398 crore vs Rs. 1532 crore in Q4FY18 down 8%. Net Loss at Rs. 1360 crore in Q4FY19 vs Net Profit of Rs. 118 crore in Q4FY18. Whereas, EBITDA stands at Rs. 424 crore in March 2019 up 3% from Rs. 414 crore in March 2018. The numbers has been un-comparable due to merger with videocon d2h.
Share Market Tips For May 2019: 4th Week
JSW Energy Ltd (NSE: JSWENERGY) (Share Price: Rs.67.60 ): Potential Buy
Valuation:Over-Valued stock with TTM PE of 18x.
Reasons to Consider: JSW Energy has posted surprisingly positive result in Q4 and logs Rs 6 cr profit as against Rs 483 cr loss in the year-ago. Company has also decided not to pursue the electric vehicle business because of the higher than anticipated uncertainties associated with it. Rather, it would maintain capital cushion for growth opportunities in power and other related businesses which street see as a positive for the company going forward. During the quarter the PLF(Plant Load Factor) was at 54% as against 51.9% in the corresponding quarter of the previous year.
Key Drivers: Company has continued de-risking the business with significant portion of open capacity tied-up with under short-term power supply contract in FY20 in which a) Vijayanagar plant secured PPA for 330 MW from Telangana state for period of 9M which begins from July 19, b) Open capacity at Ratnagiri plant nearly fully tied up in H1FY20 through short term contract, c) Commissioning of 36 MW thermal capacity at salboni and nandyal expected in Q1FY20 along with long term PPA tied up under group captive scheme. It is also focusing on strengthing the balance sheet in which during the quarter it has reduced the net debts of Rs 636 cr with net debt to equity ratio stood at 0.85x. Going forward the key to watch will be the PLF on various power plant and the tariff on merchant rates with the ability to sign the long-term PPA with Discoms.
Financial: Company had reported a Revenue of Rs 2018 cr in Q4FY19 Vs Rs 1879 cr in Q4FY18 up 8%, posted Net Profit of Rs 6 cr in Q4FY19 vs Rs 483 cr loss in Q4FY18.
PHOENIX MILLS(NSE: PHOENIXLTD ) (Share Price: Rs.610 ): Potential Buy
Valuation: Fairly-Valued stock with TTM PE of 25x.
Reasons to Consider: Company has posted robust performance on revenue and profit front up 65 & 120% during the quarter despite slowdown in the real estate sector due to liquidity crunch. The Company is engaged in the development and operation of malls and other real estate properties. The company has an operational asset portfolio of eight operational retail assets aggregating 5.9 million square feet (MSF) and four operational commercial assets aggregating 1.16 million square feet.
Key Drivers: Focusing on completing its existing/upcoming projects by FY22/23 and de-leveraging its balance sheet will be a key driver for growth. Phoenix has two under construction assets at Pune, Chennai with GLA of 1.12 MSF and plans to develop commercial asset at PMC Hebbal with GLA of 0.65 msf. Phoenix Mills Ltd provides a unique way to play Indiaâ€™s real-estate & retail growth story. It will be the prefer bet in the real-estate sector due to its strong operational performance, scalability (through the CPPIB deal), robust cash generation and no issue in corporate governance.
Financial: Total revenue Rs 723 cr in Q4FY19 vs Rs 436 cr in Q4FY18 up 65%. Net Profit at Rs. 228 cr in Q4FY19 vs Rs 104 cr in Q4FY18 up 120%. Ebitda stands at Rs.410 cr in Q4FY19 up 78% vs Rs. 230 cr in Q4FY18.
Share Market Tips For May 2019: 2nd Week
Indian Hotels Company Ltd (NSE: INDHOTEL) (Share Price: Rs.147 ): Potential Buy
Valuation:Over-Valued stock with TTM PE of 60x.
Reasons to Consider: Indian Hotels reported mixed bag numbers for the quarter. Consolidated revenues grew 8.8% YoY to Rs 1,244 crore. Average occupancy for Q4FY19 was at 74%, a 200 bps dip YoY led by the addition of new properties during the quarter. However, the financial year ended with an occupancy of 68% for the company, implying a 100 bps increase in occupancy rates. As demand has grown at a rate higher than supply, the industry saw RevPAR growth of 3.7%, simultaneously IHCL also seen a growth of 6 % YoY in domestic hotels while the same for international network grew 9.3% YoY in FY19. Also, IHCLâ€™s international portfolio has shown signs of a turnaround, which will provide a cushion going forward.
Key Drivers: Asset light focus continues with leverage ratios to improve in the coming quarter with Indian hotel portfolio in FY18 comprised 32% of rooms under management contracts whereas it ended FY19 with 40% of rooms under management contracts. Revenues from management contracts for FY19 were at Rs 222 crore. Further, in FY20E, 1800-2000 new keys would be added, mostly via management contracts. Thus, we believe the asset-light nature of management contracts and their increasing share in the hotels' portfolio of IHCL, should enhance EBITDA levels, thereby leading to an improvement in net debt/EBITDA ratio. Considering the expected tailwinds in the hospitality sector as a whole fuelled by steady demand, lower supply addition and higher discretionary spends, IHCL being one of the leaders in the sector should be a key beneficiary of the turnaround. Additionally, the focus on cost rationalization is expected to drive margins further.
Financial: Company had reported a Revenue of Rs 1244 cr in Q4FY19 Vs Rs 1144 cr in Q4FY18 up 8.8%, Net Profit up 62% to Rs 122.6 cr in Q4FY19 vs Rs 75.6 cr in Q4FY18, whereas EBITDA stands at Rs 284 cr in Q4FY19 vs Rs 245 cr in Q4FY18 up 16%.
Tata Chemicals Ltd (NSE: TATACHEM ) (Share Price: Rs.588 ): Potential Buy
Valuation: Over-Valued stock with TTM PE of 15x.
Reasons to Consider: Tata Chemical showed signs of revival across geographies, except Europe. EBITDA/MT increased 43% YoY to USD53.3 in North America (realization up 5% YoY to USD 226.3/MT) and 46% YoY to USD 56.1/MT in Africa (realization up 3% YoY to USD 255.3/MT). India business delivered 4% YoY growth in soda ash volumes and also improved realization, but profitability was dented by higher power and plant fixed cost. Europe was subdued with EBITDA/MT declining 65% YoY to GBP28.3 due to higher energy and plant fixed cost.
Key Drivers: TTCHâ€™s standalone business witnessed a growth of 15.3% YoY to Rs 1060 Cr. The revenue from consumer products business increased by 18.8% YoY, mainly due to higher sales volume across categories and controlled marketing investments during the quarter. Its product (Tata Salt) continues to maintain a leadership position with a market share in excess of 25% along with the company has launched snacks products and detergent powder. The detergent powder is in the pilot stage in West Bengal and has been receiving a positive response. Domestic demand remains balanced with pockets of tightness witnessed in the market in the previous quarter. The near term plan is to attain a turnover of Rs 5000 cr in the consumer segment with Rs 450 cr contributed by salt, pulses, and spices. Company Nellore plant for nutraceuticals is in the final stage of commissioning. The plant will go through pilot production and the company is targeting commercial production by the end of Dec 19. The company has guided to get into three segments in Lithium-ion business viz. 1) manufacturing of batteries (cell), 2) recycling of batteries, and 3) chemical coating which goes into making batteries. The company has also hinted at getting into manufacturing battery pack at later stages.
Financial: Company had reported a Revenue of Rs 2845 cr in Q4FY19 Vs Rs 2628 cr in Q4FY18 up 8.1%, Net Profit up 26% to Rs 450 cr in Q4FY19 vs Rs 356 cr in Q4FY18, whereas EBITDA stands at Rs 629 cr in Q4FY19 vs Rs 537 cr in Q4FY18 up 17%. EBITDA margins up 180 bps to 22.8% in Q4FY19 from 21% in Q4FY18.
Amara Raja Batteries Ltd(NSE: AMARAJABAT ) (Share Price: Rs.640 ): Avoid
Valuation: Fairly-Valued stock with TTM PE of 22x.
Reasons to Avoid: Amara Raja Batteries (ARBL) said in a statement in the month of April 19 that it has ended all agreements with its co-promoter entity and technology partner (Johnson Controls) with effect from April 1, 2019. Agreements include shareholderâ€™s agreement, share subscription & investment agreement, technical assistance & licensing agreement and power frame technology license agreement. The end of an association with Johnson Control, however, raises concerns over the future innovation pipeline at ARBL, since existing business to run unchanged but future technology innovation pipeline looks uncertain for which we believe it will effect on the valuation multiple being commanded by the company.
Financial: On the financial front in Q3FY19 Net Sales was Rs 1694 crore vs Rs. 1554 crore in Q3FY18 up 9%. Net Profit at Rs. 131 crores in Q3FY19 vs Rs. 134 crore in Q3FY18 down 2.6%. Whereas, EBITDA stands at Rs. 253 crores in December 2018 up 4.6% from Rs. 242 crore in December 2017.
Marico Ltd (NSE: MARICO) (Share Price: Rs.364 ): Potential Buy
Valuation:Over-Valued stock with TTM PE of 42x.
Reasons to Consider: In Q4FY19, Marico witnessed a stable demand environment and healthy offtake on account of the competitive strength of its products. Rural growth stood ahead of urban growth. However, the same has to be keenly monitored in view of some sluggishness seen at the wholesale level at the end of March 2019. We believe volume growth of 8 percent has been aided by healthy growth in Parachute & Saffola backed by strong promotional activity, while value-added hair oil portfolio performance was muted during the quarter. The international business had a reasonable quarter, with Bangladesh and Vietnam performing well. Going forward (OPM) is expected to improve marginally due to easing input cost pressure (especially copra prices) and provides growth and margin visibility in the coming quarter.
Key Drivers: Inline with its innovation strategy, Marico launched many new products during Q4FY2019. The company launched a new range of skincare products under the new brand, Kaya Youth Oz (comprising face cream, face wash, micellar water, and face wipes). In the food space, the company launched healthier versions of ready-to-cook poha and upma by including millets and quinoa. The company also launched organic food offerings under Coco Soul brand - coconut sugar, coconut chips, coconut peanut butter and coconut almond butter in selected markets. New launches remain at the core of the companyâ€™s growth strategy. We expect many more new launches in the value-added hair oil and food category which will be the key driver for the stock in the coming quarters. New launches will be well supported by adequate media and promotional spends.
Financial: Company had reported a Revenue of Rs 1609 cr in Q4FY19 Vs Rs 1480 cr in Q4FY18 up 8%, Net Profit up 118% to Rs 401 cr in Q4FY19 vs Rs 183 cr in Q4FY18, whereas EBITDA stands at Rs 311 cr in Q4FY19 vs Rs 275 cr in Q4FY18 up 13%.
Share Market Tips For May 2019: 1st Week
Fortis Healthcare Ltd (NSE: FORTIS ) (Share Price: Rs.138): Avoid
Valuation: Over-Valued stock with negative earnings.
Reasons to avoid: Company has been in news from last year due to its corporate governance issue and its promoter stake sale to Malaysian group entity IHH healthcare where the SC has put this transaction on hold due to the petition filed by Japanese drugmaker Daiichi Sankyo alleging former promoters - brothers Malvinder and Shivinder Singh violated undertakings and court orders. Daiichi had sought a stay on the Fortis sale as the Singh brothers had not fulfilled their commitment to pay them as per the Delhi High Courtâ€™s orders. Bidding for cash-strapped Fortis kicked off earlier this year after its founders, brothers Malvinder and Shivinder Singh, lost their shareholding due to debt, and allegations that they had improperly taken funds from the company. On financial front also the company has posted a quarterly loss as against profit in the previous quarter and EBITDA was also declined 14% during the quarter.
Financial: On the financial front in Q3FY19 Net Sales was Rs 1103 crore vs Rs. 1120 crore in Q3FY18 down 1.55%. Net Loss at Rs. 197 crore in Q3FY19 vs Net Profit of Rs. 19 crore in Q3FY18. Whereas, EBITDA stands at Rs. 81 crore in December 2018 down 14% from Rs. 94 crore in December 2017.
HEG Ltd(NSE: HEG ) (Share Price: Rs.1761): Avoid
Valuation:Under-Valued stock with TTM PE of 8x..
Reasons to avoid: For Q4FY19, we expect blended realisations to decline QoQ on the back of a fall in graphite electrodes prices for both UHP grade electrodes as well as HP grade electrodes. For Q4FY19, we expect HEG to report capacity utilization of 80% compared (84% in Q4FY18 and 82% in Q3FY19). Due to the higher price of needle coke, it will impact raw material costs. Thus, the top line is expected to come down 14.5% QoQ and EBITDA also likely to come down, implying an EBITDA margin of around 48% due to higher raw material prices (73.6% in Q4FY18 and 62.6% in Q3FY19).
Financial: On the financial front in Q3FY19 Net Sales was Rs 1865 crore vs Rs. 843 crore in Q3FY18 up 120%. Net Profit at Rs. 867 crore in Q3FY19 vs Rs. 342 crore in Q3FY18 up 153%. Whereas, EBITDA stands at Rs. 1313 crore in December 2018 up 135% from Rs. 559 crore in December 2017.p>
Hero Motocorp Ltd (NSE: HEROMOTOCO ) (Share Price: Rs.2526): Potential Buy
Valuation:Fairly-Valued stock with TTM PE of 15x
Reasons to consider: Hero MotoCorp (Hero) has reported results for the Q4. Revenue at Rs. 7,885 crores declined by 8% yoy and net Profit down 25% to Rs 730 cr yoy. The drop in revenue can be attributed to a sharp 11% decline in volumes, while realization per vehicle rose by 3.5% yoy on account of price hikes taken by the company. Heroâ€™s management has identified the reasons for falling market share and renewed its focus on the 150-200cc segment (where buyers are moving) and on the scooters (where Hero is late entrant). Since the auto industry has seen a slowdown in 1HFY20 but due to the good festive season, pre-buying ahead of the implementation of BSVI, a lower base, the expectation of near normal monsoon and further interest rate reduction would make 2HFY20 better.
Drivers: Hero has displayed great concepts in the premium segment (200cc & 250cc) and is expected to launch three new motorcycles (Xpulse200, Xpulse 200T and HX250R). On the operating performance front, commodity prices have stabilized from the last few quarters, focus on the premium motorcycles & scooters and higher realization post BS6 to aid further. We believe the EBITDA Margins have bottomed out and is ready to bounce back gradually in the coming years due to cost rationalization and a combination of multiple things, along with Heroâ€™s strategy of taking price increase in small steps. However, for the next 1-2 quarters, the margins to hover around the current levels as the headwinds and tailwinds are neutralizing each other.
Financial: Company had reported a Revenue of Rs 7885 cr in Q4FY19 Vs Rs 8564 cr in Q4FY18 down 8%, Net Profit down 25% to Rs 730 cr in Q4FY19 vs Rs 967.5 cr in Q4FY18, whereas EBITDA stands at Rs 1069 cr in Q4FY19 vs Rs 1371 cr in Q4FY18 down 22%. EBITDA margins declined 240bps to 13.6% in Q4FY19 from 16% in Q4FY18.
Niveza Research Desk :
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