Best Shares To Buy For Short Term In September 2018

RCON International Ltd (IPO) : Potential IPO

About Company: Incorporated in 1976, IRCON International Limited (IRCON) is four decade old government company (under the ministry of railways). It is engaged in the business of engineering and construction mainly specialising in major projects including railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangers, runways, EHV substations, electrical and mechanical works, commercial and residential properties, development of industrial areas and other infrastructure activities. IRCON provides EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects. Presently it has 26 project offices and five regional offices to support and manage its business operations throughout India and five overseas project offices in Sri Lanka, Bangladesh, Malaysia, South Africa and Algeria to provide onsite support overseas

Object of the Issue: The object of the offer is to carry out the disinvestment of upto 99,05,157 equity shares by the promoter, and to achieve benefits of listing the equity shares on the Stock Exchanges. The public issue comprises an offer for sale of 99,05,157 equity shares by its promoter, The President of India, acting through the Ministry of Railways, Government of India. The company will not receive any proceeds from the offer and all proceeds will go to the selling shareholder.

Issue Date: Sept 17, 2018- Sept 19, 2018

Price Band: Rs 470-475 per share

Issue Size: Rs 462- 467 crore

Market Lot: 30

Valuation: On valuation front post-IPO IRCON is expecting PE of 11.28x on higher price band at FY18 EPS

Reasons to consider: Company has a strong credit profile that includes non-fund based standby bank limits of Rs 3,120 crore out of which Rs 1,664.77 crore has been utilised. As of March 2018, the financial profile of the company is characterised by healthy profit margins and a comfortable liquidity position. Healthy order book of Rs.22,406.79 crore with a book to bill ratio of ~5x gives healthy revenue visibility.

Financial: On a consolidated basis, over FY16-18, IRCON posted revenue and PAT CAGR of 27% and 2%, respectively. Average EBITDA margins stood at 10.8% and ROE at 10.3%.

Varroc Engineering Limited (NSE: VARROC) (Share Price: Rs.1017): Potential Buy

Valuation: Undervalued TTM PE 30.54x as compared to close peers.

Reasons to consider: The company is position among Indias top auto component groups, with a 4% share of global automobile lighting systems and top PV (passenger vehicle) makers as customers. The company also has a 6% share of the premium PV lighting market, which is growing fast. Operating margin and return ratios are lower than peers.

Drivers: As per management forecast that the company is increasing presence in the premium LED lighting segment which will lift realizations and margins. A low-cost manufacturing base and focus on driving up margins, lift the growth prospectus of the company. Presence in the domestic and international market, strong relationship with clients, expansion plans in the process would aid topline.

Financial: Revenue grew from Rs 6951 cr in FY15 to Rs 10378 cr in FY18. PAT rose up to Rs 451 cr in FY18 from Rs 17 cr in FY15. EPS increased to Rs 33.4 per share in FY18 from Rs 1.35 per share in FY15.

Uflex (NSE: UFLEX) (Share Price: Rs.305): Potential Buy (10 Steps To Pick The Best Stocks)

Valuation: Undervalued with TTM PE of 7.09x.Reasons to consider: The company posted healthy numbers in FY18 and Q1FY19 as well. High margin Aseptic's margins would benefit company at margin front.

Drivers: Uflexs Aseptic revenues are expected to start from H2FY19. Uflex will be the second player in the segment in India after Tetra Pack. The company expects to garner market share of 23-24%. Capex, continuous innovation and product portfolio expansion poised well for growth.

Financial: For year FY12, the company posted revenues of Rs 4515 crores and since then it has given steady growth and have managed to reach revenue size Rs 6697 crores in FY18 . The EBITDA of the company in FY12 was Rs 636 crores which have increased to Rs 902 crores in FY18. The net profit has grown from Rs 252 crores in FY12 to Rs 312 crores in FY18.