Share Market Tips For April 2018

Sanco Trans Ltd (BSE: 523116) (Share Price: Rs.245): Avoid

Valuation: Overvalued with trailing PE of 450.28x.
Reasons to avoid: The market cap of the company is very low. On a consolidated basis, the company has posted negative earnings since last two years.
Drivers: Shipping and logistics industry is pacing up which can reflect in peers' financials. The company delivered flat growth of 1.3% since last five years.
Financials: Net sales stood at Rs.82 crores in FY17 vs Rs.76 crores in FY13. EBITDA stood at Rs.9.6 crores in FY17 vs Rs.15 crores in FY13. EPS stood at Rs.1.81 per share in FY17 vs Rs.35.37 per share in FY13.

Uttam Value Steels Ltd (NSE: UVSL) (Share Price: Rs.0.20): Avoid

Valuation: Poor valuation with negative earnings.
Reasons to avoid: The company has delivered poor growth of -1.81% in last five years. The company has delivered negative return ratios.
Drivers: Promoters have pledged more than 47% of their holdings. Lack of operational efficiency by the company dragged the company down.
Financials: On YoY basis, the company has delivered negative earnings since FY14. Splitting year in quarters, the scenario is same as all quarters are in negative territory.

Gangotri Textiles Ltd (NSE: GANGOTRI) (Share Price: Rs.0.05): Avoid

Valuation: Stock with falling fundamentals and poor valuation.
Reasons to avoid: Company has delivered negative growth over last few years. Interest coverage ratio is low. Promoters' holding is just 24%. Contingent liabilities are 122.95 crores.
Drivers: Company is engaged in manufacturing of cotton yarn, specificity yarn, fabric and ready-made garments. Demand is good for the products but the quality of the company products is little inferior as compared to peers.
Financials: The last couple of years company has shown significant improvement, but on YoY basis, the company is still delivering negative earnings. The market share of the company is low.

Gayatri Sugars Ltd. (BSE: 532183) (Share Price: Rs.14.9): Avoid

Valuation: Undervalued stock as compared to industry peers with PE of 6.77x.
Reasons to avoid: The company has delivered poor growth of 2.1% over the past five years.
Drivers: Promoters have pledged more than 40% of their holdings. Interest coverage ratio is low. Operating margins are going down due to higher expenses.
Financials: Earnings are uncertain. YoY numbers were negative for the company whereas quarter growth is unstable. Debt is on increasing side.

Thirani Projects Ltd. (BSE: 538464) (Share Price: Rs.53): Avoid

Valuation: Overvalued stock as compared to industry peers with PE of 861x.
Reasons to avoid: Stock is trading 5 times its book value. Promoter holdings is low i.e. 20%.
Drivers: Margins were hammered down. Return ratios were also low. It is getting difficult for the company to survive the competition.
Financials: Quarter numbers are uncertain for the company. In the last couple of years, the company has shown significant improvement. However, on YOY basis the company is still delivering negative earnings. The market share of the company is low.

Ginni Filaments Ltd. (NSE: GINNIFILA) (Share Price: Rs.32): Avoid

Valuation: Overvalued stock as compared to industry peers with PE of 34x.
Reasons to avoid: The company has delivered poor growth of 1.43% over past five years. The company has a low return on equity of 7.62% for last three years.
Drivers: Promoters have pledged more than 40% of their holdings. The interest coverage ratio is low while the operating margins are going down due to higher expenses.
Financials: Quarter numbers are uncertain for the company. The case is nearly same for yearly results. Peers are posting stable growth numbers while the company is finding it difficult to survive the close competition. Debt is on the growing side with slow and low repayment.

A2Z Infra Engineering (NSE: A2ZINFRA) (Share Price: Rs.28.45): Avoid

Valuation: Overvalued with negative earnings.
Reasons to avoid: The company has weak financials as margins and final profit are both in the negative. Also, promoters of the company have pledged 96% of their shares.
Drivers: The company's board approved the issuance of 8 crore equity shares to lenders as a one-time settlement. The company belongs to the power sector which is growing slowly at this point. These developments have impacted the company's earnings significantly.
Financials: In Q1FY18, net sales down by 34% QoQ to Rs.112 crores. EBITDA and PAT witnessed negative numbers.

ABM International (NSE: ABMINTLTD) (Share Price: Rs.35.1): Avoid

Valuation: Stock is undervalued with PE multiple of 72x.
Reasons to avoid: Company has delivered poor growth of 6.8% over past five years. The company has a low return on equity of 4.08% for last three years. The company has contingent liabilities of Rs.13.76 Cr. The company might be capitalizing the interest cost.
Financials: Revenue growth is poor for the company over last five years. Uncertainty has been seen as far as business is concerned. Closed peers are performing strongly making way difficult for the company to survive in the hunt.

OK Play India (BSE: 526415) (Share Price: Rs.81): Avoid

Valuation: Overvalued as compare to peers with trailing PE of 368.60x.
Reasons to avoid: The company having debt with DE of 1.38x as of now. Revenue witnessed degrowth of 21% in FY17. It is not seeing any uptick in volume which can boost topline.
Drivers: Promoters have pledged 68.26% of their holding. The company has a portfolio of plastic toys and auto parts still it is not picking up momentum since past years.
Financials: ROE is low to 0.2% in FY17. PAT margin is flat at 0.03% in FY17. EPS was negative till FY16 and in FY17 is slightly positive to Rs.0.03 which is very low as compared to peers.

NCC (NSE: NCC) (Share Price: Rs.127): Avoid

Valuation: Overvalued 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.
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 the last couple of years. Cash flows are negative whereas de-growth in revenue as well as in earnings has been seen.

Adhunik Industries (NSE: ADHUNIKIND) (Share Price: Rs.88): Avoid

Valuation: 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 travelling downward only while most of the closed peers are on the performing side. The company has delivered poor growth in last five years.
Financials: 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.

Royal Orchid Hotel (NSE: ROHLTD) (Share Price: Rs.176): Avoid

Valuation: Overvalued stock with troubled operational performance of the company.
Reasons to avoid: Earnings as well as revenue growth 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.
Financials: 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.

Emco Ltd (NSE: EMCO) (Share Price: Rs.12.35): Avoid

Valuation: Uncertain with uncertain numbers.
Reasons to avoid: The company has low-interest coverage ratio. Nearly zero growth in last five years.
Drivers: The company is dealing with operational troubles. Return ratios are unable to contribute. Contingent liabilities increasing year after year and has touched to Rs.777 crore.
Financials: Fundamentals of the company are not in support of the business of the company. Revenue growth looks uncertain on the YoY basis. Financial troubles are adding uncertainty on the earnings side.

Uttam Galva Steels (NSE: UTTAMSTL) (Share Price: Rs.14.5): Avoid

Valuation: Poor valuation with negative earnings.
Reasons to avoid: The company has delivered poor growth of -3.4% in last five years. The company has delivered negative return ratios.
Drivers: High debt company with low interest coverage ratio. Lack of operational efficiency by the company dragged the company down. The headwind of the industry is also not in support in the current market.
Financials: On YoY basis, the company has delivered negative earnings since FY14. Splitting year in quarters, the scenario is same as all quarters are in negative territory.

Ginni Filaments (NSE: GINNIFILA) (Share Price: Rs.33): Avoid

Valuation: Overvalued stock as compared to industry peers with PE of 34x.
Reasons to avoid: The company has delivered poor growth of 1.43% over past five years. The company has a low return on equity of 7.62% for last three years.
Drivers: Promoters have pledged more than 40% of their holdings. Interest coverage ratio is low. Operating margins are going down due to higher expenses.
Financials: Quarter numbers are uncertain for the company. The case is nearly same for yearly results. Peers are posting stable growth numbers while the company is finding it difficult to survive in closed competition. Debt is on the growing side while repayment is slow and low.

FRAUD ALERT:

In this week fraud messages with Niveza's name have been making the rounds. The SMS does not provide a client ID. The SMS also states that you should buy a certain amount of shares, which we at Niveza India never do. Here's our actual analysis of the stock.

Aplaya (BSE: 511064) (Share Price: Rs.2.28): Avoid

Valuation: Overvalued stock as compared to industry peers with PE of 519x.
Reasons to avoid: The company has delivered poor growth over the years. Due to poor earnings, company has low return ratios. Promoter holding is low as well i.e. 9.57%
Financials: Quarter numbers are falling for the company over the quarters. The case is nearly same for yearly results. Peers are posting stable growth numbers while the company is finding it difficult to survive in closed competition. Debt is on growing side with repayment is slow and low.