Siddharth Sedani Anand Rathi Shares and Stock Brokers
Indian equity indices are recording stellar performance since July 2018, with Sensex and Nifty touching new highs. Encouraging domestic and global cues are contributing towards the rally.
Banking names are seeing renewed interest, owing to good earnings by some lenders as well as unveiling of “SASHAKT” programme by the government. The scheme proposes to set up independent asset management companies (AMCs) and steering committees for
faster resolution of bad loans in the banking system. Share prices of corporate banks have rebounded in the last few weeks during the result season.
IT & pharma sectors are also seeing an upmove, considering reasonable valuations and factors such as rupee depreciation, which could turn favorable for such segments.
The industrial production growth data has also been a positive which rose to 7% in June 2018, against a 0.3% decline in June 2017. The spike was largely because of high growth in the manufacturing sector, which after falling for five consecutive months rose in June 18 to 6.9%. Manufacturing contributes more than three-fourths to overall IIP.
IIFL Holdings | Rating: Buy | Target: Rs 910
With the aim of thriving in the evolving competitive and regulatory environment, the company has taken the momentous decision to re-organise the unified corporate structure and create independent entities focused on their core businesses.
Owner of 7 shares of IIFL Holdings will own 7 shares of IIFL Finance, 7 shares of IIFL Securities, and 1 share of IIFL Wealth post reorganization. The proposed rejig is expected to result in the unlocking of value and creating enhanced value for its
shareholders.
This move will enable each business to grow faster, attract the right talent and become more innovative & efficient.
IIFL Finance has a retail focussed diversified loan assets with a loan AUM of ₹ 33,700 Crores.
IIFL Wealth comprises wealth assets of ₹ 1,40,900 Crores from 10,000 plus high networth families.
IIFL Securities provides capital market related activities having 24 Lakh customers serviced from 1300 plus locations
NBFC’s in India are expected to see an 18% CAGR and raise their share in total credit to 19% by 2020 from 13% in FY18.
Management is expecting a growth rate of 30% to 35% year-on-year of its NBFC Business and targeting net new money to be raised on the wealth division in the region of 20% to 25% of its last year assets.
On profitability front, we expect company to report ROE of around 18.2% in FY19E and 18.8% in FY20E. Favorable product mix will result in delivering ROE going forward.
Larsen & Toubro Technology Services | Rating: Buy | Target: Rs 1,940
With the rise of enabling technologies like 5G, IoT, Artificial Intelligence etc, the digital disruption now has expanded to almost each and every part of the global industrial complex including manufacturing and process industries. This has opened a new and bigger opportunity of more than $1.1 trillion market for engineering outsourcing market.
LTTS’ has multi-sectoral presence and domain expertise enables cross-pollination of ideas and best practices leading to differentiated engineering solutions.
During the latest quarterly results, the company has reported robust growth in revenues; it grew 33.2% in Q1-FY19 to $168.9 million as against $127.6 million in Q1-FY18 in constant currency terms.
We expect LTTS to grow its consolidated revenues at CAGR of 23% for the next two years and reach ₹4895 Cr in FY19 and ₹5696 Cr in FY-20 on back of large opportunity present across capex intensive business and sustained momentum of ramping up of existing clients.
At CMP the stock is trading at 2x times FY18E consolidated earnings and 16.9x times FY19E consolidated earnings.
Deepak Nitrite | Rating: Buy | Target: Rs 346
Deepak Nitrite has reported a growth of 33% in its standalone revenues at ₹421 Cr in Q1-FY19 as against ₹316 Cr in Q1-FY18.
The PAT margins for the company during the quarter stood 5.2% at ₹21 Cr as against 2.6% at ₹8 Cr in Q1-FY18.
The Performance products segment has turned EBIT Positive for the quarter and management has guided it to be profitable for the full year.
On its progress of its Greenfield project to manufacture Phenol and Acetone – The Company’s mega-project is expected to get commissioned by third week of Aug-18 and all pre-commissioning activities have been concluded successfully. The company has incurred an amount of ₹1,400 Cr in this project.
The management has also guided to achieve 40%-60% utilizations in FY19 and around 95% utilizations from FY-20 onwards. At full utilization levels and with current spreads this project’s potential revenue generation stands at around ₹2,800 crore for the company.
Disclaimer: The author is Vice President — Equity Advisory at Anand Rathi Shares and Stock Brokers. The views and investment tips expressed by investment expert on Moneycontrol are his own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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