Buy

Buy Tourism Finance Corporation Ltd CMP at Rs. 43.65 and add on dips to Rs. 39- 40

Update 2: Shirpur Gold Refinery Ltd. Target of Rs.152 achieved. Book Profit. Update 1: Shirpur Gold Refinery Ltd. rallied from the low of 92.2 to the high of 137 after our report publication, so on 26th AUG 2016 we advised to book 50% profit and Trailed stop loss to 125....

With a Portfolio of more than 2,000 products across the world, presence in more than 150 countries across branded and generic markets, 47 manufacturing sites, multiple facilities approved by various regulatory authorities across the world including USFDA, company is ranked Number 1 Pharma company in India, 5 th in US with one of the largest ANDAs pipeline (159 ANDAs awaiting approval) & Largest Indian...

JBM Auto Limited, established in 1996, is the flagship company of the USD 1.35 Billion diversified JBM Group. The Company is an automotive company that manufactures key auto systems and city buses. The Company over the last two decades has focused on technological excellence and is supplying products to almost all major OEMs in India. JBM Auto aims to be a pioneer for initiatives related to sustainable transportation solution aiding towards passenger comfort and safety.

They initiate coverage JBM Auto as a BUY @218 with a target of Rs 280 representing a potential upside of 28% from the buy price, JBM Auto share price is trading at a PE of 16.8.

Deepak Nitrite, a leading supplier of organic, inorganic and fine chemicals, specializes in hydrogenation, nitration, customized molecule development, hazardous reactions and toluene derivatives. Its products - manufactured at its plants in Nandesari & Dahej in Gujarat, Roha and Taloja in Maharashtra, and at Hyderabad in Andhra Pradesh - finds end use in agro-chemicals, dyestuffs, pigments, inks, whiteners, pharmaceuticals, fuel additives, textiles and paper. For few products like sodium nitrite, sodium nitrate and nitro toluenes it has market supremacy in India, while for some like xylidines, cumidines and oximes it is amongst top global suppliers.

Valuation: The stock currently trades at 18.4x FY17e EPS of Rs 6.78 and 16.4x FY18e EPS of Rs 7.64. Ramification of adverse fx movement, project delays and subtlety of FWA business - Rs 8.7 crs deficit last fiscal - could somewhat annul forbearance of entrenched FSC (Fine & Specialty Chemicals) and BCC (Bulk Chemicals & Commodities) segments. Yet high entry barriers for the phenol business - multitude of government approvals being one of the many - are nauseating for new entrants. Ample scope exists to launch key derivatives of phenol and acetone at a later stage. They assign buy rating with target of Rs 153 based on 20x FY18e earnings (peg ratio: 0.9) over a period of 6-9 months.

Inox Wind Ltd’s (IWL) 1QFY17 results were below our estimates both in terms of revenue (adverse mix) and extended net working capital (180 days vs. 82 days as on Mar-16). The management clarified that mismatch in supply of individual parts (blades, towers, nacelles & hubs) had led to the buildup of receivables so far. To correct the same, it focused only on manufacturing the balance part of supplies in 1QFY17 leading to lower revenues/ utilisation. With this anomaly getting cleared now, it expects a substantial pick up in volumes and reduction in working capital by end of 1HFY17. Gradual improvement in working capital (over FY17) should enable it to be a net cash company by FY17-end.

Notwithstanding short term ups and downs, long term visibility on WTG volumes remain high given the expected policy on repowering and hybrid model (wind + solar). A bid based tender for 1GW is expected to open in the next 2 months providing further visibility on FY17E WTG volumes. Policy thrust coupled with technical advancements would continue to drive wind sector and IWL would be a key beneficiary of the same. Retain BUY with a TP of Rs 475/sh (10x FY18E EV/ EBITDA).

Firstsource Solutions is a leading global provider of customized Business Process Management (BPM) services to the Healthcare, Telecom, Media and Banking & Financial Services industries. It has operations in India, Philippines, Sri Lanka, UK and US. In Q1FY17, it reported revenue growth of 20.6% to Rs. 894Cr against Rs. 741Cr on yearly basis. Net profit surged 38.8% to Rs. 73.4Cr compared to Rs. 52.9Cr in the same quarter last year.

Net sales was up by 16% to Rs. 330.6Cr against Rs. 285Cr in the same quarter last fiscal led by 21% volume growth in leaf springs and 27% growth in lift axle business. Operational margin improved substantially from 9.7% to 15.8% on yearly basis.

BPCL reported an EBITDA of Rs 39.2bn in 1QFY17 led by product inventory gains of Rs 12.8bn (refining gains are not disclosed). RPAT was Rs 26.2bn. Results are not comparable owing to inventory and forex impacts.FY16 has been outstanding for OMCs led by (1) Strong GRM, (2) Higher profits in the marketing owing to higher volumes at lower product prices and healthy marketing margins, and (3) Reduced interest burden owing to lower subsidy receivables.Growth in FY17 may be challenging considering the higher base and muted GRM trend in 2Q. The benefits of lower crude prices (balance sheet healing, lower interest cost) are priced in. Expansion in marketing margins is the only trigger left for OMCs. However, up-gradation/capacity expansion (in 4QFY17) of Kochi refinery will be an additional trigger for BPCL.

They remain positive on BPCL owing to its superior refining assets, rising capacity/complexity of Kochi refinery and possible upsides in marketing margins. However, the stock has moved up by ~49% over the past 6-months and we see a correction in the near term (better entry point) led by the weakness in GRM and low chances of inventory gains. Their SOTP target is Rs 650 (4.5x FY18E EV/e for standalone refining, 6.5x EV/e for marketing, Rs 62/sh from upstream and Rs 96/sh from other investments). Maintain BUY.

Well-placed to Cash in Likely Rise in EXIM Trade Navkar Corporation's (NCL) reported numbers for 1QFY17 are largely in-line with our estimate. Its consolidated revenue grew by 10% yoy (-1% qoq) to Rs902mn. However, growth in revenue was lower than volume growth, which rose by 15% yoy (up 1% qoq) to 81,866 TEUs, primarily due to 6% yoy (3% qoq) decline in realization to Rs10,748/TEU on account of higher share of empty cargoes at 5,300 containers vis--vis 1,200 in 4QFY16. EBITDA adjusted for forex loss rose by 2.2% yoy (flat qoq) slower than revenue growth largely due to 3-4% yoy higher cost...