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Stock Market India – Buy Calls – IPO Updates – Online Share Trading – Finance Articles
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Record Date – SRG Housing Finance Bonus Issue

SRG Housing Finance has fixed 30 May 2014 as the record date for the purpose of issue of bonus shares in the ratio of 2:5 (i.e. 2 equity shares for every 5 shares held).
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Buy Calls – Dabur India

Dabur India breached a key resistance at ₹185 recently and has formed a flag pattern on the daily candlestick chart. This gives traders an opportunity to buy the stock at current levels. Since taking support at ₹145 in August 2013, the stock has been on an intermediate-term uptrend. The medium- and short-term trends are up for it.

After taking support at ₹177 last month, the stock continued to trend higher. It is hovering well above its 50- and 200-day moving averages. There has been an increase in daily volumes over the past seven trading sessions. On Tuesday, the stock decisively breached its immediate key resistance at ₹185. It is pausing well above this level forming a flag pattern which is a continuation pattern. Indicators on the weekly chart are hovering in the bullish zone implying upward momentum. Our short-term outlook on the stock is bullish. It can extend its upmove and reach the price target of ₹195.5 and ₹200 in the ensuing trading sessions. Buy the stock with a stop-loss at ₹183.5.

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Hot Chips Buy Calls – Talwalkars Better Value Fitness

Talwalkars Better Value Fitness posted a growth of 17.7 per cent on YoY basis in its Q4FY14 revenues. It is mainly driven by a mix of growth in value added services like NuForm, Reduce and Zumba as well as sales push from various oferings like New Year, EMI scheme, Women’s day etc. Volume growth was supported by addition of 14 itness centres in FY14. An expanded gym base yielded operating costs synergies and sourcing beneits which drove a 190 bps YoY rise in the EBIDTA margins. he bottomline also witnessed robust growth of 22.6 per cent on YoY basis. Going forward, the company aims to expand its health clubs in locations which can yield an incremental RoCE of 25 per cent and improve its same store sales from presently 4‐5 per cent to 8‐10 per cent. In terms of expansion plans, company has signed a master franchisee for 30 HiFi (no frills gyms) in Tier III and IV towns over the next three years.

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Low Priced Scrip – DCB Bank

Here is why –

The bank has recorded strong improvement in asset quality and its gross NPA ratio came down to 1.69 per cent in FY14 from 3.18 per cent in FY’13.Further net NPAs improved to 0.75 percent in FY’14 from 0.91 percent in FY’13. As on 31 March 2014 the bank’s capital adequacy ratio stood at 13.71 per cent under Basel III, norms which is above the mandatory ratio and further the bank has plans to raise up to `300 crore in 9 to 12 months through QIP/preferred allotment.

On valuations front the bank is trading at 1.45 times of its adjusted book value, which is much cheaper as compared to other listed peers. Going forward, it’s believed that the expansion plan, cost optimization and strong assets quality makes a convincing case for having this stock in one’s portfolio. Thus, recommendion is ‘buy’ on the stock with one year time horizon.

 

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We are back!

After a relatively long break from this blog, we are back now with you! Sorry, that some things in life took precedence over anything else and we had to unfortunately go away from this blog as well as from all of my visitors and subscribers. Apologies!

Here on, we would like to continue updating you on the latest news on Indian stock market – just like we used to do before.

Thanks for supporting and staying with us!

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Choice Scrip Buy Recommendation – IPCA Laboratories

IPCA Laboratories: From Strength To Strength

HERE IS WHY

Established in 1949, Mumbai-based IPCA Laboratories is one of the oldest companies in the Indian pharmaceuticals sector. It is a fully integrated pharma company with a presence in formulations and active pharma ingredients (APIs). The scrip is already up by 60 per cent this year, and even on conservative valuations, it can get an investor another 25 per cent returns from here on. Besides, the company has also been extremely consistent in dividend payments.

Due to its focus on the promising products and high growth markets, IPCA has seen a 10-year CAGR of 19 per cent in revenues and 18 per cent in net profits. The EBITDA margins have also improved from 19 per cent in 2002-03 to 22.5 per cent in FY12. Going ahead, we expect sales growth and margin expansion to continue, led by exports. This makes it a good buy in the current uncertain macro-economic environment.

Best of Last One Year

Company Name Reco. CMP (Rs) Gain %
Ajanta Pharma

171.00

407.75

138.45

FAG Bearings India

1261.00

1619.00

28.39

Torrent Pharmaceutical

559.00

708.00

26.65

Dabur India

104.00

128.00

23.08

Asian Paints

2985.00

3669.00

22.91

Colgate Palmolive

1014.00

1218.00

20.12

HDFC

621.00

722.00

16.26

ING Vysya Bank

325.00

374.50

15.23

The revenues of IPCA Laboratories are majorly driven by formulations, which constitute almost 76 per cent of its topline. The remaining 24 per cent come from its APIs business. Exports are a major contributor, making for 61 per cent of the total revenues. Over the years, the contribution of exports has increased consistently. Domestic revenues are also growing by a rate of over 15 per cent, and by FY12, the contribution from the same stood at 39 per cent.

On the exports front, Europe, Africa and America are key markets for IPCA, adding 41 per cent of the company’s revenues. In Africa, it is a dominating player in the antimalarials market, while in the US, it is growing on the generics boom. In Europe, it has started increasing formulations exports in other untapped countries from FY12 onwards, due to which revenues will grow in future.

The World Health Organisation (WHO) has approved its anti-malarial formulation, which has helped IPCA to increase its African revenues by 84 per cent in FY12. The company also has another set of products in the same category which has been approved by WHO and which it expects to launch in India in the second half of the current fiscal. This will provide a further upward thrust to its revenues. India and Africa are the biggest markets for antimalarials, where IPCA has already been successful with its formulations. The new products will garner more revenues for the company in these markets.

We also expect a rise in US revenues as its capacity constraints have been addressed after the USFDA approved its Indore SEZ facility. According to the management, the Indore SEZ facility can add about USD 80-100 million (Rs 440-550 crore) per year when used at its optimum level. Currently, it has 25 ANDAs filed with 12 approvals. It is moving a total of five ANDAs from its Silvassa facility to the Indore SEZ facility, and hence, we expect higher revenues and margin expansion as well. It is also targeting the addition of eight to 10 products in the USFDA-approved products pipeline, which will lead to sustainable revenues.

In the June 2012 quarter, IPCA’s revenues grew by 20 per cent to Rs 637 crore. However, its net profit was down by 30 per cent to Rs 43 crore due to forex loss of Rs 59 crore. Its EBITDA margins have expanded by 456 basis points showing a robust performance. We expect further expansion of EBITDA margins with higher sales growth in FY13. On the valuations front, the scrip is trading at a PE of 15x its FY13 expected EPS of Rs 28. We advise our readers to buy the scrip with a target price of Rs 525.

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Low Priced Scrip Buy Recommendation – Dena Bank

Dena Bank – Promising Returns

Here is Why:

Asset quality is a very sensitive issue when it comes to public sector banks. However, in the case of Dena Bank, the situation seems to be slightly different. Even in uncertain times, the bank has seen an improvement in its asset quality, which set it apart from the other affected public sector banking companies. This, coupled with good business growth and the fact that the stock is available at lower valuations, makes Dena Bank a good buy at the current levels.

Best of Last One Year
Name of Company Reco. CMP(Rs) Gain%
Granules India 102.30 198.60 94.13
Omkar Specialty Chem. 58.50 78.50 34.19
PTC India 45.00 56.25 25.00
Power Grid Corp. of India 96.00 123.90 29.06
HeidelbergCement India 36.30 42.50 17.08
Dena Bank 80.50 88.30 9.69
IDBI Bank 81.00 87.50 8.02
GIC Housing Finance 84.00 84.50 0.60

Dena Bank is currently witnessing handsome business growth. This is evident from the fact that as on June 30, 2012, its total deposits increased by 26 per cent to Rs 79736 crore and the advances increased by 39 per cent to Rs 59641 crore on a YoY basis. The robust growth in advances was due to high lending that resulted in growth of around 70 and 31 per cent in the agriculture and MSME segments respectively.

The asset quality of the bank strengthened as the gross and net NPAs of the bank contracted. Its gross NPAs decreased by six basis points to 1.8 per cent, while the net NPAs decreased by seven basis points to 1.01 per cent YoY. Even on a sequential quarter basis, the net NPAs remained stable, which is commendable. Further, the provision coverage ratio (PCR) stood at 75.62 per cent, which should be considered as decent enough.

The bank did face some sought of pressure on the margin front. On a sequential basis, the Net Interest Margin (NIM) of the bank decreased by 15 basis points to 3.06 per cent. However, this improved by 16 basis points on a YoY basis. The management has further guided they would maintain the NIM above three per cent. As of 30th June, 2012, the Capital Adequacy Ratio (CAR) stood at 12.35 per cent, with the Tier 1 CAR at 8.33 per cent. According to the management, the bank has no plans of raising capital to meet the Basel III norms as of now, as there is plenty of time before the deadline kicks in.

The bank opened 16 new branches in the June 2012 quarter, taking its total network to 1358 branches and 545 ATMs. The management plans to open 100 new branches during FY13. According to Nupur Mitra, Chairperson and Managing Director of the bank, the management is focussing on core banking activity, which will help the bank to grow further. In terms of guidance, Mitra expects an 18 per cent growth in deposits and a 20 per cent growth in terms of advances in FY13, which is above the RBI’s projection of 15 and 17 per cent respectively.

SHAREHOLDING PATTERN AS ON 30/06/2012
Indian Promoters 55.24
Banks Fin. Inst. and Insurance 10.3
FII’s 13.28
Private Corporate Bodies 4.51
General Public 15.19
Others 1.48
GRAND TOTAL 100

In the June 2012 quarter, the bank’s Net Interest Income (NII) increased by 37 per cent to Rs 446 crore and it posted a robust net profit growth of 42 per cent to Rs 238 crore on a YoY basis. As on June 30, 2012, the ratio stood at 39.26 per cent as against 46.10 per cent during the same period last year, which shows that the bank is operating in an efficient manner.

The board of directors recommended a 30 per cent dividend (Rs 3 per share) for FY12, which translates into a dividend yield of around 3.5 per cent. On the valuations front, the stock is available at a price to book value of around 0.65x, which should be considered a fair valuation. We believe that Dena Bank presents a good buying opportunity to garner better returns over a long-term horizon.

LAST FIVE QUARTERS (Rs / Cr)
Jun ‘ 12 Mar ‘ 12 Dec ‘ 11 Sep ‘ 11 Jun ‘ 11
Sales 2,137.20 1,955.89 1,676.24 1,633.82 1,528.18
Other income 141.65 210.47 133.97 113.37 124.35
Employee Expenses 172.17 213.1 170.84 162.63 168.11
Total interest 1,524.96 1,357.52 1,135.04 1,118.93 1,081.63
Provisions Made 103.41 291.11 124.33 81.33 65.49
Net profit / loss 238.63 254.79 186.68 193.58 168.09
Equity capital 350.06 350.06 333.39 333.39 333.39
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