1 nov 2018intimation.inventuregrowth.com/files/research/410.pdf · 38.2% retracement of recent rise...

1st Nov 2018

Consumption Drivers

Consumer Durables

Finance

Entertainment

Automobile

This Diwali, we expect the flame of India’s consumption story to burst most of the crackers. The Indian consumption expenditure has exploded significantly and is further expected to skyrocket. India is a big growth story. Even assuming conservative GDP increases of 6% to 7% a year, we expect consumption expenditures to rise by a factor of three to reach $4 trillion by 2025. India’s nominal year-over-year expenditure growth of 12% is more than double the anticipated global rate of 5% and will make India the third-largest consumer market by 2025. Behind the growth headlines is an even more important story: consumer behaviors and spending patterns are shifting as incomes rise and Indian society evolves, people are spending more as credit facility is available at attractive rates and schemes. These shifts have big implications for how companies position themselves now. The GST collections in October crossed the Rs 1 lakh crore mark, after a gap of 5 months, on the back of festive demand, anti-evasion measures. This means that India has crossed the phase of low spending after demonetization and GST. Having recovered from the phase of sluggish growth, the economy’s consumption expenditure is set to explode and this serves as a perfect opportunity to invest in the sectors benefiting from this change in dynamics. Our Diwali Picks for Vikram Samvat 2075 are based on the sectors which would act as the crackers and explosives that are expected to burst from this rise in the flame of consumer spending. We have picked the stocks from Automobile, Electronic, Finance and Entertainment sectors for this Diwali with the blend of fundamental and technical parameters to make the perfect investment portfolio till next Diwali.

Consumption – The Lantern this year

Samvat

2075

Picks

M&M

Target: 960

Voltas

Target: 660

Havells

Target: 780

Bajaj Finserv

Target: 6680

Delta Corp

Target: 305

PVR

Target: 1650

TVS Motors Target : 650

Bajaj Finserv Limited is a holding company for various financial services businesses. The Company is engaged in the business of promoting financial services, such as finance, insurance and wealth management, through its investments in subsidiaries and joint ventures. The Company focuses on six categories: consumer lending, small and medium enterprise (SME) lending, commercial lending, rural lending, fixed deposits and value added services.

Company Profile

Bajaj Finserv Close price : 5450 Target Price: 6680 Potential Upside: 24%

Particulars FY 18 FY 19E FY 20E

Revenue 30,550.93 35,359.52 43,718.16

PPP 10,434.88 13,421.00 15,757.70

Net Profit 2,741.44 3,478.80 4,326.62

EPS 177.50 219.11 273.95

P/E 20.44 20.44 20.44

DPS 2.30 2.61 3.46

• Bajaj Finserv is in long term up trend, forming higher top - higher bottom formation. Stock has recently given correction from high of 7200 to 4955 levels. This lower level is 38.2% retracement of recent rise from 1550 to high of 7200 levels. Horizontal trend line is also acting at short term support placed at 4750.

• Bajaj Finserv Limited is backed by Bajaj group, under the leadership of Mr. Sanjeev Bajaj company is well established in market having great potentials to grow ahead.

• Bajaj Finserv Limited is holding company, its subsidiaries are Bajaj Allianz General Insurance Company, Bajaj Allianz Life Insurance company and Bajaj Finance.

Investment Rationale

Financials

Market Data

Bloomberg Code BJFIN IN EQUITY

Shares outs (Cr) 15.91

Market Cap(INR Cr) 85,917.59

52 Week H/L (INR) 7,200/4,444

Face Value (INR) 5

Promoter Shareholding (%) 58.35

• Bajaj Finserv Limited is an financial conglomerate having its

business diversified in insurance, consumer finance and other financial products.

• Bajaj Allianz Life Insurance company, is a well established and one

of the oldest player in the Insurance sector. • Considering both fundamental valuations & technical chart we

expect Bajaj Finserv can achieve price target of 6680 by next Diwali.

In Crores of INR except Per Share Source: Company, Bloomberg Consensus

Havells India Limited is a holding company. The Company is engaged in manufacturing Switchgears, Cable, Lighting and Fixtures, and Electric Consumer Durables. The Company operates through four segments: Switchgears, Lighting and fixtures, Cables and Electrical Consumer Durables. Its subsidiaries include Havells Sylvania Brazil Iluminacao Ltd. Havells Sylvania (Thailand) Ltd., Havells USA Inc., Havells Sylvania Iluminacion (Chile) Ltd, Havells International Limited and Havells Holdings Limited.

Company Profile

Havells India Close price: 645 Target Price: 780 Potential Upside: 21%


Revenue 8,099.90 9,688.90 11,118.55

EBITDA 1,043.87 1,254.19 1,481.13

Net Profit 662.37 844.54 1012.15

EPS 10.93 13.58 16.28

P/E 39.69 39.69 39.69

DPS 2.30 2.61 3.46

• Havells after testing recent high of 728 has corrected to low of 550 levels. Cluster of support is placed around 550 to 560 levels. 50% retracement level from 300 levels to recent high also comes around 565 levels. Recent price action indicates buying interest at this support zone.

• Havells is been ahead in product development and achieved success in new launches. Its new product in Switchgear segment has been one of the major driver in boosting revenues for recent quarter.

• Havells continues to be different than it’s peers with more aggressive portfolio diversification. Today Havells have been established as a “ Big Brand” in the market.


Financials

Market Data

Bloomberg Code HAVL IN EQUITY



52 Week H/L (INR) 728/450

Face Value (INR) 1


• Havells fully owned brand Lloyd, Lloyd is the third largest player in AC segment. Company would be incurring a capex of 300 crores and setting up a manufacturing plant, to improve production and reduce overseas sourcing. This will improve margins for Havells.

• Havells has been continuously expanding its product portfolio, it has recently launched new products such as Water Purifiers, Water heaters, Grooming Kits, Air Purifiers and coolers.

• Considering both fundamental valuations & technical chart we

expect Havells India can achieve price target of 780 by next Diwali


Mahindra and Mahindra Limited is engaged in the manufacture of passenger cars, commercial vehicles and tractors. The Company's segments include Automotive, which is engaged in the sale of automobiles, spare parts and related services; Farm Equipment, which is engaged in the sale tractors, spare parts and related services. M&M is world’s largest tractor brand by volume, India’s largest utility vehicle manufacturer, and several of their businesses enjoy leadership positions in the industries in which they operate.

Company Profile

M & M Close price: 765 Target Price: 960 Potential Upside: 25%


Revenue 81,882.08 92,338.20 1,02,900.08

EBITDA 13,226.10 12,530.80 14,464.83

Net Profit 7,510.39 6,031.10 6,966.73

EPS 37.45 51.61 59.64

P/E 13.19 13.19 13.19

DPS 2.30 2.61 3.46

• Mahindra and Mahindra is holding above rising trend line, taken from low of 370 to 612 levels. Horizontal trend line is placed near cluster of support at 730 levels. Price is holding well above 200 period MA which is at 692. Recent volume is also increasing as price is trading near support zone.

• M&M’s October sales were above estimates, Domestic sales for the month rose by 14% year on year (yoy), and exports rise 33% yoy.

• Mahindra and Mahindra has recently announced that they want to become a carbon neutral company, for that they have introduced their Electric Vehicles.


Financials

Market Data

Bloomberg Code MM IN EQUITY



52 Week H/L (INR) 993/660

Face Value (INR) 5


• Further M&M has planned to expand its business in utility vehicles,

and they expect an 23% CAGR by launching 3 new vehicles in that segment Marazzo is one of them.

• Considering both fundamental valuations & technical chart we expect M&M can achieve price target of 960 by next Diwali


TVS Motor Company Limited is engaged in the manufacturing of motorcycles, scooters, mopeds, three wheelers, parts and accessories. The Company's motorcycles include Apache Series RTR, Phoenix 125, Victor, Star City+, Sport and Max4R. Its scooters include Jupiter, Wego, Scooty Zest 110, Scooty Streak and Scooty Pep +. Its mopeds include XL 100, XL Super and XL Super Heavy Duty. Its three wheelers include TVS King. Its subsidiaries include PT. TVS Motor Company Indonesia, TVS Motor Company (Europe) B.V., TVS Motor (Singapore) Pte. Limited, Sundaram Business Development Consulting (Shanghai) Company Limited and Sundaram Holding USA Inc.

Company Profile

TVS Motors Limited Close price: 545 Target Price: 650 Potential Upside: 19%


Revenue 15,382.68 18,212.06 20,763.94

EBITDA 827.00 1,672.90 2,002.10

Net Profit 652.35 823.56 1039.20

EPS 14.98 17.89 22.99

P/E 23.96 23.96 23.96

DPS 2.30 2.61 3.46

• TVS has strong long term chats as well. Price is in long term up trend holding above

rising trend line. Stock after attending high of 794 has given correction to 50% retracement of pervious rise. RSI has given bullish cross over while rising from oversold zone. 200 period MA is placed at 430 levels which is also near 61.8% retracement levels.

• Recently company has expanded its product portfolio in abroad, company has introduced its 3 brand new models in motorcycle segment in Argentina, this will lead to increase sales in motorcycle segment.


Financials

Market Data

Bloomberg Code TVSL IN EQUITY



52 Week H/L (INR) 794/478

Face Value (INR) 1


• TVS Motor is one of the top 3 companies in gearless segment, we expect that company’s new product TVS Ntorq with capacity of 125cc will be the new leader in this segment.

• TVS motor Limited's sales for the month of October was almost as per estimates. Sales for the recent month grew by 25% year on year, Scooter sales for the month grow by 41.3%.


expect TVS Motors can achieve price target of 650 by next Diwali


Voltas Limited is an air conditioning and engineering company. Voltas is India’s premier air conditioning and engineering services company. The company’s core competence lies in management and execution of electro-mechanical projects, most significantly in air conditioning and refrigeration; design, manufacture and marketing of cooling appliances and air conditioning and refrigeration equipment; and supply, installation and service support of engineering-based products and solutions. All of the company’s capabilities are ISO 9001-2000 certified.

Company Profile

Voltas Limited Close price: 540 Target Price: 660 Potential Upside: 22%


Revenue 6,356.79 7,196.80 8,228.97

EBITDA 662.64 743.46 861.28

Net Profit 572.40 626.58 723.45

EPS 17.54 18.94 21.88

P/E 25.06 25.06 25.06

DPS 2.30 2.61 3.46

• Voltas is holding above rising trend line, taken from low of 201 to 472 levels.

Horizontal trend line which is placed at 494 levels is acting as short term support. Price has given decent bounce back from this support level on all previous occasions. Stock is also holding above 200 period MA and RSI is also showing bullish cross-over.

• Company is the leader in Electro Mechanical Project (EMP), providing high engineered products such as heating, ventilating, conditioning and refrigerating, Currently company has an order book worth of 4623 crores.


Financials

Market Data

Bloomberg Code VOLT IN EQUITY



52 Week H/L (INR) 675/471

Face Value (INR) 1


• Despite of strong competitions by International players, Voltas is

been able to maintain its Leadership in Unitary Cooling Products (UCP). Also company has introduced new technology driven products that can lead higher sales growth in next 6 to 9 months.

• Voltas limited is backed up by a strong parent TATA group, and well established leader in AC segment, with a market share of 24% as on August 18.


expect Voltas can achieve price target of 660 by next Diwali


PVR Limited is an India-based holding company. The Company is a film entertainment company, which is engaged in the motion picture exhibition in cinemas. The Company has organized its operations into three business segments: Movie exhibition, Movie Production & Distribution, and others. The Company is also engaged in cinema advertisements/product displays and sale of food and beverages at cinema locations. The Company offers technologies, including 4DX Technology, which stimulates the senses with effects, such as seat motion, wind, rain, fog, lights and scents to match the audio and video in both two-dimensional (2D) and three-dimensional (3D); IMAX.

Company Profile

PVR Limited Close price: 1362 Target Price: 1650 Potential Upside: 21%


Revenue 2,308.06 2,870.81 3,387.83

EBITDA 401.84 541.40 660.18

Net Profit 124.70 175.26 225.92

EPS 25.63 39.20 49.71

P/E 27.79 27.79 27.79

DPS 2.30 2.61 3.46

• PVR Limited after attending recent high of 1655 levels drifted to low of 1062. After

attending this high price was consolidating in narrow range. Horizontal support is placed at 1005 and 200 period MA is at 1100 levels. 14 period RSI at 55 levels with bullish across over.

• PVR operates the largest multiplex network with 730 screens at 157 properties in 62 cities, PVR is market leader in multiplex segment. PVR is currently into 19 states and 1 union territory.

• To maintain its leadership in market, PVR has came with unique services such as PVR Playhouse, PVR Director’s Cut, PVR IMAX etc.


Financials

Market Data

Bloomberg Code PVRL IN EQUITY



52 Week H/L (INR) 1,568/1,062

Face Value (INR) 10


• Recently PVR has acquired controlling stake in SPI cinemas, we

believe that this will help PVR to explore and unlock new synergies in Tamil Nadu.

• Considering both fundamental valuations & technical chart we expect PVR Limited can achieve price target of 1650 by next Diwali


Delta Corp Limited is a holding company engaged in the operation of casino. Its segments include Gaming, Hospitality and Others. The Company operates its gaming and hospitality businesses under the DELTIN brand. It owns approximately three casinos in Goa, including Deltin Royale, Deltin JAQK and Deltin Caravela. It also owns approximately two hotels, including Deltin Suites and Deltin Palms in Goa. Its subsidiaries include Atled Technologies Private Limited and Delta Pan Africa Limited.

Company Profile

Delta Corp Close price: 241 Target Price: 305 Potential Upside: 29%


Revenue 607.66 798.64 975.84

EBITDA 247.04 304.31 402.87

Net Profit 155.55 193.18 257.96

EPS 5.80 7.26 9.68

P/E 25.47 25.47 25.47

DPS 2.30 2.61 3.46

• Delta Corp limited is a established player in Goa, further company has

planned to enter in daman and start their Gamming operations soon which will help revenues to boost in next quarters.

• Considering both fundamental valuations & technical chart we expect Delta Corp can achieve price target of 305 by next Diwali


Financials

Market Data

Bloomberg Code DELTA IN EQUITY



52 Week H/L (INR) 401/ 198

Face Value (INR) 1


• Delta Corp is holding above rising trend line and is also above 100 period SMA. Horizontal trend line is placed near support zone of 180-195 levels. Recent price action indicates buying interest at this support zone. RSI is also rising towards trading zone with positive a cross over.

• Delta Corp Limited is the market leader and only listed player in gaming industry. It holds around 5 casinos out of total 15 casinos in India.

• Delta Corp limited is also engaged in Online gaming, as currently it is the biggest hub for gaming. It owns gaming website such as Adda52.com.


DISCLAIMER Inventure Growth and Securities Limited (hereinafter referred to as “IGSL”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL. It also has registration with AMFI as a Mutual Fund Distributor. Inventure Growth and Securities Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000006129. IGSL has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. IGSL or its associates/ analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the contrary view, if any. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Inventure Growth and Securities Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Inventure Growth and Securities Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Inventure Growth and Securities Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither Inventure Growth and Securities Limited , nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.

DISCLOSURES This Report is published by Inventure Growth & Securities Limited (hereinafter referred to as “IGSL”) for private circulation. IGSL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 2014 having Registration no. INH000006129. IGSL is also a registered Stock Broker with National Stock Exchange of India Limited, BSE Limited and Metropolitan Stock Exchange of India Limited (MSE) in cash, F&O & currency derivatives segments. It is also registered as a Depository Participant with CDSL and is also registered with AMFI as a Mutual Fund Distributor IGSL have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. IGSL, its associates or analyst or his relatives may or may not hold any financial interest in the subject company. IGSL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. IGSL or its Affiliates may or may not have been beneficial ownership of one percent or more of the securities mentioned in this report. However, one or more of IGSL or its Affiliates may, from time to time, have a long or short position in any of the securities mentioned herein and may buy or sell those securities or options thereon, either on their own account. IGSL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. IGSL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and IGSL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I/We, Research Team the research analyst Is the author of this report, hereby certify that the views expressed in this research report accurately reflects my/our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

Research Team Profile Email ID

Mr. Prashant Barwaliya Head- Research [email protected]

Mr. Yash Doshi Fundamental Analyst [email protected]

Mr. Smeet Gala Fundamental Analyst [email protected]

Mr. Kunal Kame Technical Analyst [email protected]

Disclosure of Interest Statement

1. Financial interest of research analyst or IGSL or his Associate or his relative No

2. Ownership of 1% or more of the stock by research analyst or IGSL or associates or relatives No

3. Served as an officer, director or employee of the company covered under Research No

4. Broking relationship with company covered under Research No

Ratings (Based on expected returns over 12 months investment period): Buy (> 15%) Accumulate (5% to 15%) Hold(5% to -15%) Sell (<15%)

Created by: IGSL - Research Contact : IGSL-Research , Inventure Growth & Securities Ltd,201,Viraj Tower, Near Landmark Building, Western Express Highway, Andheri (East),Mumbai -400 093 Tele: 91-22-71148500 , Fax: 91-22-40751511. Research Team Tel: 022 – 71148579 E-mail: [email protected] Website: Inventuregrowth.com

mailto:[email protected]



1 nov 2018intimation.inventuregrowth.com/files/research/410.pdf · 38.2% retracement of recent rise...

Documents