Dalelorenzo's GDI Blog
10Sep/210

Tata Steel, Hindalco may go up 25% in a yr: Chakri

The export request will continue to surprise on the upside for all these companies. Tata Steel is the biggest beneficiary. Hindalco will likewise benefit due to higher aluminium prices as well as consumer demand for aluminium in terms of end product because of the unlock, says Chakri Lokapriya, CIO& MD, TCG AMC. Do you think there is a case for rerating in metals or has the market priced in the additional challenge, the super cycle and all of that? The big moves in the sword sector as well as the part metal sphere are kind of done. But from here on, Tata Steel may go up a good 20 -2 5% as might Hindalco. Jindal Steel and Power has been held back because of the demerger of its capability force. These companies still have sufficient valuation comfort on their side. If you look at the recently announced develops, 45% of the revenue of Jinda, Steel and Power came from exports. So it is accelerating. The exportation demand will continue to surprise on the upside for all these companies. Tata Steel is the biggest beneficiary. Hindalco will also benefit due to higher aluminium rates as well as consumer demand for aluminium in terms of end product because of the unlock. So big bucks has been originated but a estimable 25% can be made over the next one year. Info Edge is doing exceptionally well. IndiaMart has also been doing well, peculiarly since it entered the F& O infinite. Merely Dial go bought out by Reliance Industry. IRCTC is another example? Info Edge I was owner for anchor investors many years ago and I am glad to know that the company has grown by leaps and bounds. It is now actually a kind of a scaffold corporation. It has Naukri, policybazaar, Jeevansathi, Zomato. So it provides several segments and there are also lots of new segments where it has invested really well. So when you do sum of the roles( SOTP) of InfoEdge, then it is a question of how fast these portfolio companies can ramp up their operations. For example, Zomato is now an operating negative boundary corporation. In three-four years, it was likely have positive operating margins SOTP for InfoEdge will move higher as companionships do well. As far as other online fellowships are concerned, IndiaMart will benefit from an open because many of its underlying companionships could not deliver their services due to lockdown, been in a position to do so increasingly. The customer tech infinite as well as the ecomm cavity examine very strong. Where within the power space, do you find comfort, if at all? Power demand in the coming months will go up as the unlock is happening and diners, mills are coming back with increased influence ask and not to mention the coming winter. All that bodes well for the ability sector in general but there has been a spike in coal expenditures and at the same time , no increase in the PPAs. It is not really rewarding for power companies to import coal at the current high prices. So they will have to lean on Coal India. Coal India needs to get its act together for gratify requirement. NTPC is still the largest power company. It is an inexpensive stock and sells well under work as the PLF is very low. So the operating inherent leverage is very high. From a unadulterated valuation attitude, NTPC seems good and so does Torrent Power. If we are going to see power coming into focus and demand coming back, even the government is concerned that there is a coal shortage. Thermal power is still the chiefly used strength in the country. What opportunity is there then for capitals like Coal India? I is actually stay away from Coal India because some of its pricing contracts are not commercially attractive. But it is the largest supplier of coal and has the biggest inventory of coal and therefore during times, when international coal prices move further, it is a great company. But I am not really sure whether it is a great stock. One can trade in it probably, but as a positional investment, I would stay away from Coal India.

Read more: economictimes.indiatimes.com

7Mar/210

6 turnaround stocks worth betting on

While a few areas like IT, pharmaceuticals and telecom , among others, expanded during the Covid-1 9 generated lockdowns, most other sectors "re not" so lucky. However, reform and opening up of the economy has helped these to make a comeback and the third quarter numbers of several companionships are proof of that. “The aggregate third-quarter crowds were good because the recovery in many sectors were much better than the street hopes, ” says Sonam Udasi, Senior Fund Manager, Tata Mutual Fund.Experts feel that this positive trend will continue in the coming parts and the lower locate in 2021 -- the y-o-y growth will inspect exaggerated--is just one of the factors. “Profitability in the fourth quarter will be better because the economy would have opened up more during the January-March period. Due to increased auctions, traders are now ready to hold inventory and this is working in favour of creators in 2021 -2 2. Improvement in stock expenditures should help companies from that segment, ” says Kishor P. Ostwal, Chairman and MD, CNI Research.The faster recovery in impacted areas has been translated into various of these turning around in the third quarter. For example, infrastructure actors are benefitting due to increased government spending. Real estate players, particularly those with business in Maharashtra, are also witnessing increased marketings on the back of stamp duty reduction. There is pick up in automobile ancillaries because of the pick up in automobile marketings. While Covid related corporations benefitted earlier, other healthcare providers are catching up now. Some business from areas like textiles, jewelleries, etc are also in the turnaround list.Are these turnarounds really a blip or will these be sustainable in the coming quarters as well? Professionals continue to be positive on the construction space. “The construction space is expected to do well due to increased government spending in 2021 -2 2. Reduction of pay by some of these companies is another positive factor, ” says Udasi. Continued foreign inflow of stores, especially through Reits and InvITs, is the main factor that is helping some of these companies to reduce debt. Reduction in corporate tariff is helping companies to report increased revenues and some of them are using this higher profit to pay off debt and this, in turn, will increase profit in coming quarters by reducing interest expenses. While turnaround is good, some of the bars have already reacted to this news and share tolls have already gone up. Therefore, the next step is to make sure that this is not yet fully priced in. For that, we compared the current prices of stocks with the consensus target toll and shortlisted only the ones that have sufficient potential upside. The following firms are sorted on the basis of potential upsides. 8112206 6RaymondRaymond was able to report a consolidated net profit of Rs 21.7 crore during the third quarter, is comparable to a net loss of Rs 133 crore during the second quarter. More importantly, all business segments have shown signs of improvement in the third quarter and have reported positive earnings before interest, imposition, depreciation and amortisation( Ebitda ). For example, its branded textile business has already reached 70% of pre-covid positions. Stamp duty reduction by the Maharashtra government has come as a boon for participates like Raymond, which entered the real estate business recently. This helped Raymond to propel two more towers in its Thane project and garner 179 brand-new reserves during the third quarter. ! function () "use strict"; window.addEventListener( "message" ,( purpose( a ) if( vacant 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ]) document.querySelector( "iframe[ src *= '"+ e+ "'] " ); t &&( t.style.height= a.data[ "datawrapper-height" ][ e ]+ "px" )))(); Stringent cost reduction measures adopted by Raymond during the turmoil helped it to improve margins. The reduction in working net capital cycle has helped Raymond to reduce its net pay as well. Commentators believe that things will improve further during the coming parts. “We expect Raymond to improve its overall monetary health aided by recovery in auctions and perimeters. Its receipt is gradually recovering to the pre-covid heights and further improvement will be translated into higher perimeters owing to operational leverage, ” says a recent LKP Research report.JMC Projects( India) JMC Projects was able to report third-quarter income raise of 15% y-o-y and 32% q-o-q and its quarterly incomes hit a brand-new top. JMC was also able to bag prescribes value Rs 1,050 crore in the third quarter. “The order book of JMC Programme is around 4.3 meters its last-place 12 month incomes. If one lends the prescribes received after the third quarter and L1 positions, receipt possible jumps to 4.8 eras and this appeases the concerns seeing sustainable growth in the medium term and beyond, ” says a recent Anand Rathi report. ! gathering () "use strict"; window.addEventListener( "message" ,( function( a ) if( vacant 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ])))(); JMC, the subsidiary of Kalpataru Power, was also able to get back to light-green in the third quarter of 2020 -2 1, after remaining in the red in the previous three districts. The obligation reduction exercising continues and JMC has increased its consolidated net obligation from to Rs 1,530 crore in December from Rs 1,672 crore in September, principally because of client receipts and tightening the working capital cycle further. The government’s efforts to attract more foreign inflows into infrastructure through InvITs should help companies like JMC and any success on this front will support its monetisation efforts and improve cash flows.IRB Infrastructure DevelopersIRB Infrastructure Developers is another company from the road space that has offset smart-alecky convalescence during the third quarter and hit the street’s possibilities. Improvement in toll accumulations -- up by 32% q-o-q -- due to increased road traffic after the unlocking of the economy and jump in EPC executions--up by 42% q-o-q--because of normalisation of labour and supply bonds helped IRB to achieve this feat. ! capacity () "use strict"; window.addEventListener( "message" ,( gathering( a ) if( vacant 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ]) document.querySelector( "iframe[ src *= '"+ e+ "'] " ); t &&( t.style.height= a.data[ "datawrapper-height" ][ e ]+ "px" )))(); For speciman, the Mumbai-Pune expressway toll collection pranced by 42% q-o-q during the third quarter and spanned the previous heyday collect achieved during the third quarter of 2019-20. IRB’s third part net profit of Rs 69.48 crore was able to wipe out the losses of two previous quarters--of Rs 19.66 crore and Rs 30.14 crore respectively. Despite this stellar rendition, IRB is still quality reasonably. “In the third quarter, IRB beat our revenue and net profit reckons by 15% and 37% respectively. We maintain buy on IRB, given attractive valuation and comfy liquidity posture, ” says a recent HDFC Sec report. ITD Cementation IndiaITD Cementation was able to bounce back faster due to its prevailing outlook in the metropolitan infra infinite and MNC parentage. For instance, its third quarter revenue grew by 12% y-oy and 43% q-o-q. It also surprised at the market net profit level because of higher profits from its seam bet campaigns. For speciman, it was able to report a consolidated net profit of Rs 30 crore in the third quarter, is comparable to a net loss of Rs 49.75 crore during the second quarter and Rs 10.60 crore earning during the third quarter of 2019-20. ! run () "use strict"; window.addEventListener( "message" ,( function( a ) if( void 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ]) document.querySelector( "iframe[ src *= '"+ e+ "'] " ); t &&( t.style.height= a.data[ "datawrapper-height" ][ e ]+ "px" )))(); ITD is expected to report better outcomes in coming years. “We expect execution momentum of ITD Cementation to remain strong going ahead due to health and diversified line-up record, robust bid grapevine and overall strong infra push in the economy, ” says a Prabhudas Lilladher report. ITD’s large order book, targeted above Rs 12,000 crore and around 4.8 hours its historic incomes, yields clear visibility in coming years. ITD also has strong execution capabilities and was able to solve the setbacks in Kolkata and Bangalore metro projections. It can also boast of a strong balance sheet and low-pitched leveraging. Its pay rate is exclusively 0.5 times.Aditya Birla Fashion& RetailAditya Birla Fashion& Retail's third-quarter receipts went down by 20% y-o-y, but recovery was discernible compared to the second quarter -- up by more than 100%, triggered principally by wed and gala season necessitates. The management’s focus on cost control and lower discount facilitated AB Fashion to keep its gross margins at these levels. ! run () "use strict"; window.addEventListener( "message" ,( operate( a ) if( vacant 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ]) var t =d ocument.getElementById( "datawrapper-chart-"+ e )))(); Its indebtednes reduction approach -- through asset dose and more efficient working capital management, is also yielding fruit. For speciman, this indebtednes reduction has helped AB Fashion to bring down its finance payment by 28% q-o-q in the third quarter and should help AB Fashion to bring it down further in coming years. “Controlled working capital cycle, convalescence in profitability and steady free cash flow contemporary would result in debt/ Ebitda fraction waning to 0.6 periods by 2022 -2 3 is comparable to six eras in 2019 -2 0, ” says a recent ICICI Direct report.Narayana HrudayalayaWhile Covid meant added revenues for some segments of the pharmaceutical industry, it was negative for hospices, especially those that were concentrating on other ailments. Nonetheless, they are catching up now and coming back to colors. For speciman, Narayana Hrudayalaya was able to report a net profit of Rs 40.8 crore during the third quarter, is comparable to a loss of Rs 3.42 crore during the second quarter and net profit of Rs 31.38 crore reported during the third quarter of last year. Substantial improvement in operational performance, despite Covid-related challenges, helped Narayana to achieve this feat. To keep its balance sheet health, Narayana is following the' asset right model’. ! affair () "use strict"; window.addEventListener( "message" ,( operate( a ) if( vacant 0 !== a.data[ "datawrapper-height" ]) for( var e in a.data[ "datawrapper-height" ]) document.querySelector( "iframe[ src *= '"+ e+ "'] " ); t &&( t.style.height= a.data[ "datawrapper-height" ][ e ]+ "px" )))(); While Narayana owns some hospitals, others are partnerships -- Narayana only takes care of hospital management, medical rig, etc and the investments in land, construct, etc are done by partners. “Due to Narayana Hrudayalaya’s focus on balance sheet and likely improvement in average realisation per operating bed by optimising speciman assortment, we expect an improvement in return on capital filled( ROCE) to 16.9% in 2022 -2 3 from 11% in 2019 -2 0”, says a recent ICICI Direct report.Note: Price and target price as on 16 Feb. Source: ETIG Database and Bloomberg( Graphics by Sadhana Saxena/ ET Prime)

Read more: economictimes.indiatimes.com