Wish you a very Happy and Prosperous Diwali friends.
Tomorrow is the Muhurat Trading session from 3:45PM to 5PM and we would recommend all our readers to take part on this auspicious day.
Our muhurat picks are (in no particular order):
- Atul Auto
- Balkrishna Industries
We are also studying Maithan Alloys and Aarti Drugs, and one may make an entry into them.
Further, the quarterly numbers have been good so far. A brief update about the latest numbers:
1. GRP Ltd: The company has posted a mixed set of results. The turnover has increased 20% while the net profits are down 30% compared to last year. On the face, the things may not look good but I think are results are not bad as the company had undertaken an expansion which started production from current quarter only, and hence the fixed costs would have been higher. Also, during FY12, the previous year, the company had the above average margins.
Our view on GRP is from a much longer perspective. We feel that it is a high quality company which has had a fantastic past track record and can recurringly grow at 20-25% for next few years.
2. Astral Poly: The stock has done very well and is up 3 times in about 2 years. The company has posted another set of fantastic results; the topline has grown at 48% from 136 to 200 Cr, while the bottom line has grown just 15% due to the forex losses. We think though the stock looks expensive but it might continue to trade at high PE multiples due to growth visibility of 25-30%+ for next few years. The company is undertaking a major branding building and the same might be soon seen in Dabaang 2.
3. Welspun Syntex: The company has come out with an excellent set of numbers and the stock looks undervalued at current levels. Due to the sector’s highly cyclical nature it is very tough to predict the earnings and we would avoid for long-term investing, but we feel there is an opportunity for a medium term as the sector is coming out from a very bad phase, and the companies with a stable balance sheet and decent growth can do well. Another idea on similar lines is Salona Cotspin.
4. Kakatiya Cement: The company has come out with a weak set of results and the profitability has been affected due to the problems in their power segment. Though the stock is still statistically cheap but we feel that over a longer term the stock may be a value trap as there is hardly any communication or efforts from the company on the growth part. We suggest an exit.
5. Balkrishna Ind: The company has yet again posted an excellent set of numbers and continues to beat the expectations. The topline has increased by 30% and the net profit is up by 95% (if we remove forex gains, the net profit is up by about 65%). The stock looks undervalued at these levels.
6. Mazda Ltd: The company has posted a very good set of results; the topline is up by 32% and the net profit is up by 92%. Being a project company, though the growth might be on higher side, but the valuations are very cheap and if the company is able to maintain 20-25% growth, the stock should do well too. Currently the stock trades at just 4 PE and is below book value. The company is also debt free and with cash on the balance sheet. We feel it is a buy at current levels.
7. Oriental Carbon: The company has come out with ok results. There were indications of a slowdown in the sector and hence the company has not been able to utilize the new capacities. The good thing is that as per the notes to accounts, the company expects the approvals to come in and the things to improve. We too feel that the things could improve in about couple of quarters and the company may start doing very well. The stock continues to look undervalued.
8. Atul Auto: The company has posted another excellent set of results. In-spite of the slowdown in the auto sector, the top-line and the margins have grown well and in the month of October, the company has delivered a growth of about 30% and if the same is repeated, the stock should do well.
We continue to look forward to your inputs. In the mean time enjoy this festival season.
We all wish for a great year ahead,