Tower talk By VR Advisors Date 20 June 2020

Tower talk By VR Advisors Date 20 June 2020

Tower Talk

  1. Remdesivir & Tocilizumab, drugs that boost the immune system, and hydroxychloroquine are being considered for ‘restricted use’ on severely ill COVID-19 patients. It may be prudent to buy Mangalam Drugs Organics, Glenmark Pharmaceuticals and Cipla for long term gains.
  2. Steel Strips Wheels has won export orders of over $400,000 to supply steel truck wheels to USA. A big positive when the auto industry is passing through turbulent times. Buy.
  3. NTPC’s first 150 MW unit at the Kameng hydropower project is now commercially operational while the remaining three units of 150 MW each will be commercially operational within this fiscal. A good long-term bet.
  4. Lumax Auto Technologies posted Q4 Profit at Rs.6.07 crore v/s Rs.12.22 crore, revenue at Rs.272.7 crore v/s Rs.301.4 crore YoY. Since Q4FY20 was affected by the Covid19 crisis, the results are fairly good. Hold.
  5. Morepen Laboratories consistently enjoys rising volumes with moderate rise in share price. Seems some good news is in the offing. Add.
  6. HCL Technologies has extended its operations to Sri Lanka providing off-shore Information Technology Enabled Services. Add.
  7. Tamilnadu Newsprint likely post better results for FY20 compared to FY19. The stock trades at a P/E of 6x and 7% dividend yield, it is poised to touch Rs.150 level in the short term.
  8. Ind-Swift Laboratories has commercially launched anti-histamine drug, Fexofenadine, in the USA. A big positive for this small cap pharma company. Add.
  9. Navin Fluorine International presented pleasant results for Q4FY20. EPS for the quarter was Rs.55.75 v/s Rs.9.10 in Q3FY20 and Rs.7.11 in the previous Q4FY19. This Rs.2 face value share is an excellent buy for the long term.
  10. Bank of Maharashtra posted disappointing Q4FY20 results. NPAs are nearly at 12.91% pointing to worse times ahead. Exit and stay away.
  11. Wockhardt Ltd., which makes a low-cost steroid dexamethasone, is a big buy as this WHO approved drug can reduce COVID-19 related deaths.
  12. Clariant Chemicals (India) announced good results for FY20. Although sales were marginally higher at Rs.757 cr. from Rs.719 cr. last year, the net profit zoomed to Rs.71 cr. from Rs.30 cr. FY19 and a dividend of Rs.11/share has been recommended. Add.
  13. Anti-dumping duties on tyres is likely. Add JK Tyre & Industries Ltd as lower crude prices have also brought down input costs.
  14. ITC Hotels has launched a host of discounts and other incentives to woo customers. With business gradually coming back of track, it would be advisable to add ITC.
  15. There is inherent strength in JK Lakshmi Cement. Despite excellent working, the share is available cheap. Grab it before it’s too late!.
  16. Gulf Oil Lubricants presented muted results for Q4FY20 due to Covid19 restrictions. The overall results for FY20 were good and the dividend was also stepped up. A nice opportunity to add this share at depressed prices.
  17. The auto industry is limping back to normal. Add Maruti Suzuki India, the market leader controlling over 40% of the Indian passenger cars market.
  18. Fortis Healthcare posted Q4FY20 loss of around Rs.45 cr. in as against a profit of Rs.135 cr. in Q4FY19. It failed to capitalize on the COVID-19 crises. Sell.
  19. India Cements has denied reports of Radhakishan Damani (promoter of D-Mart) buying a controlling stake. But the share price is still rising. Is this because better working? Risk bearing investors may add selectively.
  20. Indraprastha Gas posted fairly good results for Q4FY20 with profit at Rs.290.76 cr. v/s Rs.228 cr. and revenue of Rs.1,711.2 cr. from Rs.1701 cr. YoY. A good long-term investment.
  21. Power Mech Projects may notch an EPS of Rs 85-90 in FY20. The share is available at a steep discount of over 64% from its 52-week high. Buy for decent gains. Accumulate.
  22. Debt-free and cash rich IT major, Mastek Ltd., with a tiny equity of Rs. 12 cr. has notched a consolidated EPS of Rs. 14 in Q4FY20 and Rs. 45.2 for FY20 despite an exceptional provision of Rs. 24 cr. Otherwise, the EPS would have been Rs. 55. A reasonable P/E of 10x will take its share price to Rs 450. Buy for the medium-to-long term
  23. Globus Spirits posted a Q4FY20 EPS of Rs. 6.7 and Rs. 17.3 for FY20. A reasonable P\E of 10x will take its share price to Rs 175 in the medium term. Buy.
  24. Voith Paper Fabrics India (formerly Porrits & Spencer), a German MNC with 74% stake is expected to notch an EPS of Rs 62 in FY20. Voith Paper is expanding capacity by over 30%. It is the cheapest MNC share and its EPS for FY21 is expected to be over Rs 72. Accumulate for a likely gain of 30%+.
  25. Welspun India Ltd. (WIL), a textile unit of the $ 2.7 billion Welspun Group has posted 63% higher net profit for Q3FY20 and an EPS of Rs 4.9 in 9MFY20. Going by its expansion initiatives, WIL is set to garner an EPS of Rs 7+ in FY20. Accumulate for decent gains.
  26. GHCL (Gujarat Heavy Chemicals Ltd.), a chemical and textile major with revenue of over Rs.3,300 cr. is the cheapest share in the chemical and textile space. It posted a Q4FY20 EPS of Rs 8.7 and FY20 EPS of Rs 41. Buy for 50% appreciation in the medium to long term.
  27. Welspun Corp. Ltd. (WCL), a $ 2.7 billion enterprise of the Welspun Group has an order book of Rs. 6,200 cr. It has notched a Q4FY20 EPS of Rs. 5.9 and FY20 EPS of Rs. 24.1. Its overseas customers include Saudi Aramco, Total, Qatar Petroleum, Exxon Mobil and Kuwait Oil Co. It also supplies pipes to BPCL, IOC, GAIL, RIL, GSPL and L&T. The share is available at a steep discount of 65% from its 52-week high of Rs 234. Accumulate for decent gains.
  28. Heavy investment buying was seen in Vindhya Telelinks Ltd. (VTL). It posted a consolidated EPS of Rs 200 on a small equity of Rs.11.8 crore in FY20. VTL holds a sizeable stake in Birla Corporation and Universal Cables. The share is trading at a forward P\E of just 3.5x. Accumulate for hefty gains.
  29. Morganite Crucible Ltd. (MCL), a 75% subsidiary of MNC, Morgan Metal, UK, manufacturers of silicon carbide and clay graphite crucibles used for non-ferrous alloys that have applications in auto, industrial machinery, sanitary, electrical equipment, railways, etc. MCL posted 72% higher net in Q4FY20 with an EPS Rs. 15.2 and an EPS of Rs. 68.6 for FY20 excluding one-time relocation cost of Rs. 6 cr. on its tiny equity of Rs. 2.8 cr. The share is poised to advance by about 30% in the medium term. Buy.

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