DATE : October 17, 2014 - Peerless Sec

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Diwali Picks, 2018


Diwali Picks, 2018

MUHARAT PICKS SAMVAT 20751st November,2018

Stock Sector CMP (Rs) Target (Rs) Rating PotentialUpside

TCS IT 1936 2200 ACCUMULATE 13.63%

ICICI Bank Banks-Private 354 440 BUY 24.29%

Berger Paints Decorative Paints 292 330 ACCUMULATE 13%

Cipla Pharma 615 700 ACCUMULATE 13.82%

Dabur India Consumer Staples 371 470 BUY 26.68%Tata GlobalBeverages FMCG 218 280 BUY 28.44%

Note: All price target for 12 months period


Diwali Picks, 2018

Performance of Peerless Diwali Picks 2017Stock

Recommen-ded price

(Rs)Target (Rs) Recomme-

ndation RemarksTarget

AchievedDate

Return(%)

KOTAK BANK 1044 1200 ACCUMULATETarget

achieved27/04/18 14.9

M&M FINANCE 418 530 BUYTarget

achieved30/04/18 26.8

KANSAI NEROLAC 481 580 BUYTarget

achieved10/01/2018 20.6

MAHANAGAR GAS LTD 1142 1300 ACCUMULATETarget

achieved03/11/2017 13.8

SUNDRAM FASTNERS LTD 464 550 BUYTarget

achieved18/12/2017 18.5

SHOPPERS STOP 523 700 BUY Exited @ 490 - *-6.3

TATA GLOBAL 210 260 BUYTarget

achieved17/11/2017 23.8

Return calculated from recommended levels as on 11oct2017* Shoppers Stop return calculated at CMP (Current Market Price) of INR 490 on 31oct2018


Diwali Picks, 2018N

Stock PicksTata Consultancy Services Ltd. - ACCUMULATE

Sector ITCurrent Price (Rs) 1936Market Cap. (Rs) 712,668 cr.52 week High/Low 3674/1711Avg. Volume (3 Mo.) 2,322,515Beta 1.11Current PE (TTM) 25.15Promoter’s Holding 72.05%

Fundamental Outlook Tata Consultancy Services posted a 22.57 percent rise in profit at

Rs.7901 crore, buoyed by strong demand for digital services. Moreover,the IT service provider got a boost from the rupee fall as it bills majorityof the US and overseas clients in dollars. It’s revenue grew by 20.7percent. The revenue growth was driven by expanding demand fordigital transformation across verticals. The momentum in revenuegrowth was mainly guided by the deals the company have acquired overthe last six to eight months.

The major business verticals which accelerated the revenue growthperformance of the IT major during Q2FY19 were BFSI which grew by6.1 percent and Retail & CPG to 15.6 percent. Software servicesproviders are still continuing to revive business in North America as theyface headwinds ranging from visa curbs and slower client spending to ashift towards automation. However, it registered a revenue growth of8.1 percent.

Going forward, TCS is likely to maintain its growth and profit leadershipin the global software services business. The company is constantlystrengthening its business position following its recent large orders androbust profitability. The company’s increasing penetration into digitalservices highlights its capability to service large and complex deals witha global presence. The company's business compares well with its peersin terms of the diversity of industries it serves as well as thegeographical location of its customers.

Technical Outlook

TCS has given strong breakout after consolidating over 3 years makingmultiple top around INR 1400 where it went to INR 2283. Thereafter ithas been correcting and came close to its 61.8% Fibonacci retracementlevels. From INR 1800, it bounced backed and technical indicators areshowing strength in weekly charts.

The current price level is also around its upward trendlin e support line indicating the stock to take good support and providing

opportunity to enter around current price levels. We expect the stock torebound to its previous high and our target price will be INR 2200 intime frame of 12 months.

Target- Rs 2200

https://www.business-standard.com/topic/tcs


Diwali Picks, 2018

ICICI Bank Ltd -BUY

Sector Banks-Private

Current Price (Rs) 354Market Cap. (Rs) 222,499 cr.52 weeks High/Low 365/256Avg. Vol. (3 Mo.) 21,629,807Beta 1.77Current PE (TTM) 29.07Promoter’s Holding 45.25%

Fundamental Outlook

The company reported better than expected Q2. It also posted a declinein provisions and a better asset quality. The net profit declined toRs.908.9 crore in Q2FY19, due to elevated provisioning and a decline inother income. The core operating profit grew by 10 percent YoY toRs.5285 crore for the present quarter. Gross non-performing assets as apercentage of gross advances were lower at 8.54 percent due to fall inslippages.Net interest income grew 12.41 percent on year to Rs 6,417.6crore with good loan growth of 12.8 percent YoY and marginimprovement.

As per the bank its domestic loan growth for the quarter was at 16percent YoY driven by retail loans that grew 20 percent. Deposits alsoregistered a double-digit growth of 12 percent YoY to over Rs 5.58 lakhcrore. Bank’s fee income grew by 17 percent YoY in Q2FY19 driven byretail fee income growth of 21 percent YoY.

The bank’s consolidated assets grew by 11.4 percent Y-o-Y to Rs 11.37lakh crore.

It reported an outstanding CASA ratio at 50.8 percent this quarter and a15 percent Y-O-Y growth in CASA deposits indicating lower cost of fundsfor the bank.

India’s second largest lender became profitable even in a turbulentquarter with the challenges related to the management transitiongetting addressed. The exit of its former Chief Executive Officer ChandaKochhar will have a positive impact as the investigation will have alimited impact on the bank itself and the bank will now focus ongrowing its core operating profits. The company is also hoping of earlyresolution of Insolvency and Bankruptcy Code (IBC) cases. All these willhave a positive impact and will strengthen the financial performance ofthe company in the coming quarters.

Technical Outlook

The stock made a higher base forming triple bottom support around INR260 and gave a W pattern bounce back. Recently it has broken thatpattern on the upside and now ready to make a fresh high as alreadythe stock in longer timeframe has made out of double top and ready forfresh breakout. Target on the upside of the longer time frame patterncomes to around INR 440.

Target- Rs 440


Diwali Picks, 2018

Berger Paints(I) Ltd- ACCUMULATE

Sector Decorative PaintsCurrent Price (Rs) 292Market Cap. (Rs) 27,673 cr.52 weeks High/Low 349/232Avg. Vol. (3 Mo.) 893,411Beta 1.19Current PE (TTM) 57.34Promoter’s Holding 74.99%

Fundamental Outlook

In the last few quarters, Berger has been able to deliver strong volumegrowth in both the key segments of decorative and industrial paints,has shown continuous improvement in financial performance andgrown faster than its peers - leading to gain in market share. It enjoys~19% share of organized domestic decorative market. In Q1FY19, inthe decorative segment, reported 15% YoY volume growth. In terms ofproducts, the focus of the company remains on midrange productswhich are shifting towards emulsions.

Berger is expecting healthy volume growth in the decorative segmenton the back of low per-capita consumption in the country, strongurbanization trends, shortening re-painting cycles, up-trading, realestate reforms and pick-up in capex cycle (both private andgovernment). From 27th July, 2018 would result in 9-10% pricecorrection in products and will further drive demand for organizedpaint companies.

Almost ~60% of the raw material are crude derivatives and with crudeat $77/barrel (+50% YoY), prices of crude derivatives have alsoincreased. Even INR volatility has contributed to cost inflation for thecompany. To counter this, the management of paint companiesincluding Berger have resorted to price increase and cost optimization.

We estimate that branded paint demand will remain robust in acountry like India where per capita consumption is very low and 30 %paint market is still un-organized. Management of Berger alsoindicated that the volume trends remain strong for the company andexpect the trend to continue in medium term. Berger’s performancehas been better than peers and is indicative of continued market sharegains. Reduction in GST rates can drive further improvement indemand.

Technical Outlook

The stock has given a long-term breakout of its ascending triangle after1 year of such pattern formation. It has moved partially to fill up to61.8% Fibonacci target on the upside and now is correcting and hasfallen to its breakout level.

We believe that with weekly technical indicators now correcting andcoming to moderate levels (RSI around 46), the stock historicallybounces from this RSI level. Henceforth, indicator wise and patternwise price will move up in medium term. We expect minimum pricetarget of INR 330 in time frame of 12 months.

Target – Rs 330


Diwali Picks, 2018

Fundamental Outlook

Cipla Limited posted a strong Q1FY19 backed by strong foothold andcontinued growth momentum in domestic markets and partly due to alow base as business was impacted to GST rollout, in addition to strongperformance in Respiratory, Urology, Cardiology, and CNS (CentralNervous System) segments. However, the numbers were dragged a littledue to slower growth in US market. The drug-maker reported 10 percentrise in its net profit for the June quarter to Rs 451 crore, primarily due tobetter sales in India and South Africa, while US remained flat. Thecompany's total income grew 12 percent year on year to Rs 4,109.10crore and EBITDA margin expanded 330 basis points to 18.4 in Q1FY19.

Cipla’s success in getting new approvals does lend confidence to its viewthat US sales will ramp up. Cipla filed 5 abbreviated new drugapplications (ANDAs) in Q1 and is on track to file 20 more inFY19.Recently, it received USFDA approval for to market Metoprolol ERtablets used to treat hypertension and various cardiac conditions. It hasalso signed deals in Australia, New Zealand, Colombia and Malaysia tomarket breast cancer drug Trastuzumab. These efforts will help driveportfolio build-up and sustainable growth path for the company in thefuture.

Cipla Medro South Africa acquired 100 percent stake in South Africanfirm Mirren. This acquisition will allow the company to extend itsportfolio breadth and will be a major contributor to the company’sexisting OTC portfolio. This space offers immense opportunity and willhelp the company to gain competitive advantage along with revenuegrowth.

Going forward the supply constraints in the US market have ended and isat an inflection point, so growth should recover to that extent and aramp-up of sales from new products will add to sales and the grossmargin should benefit.

Technical Outlook

The stock has given a strong breakout of its long-term symmetricaltriangle formation and now correcting to its upward trend line breakoutpoint. This gives good opportunity to enter the stock.

The stock will touch its previous all time high in long term seeing thepattern formation with technical indicators and we expect minimumtarget of INR 700 in time frame of around 12 months to be achieved.

Target – Rs 700

Cipla Ltd- Accumulate

Sector PharmaCurrent Price (Rs) 615Market Cap. (Rs) 49145 cr.52 weeks High/Low 678/507Avg. Vol. (3 Mo.) 2,253,118Beta 0.65Current PE (TTM) 33.87Promoter’s Holding 36.74%


Diwali Picks, 2018

Dabur India Ltd- Buy

Sector ConsumerStaples

Current Price (Rs) 371

Market Cap. (Rs) 70,431crore

52 weeks High/Low 490/311

Avg. Vol. (3 Mo.) 3,234,815

Beta 0.98

Current PE (TTM) 48.47

Promoter’s Holding 67.88%

Fundamental Outlook

Dabur posted a rise in net profit of 4.1 percent The revenues rose by8.5 percent on the back of increase expenditure capacity of consumersdue to various government initiatives and moderate monsoon. TheEBITDA rose 7 percent at Rs 450.9 crore during the quarter but themargin fell marginally to 21.1 percent from 21.4 percent due to rise inraw material cost. The company also posted a volume growth of 8.1percent for the quarter, up from 7.2 percent last year.

The strategic initiatives that are bolstering optimism towards thecompany are its focus on innovation and improving market leadership,aggressive ad spends and enhancing direct distribution (ProjectBuniyaad). Innovations and new product launch is the main focus ofthe company during the fiscal year. It is eyeing a capex of Rs.250-300crore this fiscal. Moreover, the company is best placed to regain sharefrom some herbal companies that are facing a slowdown. Thecompetitive intensity has receded for the company, especially in somecategories where Patanjali was a core challenger.

It is aggressively strategising of gaining overall market leadership thatentails strengthening ayurvedic offerings, rationalization, offeringproducts for generation next, premiumisation and deepeningdistribution. Latest increase in demand for herbal and ayurvedicproducts have helped Dabur to place itself as a leader in ayurvedicspace and create a niche for its product offerings. Moreover, it isworking on increasing e-commerce presence and is also eyeing fewM&A deals, which makes it an attractive investment opportunity.

Technical Outlook

The stock price has been correcting after giving a sharp upsurge fewmonths back as 5 weeks up move is now followed with 10 weeks slowdown move where price still has not fallen till the levels from whereprice started to rally , i.e around levels from INR 376. Henceforth itshows internal strength in the stock.

Technical indicators William %R, RSI are oversold and now ready tobounce. We expect price to target INR 470 which is closer to itsprevious high in time frame of around 12 months.

Target – Rs 470


Diwali Picks, 2018

Tata Global Beverages Ltd- BUY

Sector FMCGCurrent Price (Rs) 218Market Cap. (Rs) 13,789.5crore52 weeks High/Low 328/205

Avg. Volume (3 Mo.) 25,93,059

Beta 1.11Current PE (TTM) 28.30Promoter’s Holding 35%

Fundamental Outlook Tata Global Beverages(TGB) posted a 19.07percent rise in net

profit on Y-o-Y backed by higher tea prices and benefit arising outof a tax credit on account of Starbucks. Revenue from operationsstood at Rs.1760.87 crore and close to a double digit volumegrowth in India.

The year saw strong focus on strengthening the company’s corebrands, streamlining the business and category expansion forbetter agility and business performance.The company witnessed ashare gain from other smaller players and is focussing onexpanding its markets in India, which accounts for 45 percent ofthe revenues.

The management is evaluating proposals for diversifying thecompany’s portfolio ranging from beverages (tea, coffee and dairy)to lentils and food ingredients.Such a move can remove businessrisk on account of limited exposure to beverage but also opens upspace for product extension in food and beverages.Themanagement is also considering moving the food/consumptionbusiness from Tata Chemicals’ stable to TGB. Going forward, such amove may help the company to place itself as a FMCG leader.

Tata Global Beverages remains focused on base businessrejuvenation through brand building, category expansion andenhancing distribution reach. The company is constantly exploringnew opportunities through pilot projects such as Tata Cha,products in the RTD segment and entering new categories likeTetley Squash. It is also increasingly focusing on the digital spaceand leveraging the possibilities this offers, both in terms ofconsumer connect campaigns as well as e-retail. The joint ventureshave clocked good growth and have performed well during theyear.

Technical Outlook The stock price is forming downward wedge formation and

breakout of the pattern occurs in upward breakout from wherefresh momentum starts on the upside.

There is clear signal of positive divergence of William%R & RSIwhich shows that the stock will bounce back on the upside.

The price level on the upside which the stock is likely to move willbe 61.8% Fibonacci retracement level of the current from its alltime high to INR 205. This target price comes to around INR 280 intime frame in around 12 months.

Target - Rs 280


Diwali Picks, 2018

DisclaimerRATING PARAMETERBUY We expect the stock to deliver more than 15% returns over the next 12 months

ACCUMULATE We expect the stock to deliver 6% - 15% returns over the next 12 months

REDUCE We expect the stock to deliver 0% - 5% returns over the next 12 monthsSELL We expect the stock to deliver negative returns over the next 12 months

NOTE Target prices are for a period of 12-month perspective. Returns stated in the ratingparameter are for our internal benchmark.

TECHNICAL CALL RATING PARAMETERBUY A condition that indicates a good time to buy a stock. The exact circumstances of the signal will be determined by the indicator that

an analyst is using.

SELL A condition that indicates a good time to sell a stock. The exact circumstances of the signal will be determined by the indicator thatan analyst is using.

STOP LOSS An instruction to the broker to buy or sell stock when it trades beyond a specified price. They serve to either protect your profits orlimit your losses.

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Diwali Picks, 2018

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DATE : October 17, 2014 - Peerless Sec

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