Info which matters during Sep Month
👍🏻 Yes Bank is facing huge selling pressure on Mr. Rana Kapoor's impending exit. However, its fundamentals remain
strong and the stock is likely to bounce back. Investors willing to take a small risk may enter and maintain a strict stop loss.
👍🏻 Sun Pharmaceutical Industries (Sun Pharma) has received USFDA approval for its speciality eye drug Xelpros estimated to garner $50-75 million revenue in the next 2-3 years. Sun Pharma had in-licensed Xelpros from Sun Pharma Advanced Research Company (Sparc) in June 2015. The USFDA approval will trigger a milestone payment to Sparc, which is also eligible for milestone payments and royalties on commercialization of Xelpros in USA. Buy both the stocks.
👍🏻 Bank of India plans to raise Rs.1000 crore via stake sale in non-core assets (including Rs.800 crore through stake sale in STCI Finance and SIDBI). Buy.
👍🏻 Jamna Auto Industries has signed a pact with UK based Tinsley Bridge for technology transfer. It also plans to incur capex of Rs.600 crore to launch new products. Buy.
👎🏻 ICRA has downgraded the long-term ratings of Oriental Bank of Commerce. It may be prudent to stay away from this counter.
👍🏻 Indian Oil Corporation has won some prestigious city gas licences. This efficient oil marketing company is also a good dividend distributor. Accumulate.
👍🏻 GMR Infrastructure plans to monetize its 1,400 acre land bank around Hyderabad international airport. A good opportunity to accumulate the stock at reasonable valuations.
👍🏻 Lakshmi Vilas Bank is on the verge of inducting a strategic partner by offering 30% of its stake to improve capital adequacy norms and to meet expansion plans. Buy.
👍🏻 HDFC Standard Life Insurance Company is eyeing a big pie of the insurance market in the next 2 years. Buy for 30% returns in the medium-term.
👍🏻 GHCL's soda ash enjoys strong demand and company is eyeing higher selling prices. A stronger dollar also augurs well for this export-oriented company. Buy for a year or two to reap huge returns.
👍🏻 The pharma sector looks good. It may be prudent to buy Biocon, which also has a big stake in Sygene.
👍🏻 Crude oil prices are on the rise. A positive for Selan Exploration Technology as it sells its products to Government of India at international prices.
👍🏻 Srikalahasthi Pipes is reportedly faring better. Its current beaten down share price
warrants a buy.
👍🏻 Most asset management companies (AMCs) have increased their exposure in paper companies due to the plastic ban and cut in
paper production by Chinese companies. Buy
JK Paper.
👍🏻 Cash-rich Mahindra
Lifespace Developers is
scouting for buying stressed assets of weaker companies. Buy.
👍🏻 The Chairman of
Power Grid Corporation of India sounds optimistic about its current and future operations. The stock deserves a permanent place in every portfolio.
👍🏻 Hindalco Industries plans to raise Rs.6000 crore via NCDs to meet capex requirements, repay loans and to fund
general corporate purposes. The aluminum sector also looks good. Buy.
👍🏻 IFCI, which has already recovered NPAs of Rs.160 crore, plans to recover another Rs.8000 crore over the next few
months. If its results are positive, the stock may bounce back.
👍🏻 National Aluminium Company is on an expansion spree. It plans a capex of Rs.5800 crore on a greenfield plant.
Aluminium prices are also on the rise. Buy.
👍🏻 TVS Motor Company has tied up with Mexico based Torinto to strengthen its foothold in the country. A positive for the company.
👍🏻 Shreyans Industries reported a good set of numbers for Q1FY19 and is on course to notch an EPS of Rs.30 in FY19.
Buy for a price target of Rs.280.
👍🏻 Hinduja Global Solutions is expected to notch an EPS of Rs.105+ in FY19 and Rs.115 in FY20. The stock is likely to touch Rs.1200.
👍🏻 Based on its Q1FY19 EPS of Rs.141, Bosch is expected to notch an EPS of Rs.600 in FY19. The stock is likely to cross
Rs.24000.
👍🏻 Based on its FY18 EPS of Rs.282.45, Honeywell Automation India is expected to notch an EPS of Rs.368 in FY19.
The stock is poised to touch Rs.25000.
👍🏻 Morganite Crucible (India) is set to notch an EPS of Rs.75 in FY19 based on its bright industry prospects. The
stock is likely to cross Rs.3000. Buy for the long-term.
👍🏻 An Ahmedabad based analyst recommends Amal, Amarjothi Spinning Mills, Crest Ventures, Goldiam International, IOL Chemicals & Pharmaceuticals, Lahoti Overseas and Lambodhara Textiles. From his previous recommendations, Tanfac Industries appreciated 273% from Rs.107.80 on 2 July 2018 to Rs.402.65; Rishabh Digha Steel & Allied Products appreciated 214% from Rs.39.5 on 11 December 2017 to Rs.124.2; Cenlub Industries appreciated 81% from Rs.55.3 on 2 July 2018 to Rs.100; Globus Spirits appreciated 67% from
Rs.128.45 on 13 August 2018 to Rs.215; Balrampur Chini Mills appreciated 49% from Rs.66.4 on 25 June 2018 to
Rs.98.95; and Makers Laboratories appreciated 46% from Rs.80.1 on 20 August 2018 to Rs.116.85.
👍🏻 The latest grey market premium for the Aavas Financiers IPO is Rs.60-65 and the cost of its minimum application
form is Rs.350-360.
👎🏻 The latest grey market premium for the Ircon International IPO has crashed to Rs.2-4 from a high of Rs.105-110.
Will LIC Step in to Save IL&FS?
What happened in the financial debt market leading to a huge sell-off and panic in the Stock Market yesterday?
A debt fund of DSP Mutual Fund named DSP CREDIT RISK FUND was holding IL&FS commercial Paper (CP).
This paper were rated AAA.
But last week IL&FS made an interest default hence its rating went down to D.
Redemption pressure came to this fund.
Hence DSP MF sold AAA rated 9.1% paper of DHFL as they needed big fund and hence this quality paper was sold at a steep discount to meet the redemptions.
Fine...this was debt market operations
but its repercussion were seen in DHFL stock... thinking its paper was sold at steep discount... hence company must be in some trouble.
This led to fear of all NBFCs specially HFC's will have big problem and it triggered sell off in all the NBFCs.
Then followed by banks and YES Bank was already in bad news.
Leading to overall sell-off and volatility.
Now Post this NBFC Sell Off What is expected ahead ?
(1) Due to the redemption pressure on DSP Blackrock MF, the fund house had to sell DHFL Bonds at net yield of 11% whereas as per Issue DHFL had yield of 9.1%. This means the Bond was sold at 18% steep discount (Rs.100 bond sold at Rs. 82). After this so many clarifications are coming up by DHFL that it was a secondary market deal wherein they have nothing to do.
(2) Why did DSP Sell?
Ans : Because DSP faced redemption pressure from the Corporate clients holding Funds that have exposure to IL&FS due to downgrade of rating to D from AAA.
This redemption pressure would have resulted in default by DSP and hence they had 2 options :
(a) Either sell GSec
or
(b) Sell DHFL Bonds as investment at a loss.
Now Gsec is already in loss due to Bond yield having risen hence logically if the loss is same it's better to sell Corporate Bonds.
(3) Now hereafter other AMCs having exposure of Rs.2800 crores to IL&FS bonds would get redemption pressure from Corporate clients who have invested in this Rs 16 trillion Debt MF industry. Assuming the avg exposure to IL&FS Bonds as 3% of Gross portfolio this means the value of AUM in such affected funds is Rs. 94,000 Crores. Assuming 25% of such investments are by Corporate Client who do not wish to hold D grade funds the redemption pressure would be a whooping Rs. 23000-24000 Crores.
(4) It's impossible for such schemes to get this amount in a week. Further, illiquid Corporate debt market and DHFL saga results in the fact that AMCs have no option but to sell GSec. Hence, GSec will face a huge selling pressure so either Bond Yield will shoot up to 8.30-8.50% levels or the RBI has to do OMO (Open Market Operations).
(5) If RBI Opts for OMO then the governments spending capacity will reduce by an equal amount and given that elections are around the corner it is impossible for Govt to allow Rs. 24000 Crores out of the system.
(6) The government has only 1 solution: It will have to tell LIC to save IL&FS by ensuring no further defaults specially to Banks and Mutual Funds till elections in order to avoid a financial system crash that will involve a lot of banks, nbfc and Mutual Funds.
(7) At the end of the day public money will be used by LIC to save IL&FS and prevent further defaults.
This will relax the Corporate bond market and stock markets from further panic!
Konkan Railways is Doing a Superb Job for Freight Industry
A sight not to be missed.
Loaded Trucks being transported from Mumbai to Mangalore by Konkan Railways. This facility is currently available on the Konkan Railway only from Mumbai to Mlore.
(To be precise from Kolad to Surathkal.)
Trucks which would otherwise take close to 72 hrs by road now cover the same distance of 900km in 16 hrs.
Advantages are-
-No wear and tear of the Truck
- No fatigue of the driver
- No hassles at the check posts
- Short travel time
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