Weekly stocks update 15 Mar 2019

STOCK UPDATE

BUY

CMP	:	Rs512
PT	:	Rs590

Trade now

LIC Housing Finance

Attractive valuations allow for margin of safety

• LICHF has been able to maintain its cost of funds well, which is an important factor in favour of its long-term sustainability.
• Valuations suggest asset-quality caution is likely overdone.
• Management has guided for improved growth in the near term. Loan growth guidance of ~15% for FY2019 and FY2020 also appears achievable.
• We upgrade our recommendation on the stock to Buy with a revised PT of Rs. 590.

Read more →

BUY

CMP	:	Rs1,011
PT	:	Rs1,200

Trade now

PI Industries

Impressive earnings visibility

• With industry-leading return ratios coupled with healthy balance sheet and strong earnings visibility, we expect further re-rating in the stock. We reiterate our Buy rating on PI Industries with an upward revised PT of Rs. 1,200/share.
• The start of the multiyear upcycle in the global agrochem market, which has been good, augurs well for the business visibility of the CSM business (expected to grow by 20%+ in next 2-3 years).
• Management has reiterated its guidance and is confident of achieving revenue growth of 20%+ and EBITDA margin of ~21% over the next two-three years.
• The company is expected to post revenue and earnings CAGR of 21.6% and 23.4%, respectively, over FY2018-FY2021E.

Read more →

VIEWPOINT

POSITIVE

CMP	:	Rs583

Trade now

Kajaria Ceramics

Positive environment persists

• We reiterate our Positive view on the stock with a 18-20% upside potential given key positive triggers like NGT ban on coal gasifiers, stabilising power costs, GST related benefits and government’s focus on affordable housing.
• NGT bans usage of coal gasifiers for Morbi, Guajrat which is likely to affect almost half of Morbi tile manufacturers. The Morbi Ceramic Association is expected to challenge the order in apex court.
• The recent ban is likely to increase cost of fuel for the unorganised sector and higher working capital requirement due to shift to PNG or non-coal gasifier fuel technology.
• Kajaria may benefit from narrowing product pricing gap leading to shift in volume and market share gains in the near to medium term.

Read more →