Samvat 2070: The Global Turnaround Year

Diwali is still a few days away, but the equity market is already in celebration mood. From the way the Sensex and Nifty have sustained at the higher levels despite the disappointments on the global as well as domestic fronts, it is clear that the markets are not in a mood to concede ground so easily. Despite the difficult macro economic situation, the Sensex has appreciated by more than 8.50 per cent since last Diwali’s Muhurat trading session. Of course, the upward move was not as smooth as it was expected to be.

Ahead of Diwali 2012, the government was fully aggressive in terms of bringing in reforms to help the economy get back on track. In fact, the appointment of P Chidambaram as Finance Minister was part of the strategy to get the reforms engine running. However, though the economy gathered some momentum, it lost steam soon enough as the government failed to implement any major reforms. The impact of the policy paralysis and difficult economic scenario was clearly seen with GDP growth declining to less than five cent, a multi-year low.

As expected the slower growth found reflection in the financial performance of India Inc., depleting for every sequential quarter. Factors like rising interest costs and higher raw material prices impacted the bottom-line. Corporates took the worst hit in Q4FY13 and Q1FY14, as the impact of rupee depreciation added further their woes. Amid all this, the government remained at a standstill.

While this was the scenario on the domestic front, it was not much better globally. The European markets remained under pressure and fears of QE tapering continued to emanate from the US, which was expected to suck out liquidity from most of the emerging markets. Most of the macro factors hinted at slower growth for the developed economies. While the macro data was quite negative, liquidity kept the markets ticking. In a nutshell, the scenario was gloomy all around and market participants were on the edge.

In all this volatility, the Sensex – the barometer for the country’s financial health – surged more than 8.50 per to cent, resulting in significant gains for investors. The readers of Dalal Street Investment have even more reason to smile, as our recommended portfolio ‘Muhurat Buys For Diwali 2012’ has seen a handsome appreciation of more than 19 per cent. 

If we consider the Sensex gains since the day of our recommendation (October 30, 2012), it is just 11 per cent. Even in that case, the DSIJ-recommended portfolio has managed to beat the leading index by a significant margin. We have managed to create some good wealth for our readers as our ‘Muhurat Buys For Diwali 2011’ portfolio had also yielded strong returns of more than 29.33 per cent as against the Sensex returns of 11.21 per cent. 
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Muhurat Buying: Assured Returns Or Mere Sentimental Tokenism? 

With a track record of lucrative returns behind us, for this Diwali we have come up with a fresh investment portfolio. However, before we dive into to the recommendations, we would like examine a fundamental question here. Does it really make sense to create a portfolio in Diwali? Is it just a ritualistic, sentimental investment or does it really help to create wealth? 

To find the answer, we have churned data since 2005. We have considered the year 2005 as a base, as we have seen a whole economic cycle since then, as well as one-off events like the global recession in 2008-09. 

The data over the past eight years clearly suggests that Diwali has been a good time to invest and maximise returns. If we consider the returns for a particular year on a Samvat basis, the markets have provided positive returns for six years and have given negative returns for just two years (Sensex down 52.60 per cent in Diwali 2008 and by 26 per cent in 2011). While one may jump to the conclusion that the negative returns would have eroded wealth, in reality the positive returns have been much higher than the negative ones have been down. All of this suggests that investing in Diwali is a good idea if the stocks are chosen properly.

What’s In Store For Samvat 2070? 

We, at Dalal Street Investment Journal, have always been at the forefront of the guiding our readers through market uncertainties. In the past, we had captured possible rallies in the markets much ahead of the others, and also cautioned investors well ahead of the corrections. 

At this juncture too, the scenario is quite uncertain and investors are still grappling for direction. This is on account of political uncertainty, volatility in the INR against the USD, dipping GDP growth and the overall impact seen on the financial performance of India Inc. On the other hand, the indices are trading at multi-year highs. So what lies ahead? 
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Expect A Better H2FY14 

We are of the opinion that things are likely to take a favourable turn for the markets, and have some compelling reasons to back our conviction. First and foremost is that most of Corporate India is confident about faring better in H2FY14 than H1FY14 proved to be. Adi Godrej, Chairman, Godrej Group opines, “On the economic scenario, the worst is behind us. And I think the growth in the second half of the current financial year would be considerably better than in the first half. The first reason is that the reforms are likely to play a role, and secondly, the strong monsoon has lead to good agricultural growth. This will have a multiplier effect on both industry and services”. 

Upasna Bharadwaj, Economist, ING Vysya Bank agrees, “I expect Indian growth to pick up in H2 amid improved seasonal demand on the back of festivals and rural monsoons”. 

We, at DSIJ, second this view and expect the GDP growth momentum to improve in the second half of the year. 

Stability In INR To Help India Inc. 

The second factor is that the INR has stabilised against the USD. This would provide a fair amount of chance for India Inc. to align its policies accordingly. 

While this is on the micro front, there are some macro advantages too. The past month has seen some favourable trade data, with a much lower deficit than the street’s estimates. This definitely has to do with a degree of stabilisation in the INR, along with other factors, which has helped reduce the import bill. 

With the currency fall being arrested, there has been a marked improvement on the CAD front as well. We strongly believe that the corrective actions taken by the government would help contain the CAD. Though achieving the target of USD 70 billion for FY14 appears to be a tough call, we feel that it would be lower than the earlier estimate of over USD 90 billion. 

Dharmakirti Joshi, Chief Economist, CRISIL shares, “We expect the rupee at 60/USD by March 2014. This will be due to a lower CAD and improved cushion on foreign flows via debt swap agreement with Japan and mobilisation of FCNR deposits. A 28- 30 per cent decline in gold imports and reduction in other non-oil imports due to weak economic growth in conjunction with a pick-up in exports will narrow the trade deficit, and hence the CAD”.
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Inflation Levels Likely To Recede 

Among the factors on the domestic front, inflation has remained high, and this has impelled the RBI to tighten liquidity. Here Rajesh Desai, Executive Director – Finance, Glenmark Pharmaceuticals says, “All the focus of the government should be on control- ling inflation at around three-four per cent and getting back to the eight per cent GDP growth trajectory. All policies must be directed to achieve these two major objectives, which will put the country back on track”. 

At the heart of the current inflation figure lies the spiralling food inflation levels. However, with a good monsoon, we expect food and vegetable prices to decline in the coming months. Further, crude imports would be comparatively cheaper following the INR decline. With lower petrol and diesel prices, there is a high possibility of contraction in inflation.

QE Tapering Already Priced In

There is a fear that QE tapering would result in FII money finding its way out of the emerging markets. However, we feel it is already priced in, and hence, the current levels do not give investors cause for concern. We are of the opinion that even before QE had started, India was a preferred destination for foreign investors as it offers breadth and depth in terms of sectors that operate, the market cap it has and number of quality stocks it provides. 

Apart from that, the US Fed Chairperson designate Janet Yellen is expected to be pro-QE, and hence, immediate tapering may not happen. Even if it happens, it would be a gradual process. One noticeable factor is that the developed markets are showing some signs of improvement. Even the IMF, in its latest report, has suggested that the worst is over for the European markets. The logjam in the US is also likely to be over soon. Apart from that, the other macro factors are providing positive news. 

All the above factors are indicating towards a better scenario and causing the indices to surge higher. However, the General Elections in 2014 have spawned a climate of political uncertainty. It is well known that FIIs tend to avoid politically uncertain geographies. However, this uncertainty would be temporary in nature, as regardless of which government comes to the centre, it is unlikely to bring the reforms process to a halt. 

In sum, we expect the positivity on the street to take the markets to new highs. Gaurav Dua, Research Head, Sharekhan believes, “A lot would depend on the outcome of the General Elections and the formation of the new government in 2014. However, going by the general mood of the people and the base assumption that the economy could bottom out in FY2014, there is a good possibility that we could be at a new high by Diwali of 2014”. 

However, by no means would the surge be a one-way movement. The markets would remain volatile till the election results are announced and would continue to take cues from the global and domestic markets beyond that. 

On the valuations front, the FY14E Sensex EPS of Rs 1260-1280 discounts the current Sensex levels by around 16x, and hence seems fairly priced. But as upgrades happen in the December and March quarters, one can expect the Sensex to make an up-move. As regards the period until next Diwali, we see the markets touching their all-time highs amid volatility. 

Like every year, we have picked a bouquet of stocks (See Page 9: Six Muhurat Buys For Diwali 2013) that our readers can use to build their Rs 1 crore portfolio this festive season, and remain confident of creating the magic of the past two years in the next year too. With that, the whole team of Dalal Street Investment Journal wishes you all a happy Diwali and a prosperous Samvat 2070!
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Agro Tech Industries

BSE Code: 500215 | Face Value: Rs 10 | CMP: Rs 511

• Agro Tech’s parent company, Conagra Foods, has a vast portfolio of products which have not yet made their way into the Indian markets.
• With the encouraging responses that its peanut butter segment has received, the company plans to increase the number of SKUs therein.
• The management is also targeting a 40 per cent annual increase in the non-edible oils business, which would drive up revenues and aid margins expansion.

FMCG is a sector that cannot be ignored while devising an investment portfolio. In fact, this sector acts as a portfolio stabiliser for investors. With this in mind, we are recommending Agro Tech Foods this Diwali, with a one-year time horizon. 

Agro Tech Foods is best known for its renowned edible oil brand ‘Sundrop’. Of late, the company’s strategy of focusing on higher value refined edible oils has resulted in its EBITDA margins expanding. These have doubled in the last three years to stand at 8.2 per cent as of FY13. The management is also targeting a 40 per cent annual increase in the non-edible oils business, which would drive up revenues and aid margins expansion. 

Among other developments, Agro Tech’s peanut butter facility in Gujarat was scheduled to be commissioned in Q2FY14, followed by a new product facility in Unnao, Uttar Pradesh in the second half of FY14. The company also plans to commission a facility in Bangladesh by FY15 and one in Sri Lanka in due course, as it looks to widen its geographic presence. The annual capex would be in the range of Rs 30 crore.

Agro Tech’s transformation from an edible oils company to a value-added-food major is well underway. Having increased its gross margins by 1000 basis points in the past five years and building a second brand ‘ACT II’ popcorn, the company is now charting a gradual course towards diversifying its product portfolio and improving profits. 

The company also plans to increase the number of SKUs in the peanut butter segment. With the encouraging responses that it has received, the management believes that the product has the capability to achieve the Rs 100 crore revenue benchmark from the present levels of Rs 10 crore. It is also test marketing its olive oil brand ‘Olivia’ and plans to continue trials of new products to evaluate the next big product to invest in. 

Agro Tech’s parent company, Conagra Foods, has a vast portfolio of products which have not yet made their way into the Indian markets. This untapped potential and the fact that India is one of only two emerging markets that Conagra is present in (Mexico being the other) augurs well for accelerated innovations and product launches, imparting significant long-term visibility to Agro Tech’s business. The acquisition of Ralcorp in November 2012 by the parent company further implies huge potential for a range of products in India. 

As regards the valuation levels, the stock currently trades at a TTM PE of 30.38x. Keeping this in mind, we believe that the company has the potential to yield 20 per cent returns from the present levels to its investors in the next one year. You would do well to add this stock to your portfolio.
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Infosys

BSE Code: 500209 | Face Value: Rs 5 | CMP: Rs 3355

• The company has provided a higher revenue guidance for 2014. 
• It has added a good number of clients during the quarter, which shows renewed confidence in the customer fraternity. 
• It managed more diversification in terms of geography and industry segments, which will help mitigate risk.

India’s second largest IT company, Infosys, has posted good growth in its topline in Q2FY14, and the management has revised its revenue guidance on the upper side. This has definitely made the market look at Infosys as an investment opportunity. 

Previously, Infosys had been criticised for its preference for margins over growth. The latest numbers clearly show the effects of strategy relaxation in the company’s sales and pricing policy for the last one year. This is coupled with the overall revival in demand for outsourcing services, especially from the North American market, which contribute more than 61 per cent to the topline. 

On the other hand, the lower operating margins seen continuously for the past six quarters have had a negative impact on its pursuit for revenue growth. The operating margin dipped to 21.88 per cent during the June 2013 quarter against 34.71 per cent in the same period last year. However, we are confident that with its long experience of running the IT business, Infosys’ management has the requisite skills to reverse the declining trend. 

Further, there are certain other concerns looming too. The company’s attrition rate rose to 17.3 per cent during the September 2013 quarter from 16.9 per cent a quarter ago and 15 per cent in the same period last year. Interestingly, this rise is despite the recent salary hikes. Further, the company is under scrutiny by the US government with regard to the compliance with visa rules. It has made provisions of USD 354 million for the same, which also contributed to bringing down this quarter’s operating profit. 

Shrugging off all these negatives, the company’s management has revised its lower cap of revenue guidance from six to 10 per cent in the first quarter to nine to 10 per cent in this quarter in dollar terms. The narrowing of the guidance range hints at the company’s level of confidence over the improving market conditions for the IT business. It also shows that the downside for its business in considerably lower in the coming future. The company revised its rupee revenue guidance to 21-22 per cent for FY14 from 13-17 per cent earlier. 

Another major positive for the company is the number of clients added during the quarter. It was able to add 68 clients to its list in this period, which is the highest for the company in the recent past. This is clearly shows the improvement in customers’ confidence in the company post Narayan Murthy’s return after the recent potential loss of customers due to the ongoing management churn. 

On the diversification front too, the company managed a slight improvement in terms of both geographic and industry segments. In the first half of the year, its European revenues increased by over two per cent while the North American revenues decreased by two per cent in its topline pie. Industry segment-wise, the company’s manufacturing business grew by 6.8 per cent sequentially and 6.6 per cent in constant currency terms during this quarter. We expect that the company’s dependancy on North America and BFSI will reduce over the coming quarter, which will help to mitigate the risk associated with its stock. 

As regards the valuations, Infosys’ stock is trading at a PE ratio of 20.18x trailing 12-month EPS. This is highly attractive at its current market price. Considering the sustainable revenue visibility and good number of client additions along with good valuations, we recommend buying this stock from the next one-year’s perspective with price target of Rs 3850.
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Ipca Laboratories

BSE Code: 524494 | Face Value: Rs 2 | CMP: Rs 699

• The company has received USFDA approval for its solid dosage formulations manufacturing facility at the Indore SEZ.
• It has received 15 USFDA approvals till date, of which only eight have been commercialised so far.
• Ipca is leveraging its cost competency to gain an incrementally higher market share under anti-malaria tenders from multilateral agencies.

Pharmaceuticals has been one of the few sectors that have out- performed the broader markets year-till-date. One of the reasons for such outperformance is the ‘safe haven’ status attached to the sector in turbulent times. It is with this in mind that we are considering Ipca Laboratories for a sparkling portfolio this Diwali. 

Apart from this, the other triggers that are likely to keep the stock in the lime-light are better traction in the domestic market, and better scale-up in the institutional business, where the company has provided guidance for a revenue of Rs 460 crore in FY14 as against Rs 394 crore reported during FY13. Another key factor behind our optimism for this counter is that the company earns 60 per cent of its revenues from exports. This is a big positive keeping in mind the INR, which has made a new normal above 60/USD. 

The other important development that has taken place in recent times is that the company has received the US Food and Drug Administration’s (USFDA) approval for its solid dosage formulations manufacturing facility at the Indore SEZ. This is likely to lead to a significant scale-up in its US business, which largely remained flat in FY13 keeping the currency benefits aside. 

The company has three USFDA-approved products from the Indore facility, but according to the management, their launch will be spread over the next couple of quarters in order to put the supply chain in place. The impact of this would be visible from Q1FY15 onwards. The company expects to add close to Rs 150 crore from this facility in FY15 and maintain its long-term guidance of Rs 500 crore sales by the end of the third year post approval for the unit. 

Ipca has received 15 USFDA approvals till date, of which only eight have been commercialised so far. The company has planned a site transfer of the remaining seven products from the existing Silvassa facility to the Indore SEZ. Till date, it has filed 36 ANDAs in the US and has 21 pending approvals, primarily from the Indore SEZ. 

It is leveraging its cost competency to gain an incrementally higher market share under anti-malaria tenders from multilateral agencies. Also, the domestic business, which is core to the company’s profitability and contributes 32 per cent to its topline, is likely to witness a sustainable 16-17 growth over the next two years. 

On the valuations front, Ipca Laboratories trades at a TTM PE of 25.68x, which is cheaper as compared to its large listed peers. We recommend a ‘buy’ on this stock for a one-year time horizon, as we estimate it will give a return of 20 per cent to investors over this period.
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JSW Energy

BSE Code: 533148 | Face Value: Rs 10 | CMP: Rs 44

• The company has recently added 540 MW capacity, which will boost its sales. 
• The order by CERC in favour of power companies would act as a sentiment booster.
• Merchant power tariffs have risen, which will mean better realisations.

The attractive valuation of the stock as well as the addition of new capacities by the company make JSW Energy a good pick. Besides, the recent order by the Central Energy Regulatory Commission (CERC) in favour of power companies would act as a sentiment booster for stocks in the sector. The merchant tariffs and volumes have also gone up, which will benefit JSW Energy (JSWEL), a prominent player in the power trading business. This is the only stock that has generated fantastic returns for investors in the power sector, reinforcing our confidence in it. 

JSWEL currently has a power generating capacity of 3140 MW. It plans to add a total capacity of 11770 MW in next 24-36 months, which will make it a leading power generating company. The power business is its largest business segment, and accounts for 85 per cent of its total revenues. Among the other businesses, JSWEL is engaged in power trading, and also has a few coal and lignite mines. 

We are confident about the stock as the company enjoys better fuel security as compared to its peers. This is reflected in the plant load factors (PLF) reported in the June 2013 quarter. For its Vijayanagar power plant, the company reported a PLF of 102 per cent against 101 per cent a year before. However, the PLF for the June 2013 quarter at the Barmer plant declined to 65 per cent from 75 per cent a year ago on account of a shutdown for maintenance. Even the Ratnagiri plant reported PLFs of 83 per cent, marginally lower than that in the June 2012 quarter. But with better coal availability, the PLF is likely to improve in the coming quarters.

JSWEL sells about 46 per cent of the total power through the merchant route and the rest through long-term agreements. The shortage of power results in higher merchant rates, which mean better realisations for the company. Though the management is expecting marginal pressure on the merchant power rates on account of additional power capacities being commissioned, we feel that the margins are likely to remain intact. For most of its capacity, the company is dependent on coal imports. In the last one year, international coal prices have fallen by about 15-20 per cent. This is a good sign for JSWEL, which would see an expansion of its profit margins.

The volumes and prices on the power exchanges have also shown a rise, which will benefit the company. It has recently commissioned 540 MW of capacity, which will boost its performance further. 

The most compelling factor behind recommending JSWEL is that it has reported profits for the last six quarters in a row, whereas the performance of many power companies deteriorated over the same period. It has remained strong on the operating front too, with improved EBITDA margins in Q4FY13 and Q1FY14. Here, the Operating Margins improved to 38.71 per cent as against 35.56 per cent in March 2013 and 28.18 per cent in June 2012. 

The stock is trading at 7x its trailing four quarter EV/EBITDA and the EV/ MW stands at 6.2x, both in line with its peers. The higher merchant tariffs as well as the addition of new capacity would help the company come up with a healthy financial performance. We would advise investors to enter the counter with a price target of Rs 60.
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Maruti Suzuki (India)

BSE Code: 532500 | Face Value: Rs 5 | CMP: Rs 1439

• The demand for automobiles is bouncing back, and rising rural incomes will drive the sales of small passenger vehicles, which is the company’s forte. 
• Rupee depreciation will benefit rather than dent the company’s bottomline due to the management’s proactive strategies.
• The acquisition of Suzuki Powertrain India and its increased capacity will remove the company’s diesel engine dependency from Fiat and will help in margins expansion.

According to the India Brand Equity Foundation, rising disposable incomes and a bourgeoning young, middle class population along with development of new technology are fuelling the Indian automobile market, which is expected to make the country among the world’s top five auto producers by 2015. However, the domestic car industry is witnessing an unprecedented churn. Original equipment manufacturers (OEMs) are struggling to predict the Indian consumers’ preferences and inclination. There is one company that has been an out-standing player in this sector and has made a significant impact on the Indian automobile industry is Maruti Suzuki, the market leader in the sector, with almost 45 per cent market share. 

While it is true that the Indian automotive market has been weak for the past three years, it is not expected to slow down further. On the contrary, industry experts are predicting a strong recovery in demand over the next one-two years. Maruti has expanded its presence into almost all the segments, but small cars still dominate its portfolio. The upcoming festive season is expected to lead to a good recovery in the passenger vehicle volumes. In addition, the good monsoon seen this year is expected to boost rural incomes, and this will help to boost the sales of small passenger vehicles. 

The latest monthly sales figure points towards this. The sales volumes of Maruti Suzuki stood at 104964 units in September, 2013 against 93988 units in the same month last year, registering a growth of 11.68 per cent on a yearly basis. On a monthly basis, the sales increased by 20.20 per cent from last month’s figure. Barring the utility vehicles (UV) segment, it has been able to maintain its dominant market share across most of the segments, and this has been one of the highlights of the company’s performance. 

Maruti exports almost 15 per cent of its total volume, and the recent depreciation of the rupee has given it an opportunity to increase this figure. With uncertainty in the domestic vehicle market for a past few quarters, this is a prudent step to drive growth. The currency depreciation, on the other hand, will increase the import costs for some critical components. However, the company has already initiated several measures to increase local sourcing and replace some of the imported parts. Hence, we expect that rupee depreciation will be more helpful to the company. 

The recent strategic move to merge Suzuki Powertrain India (SPIL) is expected to improve Maruti’s operating margins. This shows up in the Q1FY14 results, where its margins have surged by almost 420 basis points. 

The company has had a considerable lacuna in that its portfolio was inclined sharply towards petrol engines. In order to meet the growing demand for diesel vehicles, the company started outsourcing almost one lakh engines per annum from Fiat India. With the two-phase expansion of SPIL (the diesel engine manufacturing facility of the company) on the verge of completion, the outsourcing of diesel engines will be eliminated gradually, leading to better margins in the coming quarters.

Coming to the valuations, Maruti’s stock has been trading in a PE ratio range of 16-26 for the past couple of years. At its current market price, it is trading at a PE ratio of 16.62, which is close to the lower range. This makes investing in the stock attractive at the current levels. We expect it to touch the Rs 2000 level over the next one year’s time.
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Shriram City Union Finance

BSE Code: 532498 | Face Value: Rs 10 | CMP: Rs 990

• Robust business growth expected from the Tier II and Tier III cities. 
• It has a strong asset quality, while others are struggling on the NPA front.
• The company has sustained its spread even in a difficult macroeconomic scenario.

Investors may be surprised by our recommendation of Shriram City Union Finance (SCUF), a company which is in the business of auto financing, personal loans, gold loans and preowned vehicles. With the automobiles segment witnessing a sort of stagnation and many NBFCs facing issues with regard to asset quality, the sentiment on the segment is not bullish overall. However, despite all the apparent odds, we have compelling reasons to recommend this company to our readers. 

First and the foremost is the strong growth expected for the company from the Tier II and Tier III cities. Its ability to grow is also evident from the fact that its Assets Under Management (AUM) have increased to Rs 15393 crore in June 2013 from Rs 14889 crore in June 2012. This is despite the fact that the management has consciously reduced its focus on gold loans. For June 2013, the gold loans as a part of its total AUM stood at 24 per cent as against 39 per cent in June 2012. This was a deliberate attempt on the management’s part, as it wanted to reduce exposure to this risky portfolio that has witnessed higher fluctuations in the past one year. 

The company has been serving the underserved and the management is quite confident of growth from the areas SCUF caters to. Company has last mile connectivity through Shriram Chits, which provides access to territories unexplored by other lenders. 

While the growth in advances has been good and that too in a high-risk area (Micro, Small and Medium Enterprises), its asset quality has been intact. Even if we consider the gold loan portfolio, the NPAs stood at 0.38 per cent for Q1FY14 against 0.80 per cent in March 2013. With gold prices bouncing back, we feel that the NPA levels will come down in the September quarter. 

The company has not only managed to sustain its asset quality but has also sustained its spread. This is a major positive, as the other NBFCs are facing margin pressures. In a scenario where the cost of funds has increased, its gross spread was 11.08 per cent as against 10.48 per cent in June 2012. The net spread for the June 2013 quarter stood at 4.51 per cent against 4.32 per cent in June 2012. This clearly suggests SCUF’s ability to raise funds at lower costs and to pass this on to the end users. 

Further, 90 per cent of its funds are long-term in nature (more than one year), and hence, the fluctuation in the short-term rates hardly makes any impact on its margins. The company also hardly has any competition, as other players have overlooked the segment, considering it a risky one. Hence, the management is quite confident of sustaining the spread. SCUF is adequately funded, with a Capital to Risk Weighted Assets Ratio (CRAR) of 19.87 per cent (Tier I 15.56 per cent and Tier II 12.63 per cent). Thus, it does not need to raise funds for the next 12-18 months. 

On the valuations front, the scrip is trading at 2.35x its price-to-book value and discounts its trailing four quarter earnings by 13x. We recommend a ‘buy’ on the counter, with a target price of Rs 1350 in the next one year.