Recommendations From Diversified And Paints Sector.

BOMBAY DYEING & MANUFACTURING COMPANY

CMP: Rs. 80 BSE Code: 500020

Bombay Burmah Trading Corporation has bought 4.92 crore shares in Bombay Dyeing & Manufacturing Company. NW Exports and Sunflower Investments and Textiles sold these shares. The stake purchase was done as part of internal restructuring of promoters' holding in Bombay Dyeing. The company has planned to launch 500 exclusive stores as franchises. Along with transforming 30 company-owned outlets into experience centres, the retail turnover is anticipated to gross by over Rs.1000 crore. The company will also be setting up an e-commerce platform, besides investing in technology and promotions. It is earmarking over Rs.100 crore for the revamp for the next four years. On the financial front, the company witnessed a net loss of Rs.52.97 crore in the Q3FY17, while the revenue of the company was Rs.382.62 crore in Q3FY17. We recommend Buy on the scrip, with a price target of Rs.90 and stop loss of Rs.75.

Kansai Nerolac Paints (KNPL) is expanding its capacity by setting up a new plant in Andhra Pradesh with a capacity of 60000 kilolitre a year at an outlay of about Rs.300 crore. The company plans to use the proceeds from the sale of the Chennai plant last fiscal to set up a plant in Gujarat. There are also plans to set up a plant in Punjab. Besides, it has presence in Nepal and Sri Lanka through joint ventures. KNPL has associated with Sunrisers Hyderabad franchise as the ‘official sponsor' for the tenth edition of the Indian Premier League (IPL). For 2017, the defending champions will carry company's logo on their helmets as part of this association. On the financial front, KNPL's revenue increased 6.66 per cent to Rs.3058 crore in 9MFY17 as compared to the same period in the previous financial year. The company's net profit rose 39.44 per cent to Rs.390 crore in 9MFY17 on yearly basis. We recommend Buy with a price target of Rs.425 and stop loss of Rs.367.