Recommendations From Holding Companies & Specialty Chemicals Sectors

Recommendations From Holding Companies & Specialty Chemicals  Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

L&T FINANCE HOLDINGS 

CMP - Rs 116.50
BSE CODE 533519
Volume 5,08,239
Face Value Rs 10
Target Rs 126
Stoploss Rs 108(CLS)
 

L&T Finance Holdings Limited is a non-banking financial institution-core investment company. It offers a range of financial products and services across retail, corporate, housing and infrastructure finance sectors, as well as mutual fund products and investment management services. For Q2FY20, Assets under Management (AUM) increased by 1.65 per cent to Rs 65,797 crore from Rs 64,729 crore in Q2FY19. Interest Income for Q2FY20 was reported to be Rs 3,294.38 crore, up by 16.73 per cent, from Rs 2,822.34 reported in the same quarter of the previous fiscal year. Net profit on the other hand, saw a decrease of 68.79 per cent to Rs 174.51 crore in Q2FY20, from Rs 559.12 crore reported in Q2FY20. The decrease in net profit was on account of a onetime impact of reversal of DTA of 473 crore which has been fully accounted for in the second quarter of the current fiscal year. The company exited from its wealth management business by divesting its holding in L&T Capital Markets Limited which was contributing less than 1 per cent towards LTFH's total revenue and profitability. Thus, we recommend a BUY.

GALAXY SURFACTANTS 

CMP - Rs 1407.20
BSE CODE 540935
Volume 1313
Face Value Rs 10
Target Rs 1530
Stoploss Rs 1320(CLS) 


Galaxy Surfactants (GSL) is engaged in manufacturing and marketing surfactants and specialty chemicals for personal and home care industry. It produces a variety of vital cosmetic ingredients, which also includes active ingredients, Ultra Violet (UV) protection and functional products. On the consolidated financial front, for Q2FY20, the company reported net sales of Rs 648.82 crore, a decrease by 5.32 per cent YoY from Rs 685.29 crore for Q2FY19. A correction in the product prices owing to a sharp fall in RMC (fatty alcohol) negatively impacted the company’s revenue. PBDT grew by 1.74 per cent to be Rs 82.90 crore as compared to Rs 81.48 crore in Q2FY19. Net profit significantly increased by 44.80 per cent YoY in Q2FY20 to be Rs 67.07 crore from Rs 45.71 crore in Q2FY19. Robustness of its business has enabled GSL to maintain stable margins. A gradual shift in the consumption pattern towards specialty care products will support volume growth and profitability. Hence, we recommend a BUY.

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