Recommendation From Pesticides & General Insurance Sector
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.
RALLIS INDIA LIMITED
CMP - Rs 266.45
BSE CODE : 500355
Volume : 1,88,353
Face Value : Rs 1
Target : Rs 290
Stoploss : Rs 245 (CLS)
Rallis India Limited manufactures and exports chemicals and allied products. The company produces pesticides, fertilisers, textiles and garments, marine products and leather tanning materials. On the quarterly consolidated front, net sales were reported at Rs 346.29 crore in Q4FY20, up by 1.94 per cent from Rs 339.69 crore in Q4FY19. Due to the impact of the nationwide lockdown to contain the virus outbreak, the company reported an operating loss of Rs 0.31 crore in Q4FY20 as against an operating profit of Rs 17.75 crore in Q4FY19. In the quarter ended March 2020, the company reported net profit of Rs 0.68 crore from Rs 1.35 crore reported in the same quarter for the previous fiscal year. The company's plants were able to coincide the lockdown period with the planned annual maintenance shutdown period. Hence it is one of the few companies to not see any material impact on the business in case of non-fulfilment of any contractual obligations. Hence, BUY.
ICICI LOMBARD GENERAL INSURANCE CO. LTD
CMP - Rs 1370.10
BSE CODE : 540716
Volume : 3,37,566
Face Value : Rs 10
Target : Rs 1495
Stoploss : Rs 1257 (CLS)
ICICI Lombard General Insurance Company Limited (ICICGI) offers motor, health, travel, business, personal accident and home insurance, as well as claim settlements and renewals services. On the standalone quarterly front, the company reported total income of Rs 2,851 crore in Q4FY20, up by 12.1 per cent from Rs 2,544 crore in Q4FY19. Its combined ratio degraded by 101 bps YoY to 100.1 per cent in Q4FY20, primarily on account of long-term motor policies and change in the product mix. The company’s net profit stood at Rs 282 crore in Q4FY20, up by 23.8 per cent from Rs 228 crore in the same quarter for the previous fiscal year. The company’s solvency ratio stood at 2.2x in Q4FY20, comfortably higher than the minimum regulatory requirement of 1.5x. Given the company’s strong capital position, distribution network, brand and technological prowess, ICICIGI should be able to increase market share in these times ahead. Thus, we recommend BUY.
(Closing price as of June 16, 2020)