Recommendation From Cement & Banking 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.

JKCEMENT 

CMP - Rs.836.40
BSE CODE 532644
Volume 2229
Face Value Rs.10
Target Rs.975
Stoploss Rs.770 (CLS) 

JK Cement is engaged in manufacturing cement and cement products. The company’s product portfolio includes grey cement, white cement and wall putty. It offers a range of grey cement, which include Portland Pozzolana cement (PPC), ordinary Portland cement (OPC) and Portland slag cement. Its white cement is used for decorative and architectural applications. 

JK Wall Putty is a white cement based fine powder, which provides a base for concrete/cement plastered walls and ceilings. JK Cement’s sales volumes rose 9 per cent YoY to 2.3 million tonnes. Interest rates are heading downwards as per the RBI and inflation has remained tepid. The 20 MW CPP at Durg plant and 0.6 MTPA grinding unit in Odisha would be commissioned in Q4FY19. The company is expecting saving of Rs.60-70/ tonne in power cost at Durg plant from new CPP. Thus, we recommend a BUY.

 

FEDERALBNK 

CMP - Rs.98.50
BSE CODE 500469
Volume 721,687
Face Value Rs.2
Target Rs.110
Stoploss Rs.91 (CLS) 

The Federal Bank operates through four segments: treasury, corporate or wholesale banking, retail banking and other banking operations. The treasury operations include trading and investments in government and corporate debt instruments, equity and mutual funds, derivative trading and foreign exchange operations on account and for customers. Overall slippages declined to Rs.2.56 bn for 4QFY19, driven by meaningful decline in SME slippages to Rs.0.97 bn. NIM remained protected at 3.17% QoQ, despite deposit growth outpacing loans during the quarter, again putting the spotlight on FBL’s differentiated liability profile. The core fee income rose 21% YoY, which was slower than the 45% growth witnessed in 3QFY19, but the management has indicated that fee income traction would be a key RoA expansion driver going forward. Digital strategy continued to display encouraging outcomes and augurs well for opex control. Thus, we recommend a BUY.