Recommendation from IT Consulting & Mining 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 

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MINDTREE
CMP - Rs540.15
BSE CODE 532819
Volume 65614
Face Value Rs10 

The Credit Suisse acclaimed IT mid-cap Mindtree majorly derives its revenue from TMS (36.7%), BFSI (24.6%) and RCM (23.8%) segments. Financially, the company posted marginal 3.2% and 2.5% revenue and PAT growth in Q2FY18. However, recently Credit Suisse upgraded Mindtree to 'Outperform' from 'Neutral', with expected higher topline growth and margin expansion from low base amid stable clientele position. Further, transition to higher digital roll-outs from small scale pilot projects from clients is expected to fetch better realisations in the long run. Therefore, with transition to digitalisation as mainstream and recovery in margins specifically from subsidiaries Magnet360, we recommend BUY in the scrip for a target of Rs621, with a stop loss of Rs504.

NMDC
CMP - Rs132
BSE CODE 526371  
Volume 368215
Face Value  Rs1 

The Ministry of Steel, Government of India, administered mining company NMDC has increased iron-ore lumps and fines prices by 13 and 10 per cent, respectively, reporting its highest price hike in any year, amid increase in demand. Thereby, steel firms too would be hiking their prices after iron ore price hike by this miner. Going forward, the company expects its sales volumes to rise from 3.55 crore tonnes to 3.56-3.6 crore tonnes in FY18 and 3.8-3.9 crore tonnes in FY19. For capacity expansion, the company is looking forward to commissioning a steel plant by H1CY18 for which it would raise capital through internal sources of loan. Its current FY17 debt stands at zero, while its net worth stands nearly at Rs22,519 crore, which leaves room for some increase in debt. Recent financials also depict a robust picture, where the company’s TTM revenue and PAT posted a growth of 20.4% and 12.8%, respectively, as against FY17 numbers. We thereby recommend a BUY in the scrip for a target of Rs150 with a stop loss of Rs121.