Recommendations From Chemicals And Consumer Goods Sector

DSIJ selects two aggressive stocks picks in every issue, with a 7-15 day horizon based upon the bullish trend during that period. For this issue, we are recommending companies from the Air conditioner and Engineering sectors. - See more... 

Phillips Carbon Black

CMP: Rs 135.10 BSE Code: 506590 Volume: 72,307 Face Value: Rs 10

Recently, the Ministry of Finance imposed definitive anti-dumping duty on certain carbon black imports from China and Russia. This is expected to improve the pricing power of domestic carbon black producers. The anti-dumping duty, which would be valid for five years, has been specifically imposed on carbon black used in rubber applications. Therefore, we believe that Phillips Carbon Black (PCBL) will benefit from the imposition of anti-dumping duty. PCBL is the eighth-largest carbon black manufacturer in the world and the largest manufacturer and supplier of carbon black in the country. The automotive tyre sector, the principal consumer segment of carbon black, is likely to boom as the Indian government sharpens its focus on improving the country’s road network. For the six months ended September 30, 2015, the company reported 49 per cent growth in net profit at Rs 2.25 crore.

CMP: Rs 265.90 BSE Code: 517518 Volume: 64,216 Face Value: Rs 10

Lloyd Electric & Engineering manufactures air-conditioners, coils, radiators (heat exchangers) and light emitting diode (LED) televisions (TVs). The company’s operating segments include radiators and heat exchangers, OEM and railways, and consumer durable products. The company has reported robust result in H1 FY16; the total revenue grew 34.7 per cent at Rs 1,129 crore and in the consumer durable segment there was growth of 51.2 per cent at Rs 651 crore as compared to H1 FY15. Its bottomline grew at 69.2 per cent at Rs 44.7 crore compared to Rs 26.4 crore in the first half a year ago. We expect the growth to continue in the second half of FY16 as well. In fact, if you see the last one year’s shareholding pattern of the company, FIIs have increased their holdings from 1.35 per cent to 9.15 per cent. It shows a good amount of confidence. This is one of the cheapest consumer durables stocks, which is available at 11.5 price earnings’ multiples.