Sock Pick From Diversified and Other Financial Services 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

DCM SHRIRAM

DCM Shriram is engaged in the business of fertiliser, sugar and caustic soda. On the financial front, the company’s topline increased 9.3 per cent to Rs.1366 crore in Q3FY17 as compared to the same period in the previous financial year. Its EBITDA doubled to Rs.189 crore in Q3FY17 on a yearly basis. DCM Shriram’s bottomline also boosted more than two-fold to Rs.137 crore in Q3FY17 as compared to the same period in the previous fiscal. The company has inaugurated its expanded capacity and completed upgradation of chlor-alkali and captive power at the Shriram Alkali & Chemicals plant at Bharuch. Its chlor-alkali capacity has been raised to 1013 TPD and captive power plant capacity raised to 115 MW. We expect the company to deliver robust financials for Q4FY17 in the upcoming week. We recommend a BUY, with a price target of Rs.370 and a stop loss of Rs.320.

Edelweiss Financial Services is in the business of providing investment banking and advisory services and holding activities or investments. The company's segments include agency business, capital-based business and life insurance. Edelweiss Financial Services has received approval from the insurance regulator Insurance Regulatory & Development Authority of India (IRDAI) for setting up a general insurance company. The company has applied for general insurance licence in July 2016. On the financial front, Edelweiss Financial Services’ revenue increased 19.7 per cent to Rs.1605 crore in Q3FY17 as compared to the same period in the previous financial year. The company’s EBITDA rose 13.22 per cent to Rs.643 crore in Q3FY17 on a yearly basis. Its net profit also boosted 46.87 per cent to Rs.155 crore in Q3FY17 on a yearly basis. On strong financials and bagging approval for setting up general insurance company, we recommend BUY with a price target of Rs.200 with a stop loss of Rs.170.