Recommendations From Electric Utilities Sector and Commodity Chemicals sector
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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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PTC INDIA CMP - Rs119
BSE CODE 532524
Volume 326060
Face Value Rs10
The company jointly promoted by NTPC, PFC, Power Grid and NHPC, is engaged in power trading business with market share of 30per cent. During Q4FY17, the company posted 7.5per cent YoY growth in its long term trades to 363.3 crore units and 1.3per cent growth in short term trades to 586.4 crore units. However, it operates in a very small margin of 4-7 paise per unit. Hence, it is mulling to increase its share of long term PPA contracts to 50per cent. As for the financials, the company posted 5per cent and 85per cent revenue and PAT growth, respectively, during Q4FY17. Further in FY17, it posted 10per cent and 25per cent revenue and PAT growth, respectively. Thereby, considering its shift towards long term PPAs, we recommend a Buy in the scrip for a target of Rs138 and with a stop loss of Rs112.
I G PETROCHEMICALS CMP - Rs460
BSE CODE 500199
Volume 24518
Face Value Rs10
A flagship of Dhanuka group, I G Petrochemicals is the largest in Indian maker of an organic compound phthalic anhydride (PA), used as an intermediate production of plasticizers used in plastics, unsaturated polyster resins, alkyd resins, polyols and a downstream product of orthoxylene petrochemical. The company is expected to post revenue and PAT CAGR of 12.5per cent and 23per cent over FY17-19E, respectively, with expected PA demand growth of 7per cent CAGR over 2016-21. Overall, the company expects to increase its capacity utilisation and brownfield expansion to cater to majorly domestic demand for PA and MA. It has posted exuberant FY17 numbers with revenue and PAT growing 13per cent and 83per cent, respectively. Thereby, considering its leadership position, competitive edge and low cost high margin products portfolio, we recommend a Buy in the scrip for a target of Rs530 and with a stop loss of Rs435.