Recommendations From Agrochemicals And Realty 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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INSECTICIDES INDIA
CMP - Rs843.50
BSE CODE 532851 Volume 33616 Face Value Rs 10

This manufacturer of agro-chemical products is known for its highmargin brands, Navratna and Super 11. The company has posted exceptional Q1FY18 results with revenue and PAT growth of 77% and 412.6%, respectively driven by expansion of its product line and subsequent tie-ups with the companies to market the products. In FY17 the company had tied up with Japan’s Nihon and USA’s MPM for the same. Meanwhile, company also signed a JV with Japan’s Agrio to take advantage of its patented products. The company has launched Kayakalp, used to improve soil health, expected to launch 3-4 annually. Company reported flat FY17 revenue but 21.3% PAT growth driven by operational efficiency. Company is mulling brownfield expansion of its technical products facilities at Dahej plant. We recommend a ‘buy’ in the scrip for a target of Rs930 and with a stop loss of Rs761.

KOLTE PATIL DEVELOPERS
CMP - Rs159
BSE CODE 532924 Volume 18501 Value Rs 10

A construction company headquartered in Pune, Kolte Patil Developers is engaged in the development and management of both commercial and residential projects. The company has recently sold its land parcel at Wakad suburb for a consideration of Rs160 crore as a part of strategic divestment. Moreover, despite demonetisation, it posted decent growth in both pre-sales. Considering this, the company is expected to maintain its 0.5x debt-equity with strong operating cash flows. Going forward too, the company’s 70% of launch portfolio under LIG/MIG would benefit from the government’s affordable housing scheme and thereby aid recovery from FY19E. Financially, the company has reported exuberant 50% and 53% revenue and PAT growth in FY17 on the back of robust performance from Life Republic, Mirabillis and Corolla projects. Implementation of RERA may result in consolidation or shut down of small builders. Thereby, we recommend a Buy on the scrip, for a target of Rs182 and with a stop loss of Rs147.