Markets
BSE See NSE See 39,046.34
85.55 (0.22%)
collapse Related Readings collapse

Stock Recommendation Reviews

| 4/5/2012 9:00 PM Thursday

Colgate Palmolive (India)

Book Partial Profits

We had recommended Colgate Palmolive to our readers in the Choice Scrip section in DSIJ Vol. 27, Issue No. 2 (dated January 2-15, 2012), when it was trading at Rs 1014. Our recommendation was backed primarily by the scrip’s strong financial performance. It had posted a strong volume growth of more than 10 per cent in 13 consecutive quarters. In addition, factors like its zero debt status, the increasing market share on account of new product launches, a strong MNC parentage and a possibility of more product additions from the parent company added to the positives.

After our recommendation, the scrip is now trading at Rs 1118, providing an appreciation of 10 per cent. Its strong financial performance for the December 2011 quarter was the prime factor behind the same. For December 2011, its topline stood at Rs 690 crore and the bottomline at Rs 115.58 crore as against Rs 576.64 crore and Rs 66.24 crore respectively in December 2010.  This takes the trailing four-quarter EPS to Rs 32.07, resulting in a P/E of 34.75x. This is in line with that of its peers.

However, we recommend that our readers book partial (50 per cent) profits at the current levels as the scrip has already provided good returns even in the current uncertain market. Despite this, we feel that the dividend payment is also an additional beneficial factor that must be considered. With the Q4 FY12 results expected soon, we feel that holding the rest will be a prudent strategy.

Dena Bank

Book Profits

We had recommended Dena Bank to our readers in DSIJ Vol. 27, Issue No. 5 (dated February 13-26, 2012), when it was trading at Rs 80.50. We had recommended the scrip as it was available at a fair valuation, coupled with the expectations of a reversal in the interest rate cycle, an improvement in asset quality and the fact that the bank will receive capital from the government (LIC), which will further increase its capital adequacy ratio.

After our recommendation, the scrip went up. Through our SMS service, we had recommended that investors book profit in it at Rs 94.50. The stock is now trading at Rs 90.10. In view of the volatile market conditions, we would advise investors to book profits now in case they have not already done so.

In the December quarter of FY12, the bank’s Net Non-Performing Assets (NPAs) contracted by 16 basis points to 1.1 per cent on a YoY basis. Further, the Net Interest Margin (NIM) also increased by six basis points to 3.30 per cent on a YoY basis. Dena Bank has raised around Rs 151 crore by issuing preference shares to the LIC.

For the month of February 2012, WPI inflation increased by 40 basis points to 6.95 per cent, while the CPI increased by 118 basis points to 8.83 per cent. With this, there is a lower probability that the RBI will cut the rates in its next policy meet. We believe that one should watch out for Q4 for taking any further positions in the counter.

Torrent Pharma

Book Profits

We had recommended Torrent Pharma in DSIJ Vol. 26, Issue No. 25 (dated November 21-December 4, 2011), when it was trading at Rs 559. After seeing a downtrend in December, the scrip is now trading up by 11 per cent at Rs 623. Our reasons to recommend the counter were the consistent growth in its topline and also a better growth in its bottomline.

Torrent Pharma has consistently been a dividend paying company. The promoters have not pledged any of their shares, which indicates the confidence they have in the business. Its low debt-to-equity ratio was also a reason why we were very positive on the scrip in a high interest rate regime. In 2011, when all the indices were hammered, the counter remained very firm.

The company sells in the domestic as well as the export markets. It has products in various therapeutic segments, including specialty segments like diabetology, cardiovascular, Central Nervous System, etc. It recently launched 19 products in the gynaecology segment, and has about six products in the pipeline that are yet to be launched. Its business, which is well integrated with formulations, API and CRAMs, is also one of the reasons why we remain positive on the scrip.

For the first nine months of this fiscal, the company has reported a topline growth of 19 per cent to Rs 1946 crore, while its bottomline grew by 26 per cent to Rs 287 crore. Its EBITDA margins took a little beating due to the increase in input costs. We believe that the next quarter’s performance is already factored into the price of the stock. Hence, investors should take this opportunity to book profits at the current levels.

 

Find More Articles on: DSIJ Magazine, Reviews, Stock Recommendations, Fundamental Picks, Product, Large Cap, PSU, Small Cap

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

MIDHANI and HAL partner to develop bio implants

Geyatee Deshpande / Article rating: 5.0

Mishra Dhatu Nigam Limited (MIDHANI) signs an MoU with Hindustan Antibiotics Limited (HAL). This MoU will provide synergy for quality manufacturing of MIDHANI’s Bio-medical Implants and get access to the pan-India distribution of HAL. This partnership is aimed to gain advantage from the strengths of both the companies and benefit users of Bio-medical products in India.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.