Fundamentals

GODFREY PHILLIPS INDIA 

Ticker : 500163
BUY: Rs899.45
Target: Rs995 

Godfrey Phillips India Limited is engaged in the manufacture of cigarettes. Its well-known brands in India include Four Square, Red & White and Cavanders. In Q3FY19, the company’s revenue increased by 13 per cent YoY from Rs. 602.68 crore to Rs. 680 crore. EBITDA grew by 29.4 per cent per cent YoY during the quarter and the EBITDA margin expanded by 198 bps to 15.6 per cent. PAT during the quarter surged by 26.6 per cent YoY from Rs 61.99 crore to Rs 78.46 crore. The revenue from cigarettes, tobacco and related products grew by 15 per cent YoY. The management is planning to expand its sales and distribution infrastructure in southern India. It is also looking to grow strategically in vaping segment with the newly launched product “verge ORA”, a nicotine saltbased product. Thus, we recommend it as a BUY. 

POWER FINANCE CORPORATION 

Ticker : 532810
BUY: Rs110.20
Target: Rs122 

Power Finance Corporation is an NBFC engaged in providing financial assistance to power projects across India including generation, transmission, distribution and RM&U projects. During Q3FY19, the company’s total income grew 17 per cent YoY, led by 17 per cent YoY growth in its net interest income. PFC has a total loan book of Rs 2.98 trillion of which government entity borrowers comprise 82 per cent and the rest is private sector exposure. There is a change in the basic sentiment for the power sector. Earlier, there used to be surplus power and, therefore, even Rs 2-4 per unit seemed to be expensive pricing. But now, with the surge in demand, the power price at the exchanges is hitting Rs 18-20 per unit. The company is seeing a lot of growth in renewable energy. Thus, we recommend it as a BUY