Recommendations From Commodity Chemicals & Bank Sectors

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.

DEEPAK NITRITE LTD. 

CMP - Rs340.70
BSE CODE 506401
Volume 20857
Face Value Rs2
Target Rs370
Stoploss Rs320(CLS) 

Deepak Nitrate is the country’s fastest growing chemical companies. With its diversified portfolio of intermediates, the company caters to laminates, coating, adhesives and paints, auto, construction chemicals, dyes, pigments, agrochemical, pharmaceutical, plastics, textiles, paper, home and personal care segments in India and abroad. For Q2, the net profits for Deepak Nitrate surged 536.6 per cent to Rs178.62 crore. This was achieved owing to a 31.5 per cent rise in net sales to Rs569.15 crore in the quarter ending September 2019 over that of September 2018. The quality result reported are on back of strong business fundamentals. Revenue growth was driven by decent growth in both basic chemicals and performance products segment. The company’s EBITDA grew to Rs216 crore reflecting a 213 per cent rise when compared to Rs69 crore reported in the same period last year. EBITDA margins expanded to 37.7 per cent compared to 15.9 per cent in the same period last year. Cost competitiveness has come in handy for the company along with its manufacturing excellence. This advantage has led the company to emerge as a supplier of choice for marquee global customers. We recommend a BUY for Deepak Nitrate. 

KOTAK MAHINDRA BANK LTD. 

CMP - Rs1651.75
BSE CODE 500247
Volume 130195
Face Value Rs5
Target Rs1750
Stoploss Rs1575(CLS) 

For Kotak Mahindra Bank, one of the leading private banks in India, Q2 net profits surged 51 per cent to Rs1,724 crore even as the asset quality weakened. The gross bad loans ticked up to 2.32 per cent of the total loans. Same ratio stood at 2.19 per cent in previous quarter. The net interest income increased to Rs3,350 crore from Rs2,676 crore in Q2FY19 suggesting a 25 per cent increase. The net interest margin rose to 4.61 per cent from 4.19 per cent last year. The CASA (current account savings account) ratio as on September 30 stood at 53.6 per cent compared to 50.2 per cent of September 30 last year. Overall, the growth outlook for private banks is positive and for Kotak Mahindra Bank specifically, the growth prospects are even better. We recommend a BUY.