Fundamentals

AARTI INDUSTRIES

Ticker: 524208 BUY: Rs.1254
Target: Rs.1360

Aarti Industries is a leading manufacturer of benzene-based derivative products. Its products have wide application across industries like paints, pigments, speciality polymers, pharma and agrochemicals. Over the last three years, the PAT has grown at a CAGR of 26.5 per cent . In FY18, the company achieved volume growth of 7 per cent YoY. For FY19 and FY20, the management has guided volume growth of 12-15 per cent , while the net profits would grow in the range of 18-20 per cent . For FY19, it has planned capex of Rs 600-700 crore for setting up new R&D facility at Navi Mumbai and has bagged multi-year contract and plans to de-bottleneck its various capacities. The company has robust demand for its products from the pharmaceuticals and speciality polymers industry. It has delivered ROE of 25.2 per cent . Considering the robust financials and extensive expansion plan, we recommend it as a BUY.

 

KARUR VYSYA BANK

Ticker: 590003 BUY: Rs.105.70
Target: Rs.116

Karur Vysya Bank reported impressive numbers in Q1FY19, indicating that the worst phase in terms of asset quality is about to end this year. The advances grew by 12.9 per cent YoY, led by growth in retail and commercial credit segments. The NII grew by 8.4 per cent YoY and NIM stood at 3.6 per cent . The non-interest income was up by 8 per cent YoY and is set to improve further through forex income. Of the total slippages, 50 per cent were of corporate nature. driven by low agristock prices and LOU facilities related to timber importers. But the bank is optimistic that slippages would improve in H2FY19 and credit costs would normalise . It is improving the branch productivity and focusing on its digital transformation process. Considering the good growth, we recommend it as a BUY.