Moneylife

STOCK LETTER

Antelope
More mid-caps

Monday, 5 December 2016

Volume 9, Issue 34

MARKET WATCH

Nifty, Sensex to be on an uncertain course

W
e had mentioned in last weeks closing gains were capped due to some selling pressure lower European
report that Nifty, Sensex were heading during the second half of trade. Most European markets, subdued Indices Change
higher. The major indices of the Indian indices opened positive as investors awaited the the Indian equities
stock markets shot up in the earlier part of the outcome of the referendum over constitutional markets on BSE Sensex 0%
week but gave up most of the gains and closed reforms in Italy. Thursday. Higher
Nifty 0%
with small losses. Indian shares climbed to a near three- global crude oil
On Monday, The key domestic indices week high on Wednesday as a gauge of prices, buoyant
closed on a flat-to-positive note, with buying lenders snapped its two-day losing streak and Asian markets, appreciation in rupee and largely
witnessed in oil and gas, metal and FMCG automakers extended their rally. Indias fiscal positive macro-economic data arrested any major
stocks. Depreciation of the rupee and prolonged deficit for the April-October period of the current fall.
outflow of foreign funds eroded the risk-taking financial year stood at Rs4.23 lakh crore, or Pharmaceutical stocks rallied after the Delhi
appetite of investors. 79.3% of the budget estimate, data released by High Court quashed the governments notification
Indian equities markets on Tuesday were the Controller General of Accounts showed. in March, which had banned 344 fixed-dose
lifted by value buying, coupled with short Profit booking, along with a political logjam drugs. Telecom stocks lost ground after Reliance
covering and an appreciating rupee. However, in Parliament over the demonetisation drive and Jio Chairman Mukesh Ambani said starting
December 4, all subscribers will get voice, data,
Market Valuation video and full bouquet of other Jio applications
free till 31 March 2017. The scheme is called
Nifty Jio Happy New Year offer.
8,950 Overvalued - above 20x; PE On Friday the Sensex closed down 329.26
Fairly valued - 17x to 20x; points or 1.2% at 26,230.66, and the Nifty
Undervalued - below17x 22x
7,660 slipped down 106.10 points or 1.3% at
The current Nifty PE is 21.25
8,086.80. About 878 shares advanced,
6,370 17x 1,785 shares declined, and 129 shares were
unchanged. European bourses were lower
5,080
as political uncertainty in Italy and France
3,790 intensified.
Stock: Bajaj Finance issued 6068 secured
2,500 redeemable non convertible debentures of
Jan-08 Jun-12 Nov-16 face value of Rs 10 lakhs each aggregating to
Rs606.80 crore. The stock rose 1%. Lupin has
announced an expansion of its partnership with
This valuation chart is purely for information purposes. Even if the market is mildly overvalued, stocks of Eli Lily and Company (India) Pvt ltd. (Lily) to
companies that growing and reasonably valued still goes up (unlike the NAV of average equity fund). Please market and sell Lilys rapid acting insulin analog
note that two of our stock selection parameters, are reasonable valuation and earnings growth. Lispro under the brand name Eglucent. The stock
fell by 1%. Atul Auto which has been reporting
Money Flows muted performance for the past few quarters,
reported a fall in sales by 13.9% y-o-y for
FII Net Inflow DII Net Inflow November 2016, to 3450 vehicles. Total sales
from April to November fell by 5.15%, to 27854
370 (Rs crore) 2,345 (Rs crore) vehicles. The stock price declined by 4% as a
result of this announcement. Cholamandalam
-175 1,790
Investment and Finance Company will be
-720 1,235
allotting 5,768 equity shares of Rs10 each to
the option grantees who have exercised their
-1,265 680 options. The stock fell by 5%, as have the other
finance companies last week. Among the other
-1,810 125 stocks, Supreme Industries rose by 9% and Cera
Sanitaryware was up by 6%. Satin Creditcare fell
-2,355 -430 by 7% after there were reports that microfinance
5 Oct-16 3 Nov-16 2 Dec-16 5 Oct-16 3 Nov-16 2 Dec-16 borrowers in Uttar Pradesh are finding it difficult
to pay back their loans.
The Nifty ended flat this week. FIIs were net sellers taking away Rs3,179.26 crore and DIIs were net buyers Changes: There are no changes this week.
bringing in Rs2,263.90 crore.

Disclaimer: The Stockletters are part of multiple services offered by Moneylife Advisory Services which is a SEBI registered investor advisor (Registration No: INA000003429).
The stockletters are only a source of information. We offer a shortlist of quality stocks, which may merit further research and analysis and then possibly could be chosen for
investments. It would not be possible for subscribers to do their research through us. Remember, we are not recommending that you buy these stocks. We are using our screening
system to offer you a shortlist of stocks. If you wish to act on this shortlist, please consult an investment advisor who would guide you about the appropriateness of these stocks,
in conjunction with your risk profile and suitability of stocks as an investment product. Although information has been obtained from and is based upon sources we believe to be
reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. Information presented is general information that does not take into account your
individual circumstances, financial situation, or needs, nor does it present a personalised recommendation to you. Individual stocks presented may not be suitable for you.
 Moneylife
STOCK LETTER

Antelope
More mid-caps

Monday, 5 December 2016

Volume 9, Issue 34

Company Business Comments

Bajaj Finance Financial Services Apart from banks, one of the best placed to fund the aspirations of the a rising middle class

Best auto battery manufacturer. Has done very well even during slowdown. Poised for huge
Amara Raja Batteries Auto Components
growth

Supreme Industries Plastics Plastic processing company with a strong brand equity. Highly efficient with capital use

One of the top manufacturers of sanitaryware. High return on equity. Government focus on
Cera Sanitaryware Building Material
toilets helps

Subsidiary of HDFC, focus on lower semi-urban and rural areas where demand will remain
Gruh Finance Financial Services
high

Motherson Sumi Systems Auto Components A globally competitive auto components manufacturer with great long term strategic thinking

Lupin Pharma Among the top Indian pharma companies. Strong global growth. High ROCE

Atul Auto Auto Strong player in the three wheeler market. Recording fast growth and high RoCE

Another among the strong smaller pharma companies in India. Low profile. High return on
Alembic Pharmaceuticals Pharma
equity. Strong financial management

Zensar Technologies Software & IT Services A small but global IT player with extremely high RoNW of 25% and low valuation

VST Tillers Tractors Farm & Farm Inputs One of the few farm-focused listed companies. Has a 23% RoNW and reasonable valuation

Global leader in the automotive cables. High RoCE. Not dependent on domestic customers
Suprajit Engineering Auto Components
alone

TVS Srichakra Auto Components Leading two & three-wheeler tyre manufacturer. Low valuation and high RONW of 49%

Pan India presence with offerings across the financial services spectrum, leading to
Cholamandalam Investment Financial Services cross-selling opportunities. Niche focus on under-penetrated rural and semi-urban areas.
& Finance Continuous double digit growth for the past five quarters

North Indias largest MFI backed by strong financial institutions. Low NPAs.Provides loans to
Satin Creditcare Network Financial Services both urban and rural poor.

Lakshmi Vilas Bank Banks Bright prospects due to top management change. Attractive valuation

German multinational in refractories. Has done very well during the slowdown. Poised for
Orient Refractories Industrial Intermediates
strong growth
Moneylife
STOCK LETTER

Antelope
More mid-caps
Monday, 5 December 2016
Volume 9, Issue 34

Financial* Valuation** Return# Shortlisted

RoE Current Annualised price
Price change (includes
Av. Sales Av. OP MC/Sales MC/OP Date Price
dividend) since
entry@
Active List
1. Bajaj Finance 2,058.30 559.07 5.17 19.43 21% 27-Jan-12 71 887 71%
2. Amara Raja Batteries 1,242.46 215.26 2.93 17.18 24% 13-Apr-12 146 924 50%
3. Supreme Industries 1,008.72 157.06 3.20 21.18 29% 27-Apr-12 208 889 38%
4. Cera Sanitaryware 239.63 38.12 2.74 16.53 23% 04-May-12 265 2,100 58%
5. Gruh Finance 343.96 95.19 7.40 28.16 32% 04-May-12 68 299 46%
6. Motherson Sumi Systems 9,910.78 961.73 1.06 10.77 34% 01-Jun-12 47 306 54%
7. Lupin 3,959.31 1,048.65 3.92 16.34 26% 15-Mar-13 610 1,489 28%
8. Atul Auto 132.15 19.02 1.64 10.68 30% 06-Sep-13 85 428 68%
9. Alembic Pharmaceuticals 830.57 246.92 3.42 17.12 36% 25-Oct-13 181 632 50%
10. Zensar Technologies 758.87 110.36 1.44 9.87 21% 23-Oct-14 596 995 29%
11. VST Tillers Tractors 166.56 26.38 2.20 14.74 18% 23-Oct-14 1,468 1,780 10%
12. Suprajit Engineering 155.50 25.36 3.57 24.02 15% 13-Jul-12 25 184 59%
13. TVS Srichakra 508.29 80.76 1.26 7.88 47% 28-Aug-15 2,619 3,360 24%
14. Cholamandalam Invt & Finance 1,095.45 249.40 3.18 13.73 18% 13-Apr-16 800 946 19%
15. Satin Creditcare Network 167.93 27.93 1.90 10.46 27% 03-Jun-16 374 417 11%
16. Lakshmi Vilas Bank 756.99 116.76 0.80 4.20 14% 26-Aug-16 145 148 2%
17. Orient Refractories 122.44 23.72 2.62 13.81 32% 28-Feb-14 49 115 38%

18. Will be added later

19. Will be added later

20. Will be added later

*5 quarter average(Rs crore) ** Based on latest quarter (annualised), MC- Market Cap # Return on Equity (based on net profit of previous 4 quarters), @ - stocks less than one year
have absolute return

Operating Profit - profit generated in the normal course of business (for companies other than bank and NBFCs); arrived at after deducting operating expenses (excluding
depreciation and interest) from sales. For Banks and NBFCs, operating profit is arrived at after deducting operating expenses (excluding depreciation) from total income and net
revenue respectively.
Valuation - ratio of market capitalisation to sales or operating profit. Low ratio is better. Market capitalisation - recently traded price multiplied by number of shares outstanding.
RoE is return on equity which is net profit divided by networth. Entered at price is the price at which we had added the stock to our stockletter.
Current price is the price as on the last trading date of the week. Performance is the return between the entered at price and current price.

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