STOCKS FOR INVESTMENT - Chart Advisechartadvise.com/afiles/DIWALI_PICKs_2017.pdf · uct is “Dominar” is steadily improving its volumes. We expect company’s star to improve its

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Techno‐Fundamental Analysis

STOCKS FOR INVESTMENT

SAMVAT 2074 ‐ MUHURAT TRADING IDEAS

2

CMP 3188 ( 3020 dip Buy)

STOP 2859

TARGET 3720

BAJAJ AUTO Market Cap 91,485Cr

52‐week High 3216

52‐week Low 2510

BSE Code 532977

NSE Code Bajaj Auto

MARKET DATA

3 www.growthavenues.com

BAJAJ AUTO LTD

ABOUT THE COMPANY: Bajaj Auto Limited is an India‐based manufacturer of motorcycles, three‐wheelers and parts. The Com‐pany's business segments include Automotive, Investments and Others. The Company's vehicles include two‐wheelers and commercial vehicles. Its two‐wheelers include Bajaj V, Bajaj V Avenger, Avenger Cruise 220, Pulsar RS 200, Pulsar FOS, Pulsar 200 NS, Pulsar 220, Pulsar 180, Pulsar 150, Pulsar 135 LS Discover, New Discover 125, New Discover 150S, New Discover 150F, Platina 100, Platina 100 ES, CT 100, CT 100 Ninja, Ninja 650R and Ninja 300. Its products also include CT 100B, Boxer BM150X, Avenger 220 Cruise, Avenger 220 Street, Avenger 150 Street, Pulsar AS 150 and Maxima‐Cargo. The Company's geo‐graphic segments include India and Rest of the world. The Company offers troubleshooting services. The Company's plants include Waluj plant, Chakan plant and Pantnagar plant. The Company's subsidi‐aries include PT. Bajaj Auto Indonesia and Bajaj Auto International Holdings BV.

INVESTMENT RATIONALE:

Recovery in exports: In the recent past Bajaj enters several new markets including Poland, Malaysia, Nepal, Latin America, and generates higher volumes in Iran, Bangladesh and Peru, The volumes increase by 11% in Q1FY18. Were exports grew by 28/8%. Bajaj has hiked prices in the export market in July‐17.

• Near‐term outlook: Expect strong volume growth in 2Q, owing to lower channel inven‐tory, new permits and festive season demand..

• Expectation of Domestic sale pickup: Going forward we expect Bajaj Auto Ltd to report strong domestic numbers on back refreshed Pulsar segment . Company’s other segment like V‐15 and V‐12 is gaining traction, which is is also likely to aid growth. Company’s star prod‐uct is “Dominar” is steadily improving its volumes. We expect company’s star to improve its numbers from ~4,000/month bikes to ~7000/month bikes in coming months on back of fes‐tive season and company’s focus on bike promotion. Hence, we expect company’s domestic volume growth of 10.1% CAGR between FY17 to FY19E.

• Healthy operating performance despite weak volumes‐ Bajaj Auto has maintained a healthy operating performance despite weak volume growth. InFY16 and FY17, when volume growth was weak the company recorded EBITDA margins of more than 20% and ROE level

Mar‐16 Jun‐16 Sep‐16 Dec‐16 Mar‐17 Jun‐17

Sales 5,359.49 5,747.95 6,054.52 5,066.89 4,897.32 5,442.37

Expenses 4,206.13 4,571.62 4,758.39 4,022.98 3,991.34 4,536.02

Operating Profit 1,153.36 1,176.33 1,296.13 1,043.91 905.98 906.35

OPM 21.52 20.47 21.41 20.6 18.5 16.65

Other Income 256.89 267.06 342.02 319.29 293.6 457.28

Depreciation 76.1 77.47 76.95 77.17 75.7 75.26

Interest 0.39 0.22 0.68 0.26 0.24 0.24

Profit before tax 1,333.76 1,365.70 1,560.52 1,285.77 1,123.64 1,288.13

Tax 384.43 387.33 437.77 361.15 321.82 364.2

Net Profit 949.33 978.37 1,122.75 924.62 801.82 923.93


W W W . Y O U R W E B S I T E H E R E . C O M

Technical Analysis

The blue chip stocks in 2‐3 wheeler space had an fantastic year and witnessed strong up move this year as compared to our benchmark and has rewarded outstanding gains to the investors and trader. The northward rally seem continue ahead as well in future. Com‐paring to the peers this company has positive and attractive chart setup on long and me‐dium term time frames with attractive fundamentals and sound management. The weekly chart attached shows that price has been in secular uptrend since listing date. Price has been gradually forming successive higher highs and higher bottoms which demonstrates clear and strong uptrend in the stock. Price has been trading in rising chan‐nel since 2015. Price has formed significant peaks and bottoms near the higher end and lower end of channel. In Ascending channel price has been following symmetrical triangle pattern and has witnessed upward thrust post breakout. Recently stock registered upward breakout from symmetrical triangle pattern as it was seen historically and thus we can ex‐pect price to stage higher to new highs as it has been followed in previous instance. Price continue to trade above pattern we can witness price to scale higher to test higher end of the channel. The breakout is well supported with surge in volumes adding further confir‐mation to the breakout.

Strength Indicator RSI, has surpassed above 60 levels and has been holding above the same which is bullish sign. Additionally, RSI is trading at 52 week high readings signifies strength and positive breadth in price. As well price has been trading above all its key moving averages (50EMA,100EMA,200EMA) in daily, weekly & monthly chart which signifies bullish senti‐ment in price. Based on the aforementioned technical observations and fundamentals we expect stock to stage higher from here and continue its primary uptrend. Thus we recommended to accumulate at current levels and at dips towards 3020 with stop below 2859 on closing basis for upside potential target of 3720 levels.

5

CMP 179 ( 166 dip Buy)

STOP 155

TARGET 216‐222

NANDAN DENIM LTD Market Cap 861 Cr

52‐week High 186.65

52‐week Low 105.40

BSE Code 532641

NSE Code NDL

MARKET DATA


NANDAN DENIM LTD

ABOUT THE COMPANY: Nandan Denim Limited is an India‐based integrated denim fabric manufacturing company. The Company's geographical segments include India and Rest of World. The Company's denim collections include EUROPA 2020, FEMME FATALE, BLUE LABYRINTH, PEOPLE OF YELLOW and KIDICIOUS. The Company also produces khakis. The Company focuses on having a denim manufacturing capacity of 110 million metric tons per annum. The Company also has an installed capacity of 10 million metric tons per annum for processing shirting fabric; an installed capacity of 10 million metric tons per annum for yarn dyeing, and an installed capacity of 64 tons per day of spinning. The Company's plants are lo‐cated at Saijpur‐Gopalpur, Pirana Road, Piplej in Ahmedabad, Gujarat, and National Highway No. 8, Bidaj in Gujarat. The Company's technology offers various kinds of weave, such as Plain, Twill, Dobby, Oxford, Chambray, Fila Fil, Herringbone, Basket Weave and Pin Point Oxford.

INVESTMENT RATIONALE: • Capacity expansion of Denim Fabric: NDL’s fabric manufacturing capacity, which stood at 99

million meters' per annum (MMPA) at the start of FY17, increased to 110 MMPA post expansion. A combination of higher sales volumes and value added products will help to surge top‐line growth in the coming results.

• GST Benefits: GST implementation has led large number of unorganized manufacturers fall under the tax ambit, which will help organized players (like NDL) in raising there sales as unorganized players will loss competitive edge over product prices which they used to enjoy before GST.

• Fabric demand continues to rise: India's denim market is growing consistently at 16‐18 percent per annum and is expected to grow with a value of around $360 billion by 2020 from the current value of $175 billion. The grow in industry should help NDL to capitalize its business and increase in profits.

• Indian Denim manufactures gaining traction globally: Globally, the denim industry is fore‐casted to grow at a CAGR of 6.5% till 2020 with the market value to expected to increase from $113 billion to $153 billion. India's biggest rival in textile industry such as China, Latin America has been losing its export advantage due to higher labor and compliance costs which will aid Indians compa‐nies to dominate in this industry. Evidently, A huge market awaits Indians denim products in forthcoming years.


Sales 294.31 300.5 302.63 235.23 382.06 423.7

Expenses 247.18 251.98 253.54 203.53 321.65 362.53

Operating Profit 47.13 48.52 49.09 31.7 60.41 61.17

OPM 16.01 16.15 16.22 13.48 15.81 14.44

Other Income 1.55 0.62 0.53 0.51 0.78 0.74

Depreciation 16 16.97 16.88 16.93 35.38 29.32

Interest 11.29 8.91 8.76 5.97 12.53 14

Profit before tax 21.39 23.25 23.97 9.31 13.28 18.59

Tax 4.82 7.49 7.68 0.52 ‐2.34 2.28

Net Profit 16.57 15.77 16.3 8.78 15.61 16.31



Technical Analysis

The few textile stocks has appreciated well this year as compared to our benchmark and has rewarded decent gains to the investors and trader. A small cap stock Nandan Denim Ltd from tex‐tile industry has a promising chart setup and price action on long and medium term time frame with attractive valuations, fundament and sound managements as compared to its peers. The monthly chart attached shows that price witnessed northward rally from 26 to 174 lev‐els in less than 3 years which is an impressive run. Stock registered an all time high of 174 in Aug 2015 and from there stock witnessed profit booking and went into hibernation mode. The correc‐tion in price led to the formation of bull symmetrical triangle pattern which is considered as a continuous pattern in nature. This pattern typically occurs after strong up move and gathers the strength for next up leg post decisive breakout from the said pattern. Price moved in the contract‐ing range for more than 24 months and this months price registered decisive breakout from the same signifies resumption in prior uptrend. The breakout have accompanied with decent rise in volumes and with long range blue candle which suggests strength and dominance of the bulls over bears. According to the pattern formation its indicates the stock is ready for next up leg and print new highs in coming months.

Strength Indicator RSI, has given positive trigger crossover and ticks higher taking support at 60 levels and near moving average which is bullish signal and indicates strength in price. Additionally, RSI has surpassed above 70 levels after a year which suggests mo‐mentum in price hence complements bullish view in price. As well price has been trading above all its key moving averages (50EMA, 100EMA, 200EMA) in daily, weekly & monthly chart which signifies bullish sentiment in price. Based on the aforementioned technical observations and fundamentals we expect stock to stage higher from here and continue its primary uptrend. Thus we recommended to accumulate at current levels and at dips towards 166 with stop below 155 on closing ba‐sis for upside potential target of 216‐222 levels.

NANDAN DENIM - MONTHLY

8

CMP 338 ( 292 dip Buy)

STOP 252

TARGET 480‐490

EVEREADY INDUSTRIES Market Cap 2415 Cr


52‐week Low 190.00

BSE Code 531508

NSE Code EVEREADY

MARKET DATA


EVEREADY INDUSTRIES INDIA LTD

ABOUT THE COMPANY: Eveready Industries India Limited is engaged in the business of marketing of fast moving consumer goods (FMCG), such as dry cell batteries, rechargeable batteries, flashlights, packet tea and general lighting products. The Company also distributes a range of electrical products. The Company's product portfolio includes Dry cell and rechargeable batteries under the brand names Eveready, Powercell and Uniross; Flashlights and lanterns under the brand names Eveready and Powercell; Packet tea under the brand names Tez, Jaago and Premium Gold; light‐emitting diode (LED) bulbs and luminaires under the brand names Eveready and Powercell; devices, such as mobile power banks, rechargeable fans and radio, under the Eveready brand, and small home appliances under the Eveready brand. The Company's manufacturing facilities are located in Chennai, Lucknow, Noida, Haridwar, Maddur and Kolkata, and it is supported by sales and distribution network across the country.

INVESTMENT RATIONALE:

• Market Leader: Eveready Industries is the market leader in batteries in India and second largest producer of carbon zinc batteries globally. The company has approx 50% market share in Indian battery and approx 70% market share in organized flashlights market. Com‐pany also has very strong distribution network pan India.

• Eveready Industries Ltd have always been leaders in innovation and provided products to consumers which are way ahead of its competition. The LED segment too is no exception. With state‐of‐the‐art technology, EIIL are now able to produce LED Bulbs with light out‐put of 120 Lumens per watt making it more energy efficient.

• Scaling up appliance segment: Appliance segment is a 15000 crores category and as Eveready has just reached about 20 crores in one quarter, so economies of scaling is quite huge. The company is looking to complete its range of offerings with the introduction of new products in professional lightings, indoor and outdoor luminaries.

• New entrant in Tea Business: Using benefit of pan India presence, Eveready is taking lev‐erage of knowledge in tea business from Mcleod Russell. Plan of stepping down subsidiary will open up opportunities to bring investor to bring in fresh capital to support growth plans.


Sales 283.39 354.43 366.63 329.46 304.61 338.78

Expenses 269.16 316.74 324.03 294.16 286.94 310.88


OPM 5.02% 10.63% 11.62% 10.71% 5.80% 8.24%

Other Income 2.78 1.88 2.01 2.12 3.61 1.46

Depreciation 3.41 3.38 3.63 3.75 4.16 4.84

Interest 6.66 6.04 5.89 5.12 6.18 6.64

Profit Before tax 6.94 30.14 35.09 28.55 10.93 17.89

Tax ‐2.38 7.77 9.47 ‐6.64 0.47 4.33

Net Profit 9.32 22.36 25.62 35.19 10.46 13.56



Technical Analysis

The most influencing pattern powering the long term up trend is stock sustaining at 50% retracement of the overall advance which was tested twice in the recent times during the sideways action. Breaking above the consolidation phase signals end of elongated secondary phase and resumption of the primary uptrend. Volume expansion at lower levels while on con‐solidation phase indicates higher participation and therefore supports longevity in the trend. Current rise is seen the result of demand from exactly the same levels and thereby provides fresh long opportunity to ride the next leg of the primary uptrend.

The rally witnessed from lows of August 2013 (15) to the highs of July 2015 (375) has pro‐duced 24x gains for investors following stock to enter into corrective move. The consolidation phase thereafter was restricted between 23.6% and 50% retracement (385 to 318 levels). The strong up move after testing twice the retracement levels has propelled past the upper range towards the peak, thereby triggering bullish structural turnaround. On momentum front, RSI was seen breaking above the range of 30 to 60 levels towards higher levels supporting bullish view on price.

Technically, every strong rally is followed by corrective move. As an‐noted on the weekly timeframe, the recent correction had witnessed towards minimal of 38.2% (considering this to be a pullback) that also confluence intersection of medium term trendline support and the consolidation phase high. The fact that weekly price are forming base on base structure, positive follow‐through action and range shift in RSI to higher levels, stock thereby is poised to continue gains further.

Based on the aforementioned technical observations, we expect the stock to resolve higher from here on and continue its primary uptrend. Thus, we recommend to accumulate Eveready Industries at current levels of 338 and dips towards 292. Stop‐loss can be placed be‐low 252 on end of day basis with upside potential towards 480‐490 levels.

11

CMP 690 ( 635‐50 dip Buy)

STOP 550

TARGET 780‐820

TATA CHEMICAL LTD Market Cap 17,578 Cr


52‐week Low 445.50

BSE Code 500770

NSE Code TATACHEM

MARKET DATA



TATA CHEMICALS LTD

ABOUT THE COMPANY: Tata Chemicals Limited is a holding company. The Company is a manufacturer of soda ash and sodium bicarbonate for diverse industries, such as glass, detergents, silicates, textiles, food, pharmaceu‐ticals, animal feed, mining and chemical processing. The Company operates through four segments: Inorganic Chemicals, which includes soda ash, salt, sodium bicarbonate, marine chemicals, caustic soda and cement; Fertilisers, which includes fertilizers and other traded products; Other Agri‐inputs, including Rallis India Limited's operations, and Others, which includes pulses, spices, water purifier and nutritional solutions. The Company classifies its products under approximately three categories, including living essentials, industry essentials and farm essentials. The Company has a global presence with subsidiaries in the United Kingdom, Kenya and the United States.

INVESTMENT RATIONALE: • Tata Chemical divestment of its Urea Business to Yara Fertilizers earned Rs 2670cr for the company.

This will definitely help company strengthen its balance sheet and help company to persue its growth and development.

• The company is likely to witness better margins on sale of its Soda Ash & Bicarbonate due to lower fuel cost.

• Tata Chemical’s Europe business witnessed a good turnaround and generated profit of around 100crs.. The operating performance has seen improvement due to reduction in cost. The company also could offset from its debt from Rs 7900crs to Rs5500crs.

• Company’s consumer business is also seeing a strong growth. Revenues from companys salt busi‐ness is growing substantially and will increase more than double in next five years as sales volume of branded salt is growing steadily.

• Sales of Tata Sampan Pulses and Besan grew over 70% to Rs 410crs and is expected to grow even further as their distribution network is growing faster over 34%.

• Tata Kisan Sansar is a dedicated franchisee for distributing agri products in retail. TKS has over 800+centers in many villages and is growing further which will add up to company’s profits.


Sales 3,479.43 3,215.32 3,390.47 3,416.71 2,919.27 2,572.37

Expenses 2,972.18 2,645.69 2,836.88 2,824.17 2,431.75 2,122.55


OPM 14.58 17.72 16.33 17.34 16.7 17.49

Other Income 63.07 52.96 58.32 69.21 153.62 77.67

Depreciation 135.73 132.07 132.41 132.47 137.78 131.72

Interest 130.54 109.12 93.59 118.01 81.37 91.57

Profit before tax 304.05 381.4 385.91 411.27 421.99 304.2

Tax 43.84 101.75 83.73 92.88 78.97 62.43

Net Profit 260.21 279.65 293.04 318.39 343.02 241.77



Technical Analysis

The monthly chart of Tata Chem shows that price is strongly in an uptrend over a decade. Looking at all this rise using momentum indicator such as RSI we see that momen‐tum has always been in the bullish range of 40‐80 expect for a small blip. This shows that this stock has always been under the control of the bulls and there is absence of any seri‐ous selling. And dips along the run were just used to buy into. With prices moving to new life time high with descent volumes suggests aggressive‐ness of the buyers and shows that even at higher level this stock is experiencing strong de‐mand. All the indicators and oscillators are positive on Monthly, weekly and daily time frame. Also looking closer in the monthly time frame we find a pole and flag bullish pattern. And price has given the breakout from the same thus completing the bullish continuation pattern. Hence as per the pattern price is all set to go even further.

As well price has been trading above all its key moving averages (50EMA, 100EMA, 200EMA) in daily, weekly & monthly chart which signifies bullish sentiment in price. Based on the aforementioned technical observations and fundamentals we expect stock to stage higher from here and continue its primary uptrend. Thus we recommended to accumulate at current levels and at dips towards 690 with stop below 550 on closing basis for upside potential target of 780‐820 levels.


NOTE: The trades mentioned above are with a 1 year time horizon. Investing deci‐sion is left solely to the discretion of the reader , no updates on these ideas shall be furnished during the course of the year.

This is solely for information of clients of Growth Avenues and does not con‐strue to be an investment advice. It is also not intended as an offer or solicitation for the purchase and sale of any financial instruments. Any action taken by you on the basis of the information contained herein is your responsibility alone. Growth Ave‐nues will not be liable in any manner for the consequences of such action taken by you. We have exercised due diligence in checking the correctness and authenticity of the information contained in this recommendation. Growth Avenues shall not be in any way responsible for any loss or damage that may arise to any person from any in‐advertent error in the information contained in this recommendation or any action taken on basis of this information.

Technical analysis studies market psychology, price patterns and volume lev‐els. It is used to forecast future price and market movements. Technical analysis is complementary to fundamental analysis and news sources. The recommendations issued herewith might be contrary to recommendations issued by in the company research undertaken as the recommendations stated in this report is derived purely from technical analysis. Growth Avenues has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Growth Avenues makes no guarantee, representation or warranty and ac‐cepts no responsibility or liability as to its accuracy or completeness.

DISCLAIMER

Documents

STOCKS FOR INVESTMENT - Chart Advisechartadvise.com/afiles/DIWALI_PICKs_2017.pdf · uct is “Dominar” is steadily improving its volumes. We expect company’s star to improve its