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T I M E S
A TIME COMMUNICATIONS PUBLICATION
VOL XXVII No.28 Monday, 14 – 20 May 2018 Pgs.22 Rs.20
Markets buoyant ahead of Now follow us on Instagram, Facebook &

Twitter at moneytimes_1991 on a daily basis to
Karnataka polls get a view of the stock market and the
By Sanjay R. Bhatia happenings which many may not be aware of.
The markets moved higher last week on consolidation ahead of the
Karnataka elections. Buying was clearly visible in index heavyweight stocks whereas selling pressure was witnessed in
mid-caps and small-caps.
The FIIs remained net sellers in the cash segment but were seen hedging their positions as net buyers in the derivatives
segment. The DIIs once again turned net buyers during the week and were seen supporting the markets at lower levels.
The breadth of the market remained weak amidst high volumes. Crude oil prices moved above $77 on the back of
concerns over US imposing sanctions on Iran. Brent crude prices hovered around $73. On the domestic front, the
earnings season continued to remain good.
Technically, the prevailing positive technical conditions helped the markets move higher. The Stochastic and RSI are
both placed above their respective averages on the daily chart. Further, the KST and RSI are both placed above their
respective averages on the weekly chart.
The Nifty is placed above its 50-day SMA, 100-day SMA and Believe it or not!
200-day SMA, which is its long-term average. The Nifty’s 50-
day SMA is placed above its 200-day SMA and its 100-day SMA  Dynamic Industries recommended at
is placed above its 200-day SMA. These positive technical Rs.111.95 in TT last week, zoomed to
conditions could lead to buying support at regular intervals. Rs.138.70 appreciating 24% in just 1 week!
The prevailing negative technical conditions, however, still  Tata Steel PP recommended at Rs.150 in TT
hold good. The MACD and KST are both placed below their last week, zoomed to Rs.168 appreciating 12%
respective averages on the daily chart. Further, the MACD and in just 1 week!
Stochastic are also placed below their respective averages on  JK Paper recommended at Rs.147.50 in SW
the weekly chart. Moreover, the Stochastic is placed in the last week, zoomed to Rs.153.50 appreciating
overbought zone on the daily and weekly charts. The Nifty’s 4% in just 1 week!
50-day SMA is placed below its 100-day SMA, signaling a  Daikaffil Chemicals recommended at Rs.62.30
‘Death Cross’ breakdown. These negative technical conditions in TT on 30 April 2018, zoomed to Rs.75.90
could lead to intermediate bouts of profit-booking and selling appreciating 22% in just 2 weeks!
pressure, especially at the higher levels.  PTC India recommended at Rs.89.70 in BB on
30 April 2018, zoomed to Rs.100.15
The +DI line is placed above the -DI line and above 26. But it
appreciating 12% in just 2 weeks!
has come off its recent highs, which indicates that the buyers
are booking profits regularly. The ADX line, however, is placed (BB – Best Bet; SW – Stock Watch; TT – Tower Talk)
below 19, which indicates that the current trend lacks strength.
The markets have defied the overbought conditions and the This happens only in Money Times!
rising crude oil prices and yet stayed firm ahead of the Now in its 27th Year
A Time Communications Publication 1

impending Karnataka elections anticipating a win for the BJP led NDA.
The Nifty has closed above the 10737 mark, which augurs well for the
markets. It is important for the Nifty to sustain above it in order to
move higher and test the 11070 mark. However, since the ‘death cross’
breakdown has not been nullified, the psychologically important
11000 level could be an uphill task. The rising crude oil prices also
remain a concern and could lead to inflationary pressure and hike in
interest rates in the forthcoming monetary policy meets.
Meanwhile, the markets will take cues from the earnings season,
global markets, news flow on the Karnataka elections, Dollar-Rupee
exchange rate and crude oil prices.
Technically, the Sensex faces resistance at the 35966, 36284 and
36444 levels and seeks support at the 35221, 35066, 35007, 34700,
34342, 34000, 33700 and 33055 levels. The resistance levels for the Nifty are placed at 11070 and 11131 while its
support levels are placed at 10785, 10737, 10631, 10583, 10475, 10436 and 10396.
BAZAR.COM
A Win-Win deal!
With Walmart’s $16 bn majority acquisition in Flipkart, online shopping will become a rewarding experience for Indian
consumers. With Jeff Bezos promoted Amazon India challenging Flipkart’s leadership position, the latter will have to do
everything under the sun to grow its market share in the $17.8 bn Indian e-commerce industry.
Industry experts feel that a competition of sorts will emerge among top entities like Walmart – Flipkart, Amazon and
Paytm – Alibaba on who loses the most over the next few years in terms of cash burnt. The Walmart – Flipkart deal
spells not only great news for Indian consumers but also for India’s overall growth story. The huge price tag attached to
the deal authenticates the prospects of the Indian economy’s growth over the next few years. India is a happening story
and the next 10-15 years belongs to India. For Indian consumers, it will be festive season all year round. For the next 5
years, Alibaba, Walmart – Flipkart and Amazon will vie for the larger market share by following a simple principle: “I
will lose more money than you”. Obviously, the only beneficiary will be the Indian consumer.
Walmart’s deal with Flipkart will not only benefit end consumers but also benefit the real producers i.e. the farmer.
Looking at the way Walmart operates its business across 35+ countries, the farmers and consumers both stand to gain
handsomely. This concept is well explained by the consumption expert Gurcharan Das, ex-CEO Procter & Gamble
Hygiene & Health Care. He explains this with a simple example. If tomato costs Rs.20/kilo in the market today, the
farmer gets around Rs.4-5/kilo and the balance is hogged by a series of middlemen. But Walmart streamlines and
consolidates its supply chain the world over, because of which it manages to offer around Rs.8 to the farmer/producer
(v/s Rs.4-5) and Rs.15 to the consumer (v/s Rs.20). Thus, by eliminating the middlemen, it benefits both the producers
as well as the consumers. Walmart is also known for its cold chain storage, which avoids the wastage of perishable food
products. Hence Walmart will not only help in meeting the government’s commitment of boosting the farmers’ income
but also get the end product cheaper into the hands of consumers.
The Jan Jagran Manch and similar organizations will pose as a stumbling block talking of kirana stores and the
middlemen being trampled over by a foreign company. However, globalization is on the world over with e-commerce
replacing the middlemen. India, too, must accept this fact and adapt to the changing scenario. The contours of consumer
play are redrawn and it is time Digital India falls in line and rises above petty political consideration.
The market remained cautious throughout the week ahead of the Karnataka polls being held over the weekend. The
battle seems fierce and the data available so far on the lines of assessment puts Congress losing on its majority and the
BJP and the JD(S) gaining. In all likelihood, these two winners may fall short of the coveted simple majority and the king
maker JD(S) may call the shots. The direction in which Deve Gowda moves will decide the fate of Karnataka and also
pave the way for drawing the initial battle lines for 2019. The exit poll over the weekend will make an interesting study
followed by the results of 15th May. Till then, keep your fingers crossed.

TRADING ON TECHNICALS
Sustaining higher levels important

Sensex Daily Trend DRV Weekly Trend WRV Monthly Trend MRV
Last Close 35535 Up 34906 Up 33681 Up 31629
Last week, the Sensex opened at 34983.50, registered a low of 34977.73 and moved up to 35596.14 before it finally
closed the week at 35535.78 and thereby showed a net rise of 620 points on a week to week basis.
The rise with the higher low and higher high is now for 7 weeks on the weekly chart.
Daily Chart
The rise continues with minor intra-day dips or intra-week dip
but it still managed to remain above the DRV since
09/04/2018 closing of 337888. A totally objective way of
looking at the market is the news flow and events that occur
with various interpretations on the subjective front. The
mechanical objective way of looking at the market indicates an
uptrend on the daily chart since 09/04/2018 as it crossed the
DRV and closed at 33788. Since then, the uptrend has showed
a gain of 1,747 points.
Resistance and support will come in the path of the movement
but a higher top and higher bottom along with higher low and
higher high is the key for the uptrend and vice versa. The
supporting role of DRV or moving average plays a
psychological role for a technical follower to derive a unbiased
look at the markets.
On the daily chart, the swing higher bottom is at 34847.
Weekly Chart
Week before last, the Sensex had formed an Inverted Hammer. But last week, we did not witness a lower high and lower
low to confirm the swing top. Last week, we saw the Sensex trading above the low of the Inverted Hammer formed 2
weeks back, which was 34847.
On the weekly chart, the Sensex traded above the weekly opening and above its previous week close of 34915 leading to
the positive weekly candle for the entire week.
The week ended with a positive bullish candle and maintained 7 weeks of higher low and higher high on the weekly
chart showing the strength of the Sensex.
Resistance will be at 35544, 36050 and 36443.
The 78.6% and 88.6% retracement of the fall from 36443 to 32483 are placed at 35597 and 36017.
The high registered last week was 35596 before it closed at 35535.
Support during the week will be at 35369-35143-34847.
The range for the week can be 35762 and 36380.
BSE Mid-Cap Index
Weekly chart:
The BSE Mid-Cap index is behaving completely opposite of the Sensex. It showed a bearish candle and underperformed
against the Sensex in the last 2 weeks.
The pullback was weak in relation to the Sensex. An uptrend can resume if a higher low and higher high is seen on the
index with a bullish candle.
Resistance is at 16700, which must be crossed with a bullish candle. The low last week was 16235 and it must not be
violated.
The broad market indices have been falling whereas the index based Sensex stocks have been making steady progress.
BSE Small-Cap Index
A lower high and lower low was seen on the BSE Small-Cap index with a bearish candle.

A reversal needs to happen for the 2-week correction to generate broad market strength.
A rise and close above 18159 with a bullish candle at the end of the week can resume the reversal process.
Strategy for the week
Traders long can revise up the stop loss to 34847. Broad market indices need to mark a reversal to generate broad-
based market strength. Expect the higher range of 35762 and 36380 to be tested. Higher levels will attract profit-
booking pressure unless a new high is made.
WEEKLY UP TREND STOCKS
Let the price move below Center Point or Level 2 and when it move back above Center Point or Level 2 then buy with whatever low
registered below Center Point or Level 2 as the stop loss. After buying if the price moves to Level 3 or above then look to book profits as
the opportunity arises. If the close is below Weekly Reversal Value then the trend will change from Up Trend to Down Trend. Check on
Friday after 3.pm to confirm weekly reversal of the Up Trend.
Note: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & S2- Support
Weekly Up
Scrip Last Relative
S1 S2 - R1- R2- Reversal Trend
Close Strength
Value Date
Weak Demand Demand Supply Supply
below point point point point
PIDILITE INDUSTRIES 1104 1069 1078.7 1094.3 1119.7 1160.7 73 1076.8 16-03-18
KOTAK MAHINDRA BANK 1265 1226 1237.3 1253.7 1281.3 1325.3 72.7 1210 06-04-18
KPIT TECHNOLOGIES 259.35 246 248.2 257.1 268.2 288.2 71.3 250.3 13-04-18
HINDUSTAN UNILEVER 1506 1467 1476.3 1496.7 1526.3 1576.3 69.1 1478 28-03-18
MAHINDRA & MAHINDRA 869 850 850 869 888 926 67.7 846.3 16-03-18
*Note: Up and Down Trend are based of set of moving averages as reference point to define a trend. Close below
averages is defined as down trend. Close above averages is defined as up trend. Volatility (Up/Down) within Down
Trend can happen/ Volatility (Up/Down) within Up Trend can happen. Relative Strength (RS) is statistical
indicator. Weekly Reversal is the value of the average.
WEEKLY DOWN TREND STOCKS
Let the price move above Center Point or Level 3 and when it move back below Center Point or Level 3 then sell with whatever high
registered above Center Point or Level 3 as the stop loss. After selling if the prices moves to Level 2 or below then look to cover short
positions as the opportunity arises. If the close is above Weekly Reversal Value then the trend will change from Down Trend to Up Trend.
Check on Friday after 3.pm to confirm weekly reversal of the Down Trend.
Note: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & S2- Support
Weekly Down
Scrip Last Relative
S1 S2 - R1- R2- Reversal Trend
Close Strength
Value Date
Demand Demand Supply Supply Strong
point point point point above
CHENNAI PETROLEUM CORP. 295.90 252.9 281.9 297 310.9 312 25.37 310.41 20-04-18
POWER FINANCE CORP. 82.90 76.8 81.2 84 85.7 86.8 27.54 84.69 20-04-18
PUNJAB NATIONAL BANK 88.65 76.6 85.2 90.4 93.9 95.7 28.29 91.85 20-04-18
AJANTA PHARMA 1059 845 1004 1108 1163 1212 28.42 1243.75 13-04-18
ORIENTAL BANK OF COMM. 82.60 68.2 78.7 85.2 89.1 91.7 28.95 88.74 20-04-18
*Note: Up and Down Trend are based of set of moving averages as reference point to define a trend. Close below
averages is defined as down trend. Close above averages is defined as up trend. Volatility (Up/Down) within Down
Trend can happen/ Volatility (Up/Down) within Up Trend can happen.
EXIT LIST
Note: R1- (Resistance), R2- (Resistance), R3- Resistance, S1- Support & SA- Strong Above
Scrip Last Close R1 R2 R3 SA S1 Monthly RS
RAIN INDUSTRIES 274.65 297.17 306.30 315.43 345 219.8 36

THIRUMALAI CHEMICALS 1861 1990.92 2036 2081.08 2227 1608.9 39
AVANTI FEEDS 2279 2359.59 2388.50 2417.41 2511 2114.6 40.3
SAVITA OIL TECHNOLOGIES 1350 1370.39 1387.50 1404.61 1460 1225.4 41.7
GUJARAT ALKALIES & CHEMICALS 685 707.83 715.50 723.17 748 642.8 44.6
SURYA ROSHNI 404.70 412.80 415.83 418.85 428.65 387.2 44.7
BAJAJ FINSERV 5339.95 5347.81 5382.60 5417.39 5530 5053 44.8

BUY LIST
Note: R1-(Resistance), R2- (Resistance), R3- Resistance, S1- Support & WB- Weak Below
Scrip Last Close S3 S2 S1 WB R1 Monthly RS
EXIDE INDUSTRIES 261.60 259.72 256.42 253.13 242.45 287.7 59.08

TATA CHEMICALS 776 774.01 770 765.99 753 808 55.51
PUNTER PICKS
Note: Positional trade and exit at stop loss or target whichever is earlier. Not an intra-day trade. A delivery based trade for a possible time frame
of 1-7 trading days. Exit at first target or above.
Note: SA-Strong Above, DP-Demand Point, SP- Supply Point, SA- Strong Above, RS- Strength
Weak RS-
Scrip BSE Code Last Close Demand Point Trigger Supply point Supply point
below Strength
- - - - - - - - -
TOWER TALK
 Jindal Saw is available cheap. Its 9MFY18 EPS was Rs.7. This OP Jindal investor-friendly company must be bought
immediately for excellent returns.
 Suven Life Sciences’ unit at Pashamylaram near Hyderabad has successfully cleared USFDA inspection. A positive
for the company.
 Money Times was among the first to recommend Selan Exploration Technology. With crude oil prices recording
new highs every day, this company is likely to report a better working. A good buy.
 P C Jeweller intends to buy back its shares at Rs.350/share. This indicates that the intrinsic value of the share is
higher than the CMP. Investors with a risk appetite may enter for huge gains.
 The fast food culture is catching up. With Jubilant Foodworks to open additional outlets, its prospects appear
bright. Buy.
 Avanti Feeds has announced a 1:2 bonus and also a stock split. Money Times had predicted the bonus issue in its
19th March issue. It is still a good buy from a one year perspective.
 Godrej Consumer Products plans to launch a slew of new products. This FMGC major must be retained for the
long-term.
 Drug major Sanofi India reported a 37% rise in Q4 PAT at Rs.82 crore. Buy.
 Gammat Pte, an investment firm managed by GIC of Singapore, intends to acquire up to 5% stake in Godrej
Properties at around Rs.783-784/share. A positive for the company.
 L&T Finance Holdings is consolidating at Rs.178 with imminent signs of a break out. A value pick for safe returns in
the coming years.
 Cummins India had shed a lot of ground on concerns of outsourcing. However, the management has clarified that
the margins are not under pressure.
 The Fortis Healthcare takeover war is heating up with parties making counter bids. The Munjals and the Burmans
jointly have nearly won the battle for its control. Minority investors may gain. Hold for some time.
 JK Tyre Industries will announce its results this week. The company is doing well and its share price is likely to
jump in the next few days. Buy.
 Indian Oil Corporation is contemplating a final dividend along with its Q4 results. It may be prudent to hold the
stock.
 NOCIL recommended in Money Times at Rs.136 in August 2017 has posted excellent Q4 results. Hold it for bumper
gains going forward.
 Federal Bank reported a 44% slump in Q4 PAT on account of huge provisions for doubtful debts. However, analysts
feel that the worst is over and it may be prudent to accumulate the stock on dips.
 The Railways intend to spend Rs.5000 crore to revamp 68 stations. Major order flows likely for NBCC. Buy.
 Ganesh Housing Corporation is expected to report excellent results for FY18. An attractive buy at the CMP.

 Karnataka Bank has crossed the Rs.1,00,000 crore turnover threshold. Its CASA ratio is also improving. A good buy.
 Shivam Autotech, a Munjal group company, is available at rock bottom prices. Its new capacities are expected to
boost volumes significantly.
 Some analysts are very bullish on Nestle India, which posted 38% higher net in Q4FY18. The share is poised to
touch the Rs.12,000 mark.
 BN Rathi Securities is likely to post an EPS of Rs.8 for FY19. The promoters have increased their stake in the
company, which is a positive sign. The stock trades at attractive valuation of 5x P/E and it may double within a year.
 Honeywell Automation India is likely to notch an EPS of Rs.260 in FY18 and Rs.300+ in FY19 post expansion. The
stock may touch Rs.25000.
 Good interest is seen built in the counter of Welspun India, which is now trading above its 60-day average. The
stock is heading towards Rs.75.
 Nandan Denim expanded its capacity from 99 MMPA to 141 MMPA during FY17 and 9MFY18, which makes it the
largest denim manufacturer in India and the 4th largest in the world. The stock may cross Rs.160.
 Vindhya Telelinks is the cheapest stock available in the Infra space. 75% of its revenue comes from the EPC
division. It has ventured into lucrative sewage projects and expects good volumes from this vertical. It may notch a
consolidated EPS of Rs.88 in FY18 and Rs.96 in FY19 post expansion. The stock is poised to touch Rs.1500.
 Datamatics Global Services is likely to report an EPS of Rs.13 in FY18 and Rs.16 in FY19. The stock could rise to
Rs.162 in the medium-term and Rs.200 thereafter.
 The demand for chrome ore exceeds the mining against Indian Metals Ferro Alloys (IMFA’s) chromite mines has
been stayed by the Revisionary Authority, Mines Tribunal, Ministry of Mines. The government has stopped the
politically motivated agitation too. This is positive news for IMFA, which may notch an EPS of Rs.110+ in FY18. The
stock can appreciate over 20%.
 Udaipur Cement Works, owned by JK Lakshmi Cement, reported excellent results with an EPS of Re.0.6 for Q4. The
stock trades near its 52-week low of Rs.23 and can be bought for good returns.
 Firstsource Solutions declared a maiden dividend of Rs.1.5/share on account of excellent results. Don’t be
surprised if this company joins the big league of mid-cap IT companies in a few years. A multibagger stock in the
making.
 An Ahmedabad-based analyst recommends Hester Biosciences, Jamna Auto Industries, Saksoft and IFB
Industries. From his last week’s recommendations, Nelcast rose from Rs.100.20 to Rs.105.65 while MCX rose from
Rs.750 to Rs.792.30 in just 1 week!
BEST BET
Nagarjuna Fertilisers & Chemicals Ltd

(BSE Code: 539917) (CMP: Rs.15.40) (FV: Re.1)
By Bikshapathi Thota
Nagarjuna Fertilizers & Chemicals Ltd (NFCL) is a leading manufacturer and supplier of plant nutrients. It markets urea
under the brand ‘Nagarjuna’. It also has a Micro Irrigation (MI) division, which mainly deals with water management by
drip and sprinkler irrigation. It set up this division in 1994 in collaboration with Palma India Ltd, an Israeli consortium
of three irrigation companies - Plassim, Lego and Metzerplas.
India’s foodgrain production has grown around 5x over the last six decades. This is mainly on account of a nearly 4x
jump in productivity, which was possible with the usage of fertilizers and crop protection products. Since cultivable land
is continuously shrinking and the country’s population is rising, the prospects for the fertilizer business remain robust in
the long-term.
Tata Chemicals announced the sale of its urea plant to Yara Fertilizers for Rs.2682 crore (valuation of $352.26
EV/tonne). This plant has an annual capacity of 7 lakh tonnes of ammonia and 12 lakh tonnes of urea. Compared to this
valuation, NFCL looks attractive at the CMP. The well-known Murugappa group of SPIC fame has grown substantially
through acquisitions over the last three decades. The Zuari group, another major player in the fertilizer sector which had
taken over 2 fertilizer companies in the past, has 5% stake in NFCL. We believe that if at all NFCL joins the consolidation
process, it will attract a higher valuation multiple given its urea capacity of 15.19 lakh tonnes and its ammonia capacity
of 8.9 lakh tonnes. In our view, the replacement cost of setting up a 15 lakh tonnes urea plant could be more than 2x the

enterprise value (EV) of NFCL. Moreover, its plant is strategically located at Kakinada, a seaport on the east coast of
India.
No major greenfield plant has been commissioned over the last two decades. On the other hand, the demand for
fertilizers is continuously growing. Hence, the scope for further consolidation remains high. However, in case we go
wrong in our expectation of its possible acquisition, then the risk in this stock is quite high. Therefore, we recommend
this stock only to investors with a risk appetite.
Plant Nutrition: NFCL is a leading manufacturer and supplier of plant nutrients. Plant nutrition is responsible for
approximately one-third of the increase in world grain production. The balance is provided by factors such as better
irrigation, improved seeds, cultivation practices, pest control and planting density.
NFCL supplies a wide range of nutrition products and services that include both Financials: (Rs. in crore)
macro and micro fertilizers. Its product portfolio includes Urea, Anhydrous Particulars FY17 FY18E FY19E
Ammonia, Diammonium Phosphate, Muriate of Potash, Zinc Sulphate Revenue 3385 3872 4312
Heptahydrate and Zinc Sulphate Mono-hydrate. It employs information
Expenses 3490 3802 4086
technology and soil and tissue analysis for nutrient recommendation. It plans to
further strengthen its portfolio with advanced tools to measure the actual PBDT -68 70 220
nutrient requirements and status and deliver customized nutrition solutions to Net Profit -122 -10 66
meet the exact needs of the customer. EPS (Rs.) -2 0.2 1.1
Outlook: Agriculture activity this year will get a boost from the weather
department's forecast of a normal monsoon season for the third straight year. The government has also announced a
minimum of 50% margin on crops, implying a 15% rise in minimum support prices. We believe this will boost the
demand for nitrogenous fertilizer, which is a huge opportunity for NFCL given its brand reputation.
Valuation: Given its focus on R&D, share book value, enhanced production, the rising demand for urea and the
replacement cost of setting up a urea plant, we expect NFCL to turnaround in FY18 and report good profits by FY19. We
expect it to notch an EPS of Rs.1.1 for FY19. We, therefore, have a Buy on the stock with a price target of Rs.25 (23x 19E
earnings) within a year.
STOCK WATCH
By Amit Kumar Gupta
Multi Commodity Exchange of India Ltd

(BSE Code: 534091) (CMP: Rs.764.25) (FV: Rs.10) (TGT: Rs.950+)
Incorporated in 2002, Mumbai-based Multi Commodity Exchange of India Ltd (MCX) operates as a commodity
derivatives exchange and offers online trading and clearing and settlement of commodity derivative transactions as well
as offers a platform for risk management services. It also provides trading in various commodity futures contracts across
segments including bullion, industrial metals, energy and agricultural commodities and offers data feeds. In addition, it
offers various facilities such as calendar-spread facility and exchange of futures for physical transactions that enable
participants to swap their positions in the futures/ physical markets; and MCXCOMDEX, a real-time composite
commodity futures price index, which gives information on market movements in key commodities as well as MCXAgri,
MCXEnergy, MCXMetal and Rainfall indices. Its market operations include trading and surveillance, delivery,
warehousing and logistics and gathering information on the spot price of the commodity. It has strategic alliances with
various exchanges such as the CME Group, London Metal Exchange, Dalian Commodity Exchange, Mozambique
Commodities Exchange, Singapore Diamond Investment Exchange, and Taiwan Futures Exchange.
MCX’s Q4FY18 revenue grew 15.8% QoQ to Rs.706 mn v/s an estimate of Rs.694 mn. EBITDA margin expanded ~12 bps
QoQ to 34.1% compared to our estimate of 34.8%. PAT soared 81% QoQ to Rs.340 mn in line with our estimate. The
smart growth in sequential financial performance was a function of 17% QoQ growth in volumes.
For FY18, MCX’s revenues rose 5.5% YoY to Rs.2580 mn. EBITDA margin expanded 120 bps YoY to 33.1% while PAT
declined 17% YoY to Rs.1080 mn. The sluggish revenue growth was due to the Average Daily Turnover (ADT) of
Rs.216000 mn v/s FY17 ADT of Rs.345000 mn. PAT declined due to lower other income. It declared a dividend payout of
80% (Rs.17/share) for the year.
The pick-up of Q4 has so far held on to its momentum in the first month of this fiscal, with total turnover in April at
Rs.5400 bn. This was due to the pick-up in crude oil given the price action and also because of part revival in Gold

Futures. Even Gold Options saw the liquidity enhancement scheme come in towards the end of April 2018, driving the
turnover up by more than 10x. MCX is yet to start charging for them.
SEBI’s recent MID-CAP TWINS
announcements have been in A Performance Review
sync with the overall agenda Have a look at the grand success story of ‘Mid-Cap Twins’ launched on 1st August 2016
of attracting hedgers on the
Sr. Scrip Name Recomm. Recomm. Highest % Gain
commodity derivatives
No. Date Price (Rs.) since (Rs.)
platform, which will drive
1 Mafatlal Industries 01-08-16 332.85 374.40 12.48
higher volumes. We expect
FY19 volumes to exit at over 2 Great Eastern Shipping Co. 01-08-16 335.35 482.40 43.85
Rs.300 bn/day from FY17 3 India Cements 01-09-16 149.85 226 50.82
levels of Rs.235 bn, driving 4 Tata Global Beverages 01-09-16 140.10 328.80 134.69
earnings CAGR of 26% over 5 Ajmera Realty & Infra India 01-10-16 137.00 365.65 166.90
FY18-20. 6 Transpek Industry 01-10-16 447.00 1493 234.00
Technical Outlook: The 7 Greaves Cotton 01-11-16 138.55 178 28.47
MCX share looks very good 8 APM Industries 01-11-16 67.10 84.40 25.78
on the daily chart for 9 OCL India 01-12-16 809.45 1620 100.14
medium-term investment. It 10 Prism Cement 01-12-16 93.25 158.95 70.46
has formed a downward 11 Mahindra CIE Automotive 01-01-17 182.50 270.05 47.97
channel pattern and a close 12 Swan Energy 01-01-17 154.10 235 52.50
above Rs.830 with volume 13 Hindalco Industries 01-02-17 191.55 283.95 48.24
can push the stock higher. 14 Century Textiles & Industries 01-02-17 856.50 1471.85 71.84
The stock trades below its
15 McLeod Russel India 01-03-17 171.75 248.30 44.57
important 200 DMA level on
16 Sonata Software 01-03-17 191.00 366 91.62
the daily chart.
17 ACC 01-04-17 1446.15 1869 29.24
Start accumulating at this
18 Walchandnagar Industries 01-04-17 142.25 272.90 91.85
level at Rs.764.25 and on
19 Oriental Veneer Products 01-05-17 222.30 645 190.15
dips to Rs.715 for medium-
to-long-term investment and 20 Tata Steel 01-05-17 448.85 792.55 76.57
a possible target of Rs.950+ 21 Sun Pharmaceuticals Industries 01-06-17 501.40 608.55 21.37
in the next 12 months. 22 Ujjivan Financial Services 01-06-17 307.45 423 37.58
******* 23 Ashok Leyland 01-07-17 93.85 151.55 61.48
24 KSB Pumps 01-07-17 759.55 936 23.23
Edelweiss 25 IRB Infrastructure Developers 01-08-17 224.95 260 15.58
Financial 26 JTL Infra

27 Stock ‘A’
01-08-17
01-09-17
70
187.40
208
308.90
197.14
64.83
Services Ltd 28 Stock ‘B’ 01-09-17 271.20 326.10 20.24
29 Stock ‘C’ 01-10-17 73.65 97.50 32.38
(BSE Code: 532922) (CMP:
30 Stock ‘D’ 01-10-17 74.10 91.35 23.28
Rs.287.80) (FV: Re.1)
(TGT: Rs.350+) 31 Stock ‘E’ 01-11-17 206 223.15 8.33
32 Stock ‘F’ 01-11-17 38 57.90 52.37
Founded in 1995, Edelweiss
33 Stock ‘G’ 01-12-17 194.65 196.80 1.10
Financial Services Ltd
(formerly Edelweiss Capital 34 Stock ‘H’ 01-12-17 71.80 82.50 14.90
Ltd) provides financial 35 Stock ‘I’ 01-01-18 59.25 71.90 21.35
products and services to 36 Stock ‘J’ 01-01-18 72.85 82.20 12.83
corporates, institutions and 37 Stock ‘K’ 01-02-18 234.90 291.85 24.24
individuals. It operates 38 Stock ‘L’ 01-02-18 164.25 180 9.59
through three segments - 39 Stock ‘M’ 01-03-18 575.15 588 2.23
Agency business; Capital- 40 Stock ‘N’ 01-03-18 211.80 216.80 2.36
based business; and Life Thus ‘Mid-Cap Twins’ has delivered excellent results since its launch.
Insurance. It offers
corporate credit products Latest edition of ‘Mid-Cap Twins’ was released on 1 May 2018.
such as promoter funding Attractively priced at Rs.2000 per month, Rs.11000 half yearly and Rs.20,000 annually,
and trade financing ‘Mid-cap Twins’ will be available both as print edition or online delivery.

solutions; fixed income services; retail credit products including term loans, loans against listed securities, IPO financing
and loans against ESOPs; and housing finance products comprising home loans, balance transfer and top-up loans, loans
against property (LAP), re-financing and lease rental discounting. It also provides investment banking services
comprising private equity advisory, merger and acquisition advisory, equity and debt capital market and loan
syndication services; corporate and individual wealth management services. In addition, it offers institutional brokerage
services; and perspective, corporate and alternative and quantitative research services. It also provides retail brokerage
services through its edelweiss.in website. Further, it offers insurance brokerage services consisting of risk management,
risk monitoring, insurance programs designing, insurance portfolio management services and claims management
services; and asset/property, marine, personal, business interruption, liability, financial, art and miscellaneous
insurance as well as life insurance products. Additionally, it provides mutual funds, alternative asset advisory and
reconstruction services and commodities.
In the credit business, Edelweiss continued to deliver strongly on most operating matrices – stable reported NIMs and
asset quality QoQ and continued strong growth in loans. Retail loans continued to grow faster than wholesale loans. As a
result, the share of retail loans in the overall loans pie inched up to 39% against ~33% in FY17. The profitability of the
credit business remained steady.
Asset management and capital market businesses had a strong quarter given the macro tailwinds in these businesses.
Overall Assets under Advice (wealth management + MF + alternative assets) grew 52% YoY to Rs.1,20,000 crore. The
PAT contribution from these businesses rose to ~35% in FY18, which further reiterates our positive stance in the
franchise business.
In the life insurance business, the gross premium income grew 52% YoY to Rs.310 crore. However, the business
continues to remain in the investment mode though the quantum of losses declining for FY18 stood at Rs.110 crore v/s
Rs.136 crore for FY17. The management also remains confident of developing its general insurance business without
any partnership for now.
Edelweiss continues to improve the C/I trend at 34% against 35% last quarter as economies of scale finally play out
favorably. However, provision charges during the quarter surged by 75% QoQ to Rs.616 crore as it maintained a healthy
coverage ratio of ~80% for FY18. The management is confident of managing healthy trends in asset quality in future.
However, we continue to remain conservative and maintain elevated credit costs of 1.8% for FY19-20E.
Technical Outlook: The Edelweiss share looks very good on the daily chart for medium-term investment. The stock is
trading near its all-time high and a close above Rs.300 with volume can push the stock higher. The stock trades above all
important moving averages like the 200 DMA level on the daily chart.
Start accumulating at this level of Rs.287.80 and on dips to Rs.267 for medium-to-long-term investment and a possible
price target of Rs.350+ in the next 12 months.
STOCK PICK
Gujarat State Fertilizers & Chemicals Ltd: Due for re-rating

(BSE Code: 500690) (CMP Rs.132.45) (FV Rs.2)
By Dildar Singh Makani
Company Background: Gujarat State Fertilizers & Chemicals Ltd (GSFC) was set up in the early Sixties to manufacture
agricultural nutrients to enable farmers to shift to high yield products. Over the years, it has widened its product range,
enhanced its manufacturing, marketing and R&D processes to emerge as a leader in the field of fertilizers and industrial
chemicals.
GSFC is the largest manufacturer and one of the only two domestic manufacturers of caprolactum, a chemical used for
making nylon fibre. In FY17, it produced 15,07,991 tonnes of fertilizers and 86,191 tonnes of caprolactum. It benefits
from the improving realisations and high caprolactum and benzene spreads. Benzene is the key raw material and thus
impacts its overall profitability. The spreads between benzene and caprolactum has doubled since the beginning of FY18
to $1,340/tonne on account of lower production in China and the domestic market since FACT’s plant shut down and
there is no other major producer. In the next 2-3 years, caprolactum prices are expected to remain firm as no new major
capacities are likely to be added. In fact, several European companies including BASF have shut down their caprolactum
plants over the last two years.
GSFC’s Ammonia plant operated at 80% utilisation in Q3FY18 and the management expects its capacity utilisation to
touch 100% in Q4FY18, which will also help reduce the power cost due to additional steam generation. Its Melamine

plant is expected to be commissioned by September this year. The management has categorically guided for a ramp up in
its Nylon plant utilization.
During the quarter, GSFC’s fertilizer segment’s sales grew 49% YoY on the back of 40% volume growth. Total fertilizer
sales volume was over 5,00,000 tonnes. The segment’s EBIT rose 60% YoY to Rs.74.5 crore with a margin of 7% v/s
6.5% YoY and 4.7% QoQ. This segment will also benefit by the onset of a normal monsoon. The Indian Meteorological
Department (IMD) in its first-stage forecast has talks of a normal South-West monsoon (June-September 2018) which
could put a lot of Agri, FMCG and auto stocks back on the investors’ radar. Quantitatively, rainfall activity is likely to be
97% of the long period average (LPA) as against 95% actual rainfall last year. If the forecast holds true, this will be the
third consecutive year of a normal monsoon.
Noteworthy points:
1. GSFC has enormous hidden wealth. The total value of its quoted investments as at March 2017 was Rs.1949.82 crore
v/s Rs.1078.52 crore in 2016 and Rs.482.99 crore in 2015. This shows how wisely it has deployed its earnings.
a) It holds about 3.08 crore shares of GNFC, which recently declared a dividend of Rs.7.5/share. The dividend receipt
itself will be over Rs.23 crore.
b) It holds 2.23 crore shares of Gujarat Industries Power.
c) It holds over 16.55 lakh shares of Gujarat Alkalies and Chemicals.
d) It holds 93.83 lakh shares of Gujarat Gas.
It is interesting to note that these stocks have recorded excellent appreciation in the last one year - GNFC has risen from
Rs.287 in March 2017 to Rs.484 now; Gujarat Alkalies and Chemicals has risen from Rs.406 in March 2017 to Rs.690
now; Gujarat Gas has risen from Rs.767 in March 2017 to Rs.840; and Gruh Finance has risen from Rs.396 in March 2017
to Rs.688 now. All this hidden wealth definitely needs a consideration while evaluating GSFC.
2. GSFC also holds investments in other unlisted companies, the carrying cost of which is around Rs.528.86 crore.
3. Most analysts foresee a very sharp rise in the share price of GNFC due to its excellent working. Higher payout ratios
and its bulging profitability and reserves will make GSFC a compulsive buy.
Quarterly Performance: During Q3FY18, GSFC’s net profit zoomed to Rs.199.6 crore from Rs.61.1 crore in Q3FY17
while revenue grew 39% to Rs.1537.45 crore from Rs.1103 crore in Q3FY17. It expects a subsidy payment of Rs.700
crore in the next 1-2 quarters, which will help reduce its debts. As at March 2017, its share book value was Rs.166 and
its EPS was Rs.11. It is likely to turn debt-free by the end of Q4FY19.
Its EPS has consistently risen from Re.1 in Q1FY18 to Rs.2 in Q2FY18 and Rs.5 in Q3FY18. Its cumulative EPS for
9MFY18 works out to Rs.8. Its net profit margin in Q3 was 12.98%. The management expects a turnover of ~Rs.6000
crore in FY18. After posting a turnover of Rs.4215 crore for 9MFY18, it expects revenue of ~Rs.1800 crore in the last
quarter. At 12.98%, it should result in a profit of Rs.234 crore and an EPS of Rs.6.6. The management had also guided
that crude oil prices of $60/barrel suited well its benzene and caprolactum prices. But in reality, crude oil prices during
Q4 were over $70/barrel. Thus, after conservative estimates, we can expect an EPS of Rs.13-14.5 for FY18.
In such a scenario, it may pay a dividend of Rs.3.5-4/share. With Rs.10 going to the reserves account, its share book
value will rise from Rs.166 to Rs.176 (FV: Rs.2). Therefore, the possibility of a bonus issue either this year or in the near
future cannot be ruled out. This argument will also hold ground if the bulging value of its holdings in renowned
companies are taken into account.
Conclusion: GSFC is valued reasonably at a P/E of around 10.42x on trailing profits of twelve months EPS and P/BV of
0.80x. The focus on agriculture in the recent budget can also add spark to this scrip. A good monsoon could usher robust
volumes Q4 onwards. GSFC’s Q4 and FY18 results are scheduled for release on 16 May 2018. We are optimistic that it
will deliver strong Q4FY18 results. We expect the stock to touch Rs.180 by that time or soon thereafter.
We believe that GSFC is grossly undervalued and is due for a re-rating. It is at a point of inflection and in the next few
years, it will be in a higher orbit altogether. Buy immediately before it announces its results with a holding period of
three years to reap the best benefits, especially when a bonus issue is around the corner.
STOCK BUZZ
By Subramanian Mahadevan
Balkrishna Paper Mills Ltd: Valuable paper

(BSE Code: 539251) (CMP: Rs.77.60) (FV: Rs.10)

Established in 1975, Balkrishna Paper Mills Ltd (BPML) is a part of the reputed Siyaram Poddar group, which is engaged
in the businesses of textiles, garment yarn, home furnishing and paper. It was formed pursuant to a scheme of
arrangement between BPML, Nirvikara Paper Mills Ltd (NPML) and Balkrishna Industries (BIL) whereby the paper
division of BIL was demerged into a separate entity and was eventually amalgamated with NPML. NPML was renamed as
BPML after the new management took over.
BPML is a pioneer in the field of Coated Duplex boards, which find application across various industries such as
Pharmaceuticals, Toiletries, Cosmetics and Health Care, Readymade Garments, Instant Food Products, Match Boxes,
Incense Sticks, etc. Its duplex board manufacturing capacity has expanded from 15 TPD (tonnes per day) initially to
1,15,000 TPA (tonnes per annum).
It is indeed an irony that at a time when the paper industry is at its best after struggling for over a decade, the erstwhile
leader Ballarpur Industries Ltd now known as BILT Ltd is on the verge of bankruptcy. The void left by Ballarpur offers a
tremendous opportunity for the Poddar group to make a mark in this industry in terms of size and scale. The
management had issued preference shares worth Rs.25 crore to the promoters on a private placement basis, which
reflects their vision to make BPML grow into a giant in the listed paper space.
Given the reserves on its balance sheet, top-line v/s market cap, top-class management, installed capacity and the rising
demand for duplex boards by e-tailers, we believe that BPML is a multibagger story unfolding slowly. Accumulate on
every decline for solid returns over the next 2-4 years.
*******
BGR Energy Systems Ltd: In power

Chennai-based BGR Energy Systems Ltd (BGR) was incorporated in 1985 as GEA Energie Systems India Pvt Ltd (a JV
between GEA Energietechnik GmbH Germany and B G Raghupathy) to produce and sell online condenser tube cleaning
systems, debris filters and rubber cleaning balls used in Thermal and Nuclear Power plants. BGR is an engineering
company in the power sector that operates through two segments – (i) Supply of systems and equipment wherein it
designs, manufactures and services systems and equipment for the Power, Oil and Gas Refinery, Petrochemical and
Process industries; (ii) Turnkey Engineering project contracting. Its complementary businesses include Power Projects,
Oil and Gas Equipment, Air Fin Coolers, Environmental Engineering, Electrical Projects and the Infrastructure business.
Recent developments like its entry into the water treatment business, execution of the dispute settlement with Hitachi,
huge EPC order from APGENCO worth Rs.2300 crore in 2016 to be executed in 36 months and scrapping the 8-year old
deal with the TN government (Cuddalore PowerGen Corporation) for a 1,320 MW thermal power project all augur well
for BGR. Given its track record of uninterrupted dividend payouts and experienced management, we believe that BGR is
available at attractive valuations for 30-50% returns.
STOCK SCAN
KNR Constructions Ltd

By Kushal Lakhani
Company Overview: KNR Constructions Ltd (KNR) is a multi-domain infrastructure project development company that
provides engineering, procurement and construction (EPC) services across various sectors like roads and highways,
irrigation and urban water infrastructure management. Its project execution strength lies primarily in road
transportation engineering projects like construction and maintenance of roads, highways, flyovers and bridges. It has
executed infrastructure projects independently as well as through JVs under EPC and PPP (Public-Private Partnership)
models in Uttar Pradesh, Madhya Pradesh, Assam, Andhra Pradesh, Karnataka, Tamil Nadu, Orissa, Bihar, etc. With 20+
years of experience, it has executed around 6,000 lane km of road projects across 12 states in India. It obtains 90% of its
orders from South India.
KNR was awarded the ‘2nd Fastest Growing Construction Company (Medium Category)’ at the Construction World
Annual Awards 2017. It has a team of 1,000+ qualified and experienced employees. Some of its marquee clients include
National Highways Authority of India (NHAI), Andhra Pradesh Road Development Corporation, NMDC, Hyderabad
Growth Corridor Ltd, Ministry of Road Transport and Highways, Karnataka State Highway Improvement Project,

Madhya Pradesh Road Development Corporation Ltd, Bruhat Bangalore Mahanagara Palike, Uttar Pradesh State
Highways Authority, GMR Projects, Sadbhav Engineering, Engineers India, Oriental Structural Engineers, etc.
Share Holding: Promoters - 55.38%; FIIs - 3.78%; Mutual Funds - 28.06%; Other DIIs - 0.03%; Non Institutions -
12.75%.
Financials: (Rs. in crore)
Financials: During 9MFY18, KNR posted 23% higher revenue Particulars 9MFY18 9MFY17 FY17 FY16
of Rs.1307.28 crore v/s Rs.1058.95 crore in 9MFY17. PAT
Revenue 1307.28 1058.95 1571.33 933.04
soared 84% to Rs.192.35 crore from Rs.104.82 crore in
PAT 192.35 104.82 157.25 161.12
9MFY17. The Net Profit margin (NPM) also looks impressive
compared to the previous corresponding period. EPS 13.68 7.45 11.18 57.29
NPM (%) 14.71 % 9.90 % 10.20 % 17.85 %
Conclusion: The KNR share looks attractive at the current
level and any dip can be a buying opportunity for a 15% upside in the next two months. Its FY18 working is expected to
be on the growth side.
ARTIFICIAL INTELLIGENCE IS HERE; DISRUPTION IS IMMINENT!

By Laxmikant Bhole
In one of my previous articles, I’d written about how tech-led transformations in various sectors are changing India Inc.
We, as investors, must, therefore, understand the market trend and the winning themes of the future before taking any
investment decision. Now let’s study about some tech innovations that are now disrupting the entire industry - Artificial
Intelligence (AI) and Machine Learning (ML).
Artificial Intelligence: Most websites these days generate an auto pop-up to greet its visitors and ask whether they
need any information regarding the company’s products. Who do you think is asking this? Typically, in earlier days, a
back-end support team would interact with visitors to educate them on the products. However, in most places today,
there is no human behind the screen when such pop-ups (chatbots) show up on the website. You can interact with these
chatbots in English and get a satisfactory response in the same language. How is this possible? That’s the power of AI.
AI is about mimicking human behavior, pulling human intelligence and applying machine power to implement that
behavior. We humans learn through experiences in our lives. We analyze the data and the situation surrounding us and
then act based on our past experience or the knowledge gathered. AI is meant to do the same thing but learn from
human experience i.e. past data. Thus the key element of this ecosystem is abundant data. Machines learn from the past
data using Machine Learning (ML) techniques, that help them mold their behavior based on the learning.
AI is important for the industry as humans have certain limitations and are prone to errors while machines, on the other
hand, are accurate, efficient and at scale. Therefore, AI is likely to soon dominate the global economy transforming every
aspect of our daily life. Its impact on the major sectors of the economy is extensive and corporates are bound to change
their traditional way of doing business to stay competitive. AI will not only boost their profitability due to cost
effectiveness but also improve the scale of operations.
Imagine a future where production lines are completely automated and new production lines can be seamlessly set up.
Driverless cars has become the new normal for automobiles or what if robots start taking care of elders and help them
move around. These are examples of real possibilities in the near future, which opens up immense opportunities for
industries using AI-based tech innovation.
How is the industry changing due to AI? AI is changing the fate of the industry and India Inc is not far behind. Several
start-ups do such work already. Cloud Computing, ML and AI technologies together, which come at a low cost, enable
organizations to gather and analyze large volumes of data and deliver critical information to the least privileged.
Let’s see how AI can help transform some industries. Agriculture plays a vital role in India’s economy as over 58% of the
rural households depend on agriculture as their principal means of livelihood (Source: IBEF). Agricultural exports
constitute 10% of India’s exports and it is the fourth-largest exported principal commodity category in India. With
limited land availability, the only way to boost the crop output is by increasing the per acre crop yield and AI can be a
game changer in achieving this. On the back of higher FDI inflows and favourable government initiatives, the agriculture
sector is looking at ways to leverage technology for better crop yield. Many tech companies have emerged in the past
few years with targeted agri-based solutions that benefit farmers and eventually increase the agri output for India. Crop
and soil monitoring leveraging sensors, IoT (internet of things) based technologies to monitor crop and soil health,
predictive agricultural analytics to predict the optimal time to sow seeds, get alerts on risks from pest attacks, supply
chain efficiencies by using real time data analytics, remote sensing technology, weather advisory, monitoring crop health
and automating farm activities are some areas being worked upon to realize a better crop yield. Automated quality

analysis of food products is an accurate and reliable method for grading fresh products characterized by color, size and
shape. This is possible by feeding the AI engine with images of good and bad quality products and then, teaching it how
to grade the products in an automated manner using Deep Learning (DL) technology. Tech giant, Microsoft, is helping
Indian farmers with its AI technology. Microsoft in collaboration with ICRISAT (International Crops Research Institute
for the Semi-Arid Tropics) has developed an AI Sowing App that uses ML and business intelligence from the Microsoft
Cortana Intelligence Suite. To calculate the crop-sowing period, historic climate data (spanning over 30 years from 1986
to 2015) for a specific area in Andhra Pradesh was analyzed using AI. Moisture Adequacy Index (MAI) was calculated to
determine the optimal sowing period. MAI is the standardized measure used for assessing the degree of adequacy of
rainfall and soil moisture to meet the potential water requirement of crops.
Another industry that is transforming is the services industry, particularly the banking sector. Though in its nascence
stage, the Indian banking sector is beginning to apply AI quite aggressively. AI is viewed as one of the most exciting and
profitable ventures in the FinTech space in India. AI along with ML opens up immense opportunities for more
personalized, faster customer experience and better automation with back-end workflows. Most of the leading banks in
India are already on the AI journey. HDFC Bank has a powerful AI-based chatbot EVA (Electronic Virtual Assistant) on its
website since a year. It is one of the largest chatbots in India that addressed over 4 million customer queries for about
7.5 lakh unique users in the first few months. EVA is now integrated with a voice chat as well powered by Amazon’s
Alexa. Similarly, other fintech companies also have multiple solutions that help them provide a better customer
experience. With the help of AI, banks can approach customers proactively for loans instead of customers approaching
the banks based on the search and enquiry patterns of the customer through various channels. Banks can also pre-
approve the loans based on the customer’s profile making loan disbursement much smoother. Managing risks and
frauds better by analyzing the transaction patterns at the back-end using AI and ML and improving lending activities are
some areas banks are targeting to resolve using AI.
The Medical and Healthcare sector is advancing towards a remote sensing technology to enable scenarios that can
improve patient care and do accurate medical diagnosis. AI is making a significant difference in the manufacturing sector
as well where many manufacturing plants are now automated and can operate without human supervision. Machines
can be sensor and IoT enabled, which helps gather huge machine data that can be used to apply intelligent decisions in
the plants. This improves operational efficiency and in turn boosts profitability. Driverless car experiments are a well-
known fact today.
AI is thus making a distinct
difference in the automobile
sector in various areas,
The new ratnas at Panchratna!
especially in assisted driving After the sad demise of Mr. G. S. Roongta on 2nd July 2017, we were at a loss to
and connected cars replace our crown jewel. But so good is our team of analysts that their first two
ecosystem. Intelligent issues of Panchratna of 1st October and 1st January have already clocked in results.
insurance risk assessment for
drivers based on their driving Given below is their maiden score and
pattern is the need of the hour we are sure this team will improve as we go along.
for insurance companies.
Sr. Date Scrip Name Recom. Highest % Gain
How is all this helpful to us? No. Rate (Rs.) since (Rs.)
Berkshire Hathaway’s annual 1 October 2017 Stock A 74.50 147.80 98
meet last weekend was an Stock B 37.05 44.10 19
inspiring one with 42,000+ Stock C 90.95 100 10
participants where Mr. Stock D 77.70 93 20
Warren Buffet reiterated his Stock E 41.70 57.75 38
sound investment principles. 2 January 2018 Stock F 74.80 86 15
Investors must always Stock G 42 44.80 7
understand the business first Stock H 60.85 63.90 5
and must act like learning Stock I 90.45 125.90 39
machines throughout their Stock J 57.30 59.70 4
lives to succeed. This is why it th
17 Edition of ‘Panchratna’ was released on 1 April 2018 st
is important to understand
the future trends and winning So hurry up and book your copy now!
themes in the market. I’m a Subscription Rate: Rs.2500 per quarter, Rs.4000 for two quarters & Rs.7000 per annum.
huge fan of Mr. Buffet and You can contact us on 022-22616970, 22654805 or moneytimes.support@gmail.com
have always emphasized on

his principle that investors must always study and understand the businesses before they invest their hard-earned
money. Understanding the changing technology trends and how they impact businesses helps us decide whether the
business model and the technology applied can be a winning theme. This exercise gives us value investing ideas that
stand out from others over a period of time. Tech innovations such as AI can completely change businesses and the
market profile and can disrupt an industry. Understanding their applicability and impact on business profitability is
something warranted of us as investors.
Indian Inc. is at the forefront of the tech-led transformation of the economy. The disruptive change in businesses is here
to stay and AI is an innovation we must track. Businesses that adopt these changes will survive and the ones that don’t
will surely face trouble sooner than later. Investors must, therefore, understand and educate themselves on the path-
breaking innovations that help them take the right decisions before value investing. Keep investing with the right
strategies from the long-term perspective to reap the best benefits.
MARKET REVIEW
Sensex registers consolidated gains

By Devendra A Singh
The Sensex advanced 620.41 points to settle at 35535.79 while the Nifty closed at 10806.50 rising 188.25 points for the
week ending Friday, 11 May 2018.
On the macro-economic front, the infrastructure growth slowed to a three-year low of 4.2% in FY18. Annual output
growth was 4.2% during FY18 v/s 4.8% in FY17, dragged down by slower growth in the production of coal, steel and
electricity.
PM Modi who is expected to seek a second five-year term next year has eased several rules and pumped billions of
dollars of state funds into building roads, ports and airports to support economic growth and create jobs.
Around 356 infrastructure projects, each costing Rs.150 crore or more, had been delayed by up to five years leading to a
total cost overrun of Rs.2.19 lakh crore ($32.9 bn). The government plans to spend Rs.5.97 lakh crore ($89.7 bn) on
infrastructure in FY19.
Infrastructure output, which comprises eight sectors i.e. coal, crude oil, natural gas, steel, cement and electricity
accounts for ~40% of the country’s industrial output. Steel output growth slowed to 5.6% in FY18 from 10.7% in FY17.
Cement output was up 6.3% in FY18 compared to a 1.2% fall in FY18 indicating a pick-up in construction activity.
The economy is expected to grow over 7% in FY19, up from an estimated 6.6% last year. Asia’s third-largest economy
has been held back for years by a shortage of energy sources such as electricity, coal and transport fuel leaving
industries to cope with blackouts and hospitals to rely on diesel-run generators as a back-up power supply.
International Monetary Fund (IMF) said that global growth will be steady this year and next buoyed by stronger trade
and US fiscal stimulus that will fade by the early 2020s while higher tariffs could damage market confidence and output.
The IMF in its latest World Economic Outlook kept its FY18 and FY19 global growth forecasts unchanged at 3.9% for
both years after upgrades in January. It expects the Indian economy to grow at 7.4% in FY19 and accelerate to 7.8% in
FY19.
According to the report, inflation has become more backward-looking i.e. past inflation drives the current inflation more
than future expectations. This suggests that if inflation rises, it may persist. Further, there is some evidence that the
sensitivity of inflation to economic slack has decreased i.e. the Phillips curve has flattened, which suggests that if
inflation rises, there may be a large hit to output when reducing it. Therefore, central banks will have to watch out
closely for signs of inflation pressure now and stand ready to respond.
Global growth is projected to soften beyond the next couple of years, the IMF said in the report, adding that advanced
economies will be held back by aging populations and lacklustre productivity.
The IMF said that risks to the global growth forecasts were broadly balanced for the next few quarters, with the
potential for stronger business profits to increase hiring and investments that could boost productivity. But trade
tensions such as the US and China’s recent dueling tariff announcements could take a direct toll on trade and economic
activity and also cause financial market turmoil that would tighten financial conditions and hurt confidence. An increase
in tariffs and non-tariff trade barriers could harm the market sentiment, disrupt global supply chains and slow the
spread of new technologies, reducing global productivity and investment. Greater protectionism will also lower
consumer welfare by making tradable consumer goods more expensive, the report added.

On the monsoon front, the India Meteorological Department (IMD) forecast a normal monsoon at 97% of long period
average for the country. The onset of monsoon is expected in Kerala from the end of May or the first week of June 2018
and will cover the country in the next few weeks.
Key index surged on Monday, 7 May 2018, on consolidated buying by the FIIs. The Sensex was up 292.76 points to close
at 35208.14.
Key index closed flat on Tuesday, 8 May 2018, on marginal buying. The Sensex was up 8.18 points to close at 35216.32.
Key index climbed on Wednesday, 9 May 2018, on further buying. The Sensex was up 103.03 points to close at
35319.35.
Key index fell on Thursday, 10 May 2018, on negative cues. The Sensex was down 73.08 points to close at 35,246.27.
Key index settled higher on Friday, 11 May 2018, on fresh buying of equities by traders. The Sensex was down 289.52
points to close at 35535.79.
Events like national and global macro-economic figures as well as the earnings season will dictate the movement of the
markets and influence investor sentiment in the near future. Market participants will also watch the Rupee – Dollar
equation.
On the inflation data, the government is scheduled to release data based on wholesale price index (WPI) and the
combined consumer price indices (CPI) for urban and rural India for April 2018 by mid-May 2018. On the global front,
United States macro-economic data for April 2018 is scheduled for release in the coming weeks of May 2018.
EXPERT EYE
By Vihari
GRM Overseas Ltd: Rice to riches!

(BSE Code: 531449) (CMP Rs.235) (FV Rs.10)
Incorporated in 1978 by Mr. H.C. Garg, Chairman and Managing Director, GRM Overseas Ltd (GRM) produces a wide
variety of rice. It supplies to some of the leading brands and directly packages rice for some renowned international
brands. Its world-class, state-of-the-art modern computerised plant has an automatically controlled inflow and outflow
system. It has three milling plants installed at Panipat in Haryana with a capacity to produce over 20 tonnes/hour. These
plants are equipped with modern Pre-cleaners, De-stoners, Precision-sizers, Graders, Paddy Separators, Dehuskers, etc.
Its packaged products are available in all varieties and packaging sizes of 1-50 kgs. Its platter of varieties includes
traditional Basmati Rice, Super Basmati Rice, Indian 1121 Super Rice, Indian Long Grain Rice, Sharbati Rice and
Sugandha Rice. It is the largest exporter of rice to Dubai and its vicinity areas. Exports of Rs.534 crore accounted for 90%
of sales.
GRM has in-house laboratories to check the quality of paddy and rice, which ensures the quality of the end product. Its
labs are well equipped with Moisture Meters, Lab De-huskers, Electronic Vernier Calipers, Precision Electronic Weighing
Scales, Lab-Polishers from Satake and Kett, etc.
For FY17, GRM posted 173% higher PAT of Rs.5.6 crore on 66% higher sales of Rs.591 crore and it paid 20% dividend.
During Q3FY18, PAT zoomed 114% to Rs.1.7 crore on 31% higher sales of Rs.204 crore fetching an EPS of Rs.4.6. During
9MFY18, PAT zoomed 214% to Rs.6 crore on 80% higher sales of Rs.673 crore fetching an EPS of Rs.16.3.
With an equity capital of Rs.3.7 crore and reserves of Rs.38.4 crore, GRM’s share book value works out to Rs.114. The
value of its gross block is Rs.36 crore. Debts of Rs.198 crore give it a DER of 4.7:1. The debt is high due to higher short-
term borrowings, which will be repaid soon. The promoters hold 73.6% of the equity capital, PCBs hold 0.6%, DIs hold
3.4% and the government holds 2.1%, which leaves 20.9% stake with the investing public.
The Indian market offers a huge potential for the food processing industry. India is the second largest rice producing
country in the world. Over 80% of the basmati rice grown in India is produced for export. The global demand for rice is
expected to rise as rice is also used in other products such as beer, liquor, etc., which are heavily consumed in USA,
Europe, etc.
According to an ICRA note, Indian basmati rice exports have witnessed strong revival in the current fiscal with 22% YoY
growth in value in 9MFY18, after having been on the downward trajectory during FY15-17. This buoyant exports growth
was fuelled by a 23% surge in average realisations (Rs.64594/MT in 9MFY18 v/s Rs.53985/MT in FY17). Basmati rice
exports are estimated to cross Rs.28000 crore in FY19. The concern, however, is that export volumes have largely
remained stagnant in the last few years.

The domestic demand for rice is expected to rise 10% annually on account of increased spending power of consumers.
Higher demand from key importing countries coupled with cheaper hybrid varieties of basmati has boosted India's
exports. The hybrid variety of basmati is relatively cheaper compared to the traditional variety of basmati rice and its
easy acceptability in the export market. Hence, GRM has considerable scope for growth if it captures even a little share of
the pie.
The domestic branded rice market is
growing rapidly driven by rising incomes
One more successful year for
and changing lifestyles. The major driver for TF+ subscribers…
branded and basmati sales will be organized
retail, which is growing at 9-10% p.a. and is “Think Investment… Think TECHNO FUNDA PLUS”
expected to grow 30% in the next 5 years. As
Techno Funda Plus is a superior version of the Techno Funda
organized retail penetrates into semi-urban
column that has recorded near 90% success since launch!
and rural areas, branded basmati
penetration into rural areas is expected to Every week, Techno Funda Plus identifies three fundamentally
rise. sound and technically strong stocks that can yield handsome
GRM has explored new overseas markets and returns against their peers in the short-to-medium-term.
is also concentrating on new domestic Most of our recommendations have fetched excellent returns to
centers through brand promotion, our subscribers. Of the 156 stocks recommended between 11
advertising and offering lucrative packaging January 2016 and 2 January 2017 (52 weeks), we booked profit in
of quality products at competitive prices. It 125 stocks, 27 triggered the stop loss.
has explored new countries and new
customers within the existing export Of the 156 stocks recommended between 9 January 2017 and 1
January 2018 (52 weeks), we booked 7-41% profit in 124 stocks,
markets to further boost the sale of rice.
28 triggered the stop loss of 2-18% while 4 are still open. Out of
Increasing focus on exports will results in
4, 2 stocks are in green & 2 stocks are in nominal red.
higher sales and profitability going forward.
GRM is expected to notch an EPS of Rs.22 in If you want to earn like this,
FY18 and Rs.26 in FY19. At the CMP of subscribe to TECHNO FUNDA PLUS today!
Rs.235, the stock trades at a forward P/E of
For more details, contact Money Times on
10.68x on FY18E and 9.03x on FY19E
022-22616970/22654805 or moneytimes.support@gmail.com.
earnings. The stock is likely to appreciate by
about 25% in the medium-term. Its 52-week Subscription Rate: 1 month: Rs.2500; 3 months: Rs.6000;
high/low is Rs.359.95/86.40. 6 months: Rs.11000; 1 year: Rs.18000.
MARKET OUTLOOK
Big Nifty move likely

By Rohan Nalavade
As rightly stated in the previous edition, the Nifty remained cautious and moved in a tight range last week ahead of the
Karnataka elections. A big movement in the Nifty will be seen this week based on the outcome of the elections. The
market will cheer only if the BJP wins with a big majority. A minor win margin will not boost the market sentiment.
The W.D. Gann date also lies in this week. Hence, the movement of the Nifty this week will set the trend for the next 30
days. The Nifty needs to close above 10900 in order to touch new highs 11400-11600. Hence, long positions can be built
above 10900 closing and short positions can be created below 10600 closing for 10500-10400 levels.
Technically, the Nifty weekly candle shows strength. Fertilizers stocks may witness buying with the onset of the
monsoon next month. The global markets are also rangebound.
Bank Nifty spot is holding the 26000 level. Selling will emerge only below 25950 level, and buying above 26300 could
touch 26500, 26600 soon.
Among stocks,
 Reliance Industries looks good above Rs.985 for a target of Rs.1020-1050 (SL: Rs.970)
 Adani Ports & SEZ looks good above Rs.408 for a target of Rs.425-440 (SL: Rs.404)
 Tata Motors looks weak below Rs.436 for a target of Rs.423-405 (SL: Rs.442)

TECHNO FUNDA
By Nayan Patel
IOL Chemicals & Pharmaceuticals Ltd

We had recommended this stock earlier at Rs.82.30 on 12 February 2018, where-after it zoomed to Rs.116.60 despite the
highly negative sentiment in mid-cap and small-cap stocks. We recommend this stock once again on account of its
improving fundamentals.
IOL Chemicals & Pharmaceuticals Ltd (IOL) is a leading pharmaceutical company and a major manufacturer in the
speciality organic chemical space. It is one of the largest producers of ethyl acetate (87,000 TPA) and the second largest
producer of iso butyl benzene (IBB) in India with 30% global market share. It has forward-integrated this vertical into
the pharma segment with end products such as ethyl acetate, IBB, mono chloro acetic acid (MCA) and acetyl chloride
used as key raw materials for Ibuprofen. It plans to explore other industries such as paints, flexible packaging and glass.
In view of this, it has successfully added MNC giants to its customer base.
With presence in 50+ countries, IOL has established itself as a major player in Ibuprofen (total installed capacity – 8,000
TPA) with 17% of the global capacity. It is the world's only backward-integrated Ibuprofen producer that manufactures
all intermediates and key starting materials at one location. It has augmented its pharma business by moving up the
value-chain with entry into lifestyle drugs for pain management, anti-depressant, anti-diabetic, anti-platelet and anti-
convulsion, etc. Its Ibuprofen plant is USFDA and EUGMP certified. Ibuprofen constitutes 85% of IOL’s pharma revenue.
IOL plans to explore opportunities by diversifying its API product portfolio. Apart from its multipurpose plant, it has a
17 MW power generation plant for captive consumption with adequate backups for trouble-free operations. Its R&D lab
is DSIR approved and is fully equipped to validate the existing processes.
During Q3FY18, IOL posted 771% higher PAT of Rs.8.8 Financial Performance: (Rs. in crore)
crore on 33% higher sales of Rs.262.67 crore with an Particulars Q3FY18 Q3FY17 9MFY18 9MFY17 FY17
EPS of Rs.1.56. During 9MFY18, PAT skyrocketed 507%
Sales 262.68 197.63 713.44 565.61 710.65
YoY to Rs.16.21 crore on 26% higher sales of Rs.713.44
crore with an EPS of Rs.2.88 (Cash EPS: Rs.6.57). Its PBT 9.56 1.32 18.57 3.60 5.48
9MFY18 PAT was 283% higher than the PAT recorded Tax 0.76 0.31 2.36 0.93 1.25
for FY17. PAT 8.80 1.01 16.21 2.67 4.23
IOL plans to invest ~Rs.200 crore over the next two EPS (Rs.) 1.56 0.18 2.88 0.48 0.75
years on capacity expansion. It plans to expand its flagship product – Ibuprofen’s capacity from 8,000 TPA to 12,000
TPA, keeping in view the recent approvals from USA and Europe. It also plans to enhance the capacity of its backward
integrated products i.e. ISO butyl benzene from 9,000 TPA to 12,000 TPA, MCA from 7,200 TPA to 10,500 TPA and Acetyl
Chloride from 5,200 TPA to 8,400 TPA. It has already commercialized unit-III to manufacture Fenofibrate, Clopidogrel
and Lamotrigine at an investment of Rs.16.48 crore. It also commenced operations in Metformin, an anti-diabetes drug
with an annual capacity of 3,000 tonnes in February 2018.
Based on its performance parameters, the IOL share looks quite attractive for investment at the current level. Investors
can buy this stock with a stop loss of Rs.88 for superb returns in the medium-to-long-term.
*******
AMJ Land Holdings Ltd

AMJ Land Holdings Ltd (AMJ) was incorporated in 1964 to manufacture speciality papers at its plant in Pune and
subsequently diversified into a wide range of speciality papers and several other activities including converted tissue
products, real estate development, information technology and FMCG products. It demerged its paper manufacturing
business in January 2016. Currently, it is focused on its real estate development in Pune. It is also engaged in the
business of generation and sale of power. It has 3 wind power plants at Satara and Sangli with an aggregate generation
capacity of 4.6 MW.
AMJ is currently developing a residential project ‘Greens’ in Pune in partnership. It has completed 5 buildings so far and
sold around 470 apartments. It awaits approvals for developing a 12 acre land in Pune with a potential development of 9
lakh sq.ft. of residential apartments. It entered into a MoU last year for this project. It also plans to develop a residential

and commercial project of ~12,00,000 sq.ft. in Thane in a 50:50 JV with G Corp Township Pvt Ltd. The construction of
another project ‘Green Ville’ is in progress with about 2 lakh sq.ft. of saleable area.
AMJ has an equity capital of Rs.8.2 crore supported by reserves of Rs.86.04 crore. The promoters hold 61.75% of the
equity capital, which leaves 38.25% stake with the investing public. The promoters have increased their stake by 0.24%
in the March quarter, which is a positive sign.
During Q3FY18, AMJ posted 98% higher PAT of Rs.2.12 Financial Performance: (Rs. in crore)
crore on higher income of Rs.8.29 crore with an EPS of Particulars Standalone Consol.
Re.0.52. During 9MFY18, PAT grew 3% to Rs.4.08 Q3FY18 Q3FY17 9MFY18 9MFY17 FY17
crore from Rs.3.96 crore in 9MFY17 on higher income Sales 8.29 5.63 19.48 15.25 25.38
of Rs.19.48 crore with an EPS of Re.1. It paid 10% PBT 2.97 1.69 5.61 5.24 6.77
dividend for FY17. Tax 0.85 0.62 1.53 1.28 -0.44
At the CMP, the stock trades at a P/E of just 21.58x, PAT 2.12 1.07 4.08 3.96 7.01
which is the cheapest amongst small-sized real estate EPS (Rs.) 0.52 0.26 1 0.97 1.70
companies. Based on its financial parameters, the AMJ
share looks quite attractive for investment at the current level. Investors can buy this stock with a stop loss of Rs.25. On
the upper side, it could zoom to Rs.38-40 levels in the medium-term.
BULL’S EYE
Ruchira Papers Ltd REVIEW

(BSE Code: 532785) (CMP: Rs.169.65) (FV:  Dynamic Industries recommended at Rs.98 on 23 April 2018,
Rs.10) zoomed to Rs.138.70 last week appreciating 42% in just 3 weeks.
By Pratit Nayan Patel  Ecoplast recommended at Rs.137.45 on 2 April 2018, zoomed to
Rs.179 last week appreciating 30% in 1.5 months.
Company Background: Incorporated in 1980,
Yamuna Nagar based Ruchira Papers Ltd (RPL)  Firstsource Solutions recommended at Rs.42.60 on 27
manufactures paper and paper products. November 2017 and once again at Rs.51.75 on 26 February 2018,
zoomed to Rs.74.20 last week appreciating 74% in 6.5 months.
It manufactures writing and printing (W&P) paper
and Kraft paper. Its white W&P paper is used to make notebooks and writing material while the colored paper is used in
the fabrication of spiral notebooks, wedding cards, shade cards, coloring books, colored copier paper and bill books. Its
Kraft paper is utilized in the packaging industry for making corrugated boxes/cartons and for other packaging
requirements. After several phases of expansion, its Kraft paper production capacity has shot up from 2,310 TPA to
52,800 TPA. It had set up a 33,000 TPA unit for the manufacture of W&P paper adjoining to its existing unit in March
2008.
Financials: RPL has an equity capital of Rs.22.42 crore backed by huge reserves of Rs.130.33 crore. The promoters hold
61.14% of the equity capital, which leaves 38.86% stake with the investing public. Well-known investor Dolly Khanna
holds 1.66% stake in this company.
Performance Review: For FY17, RPL Performance Review: (Rs. in crore)
posted 65% higher PAT of Rs.32.05 crore
on 15% higher sales of Rs.417.38 crore Particulars Q3FY18 Q3FY17 9MFY18 9MFY17 FY17 FY16
with an EPS of Rs.14 and paid 22.5% Total Income 117.54 104.68 343.31 309.45 417.38 362.58
dividend. During Q3FY18, PAT jumped 48% PBT 18.44 11.60 49.41 33.94 45.75 31.77
to Rs.11.89 crore from Rs.8.05 crore in Tax 6.55 3.55 17.31 11.15 13.70 12.30
Q3FY17 on higher sales of Rs.117.54 crore
with an EPS of Rs.5.3. During 9MFY18, PAT PAT 11.89 8.05 32.10 22.79 32.05 19.47
jumped 41% to Rs.32.1 crore from Rs.22.79 EPS (Rs.) 5.30 3.59 14.31 10.16 14.29 8.68
crore in 9MFY17 on sales of Rs.343.31
crore with an EPS of Rs.14.3. Its 9MFY18 PAT was higher than the PAT recorded for FY17.
Industry Overview: The Indian paper industry has a cumulative capacity of ~15 MMTPA and a turnover of ~Rs.50000
crore, which accounts for a 3% share of the global output. Of the 750 paper mills across India, only 50 have the capacity
to produce over 50,000 TPA. ~70% of the total installed capacity is spread across Gujarat, West Bengal, Odisha, Andhra
Pradesh, Karnataka and Maharashtra. Between FY12-17, investments worth ~Rs.20000 crore were infused into the
sector to scale capacities, upgrade technologies and foster mergers and acquisitions. The current industry demand has

been pegged at ~16 MMT with over 2 MMT being imported annually. Import duties on paper and paperboard have
declined from a base rate of 10% to nil, affecting fresh capacity creation.
Conclusion: Currently, the stock trades at a P/E of just 9.20x. We have witnessed an interesting trend in the recently
published quarterly results of paper companies. International Paper’s sales have risen 5% while its margin has
expanded from 19.8% to 22.8% led by profit growth of over 100% in Q4FY18. Orient Paper’s sales have risen 24%, its
operating income has doubled and margin has expanded from 11% to 18.9%. Century Textiles’ paper segment reported
growth of 5.6% and its EBIT grew from 9.3% to 17.2%.
Dividend History:
Looking at the overall industry trend, we are quite bullish on RPL as well. We believe that it
has the potential to report a healthy top-line growth on the back of robust demand in W&P Date % Rs.
paper and kraft paper. We expect it to report a better operating performance aided by 13-09-17 22.5 2.25
enhanced manufacturing efficiencies. The rising finished paper prices globally will aid 22-09-16 15 1.50
margins. Investors can accumulate this stock with a stop loss of Rs.150 for a price target of
19-09-15 13 1.30
Rs.225-235 in the next 9-12 months. On 16 February 2018, Angel Broking published a
research report on RPL at Rs.188 with a price target of Rs.244. The stock’s 52-week 10-09-14 12 1.20
high/low is Rs.219.8/140. Its market cap stands at Rs.380.39 crore. 26-03-13 10 1
VALUE PICK
Gati Ltd
(BSE Code: 532345) (CMP: Rs.110.30) (FV: Re.2)
By Archana Jain
Hyderabad-based Gati Ltd commenced operations in 1989 as a door-to-door cargo company and a division of Transport
Corporation of India (TCI). It was demerged into a separate entity in 1994. Over the years, it has grown its extensive
network across India to provide deliveries
to 19,000 pin codes, covering 672 out of Capital Structure: (Rs. in crore)
676 districts in India through different Particulars FY17 FY16 FY15 FY14 FY13
modes of transports i.e. Road, Rail, Air and Equity Share Capital 17.64 17.54 17.50 17.45 17.32
Sea. It accelerated its service delivery in Reserve & Surplus 610.88 605.25 602.56 622.54 824.18
2014 and currently handles 70,000 Book Value (Rs.) 71.27 70.32 70.20 72.66 96.50
packages per day. It also offers specialized Long-Term Borrowings 218.89 219.95 209.17 171.31 160.06
logistics services and is currently among
the top players in the e-commerce logistics business. It has strong market presence in the Asia Pacific region and SAARC
countries with offices in China, Singapore, Hong Kong, Thailand and Nepal.
Services: Gati is a pioneer in express distribution, supply chain solutions, e-commerce and cold chain logistics. It
transformed the logistics industry in India
with many path-breaking revolutionary Financials (Standalone): (Rs. in crore)
initiatives that paved the way for an Particulars FY17 FY16 FY15 FY14 FY13
organized logistics industry. Its segments Total Income 526.33 498.01 454.58 262.58 169.25
include (i) Express Distribution and Supply Expenditure 483.34 441.95 404.89 240.97 145
Chain, which covers integrated cargo services Interest 16.73 17.53 13.92 4.69 5.98
such as road, rail and air transportation; (ii) PBDT 42.99 38.53 35.77 16.92 18.27
Shipping, which covers sea transportation; Depreciation 10.11 16.19 10.09 4.05 2.09
and (iii) Fuel Stations, which deal in petrol, PBT 32.88 22.34 25.68 12.87 16.18
diesel and lubricants. It offers third-party
Tax 3.11 2.50 1.81 -7.69 -9.18
logistics and contract logistics services; e-
Net Profit 29.77 19.84 23.87 20.56 25.36
fulfilment centres; and upstream supply chain
management services such as procurement EPS (Rs.) 3.37 2.26 2.73 2.37 2.93
management and order management. It is also engaged in the business of e-commerce and cold chain logistics. It offers
customized solutions for temperature sensitive shipments including consumer foods, pharmaceuticals, retail and
agricultural food sectors. It also provides services such as freight forwarding, customs clearance and inventory
management.

Subsidiaries: Gati’s subsidiaries include Gati Kintetsu Express Pvt Ltd (GKEPL), which contributed 65% to its
consolidated business in FY17; Gati Kausar India Ltd (GKIL); Gati Import Export (trading); Zen Cargo Movers (CHA); and
Gati Asia Pacific Pte Ltd (Singapore).
Performance Review: For FY17, Gati recorded a revenue of Rs.526.3 crore (Rs.498 crore), EBITDA of Rs.59.7 crore
(Rs.56 crore) and PAT of Rs.29.8 crore (Rs.19.8 crore). Its reserves are 35x higher than its equity capital.
Arbitration: In 2009, Gati discontinued its Freighter Aircraft operations in terms of the arrangement with National
Aviation Company of India Ltd (NACIL) (now Air India) due to continuous failure and defaults by NACIL. The Learned
Arbitral Tribunal adjudicating on the disputes passed its Award dated 17 September 2013, whereby it inter alia directed
Air India to pay Rs.26.82 crore to Gati against which an amount of Rs.26.59 crore is included in the Loans and Advances.
Further, it directed Air India to pay interest @ 18% per annum on the awarded amount. Air India took up the matter
before the High Court of Delhi, which upheld the Arbitral Tribunal award except the claim for damages of Rs.4.97 crore.
Both Air India and Gati then filed cross appeals before High Court of Delhi, where-after it directed Air India to deposit
Rs.22 crore. Air India has deposited the amount with the court pending adjudication of appeals filed by Air India and
Gati. The appeals are scheduled for hearing shortly. Pending disposal of the said appeals, the said amount of Rs.22 crore
having been deposited in the court was paid to the company pursuant to the direction of the court.
Future Prospects: Gati’s unique portfolio of services makes it a fully integrated multi-modal logistics player with a
comprehensive pan India network, which
Quarterly Performance: (Rs. in crore)
gives it a competitive edge post the
implementation of GST. Going forward, it will Particulars Q3FY18 Q2FY18 Q1FY18 Q4FY17 Q3FY17
continue to expand its value-driven logistics Total Income 113.20 143.67 146.72 126.07 134.55
offering in response to the emerging Expenditure 111.28 107.34 122.34 122.93 120.17
customer supply chain requirements and Interest 4.61 4.28 5.64 4.21 4.21
other market trends. As the industry evolves PBDT 1.92 36.33 24.38 3.14 10.17
in the post-GST environment, Gati will benefit Depreciation 1.23 1.39 1.37 -5.55 6.72
by the advantages of competing in a larger PBT 0.69 34.94 23.01 8.69 3.45
market with opportunities for service Tax 0.30 6 4.96 0.99 0.68
innovation. In fact, Gati’s Vision 2020 focuses Net Profit 0.39 28.94 18.05 7.70 2.77
on providing end-to-end logistics solutions, EPS (Rs.) 0.04 2.98 2.01 0.87 0.31
tailor-made to customer specific needs. Its
focus remains on improving customer experience, leveraging its network advantage and creating avenues towards long-
term shareholder value. Further, Gati’s cold chain subsidiary, GKIL, holds immense potential for growth in the long term.
Its growth strategy for cold chain operations is to complement the existing delivery capabilities with a GST relevant
network of cold warehouses.
Overall, Gati’s capabilities demonstrate years of commitment towards investing in a network, technology and people for
achieving its vision. The success of Gati’s pan India Shop Floor Automation (SFA) stands testimony to its inbuilt
capabilities in effecting industry-leading technology interventions. It will continue to invest in technology that improves
network efficiency, delivers value to customers and boosts profitability.
Note: Mr. Amal Parikh, Promoter and Non-Executive Director of Ohm Stock Broker
Pvt Ltd, holds 2.91% stake in Gati Ltd. He has over 27 years of experience in the Shareholding:
capital market. His acumen in the markets, in-depth knowledge and management Particulars % stake
skills has earned his company a goodwill of transparent deals. He is a knowledgeable Promoters 24.89%
person who had also won the bid for Harshad Mehta's flats for Rs.32.60 crore in General Public 34.96%
2009. Financial Institutions 21.79%
Conclusion: Gati is set to capture the strong opportunity unfolding in the Indian Others 11.66%
logistics landscape as this sector remains the backbone of every development arising Foreign Institutions 6.70%
out of GST, e-commerce, infra, housing and the agri sector. We recommend Gati for a Total 100%
short/ medium/ long-term target of Rs.140/ 175/ 250+. If the market is volatile and
if the stock falls, one can accumulate around Rs.90-109. The stock’s 52-week high/low is Rs.154.45/87.60.

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