Mahanagar Gas(BSE Code 539957)

A research analyst working with a leading mutual fund and tracking the oil & gas sector is bullish on Mahanagar Gas. Pleasantly surprised by the speedy turnaround of the gas distribution company after the steep fall following the breakout of Covid-19, the analyst is highly optimistic about the company’s outlook. He says the company will be doing much better in 2021. In fact, he thinks gas distribution companies will be among the best investment bets in the coming days, and insists that MGL is his top pick at this juncture. After the Covid-19 setback, the company has started recovering fast. During Q2FY21, the volume improved to 1.90 MMSC – a level much better than even expected by the management. In Q3FY21, the volume is expected to reach the pre-Covid level. During fiscal 2020, the company added 20 gas stations to reach 256. It also added 1.23 lakh PNG home connections. All these developments will lead to a spurt in volume in the coming days. At the same time, there was a drop in margin to Rs 15.3 per SCM in Q2FY21.

(CMP Rs 1040.00, 52 week H/L Rs 1247/666, BV Rs 292.50, FV Rs 10)

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Chemcon Speciality Chemicals(BSE Code 543233)

A knowledgeable septuagenarian market operator reveals that Chemcon Speciality Chemicals is attracting interest buying. Just a couple of days back Plutus Wealth Management LLP purchased one million shares, representing 2.7 per cent of the company’s equity capital, at a price of Rs 428.52 per piece for a total amount of Rs 43 crore on the NSE via a bulk deal. What is more, enquiries for the counter are on the rise. The company manufactures pharmaceutical speciality chemicals and is the only manufacturer of HMDS in the country and the third largest manufacturer of HMDS worldwide. It is also the largest player in the CMIC segment in the country and the second largest in the world. Again, it is the only player in the case of zinc bromide in the country and also the numero uno producer of calcium bromide.

The company’s recent public issue, offered at a price of Rs 340 per share of Rs 10 each, was oversubscribed by 150 times and was listed at Rs 735. But profit taking by allottees pruned the price to around Rs 410. However, Plutus bought these shares at a price of Rs 428.62.

Prospects going ahead are highly promising as global consumers of these chemicals have started shifting their imports from China to other countries and Chemcon will emerge as a leading beneficiary of this development. The market operator is bullish on the scrip and insists that the price will subsequently cross the Rs 700 mark.

(CMP Rs 437.00, 52 week H/L Rs 744/398, BV Rs 85.00, FV Re 02)

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Jubilant Food Works(BSE Code 533155)

A stock market analyst heading the research bureau at a brokerage house strongly recommends Jubilant Foodworks, the company that operates Domino’s Pizza and Dunkin Donuts brands in India. The company has today 1,264 Domino’s restaurants across 281 cities, apart from 26 Dunkin Donuts outlets. It is also operating Chinese cuisine restaurants under the Hong’s Kitchen brand from last year, and also rolled out a ready-to-work range of sauces, gravies and pastas, capitalizing on the growing trend of in-home cooking. The company has now entering the restaurant sector by acquiring a 10.76 per cent stake in Barbeque Nation Hospitality.

The company is growing at a fast pace. During the last five years, its revenues have zoomed from Rs 2,410 crore in fiscal 2016 to Rs 8,887 crore during fiscal 2020 with profit at the net level more than doubling from Rs 106 crore to Rs 275 crore during this period. Prospects for the current year as well are even better. During the Q2 ended September 2020, revenues have declined very modestly – from Rs 988 crore in the September 2019 quarter to Rs 806 crore in the September 2020 quarter. However, the net profit has fractionally improved from Rs 75.93 crore to Rs 76.91 crore during the respective September quarters. The pandemic situation has started easing with the arrival of vaccines and prospects for the company will get a boost from the next year.

(CMP Rs 2796.00, 52 week H/L Rs 2987/1141,, BV Rs 85.20, FV Re 10)

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Bharat Heavy Electricals(BSE Code 500103)

An investment banker is bullish about Bharat Heavy Electricals (BHEL), the country’s largest manufacturer of power generation equipment with an installed base of over 1,90,000 MW of power generation plant equipment globally. The company has a proved track record in providing customized solutions for industry-specific steam and power equipments to all major industries, including petrochemicals, refineries, fertilisers, cement, steel, chemicals, sugar and paper.

Last fortnight, the company secured a Rs 450-crore order for steam and power plants from National Aluminium Company (NALCO) for its 5th steam alumina refinery expansion project at Damanjodi, Orissa

The company is doing very well on the financial front. Though its sales turnover has, after rising from Rs 25,483 crore in fiscal 2016 to Rs 30,848 crore in fiscal 2019, come dowon to Rs 21,487 crore in fiscal 2020, the profit at net level has more than doubled during the last five years, from Rs 709.60 crore in fiscal 2016 to Rs 1,472.97 crore in fiscal 2020. Likewise, during Q2 FY21, though its sales declined to Rs 3,695 crore as compared to Rs 6,225.72 crore in the corresponding quarter last year, the net profit has zoomed from Rs 118.58 crore in Q2FY20 to Rs 556.12 crore in the same quarter this year

(CMP Rs 38.05, 52 week H/L Rs 48/19,, BV Rs 78.10, FV Rs 02)

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Sarda Energy(BSE Code 504614)

There is good news for shareholders of Sarda Energy & Minerals, a small cap company operating in the ferrous metals sector. The company has bagged two coal mines – Gare Palma 6 and 7 — in Chattisgarh and the Sahapur West coal mine in Madhya Pradesh. This development will provide security to the company, with remarkable cost savings of around 15 per cent. Graphite India (BSE Code 509488) An investment manager working with a bank favours investment in Graphite India, the pioneer in India for the manufacture of graphite electrodes as well as carbon and graphite speciality products. The company has six plants spread across the country, and is a subsidiary of Graphite Gowa Gmbh) in Nuremberg, Germany. It has been continuously improving its product quality and services, thereby scaling newer heights of excellence and customer recognition. The company’s major plus points are its reliance on cutting-edge technology, the managem

According to the management, this development provides long-term raw material security for the company and a major advantage when one is subject to fluctuations and volatility of the coal market. Again, the company will now be saving significantly in terms of costs. The company will be using the captive coal and there will be the benefit of cess. The company will now be able to ramp up production to 1.8 million tonnes and is expecting to kickstart the mines in 12 to 15 months. In short, the coal mines will give a boost to the bottomline of the company.

(CMP Rs 377.70, 52 week H/L Rs 400/97, BV Rs 545.10, FV Re 10)

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Graphite India(BSE Code 509488)

An investment manager working with a bank favours investment in Graphite India, the pioneer in India for the manufacture of graphite electrodes as well as carbon and graphite speciality products. The company has six plants spread across the country, and is a subsidiary of Graphite Gowa Gmbh) in Nuremberg, Germany. It has been continuously improving its product quality and services, thereby scaling newer heights of excellence and customer recognition. The company’s major plus points are its reliance on cutting-edge technology, the management's penchant for penchant for innovation and creativity, an eco-friendly approach to production processes, consistency of product quality and services, and productivity and cost optimization.

The market sentiment was adversely affected on account of a disappointing performance during Q2FY21. With a 45% drop in sales turnover to Rs 485 crore, the company suffered a loss of Rs 41 crore, in striking contrast to a net profit of Rs 185 crore in the corresponding quarter last year on November 17, 2020, and the stock price of GIL declined to Rs 180. However, realizing that this is a temporary setback on account of the pandemic, investors and market operators rushed back to buy the stock, pushing up its price to Rs 228. The research analyst believes that there is still room for an upsurge as the company is not only the largest and most reputed graphite company in India but is also one of the largest globally by total capacity.

(CMP Rs 309.25, 52 week H/L Rs 343/103, BV Rs 228.00, FV Re 02)

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Godavari Power and Ispat

A research analyst tracking the steel sector believes that there is a lot of potential in Godavari Power and Ispat, the flagship of the Raipur-based Hira group of industries. The integrated steel wire company is an end-to-end manufacturer of mild steel wires and in the process it manufactures sponge iron, billets, ferro alloys, captive power, wire rods, steel wires, oxygen gas, fly ash bricks and iron ore pellets. It also has the rights for iron ore mining for captive consumption. Thus, it has traversed the entire, value chain (raw material to final product) in steel wires and has now become a fully integrated steel manufacturer.

The company has made rapid strides on the financial performance front. During the last five years, its sales turnover has expanded from Rs 1,538.89 crore in fiscal 2016 to Rs 2,875.25 crore in fiscal 2019, before declining to Rs 2,744 crore in fiscal 2020 on account of recessionary trends in the steel industry. Likewise, the profit at net level has shot up from Rs 63.39 crore in 2016 to Rs 213.26 crore in 2019, before falling back to Rs 121.40 crore in fiscal 2020.

However, demand for steel products has started growing in the current year and during Q2FY21 sales have amounted to Rs 876 crore, compared to Rs 680 crore in the same quarter a year ago. Likewise, the net profit has zoomed from Rs 32.35 crore in Q2FY19 to Rs 94.17 crore in the same quarter this year. Future prospects are all the more exciting as the company has signed an MoU with the Chhatisgarh government for projects worth Rs 2,300 crore. The investment will be spread over 4 to 5 years after getting the regulatory approvals.

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