Aarnav Fashions (BSE Code 539562)

Knowledgeable circles have been accumulating Aarnav Fashions, an Ahmedabad-based small cap company engaged in miscellaneous business activities, including selling fabrics. The company is steadily growing on the financial performance front. During the last eight years, its sales turnover has advanced from only Rs 93 lakh in fiscal 2013 to over Rs 32 crore in fiscal 2021, with the profit at the net level shooting up from Rs 1 lakh to Rs 3.09 crore during this period. For fiscal 2021, it has entered the dividendpaying list with a rate of 5 per cent, indicating a payout of 24.29 per cent.

Future prospects for the company are rated highly promising as almost half a dozen group companies will be merged with it. They include Gopi Synthetics, Aarnav Synthetics Ltd, Symbolic, General Finance, Ankush Motor and General. Once the proposed merger plan is implemented after the necessary regulatory green signals, the company’s sales turnover will spurt from the current level of Rs 35 crore to around Rs. 1000 crore, as the small cap company will be graduated to the large cap conglomerate.

(CMP Rs. 121.60, 52 week H/L Rs. 203/47, BV Rs. 15.80, FV Rs. 10)

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Veljan Denison (BSE Code 505232)

A knowledgeable HNI (high networth investor) is bullish on Veljan Denison and she has started accumulating its shares. The Hyderabad-based company has five decades of rich experience in developing and manufacturing a wide range of pneumatic and hydraulic products, components and systems at its four manufacturing plants located around Hyderabad. The company, which has four branch offices in India – at Mumbai, Delhi, Kolkata and Bengaluru — and a sales centre and warehouse in the US, also has distributors spread across 25 countries.

Though the pandemic has had an adverse impact on the company’s financial performance, with sales turnover declining from Rs 97 crore in fiscal 2018 to Rs 84 crore in fiscal 2020 and further to Rs 75.38 crore in fiscal 2021, and the net profit nosediving from Rs 16.33 crore in fiscal 2019 to Rs 13.44 crore in fiscal 2020 and further to Rs 6.86 crore in fiscal 2021, things have started changing from the current fiscal.

The sales turnover durng the first half of the current fiscal has amounted to Rs 44.14 crore against Rs 73.57 crore in the whole of the previous year (fiscal 2021) and it has earned a net profit of Rs 6.71 crore against Rs 6.86 crore realised in the entire previous year. Total sales for the whole of the current fiscal are expected to be around 48 crore and the net profit to be Rs 15 crore, against Rs 73 crore and Rs 6.86 crore respectively in the previous year ended March 2021.

(CMP Rs. 1258.00, 52 week H/L Rs. 1434/671, BV Rs. 726.80, FV Rs. 10)

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Suzlon Energy (BSE Code 532667)

The subject being widely discussed in market and investor circles is: Will the beleaguered Suzlon Energy be able to come out from the quagmire of bankruptcy this time also, as it has done as many as three times in the past? Investors are extremely dismayed at the fluctuating fortunes of the company, even after Dilip Sanghvi’s (Sun Pharma) sizeable investment in the company. Though Suzlon receives orders from various clients, it is again facing a severe liquidity crunch which may halt its operations any day.

However, the management is working hard to keep the company afloat. No doubt, there is good scope for the wind power segment but the various concessions and encouragement being given to the solar segment is adversely affecting wind power companies like Suzlon.

In order to face these challenges, Suzlon has now entered the solar segment also and the management has started making drastic changes in its operational strategy to take the company out of the morass in which it has been stuck for quite a long time. Realising that the vast opportunities for the non-conventional energy sector and wind power cannot be neglected, some new entrants in the field of renewable energy like Mukesh Ambani and Adani may eye the company. Observers don’t rule out this possibility. In short, Suzlon is not going to die.

(CMP Rs. 11.71, 52 week H/L Rs. 13/4, BV Rs. -3.60, FV Rs. 02)

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Jubilant Foodworks (BSE Code 533155)

A research analyst working with a leading brokerage house is bullish on Jubilant Foodworks. According to him, the recent price correction – to the extent of 21 per cent – has made the stock quite attractive and has opened up a good entry opportunity in the scrip. This quality Quick Service Restaurant (QSR) brand enjoys a strong marketshare and the company is expanding its multiple cuisines.

Jubilant is doing very well and its performance in Q3 FY21 is going to be highly encouraging if the actual performance in October and November is any guide. The company has also effected a price rise in certain items in order to meet the rising cost of raw materials, leading to higher profits. Prospects for the company going ahead are all the more promising as it is focusing on a consistent QSR play.

Along with expanding in the domestic market, it is also focusing on consolidating its position in some key international markets to achieve sustainable growth in the long run. January 15, 2022 Corporate India The company will be consolidating its position by raising its stake in DP Eurasia to 50 per cent, while it has consolidated its position in Bangladesh by acquiring a 39 per cent stake in subsidiary Jubilant Golden Harvest to increase its holding to 90 per cent.

(CMP Rs. 3888.00, 52 week H/L Rs. 4578/2545, BV Rs. 129.70, FV Rs. 10)

Schaffler India (BSE Code 505790)

A fund manager of a leading FII (foreign institutional investor) strongly recommends Schaffler India as an investment with a long-term perspective. According to him, the SIL share is driven by a strong outlook for its automotive and industrial content per vehicle. The company has a strong R&D and technology bandwidth, which makes it well-placed to garner the benefit of the electrification and hybridisation trend in the domestic automobile sector. SIL has strong support from its parent company and has access to the latest technologies and relationships with global OEMs and Tier I suppliers. Also, the company will benefit from the industrial and automotive aftermarket segments, a strong growth traction in export markets and better prospects for the bearing business.

Recovery in the domestic business, an improving share of the exports business, an increase in content per vehicle and a solid margin expansion are expected to drive earnings by a robust 64 per cent CAGR over CY2020-CY2022. The company’s board has approved a stock split in a 5:1 ratio and targets a dividend payout ratio of 30-50 per cent of the annual standalone net profit, which will benefit the shareholders going ahead.

The company will benefit significantly from the electrification and hybridization trend as India is expected to witness faster growth in electric and hybrid vehicles going forward. The company expects electrification to be in a high single digit by 2030 and digitization to be 25 to 35 per cent. It has a strong product portfolio and is well-placed to benefit from the trend.

Schaffler India has a robust order book outlook led by strong customer engagement. In fact, it has won significant business orders in both automotive and industrial businesses and has consolidated its leadership position during Q3CY2021. If the actual performance during October and November 2021 is any indication, the company has also performed strongly in the last quarter of CY2021, with record sales and profitability growth.

(CMP Rs. 9477.20, 52 week H/L Rs. 9641/4260, BV Rs. 1054.40, FV Rs. 10)

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Laurus Labs (BSE Code 540222)

A medical practitioner-turned-stock market analyst is bullish on Laurus Labs, a pharmaceutical company whose synthesis business is on a strong-footing. The company is growing at a fast pace and during the first half of the current fiscal-2022 its sales turnover has spurted by 62 per cent to Rs. 350 crore, backed by new customer additions, new product launches and growth from existing customers.

Two recent developments are expected to give a further boost to the pace of growth of the company. The Drug Controller General of India (DCGI) has approved the restricted emergency use approval for the first oval anti-Covid pill styled as Molnupiravir. Viewed in the context of new variant of Corona-Omicron demand for the pill could increase substantially in India as well as in low and middle income countries for which Laurus has entered into a contract with Medicine Patent Pool (MPP): Moreover, the recent acquisition of a stake in immune adaptive cell therapy provides Laurus an access to advanced CAR-T therapies, indicated for multiople auto immune diseases and oncology indications. Observers feel that long-term stake acquisition will be a strong growth driver for Laurus as regulatory approval for Molnupiravir to offer sizeable growth opportunities.

(CMP Rs. 520.00, 52 week H/L Rs. 724/333, BV Rs. 55.80, FV Rs. 02)

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IFCI (BSE Code 500106)

IFCI (Industrial Finance Corporation of India) set up soon after independence in 1947, as a statutory corporation for providing medium and long term finance to industry is today, a government company (with New Delhi holding 61.02 per cent equity) and non-deposit taking NBFC and is also a notified public financial institution under section 2(72) of the companies Act. But of late it was in very bad shape and had plunged into the red. But efforts are on to take it out of the morass and serious efforts are being made to bring it back on the growth path. Its shareholders have approved to raise up to Rs. 1000 crore via bonds.

Technical experts are also bullish on IFCI. According to one of them, on monthly scale IFCI share has given a six months consolidation breakout and moved above prior high of a weekly time frame, the stock has been rising continuously with higher highs and higher lows formation. In addition, the stock has also given breakout of bullish flag pattern with huge volume and again retested the upper band of the pattern which indicated a bullish set-up in the counter. Suggesting investors to buy this possible multibagger stock for 2022, an analyst says “one can initiate a long position in IFCI around 16 or a fall in the price HNI a piece levels can be used as a buying opportunity for the upside target of Rs. 25 and 30.

(CMP Rs. 16.50, 52 week H/L Rs. 19/8, BV Rs. 13.30, FV Rs. 10)

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