Peerless Masterpicks - Jan 2016

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Peerless Securities Limited Peerless Mansion,

1, Chowringhee Square, 2nd Floor, Kolkata – 700 069

Tel. No. : 91-33-2243 5942 Fax No. : 91-33-22436941

Email : [email protected] Website : www.peerlessec.co.in

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Peerless Securities Ltd. Peerless Mansion, 1, Chowringhee Square, 2nd Floor, Kolkata- 69

For Private Circulation Only

PORTFOLIO PICKS

INDEX OF STOCK PICKS- FOR JANUARY 2016

STOCK CMP

ENTRY LEVEL

RANGE AVG SL TRGTS EXPECTED RETURNS STOPLOSS

ABIRLANUVO 2167.15 2167.00 2144 2155.5 2040 2350 8.44% -5.86%

DRREDDY 3108.60 3110.00 3100 3105.0 2950 3390 9.00% -5.14%

TECHMAH 521.65 522.00 520 521.0 494 580 11.11% -5.36%

TATAMOTORS 391.30 392.00 390 391.0 368 430 9.69% -6.12%

ONGC 241.75 242.25 238 240.1 228 263 8.57% -5.88%

KOTAKBANK 720.05 721.80 715 718.4 679 780 8.06% -5.93%

SRTRANSFIN 858.70 859.50 855 857.3 810 940 9.37% -5.76%



Monthly Performance during APRIL- DECEMBER 2015

Monthly Return % of PMP vs. CNX 100

Month wise Return % along with Cumulative Return for FY15-16

MONTH Apr-15

May-

15 Jun-15 Jul-15

Aug-

15 Sep-15

Oct-

15

Nov-

15

Dec-

15

Cumulative

Return%

CNX100 -2.2 2.55 -0.15 0.65 -5.44 -2.7 2.57 -2.6 0.59 -6.73

PMP 2.09 2.4 -2.23 3.14 1.79 -1.01 0.63 -2.33 0.19 4.67

PEERLESS MASTER PICKS- DECEMBER 2015 PERFORMANCE

CNX100 8042.85 8090 0.59%

STOCK ENTRY LEVEL SL TRGTS STATUS PRICE P/L %

TATACOMM 442.90 420 480 STOP HIT 420.00 -5.17

WOCKPHARMA 1599.20 1510 1751 PROFIT BOOKED 1725.00 7.87

HINDUNILVR 812.45 766 884 PROFIT BOOKED 866.00 6.59

LT 1332.65 1266 1458 CLOSING PRICE 1277.00 -4.18

IOC 421.05 400 460 CLOSING PRICE 428.30 1.72

INDUSINDBK 915.55 866 993 PROFIT BOOKED 970.00 5.95

ABIRLANUVO 2081.85 1970 2255 STOP HIT 1970.00 -5.37

ONGC 234.85 221 258 STOP HIT 221.00 -5.90

PMP RETURN 0.19%



Market and Economy Update

Govt says difficult to predict timeline for passage of GST bill

The government said it was difficult to predict a timeline for the passage of a bill that seeks to harmonise state

taxes after lawmakers failed to vote on the measure in the parliament session that ended on 23rd December.

Junior finance minister Jayant Sinha said the rollout of the new tax was contingent on the passage of the bill. "We

will have to see how the legislative calendar develops," he said. "It's very hard to predict how soon that will

happen. "The proposed goods and services tax (GST) is aimed at launching the biggest revenue shake-up in

decades as it seeks to replace a slew of federal and state levies, converting the nation of 1.2 billion people into a

customs union. But for want to political support, the bill has been languishing in parliament since last December.

Global growth will be disappointing in 2016, IMF's Lagarde says

Global economic growth will be "disappointing" next year, the head of the International Monetary Fund said in a

guest article for German newspaper Handelsblatt. IMF Managing Director Christine Lagarde said the prospect of

rising interest rates in the United States and an economic slowdown in China were contributing to uncertainty and

a higher risk of economic vulnerability worldwide. In addition, growth in global trade has slowed considerably and

a decline in raw material prices is posing problems for economies based on these, while the financial sector in

many countries still has weaknesses and financial risks are rising in emerging markets, Lagarde added. "All of

that means global growth will be disappointing and uneven in 2016," Lagarde said, adding that low productivity,

ageing populations and the effects of the global financial crisis were putting the brakes on growth.

She said the start of normalisation of U.S. monetary policy and China's shift towards consumption-led growth

were "necessary and healthy" changes but needed to be carried out as efficiently and smoothly as possible. The

U.S. Federal Reserve hiked interest rates for the first time in nearly a decade earlier this month and made clear

that was a tentative beginning to a "gradual" tightening cycle. There are "potential spillover effects", with the

prospect of increasing interest rates there already having contributed to higher financing costs for some

borrowers, including in emerging and developing markets, Lagarde said. She added that while countries other

than highly developed economies were generally better prepared for higher interest rates than they had been in

the past, she was concerned about their ability to absorb shocks.

"Most highly developed economies except the USA and possibly Britain will continue to need loose monetary

policy but all countries in this category should comprehensively factor spillover effects into their decision-making,"

Lagarde said. She warned that rising U.S. interest rates and a stronger dollar could lead to firms defaulting on

their payments and that this could then "infect" banks and states.



India cuts growth outlook, calls for review of fiscal, monetary targets

India slashed its full-year growth forecast, citing weak global demand and lower farm output, and called for

speedier reforms as well as a review of fiscal and monetary policies to resuscitate economic activity.In a mid-year

review, Prime Minister Narendra Modi's government said the economy would likely expand by 7-7.5 percent in the

fiscal year ending in March 2016, sharply lower than an 8.1-8.5 percent growth estimated in February. Still, the

India will remain the fastest growing major economy as China's gross domestic product (GDP) is struggling to

maintain the near-7 percent pace promised by its leaders.

Profit growth at India's top companies was the slowest in two-and-a-half years in the quarter ending in September,

hampering efforts to cut debt in one of Asia's most leveraged corporate sectors. Slowing profit growth is weighing

on corporate spending as companies are utilising the majority of their operating profit to service interest costs.

The government offered no hope for a quick turnaround in corporate balance sheets, which it expects to recover

slowly and remain a drag on fresh capital investment. It, hence, argued for further stepping up public spending on

roads, bridges and rail as well as a recalibration of fiscal and monetary targets to help spur demand. Finance

Minister Arun Jaitley has pledged to trim the fiscal deficit to an eight-year low of 3.9 percent of the GDP in 2015-

2016 and 3.5 percent next fiscal year.

Fed raises interest rates, citing ongoing U.S. recovery

The Federal Reserve hiked interest rates for the first time in nearly a decade on Wednesday, signaling faith that

the U.S. economy had largely overcome the wounds of the 2007-2009 financial crisis. The U.S. central bank's

policy-setting committee raised the range of its benchmark interest rate by a quarter of a percentage point to

between 0.25 percent and 0.50 percent, ending a lengthy debate about whether the economy was strong enough

to withstand higher borrowing costs.

USD-INR ( FUTURE ) MONTHLY CHART



"With the economy performing well and expected to continue to do so, the committee judges that a modest

increase in the federal funds rate is appropriate," Fed Chair Janet Yellen said in a press conference after the rate

decision was announced. The Fed's policy statement noted the "considerable improvement" in the U.S. labor

market, where the unemployment rate has fallen to 5 percent, and said policymakers are "reasonably confident"

inflation will rise over the medium term to the Fed's 2 percent objective. The central bank made clear the rate hike

was a tentative beginning to a "gradual" tightening cycle, and that in deciding its next move it would put a

premium on monitoring inflation, which remains mired below target.



STOCK PICKS ADITYA BIRLA NUVO LTD – BUY

Target Data Last Closing Price (Rs) : 2167.15

Target (Rs) : 2350

Buy zone (Rs) : 2167-2144 Stop loss (Rs) : 2040

Beta : 1.00

Technical Outlook

• The stock has formed a strong base around 1900 level and has taken breakout of symmetrical triangle pattern on weekly charts indicating a strong upside momentum.

• The short term target of the stock is around 2350.

Fundamental Outlook:

• For 2015-16, ABNL will invest ` 250 Crore towards the capital expenditure plan of its divisions. ABNL also plans to fund the growth capital requirements of the Financial Services businesses to the tune of ` 600 Crore and the equity requirements of the Solar Power business to bid for upcoming projects.

• Aditya Birla Nuvo Limited (ABNL) has reported a 10% year-on-year growth in its revenue for the second quarter ended 30th September 2015. The Company’s EBITDA rose by 13% to ` 1,712 Crore. Net profit declined by 8% to ` 414 Crore mainly due to lower profitability in the Life Insurance business.

• Aditya Birla Nuvo Limited (ABNL) (BSE: 500303, NSE: ABIRLANUVO, Bloomberg: ABNL IN) has reported a 10% year-on-year growth in its revenue for the second quarter ended 30th September 2015. The Company’s EBITDA rose by 13% to ` 1,712 Crore. Net profit declined by 8% to ` 414 Crore mainly due to lower profitability in the Life Insurance business.

• Spurred by volume growth in the Linen Fabric and Wool Segment, EBITDA of Jaya Shree Textiles rose by 13% to 49 Crore. EBITDA of Indian Rayon soared by 15% to ` 65 Crore driven by growth in VFY volumes and a higher share of superfine yarn. While Indo-Gulf fertilizers reported a 7% decline in its EBITDA at ` 66 Crore, Aditya Birla Insulators posted 11% rise in its EBITDA at ` 31 Crore

• At CMP of INR 2135, the stock trades at 55.85x of its FY16 EPS of INR 38.23



DR REDDY’S LABORATORIES LTD – BUY


Target (Rs) : 3390

Buy zone (Rs) : 3110-3100

Stop loss (Rs) : 2950 Beta : 0.41

Technical Outlook:

• The stock has retraced 100 percent of its upmove from 2900 to 4400 and found near term bottom around 2900 .

• Momentum indicator RSI is showing that the stock is oversold in near term and a bounce back is likely which will take the stock towards 3390 in the near term.


• Dr. Reddy's has relaunched AstraZeneca’s heartburn drug Nexium which currently is a 4 generic player product (Teva, Mylan, Torrent and Hetero Drugs) with market size at USD 1.5bn The initial launch in Oct-2015 was abruptly halted due to AstraZeneca's litigation for usage of same the same coloured pill resulting in withdrawal of the product from the market by Dr. Reddy's.

• As the initial launch was for a short duration of time, Dr. Reddy's didn't gain a meaningful market share.

• Assuming a price erosion of 20% from the current prevailing generic levels and a market share of 10%, the product could add revenues in tune of USD 15mn for the 3 months of Q4FY16. (As per our initial estimates of USD 45mn in FY16 in incremental revenues to Dr. Reddy's before the litigation).

• The stock is currently trading at CMP of INR 3128.40, the stock trades at 30.22x of its FY16 EPS of INR 103.53.



TECH MAHINDRA LTD– BUY


Target (Rs) : 580

Buy zone (Rs) : 522-520

Stop loss (Rs) : 494

Beta : 0.67

Technical Outlook:

• Tech Mahindra has been trading in a very tight range between 510-550 for past few months and has formed a base around 500 level. The stock has also formed a pennant pattern.

• The stock will try to move upwards towards 580 which will act as a supply zone for the stock.


• Tech Mahindra represents the connected world, offering innovative and customer-centric information technology services and solutions, enabling Enterprises, Associates and the Society to Rise™. We are a USD 3.9 billion company with 105,200+ professionals across 90 countries, helping over 788 global customers including Fortune 500 companies. Our innovation platforms and reusable assets connect across a number of technologies to deliver tangible business value to our stakeholders. Tech Mahindra is also amongst the Fab 50 companies in Asia as per the Forbes 2014 List.

• Won a major deal from a Nordic Services major, involving a full legacy Data Center Transformation on to a hybrid cloud-based data center solution environment. Besides providing operational efficiency, Tech Mahindra would grow this cloud environment jointly with the customer.

• Financial highlights for the quarter (`) Revenue at ` 6,616 crore; up 20.5% YoY and 5.1% QoQ, EBITDA at ` 1,101 crore; down 0.7% YoY and up 16.6% QoQ, Consolidated PAT at ` 786 crore, up 9.2% YoY and 16.2% QoQ, Earnings per Share (EPS) was ` 7.98 for the quarter ended September 30, 2015. Financial highlights for the quarter (USD) Revenue at USD 1,011 mn; up 2.2% QoQ, In Constant Currency terms revenue up 3.0% QoQ EBITDA at USD 168 mn; up 13.0% QoQ. Consolidated PAT at USD 119 mn, up 12.3% QoQ.

• Chosen by a leading ASEAN telecom operator as its Infrastructure Managed Services partner. Tech Mahindra will help in addressing customers revenue growth, optimize cost, streamline vendor ecosystem and improve ARPU.

• At CMP of INR 523.25 the stock trades at 17.36x of its FY16 EPS of INR 30.14



TATAMOTORS LTD - BUY


Target (Rs) : 430

Buy zone (Rs) : 392-390 Stop loss (Rs) : 368

Beta : 1.76

Technical Outlook:

• The stock has taken support around 360 which is 50% retracement of its current upmove from 280 to 430 levels. Above 390, the stock will try to touch recent near term high of 430.

• The short term target of the stock is around 430.


• The Tata Motors Group global wholesales in November 2015, including Jaguar Land Rover, were at 90,695 nos., higher by 8%, over November 2014. Cumulative wholesales for this fiscal were at 662,545 nos., higher by 12% over the last fiscal.

• Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range in November 2015 were 29,066 nos., lower by 4%, compared to November 2014. Cumulative commercial vehicles wholesales for this fiscal were flat over the last fiscal at 241,010 nos.

• The company reported consolidated revenues (net of excise) of Rs.61, 318 crores as against Rs.60, 641 crores for the corresponding quarter last year. Strong sales in the UK , Europe and North America which helped in offsetting weaker sales in China and other emerging markets in the Jaguar Land Rover business; and Continued robust growth in MHICV segment (35.3 % Y-o-Y) in the standalone business.

• However, the Consolidated Profit before tax (before exceptional items) for the quarter was Rs.1,538 crores, against Rs.5,644 crores for the corresponding quarter last year broadly due to:- Weaker China sales and mix, foreign exchange revaluation and higher depreciation and amortization expenses in the Jaguar Land Rover business.

• At CMP of INR 391.75the stock trades at a 11.61x of its FY16 EPS of INR 33.75



OIL & NATURAL GAS CORPORATION LTD- BUY


Target (Rs) : 263

Buy zone (Rs) : 242.25-238

Stop loss (Rs) : 228 Beta : 1.05

Technical Outlook:

• ONGC has formed a hammer pattern on monthly charts and the stock has been able to hold 240 levels for the past few months suggesting a strong upmove is likely in the near term.

• The target on the upside will be 263 in short term .


• ONGC has improved its Platts 250 global ranking among world’s top energy companies by 4 notches in 2015. As per the Platts ranking released recently, ONGC is placed 17th among the global energy majors based on net worth, revenues, profits and return on invested capital. ONGC maintains its 3rd position in the E&P industry globally.

• The project envisages cumulative production of 1.048 Million Ton of oil by 2027-28 and 2.702 BCM of gas by 2032-33 at a total investment of US$ 100.13 Million (ONGC Share of US$ 60.08 Million i.e. Rs.390.52 Crore). The project scope includes drilling of 15 wells in addition to existing 3 wells, installation of associated facilities and pipelines, etc.

• The Company has posted a net profit of Rs. 48420.20 million for the quarter ended September 30, 2015 as compared to Rs. 54448.90 million for the quarter ended September 30, 2014. Total Income has increased from Rs. 218086.40 million for the quarter ended September 30, 2014 to Rs. 218172.60 million for the quarter ended September 30, 2015

• At CMP of INR 237.45the stock trades at 11.41x of its FY16 EPS of INR 20.81



KOTAK MAHINDRA BANK LTD -BUY


Target (Rs) : 780

Buy zone (Rs) : 721.80-715 Stop loss (Rs) : 679

Beta : 1.17

Technical Outlook:

• Kotak bank has traded in the range of 640-740 for the past one year with strong resistance around 740. The stock has is trading above 700 and is sustaining above this zone which indicates further upside momentum is still left in this stock

• The stock will try to break its previous high 743 and move towards 780 which will be its near term target.


• Kotak, with 641 branches and relatively deeper presence in the West and North, has a differentiated proposition for various customer segments including HNIs, deep corporate relationships including emerging corporate, a wide product portfolio, including agricultural finance and consumer loans, and a robust capital position.

• The combined Kotak will have 1,214 branches, with a wide-spread pan-India network, getting both breadth and depth given the strong geographic complementarily between Kotak and ING Vysya. Substantial efficiencies will arise out of the proposed merger, which is likely to result in significant benefits for all stakeholders, be it shareholders, employees or customers, and ultimately the banking industry.

• The Company has posted a net profit of Rs. 5695.00 million for the quarter ended September 30, 2015 whereas the same was at Rs. 4445.20 million for the quarter ended September 30, 2014. Total Income is Rs. 46213.80 million for the quarter ended September 30, 2015 whereas the same was at Rs. 28189.30 million for the quarter ended September 30, 2014.

• The company is trading at CMP of INR 710.90, the stock trades at 74.36x of its FY16 EPS of INR 9.56.



SHRIRAM TRANSPORT FINANCE CO LTD – BUY

Target Data Last Closing Price(Rs): 858.70

Target (Rs) : 940

Buy zone (Rs) : 859.50-855

Stop loss (Rs) : 810

Beta : 1.39

Technical Outlook:

• The stock has taken strong support around 800 and bounced back from the support zone.

• The target of upside will be around 940 which will act as the near term resistance.


• Shriram Transport Finance Company Limited is the flagship company of the Shriram group which has significant presence in Consumer Finance, Life Insurance, General Insurance, Stock Broking and Distribution businesses. Established in 1979, Shriram Transport is today the largest asset financing NBFC in the country and holistic finance provider for the commercial vehicle industry and seeks to partner small truck owners for every possible need related to their assets. It has PAN India presence with 800 branch offices. Based at Mumbai, it manages assets over Rs 63,200 crores and has a live customer base exceeding 12 lacs.

• The Net Interest Income for the second quarter ended 30th September, 2015 stands at Rs. 1,193.79 crores as against Rs. 1,007.23 crores in the same period of the previous year. The profit after tax stands at Rs. 338.10 crores as against Rs. 302.21 crores recorded in the same period of the previous year. The earnings per share (basic) stands at Rs.14.90 as against Rs. 13.32 recorded in the same period of the previous year.

• The Net Interest Income for the second quarter ended 30th September, 2015 stands at Rs. 1,193.79 crores as against Rs. 1,007.23 crores in the same period of the previous year. The profit after tax stands at Rs. 338.10 crores as against Rs. 302.21 crores recorded in the same period of the previous year. The earnings per share (basic) stands at Rs.14.90 as against Rs. 13.32 recorded in the same period of the previous year.

• The company is trading at CMP of INR 851.15, the stock trades at 14.99x of its FY15 EPS of INR



DISCLAIMER

Disclosure: We, (Amartya Ray, MBA, Kaushik Hore, B.com(H), Alka Katiyar, PGDM, author and the name subscribed

to this report, hereby certify that all of the views expressed in this research report reflect our personal views about the subject issuer(s) or securities and no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. As per records or Information, Research Analyst or his/her relative or Research

entity does not have any financial interest in the subject company other than disclosed. Disclosure of Interest Statement Analyst ownership of the stock - No

Served as an officer, director or employee - No

Disclaimer: This report has been prepared by Peerless Securities Ltd (Herein after referred as PSL) and is meant for sole

use by the recipient and not for circulation. PSL and its other group Companies including associates ,affiliates are a full-service, integrated investment banking, investment management, brokerage and other financing and non financing activities (brief details available on www.peerlesssec.co.in ) The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. This research report does not constitute an offer, invitation or inducement to invest in securities or other investments and PSL is not soliciting any action based upon it. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. PSL , its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. Past performance is not a guide for future performance, Investors are advised to see Risk Disclosure Document of each products. PSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report . PSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months and might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. In addition. PSL and its other group Companies including associates have different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest. Our research professionals are paid on the profitability of PSL which may include earnings from brokerage services and other business but their evaluation & performance analysis is not based on merchant banking or brokerage service transactions .Research analyst or entity has not been engaged in market making activity for the subject company. The Research analyst or PSL or its associates or relatives have actual /beneficial ownership of 1% or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities

Rating Definitions BUY : Where the stock is expected to deliver more than 12% returns over the next 12 month period

NEUTRAL : Where the stock is expected to deliver 12% to 5% returns over the next 12 month period SELL : Where the stock is expected to deliver greater than -5% returns over the next 12 month period

Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject PSL & its group companies to registration or licensing requirements within such jurisdictions SEBI REGN. NO. NSE: INB/INF 230821137, BSE: INB 010821131, NSDL: IN-DP-NSDL-96-99, CDSL: IN-DP-CDSL-505-2009, ARN – 2103 SEBI Registration Number as Research Analyst: INH300002365





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SEBI REGN. NO. NSE: INB/INF 230821137, BSE: INB 010821131, NSDL: IN-DP-NSDL-96-99, CDSL: IN-DP-CDSL-505-2009, ARN - 2103

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