Thursday, 25 January 2018

Drishtee Capital Recommendations - January

Sector: Oil and Gas

Company: IOCL

Call: Buy at CMP

CMP: 388

Target: 520 in 12 months

Stop loss: 340


1. IOCL EBIDTA rose 11% YOY with GRM of $7.98/BBL (Which is comparable to its peers except for RIL).
2. ROCE more than peers, profit margin increased by 3 percentage points YOY.
3. IOCL is expected to have heavy cash flow in 2 years from Paradip refinery as well as investment in Israel.
4. The stock is expected to trade at 9.5X FY19 EPS of Rs 43.6; besides that ban on plastic waste import will lead to the heavy demand of petchem from China.

Sector: Information Technology

Company: Tata Consultancy Services

Call: Buy at CMP

CMP: 2773

Target: 2900 in 6 months

Stop Loss: 2650


The IT sector has been stagnant for quite a while now. But things seems to turning around. Given the fact that all the IT majors are retraining their workforce in the field of data analytics. TCS has even bagged a $2 Billion deal with Transamerica for third party administration. TCS is one of the biggest companies in India with a market cap of 531,473.24 Cr and has performed steadily over the years. The net profit for the last financial year was 23,653.00 Cr. P/E = 20.54 and the industry P/E is 21.06

Sector: Autombile

Company: Tata Motors

Call: Buy at CMP

CMP: 436

Target Price: 593

Stop Loss: 390


Tata Motors has recently launched AMT version of Tiago in Bangladesh and also launched 'Tata Motors Genuine Oil' for its CV range. Tata Motors has delivered the first batch of 250 Evs to EESL in December which is part of a total deal of 9500 EVs. Tata Motors' JLR achieved record global sales in 2017 with retails of 621,109 vehicles, up 6.5% YoY. Tata Motors group had total global wholesale sales of 116,677 units, up 23% YoY and total Domestic sales of 54,627 units, up 52% YoY. EBITDA stood at Rs 8938 Cr. Expected growth of 65.5% and 85.2% in Net profit for the years 2018 and 2019 respectively. 

Sector: Power

Company: NTPC

Call: Buy at CMP

CMP: 172

Target Price: 211

Stop Loss: 163


The revised regulatory norms will reduce risks to its earnings from lower plant load factors. As capitalization outpaces capex, return on equity will get a boost and the stock will be rerated. CAGR is expected to grow at 14% over FY 17-20. Swapping/flexible coal linkages has reduced the landed cost of coal. P/E = 14.02, Industry P/E = 16.17, Dividend Yield = 2.77%

Sector: Banking

Company: DHFL

Current Mkt Price - 614

Call: Buy at CMP

STOP loss/ TGT PRICE - 595 /720

52 Week high / low ----------   Rs 651/214

ROE – 14.9  


INFLATION – 4-5 % and MF return on Avg -8-9

P/E – 6.39 

Industry P/E – 28.06

P/B – 2.48

EPS – 96.16

Beta – 2.01


1. Healthy capital as it has an AUM of Rs 941 Bn as on 2QFY18 and still growing.

2. Cost of borrowing has been decreasing for the company.

3. NBFC catering retail clients so problem of NPA is not that worrisome unlike major banks

4. Home loans are picking up which will boost company topline and bottom line (PAT)

5. Disbursements grew by 42 %. Its strong presence in tier 2 and tier 3 cities targeting both the salaried and self-employed sections. Its major loan is coming from western part of the country. It is still taping other parts of the company so there is an upside .

6. Its branches have expanded to 345 from 226 in FY 12.

7. Govt. Boost to affordable housing is giving a boost to the sector. As major fund houses have it in their kitty.


Company : Aurobindo Pharma Ltd

CMP: 640

Target: 770

Stop Loss: 610

Investment Period: 12 months

Investment Rationale:

1.Top 3  In India among pharmaceutical companies and Top 6 In the US  generic company by volume. (2017 data)
2. As compared to its peers which saw a decline in US business, Aurobindo pharma's US business revenues posted strong result with a robust growth of 21% (owing to the launch of generic Renvela).
3. EU & RoW increased significantly by 37% YoY.
4. It has no pending regulatory issue.
5. Adjusted EBITDA increased 30.6% q-o-q and 20.3% y-o-y to Rs 11,276 mn during 2Q FY18.
6. Adjusted diluted EPS was Rs 13.4 in 2Q FY18 compared to Rs 10.1in 2Q FY 17 and Rs 9.0 in 1Q FY18.
7.Strong US pipeline and  diversified product mix


Larsen & Toubro Ltd.



Target Price


Stop Loss


1. L&T has diversified segments in which each sector played a prominent role in 26% increase in its net profit for the Q2 2017 quarter.
2. For the financial year 2016-17, L&T reported an order inflow of Rs 1,430 billion, witnessing a growth rate of 5 per cent on a year-on-year basis. In the first three quarters of 2017-18, L&T has announced orders worth Rs 659.21 billion, compared to Rs 524.33-billion orders reported in the same period last year.
4. P/E=50.77 and industry P/E=24.02. Industry P/E < L&T P/E (L&T can be good performer in future).
5. EBITDA and revenue may grow by 20% and 12% CAGR over the next two fiscals due to strong margin recovery through power, heavy engg, electrical and automation.
6. Key risks include (a) a sharp slowdown in government spending and (b) a sharp fall in oil prices in the Middle East.

Wednesday, 15 November 2017

Drishtee Diaries - November 2017 Edition

We are glad to present Drishtee Diaries, November 2017 Edition.

Use the mentioned link to read various articles about the financial market written by Drishtee Members.

Drishtee Diaries - November 2017 Issue

Monday, 24 July 2017

Drishtee Diaries - March 2017 Edition

We are glad to present Drishtee Diaries, March 2017 Edition.

Use the mentioned link to read various articles about the financial market written by Drishtee Members.

Drishtee Diaries Link 

Tuesday, 27 November 2012

Drishtee Capital - Dare to Dream, Dare to Achieve

Dreams at first seem impossible, then seem improbable,
 and finally, when we commit ourselves, become inevitable
                                                                                                                         -Mahatma Gandhi
These words are at the core of the culture at Drishtee Capital. Drishtee Capital is a student run fund focusing on investment opportunities available across various sectors in the market. Currently we are looking forward towards investing in equities only. It is one of the unique clubs of VGSoM and amongst the very few among the B-Schools of India.
Drishtee is an effort by a group of finance enthusiasts who want to bring the domain of finance at the forefront in the school of management, IIT Kharagpur and continue the hard work done by our alumni to establish this institute as the center of excellence in Finance. It provides students valuable insights into the challenges faced in the investment industry.
The concept of Drishtee Capital is purely a student initiative in which the institution is not directly involved. The faculty is however, extremely appreciative of the fact that theory sessions coupled with real time experience of managing money would mould students into excellent fund managers.
Approach and Methodology
We believe that, to generate long term value, it is essential to invest in companies with excellent strategic and products position, capable of creating growth and strong free cash flow conversion. Starting from free cash flow valuation and other concepts (for example the earnings momentum) as our basis, we have built screening models which allow us to make an initial selection of the available investments. Our initial selection is then checked against the results of macroeconomic and sector analysis, as we believe that "a good company in a healthy sector is better than a great company in a troubled sector".
We then proceed with the fundamental analysis of Business model, Market position, Company financial statements, financial outlook and valuation. Only the companies that pass this selection process are in our core portfolio which is managed on the basis of Modern portfolio theory.
To actively manage market exposure (market timing analysis) and for “yield enhancement” of the investments in the portfolio, the fund managers use a trading model which is based on Technical analysis indicators, Bid/offer indicators (based on volumes).

The way forward

We at Drishtee Capital want to grow and make its prominence felt in the industry and student community with your support. Our fund went live on October 31, 2013. We have consistently beaten the benchmark index of CNX-100.
This blog would help in reaching out to the wider mass of students and professionals. We want to make it the one-stop destination for finance enthusiasts all over the country, with a wide variety of articles related to equity research, sector analysis and insights to various current issues across the globe. We will also keep you updated about the our latest activities in Drishtee Capital.

We are looking forward to your support in turning our novel endeavor into a grand success. Your comments, feedback and constructive criticism is what we are looking forward to.