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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 MAY 2016 STOCK CMP ENTRY LEVEL RANGE AVG SL TRGTS EXPECTED RETURNS STOPLOSS

M&M 1343.35 1345 1330 1337.5 1266 1480 10.04% -5.87%

PERSISTENT 737.1 739 730 734.5 700 805 8.93% -5.28%

NBCC 996.75 997 980 988.5 940 1100 10.33% -5.72%

DABUR 269.65 270 262 266 255 295 9.26% -5.56%

ASIANPAINTS 879.5 880 865 872.5 830 965 9.66% -5.68%

M&MFIN 299.9 300 290 295 280 334 11.33% -6.67%

HDFCBANK 1114.6 1115 1095 1105 1050 1225 9.87% -5.83%



Monthly Performance during APRIL 2016

Monthly Return % of PMP vs. CNX 100

Month wise Return % along with Cumulative Return for FY16-17

MONTH Apr-15

CNX100 1.84

PMP 1.60

PEERLESS MASTER PICKS- APRIL 2016 PERFORMANCE

CNX100 OPEN PRICE 7812.35 CLOSE PRICE 7956 1.84%

STOCK ENTRY LEVEL SL TRGTS STATUS PRICE P/L %

MINDTREE 653.00 615 711 TARGET ACHVD 711.00 8.88

TATASTEEL 319.80 300 349 TARGET ACHVD 349.00 9.13

INFY 1220.00 1155 1334 CLOSING PRICE 1209.15 -0.89

TATAMOTORS 387.00 366 423 PROFIT BOOKED 412.50 6.59

RELIANCE 1046.00 985 1140 CLOSING PRICE 996.70 -4.71

SUNPHARMA 820.00 775 890 CLOSING PRICE 801.95 -2.20

BHARATFORG 874.00 825 950 STOP HIT 825.00 -5.61

PMP RETURN 1.60%



Market and Economy Update

RBI cuts rates to lowest since 2011, banks given liquidity comfort

The Reserve Bank of India (RBI) cut its policy interest rate by 25 basis points to 6.50 percent on

Tuesday, reducing it to a more than five-year low while dangling the prospect of another cut later this

year if inflation trends stay benign.To make policy rate cuts more effective, the RBI also took steps to

ensure increased liquidity in the financial system, as banks had cited tight cash conditions as a reason for

not cutting their lending rates by more earlier.

The combined moves signalled a new approach by Governor Raghuram Rajan, who was disappointed

that the RBI's aggressive easing last year failed to have the impact he had hoped for due to commercial

banks reluctance to lower rates for borrowers. Controlling inflation is the central bank's priority, but

Prime Minister Narendra Modi's government would welcome any move to improve business conditions

for industrialists who, despite data depicting India as one of the world's fastest growing economies,

remain hesitant to invest.

India's wholesale prices fall for 17th straight month in March

India's wholesale prices fell for a 17th straight month in March, declining by an annual 0.85 percent,

driven down by tumbling prices of oil and manufactured goods, as shown by the government data.The

pace of fall was faster than a 0.77 percent annual decline forecast by economists in a Reuters poll. In

February, the index fell a provisional 0.91 percent. Wholesale fuel prices dropped 8.30 percent from a

year ago in March, while prices of manufactured goods declined 0.13 percent year on year. Food prices

last month gained 3.73 percent year-on-year, compared with a provisional 3.35 percent gain in February.

Trafficking risk rises as villagers flee India's worst drought in decades

The worst drought in decades across several states in India is forcing tens of thousands of people to

migrate from rural areas in search of water, food and jobs, increasing the risk that they may be trafficked

or exploited, activists said. About 330 million people, almost a quarter of the country's population, are

now affected by drought, the government estimates. Destitute women, children and older family

members left behind in the villages are most at risk of exploitation. Maharashtra is one of the worst

affected states, with successive years of poor rainfall ravaging crops, killing livestock, drying up

reservoirs and forcing farmers into indebtedness that has led to thousands of suicides.



Fed signals no rush to hike rates as economy hits soft patch

The Federal Reserve left interest rates unchanged on Wednesday, but kept the door open to a hike in

June while showing little sign it was in a hurry to tighten monetary policy amid an apparent slowdown

in the U.S. economy.

In a statement that largely mirrored the one issued after its last policy meeting in March, the U.S. central

bank's rate-setting committee described an improving labour market but acknowledged that economic

growth seemed to have slowed. It also said it was closely watching inflation and noted that global

economic headwinds remained on its radar, though it made no mention of the risks they posed, as it had

last month.

Oil jumps to 2016 highs as dollar drops on Fed decision

Oil prices jumped about 3 percent on Wednesday, hitting new highs for 2016 as the dollar weakened

after the Federal Reserve announced it would leave U.S. interest rates unchanged. Declines in the dollar

make oil and other commodities denominated in the greenback more affordable to holders of other

currencies.

Brent has gained more than $20 a barrel, or nearly 75 percent, since hitting 12-year lows in late January.

For April, it is up 19 percent, heading for its largest monthly gain in a year.With crude inventories

building and the Saudis still pumping at record levels, we feel the recent run-up has been mainly fueled

by the weakness on the dollar.The prospect of a production freeze among the world's largest oil

exporters evaporated almost two weeks ago after a meeting between OPEC and Russia ended in

stalemate.



U.S. keeps China, India on intellectual property shame list

The Obama administration has kept China, Russia and India on its annual list of countries with the worst

records of preventing the theft of intellectual property and cited Switzerland for failing to curb online

copyright infringements. The annual list, released by the U.S. Trade Representative's Office, carries no

threat of sanctions, but aims to shame governments into cracking down on piracy and counterfeiting and

updating their copyright laws.

"Intellectual property is a critical source of economic growth and high-quality jobs for the United States,

and it is more important than ever to prevent foreign governments and competitors from ripping off

United States innovators who are trying to support high-paying jobs by exporting their goods and

services to consumers around the world,” U.S. Trade Representative Michael Froman said in a

statement. The trade agency said that the value added of U.S.-held intellectual property was

approximately $5 trillion in 2010, contributing 34 percent to U.S. gross domestic product that year and

supporting 40 million jobs in IP-intensive industries.



STOCK PICKS M&M – BUY

Target Data Last Closing Price (Rs) : 1343.35

Target (Rs) : 1480

Buy zone (Rs) : 1345-1330 Stop loss (Rs) : 1266

Beta : 0.78

Technical Outlook:

• The stock has formed flag pattern on weekly charts suggesting a strong upmove in coming weeks.

• One can buy this stock for the immediate target around 1470.

Fundamental Outlook:

• The company has seen a growth after two years in this segment, aided by 9 new launches (as planned) in FY16 and one new launch in FY17 (NuvoSport). The second half of FY16 saw much higher growth than H1 FY16 due to these launches and also increased market share. Based on the new launches, the momentum is expected to continue in FY17. While the company is working on some new products including a vehicle in compact UV segment, FY17 would be a year of consolidation and may see only tactical launches.

• MHCV segment has done well. The industry has grown more than 30%, whereas the company has grown more than 60% on a smaller base. This has helped the MS to above 3%. The newly launched ‘Blazo’ series is doing well. The company is working on ICV range (9-16T) and is expected to be launched by the end of 2018.

• Exports also had very good year with the volumes touching an all-time high of 36000 vehicles for FY16. Going forward the momentum is expected to continue with the neighboring markets as well as Africa & South American markets.

• Tractor industry has de-grown 10.4% in FY16 but the company did better than the industry and hence saw a marginal increase in market share (MS). Subject to a normal monsoon, the tractor industry may see a growth of 10% in FY17. Given that the industry has seen two continuous years of de-growth a very good monsoon may spring positive surprise.



PERSISTENT SYSTEMS LTD – BUY


Target (Rs) : 805

Buy zone (Rs) : 739-730

Stop loss (Rs) : 700 Beta : 0.75

Technical Outlook:

• Persistent has broken above 700 after forming W shaped pattern breakout. This suggest strength in the stock. It now is trading inside symmetrical triangle and showing renewned interest as its moving up with higher volumes.

• The stock is likely to move upwards closer to its high formed recently towards 805 levels.


• Persistent Systems Crossed USD 100 M Revenue Mark in Q4FY16; Annual Revenue Grew 14%. Strong Growth in H2FY16 Drives Momentum Going Into FY17.

• Alignment of operations driving four key growth strategies. Alliance with IBM to launch specialized Engineering Services for IBM Watson IoT platform. Acquisitions and alliances in the year strengthen focus on Enterprise Digital Transformation including IoT (Internet of Things), add significantly to global footprint, and enhance Accelerite product portfolio

• Nearly two years after Persistent Systems acquired web discovery startup Hoopz, the company is in talks with handset makers and mobile application developers to expand the startup's platform overseas. The company is forming partnerships to deploy the platform, Hoopz founder Akash Sureka, who is now head-mobility at Persistent Systems

• Persistent Systems is set to acquire US-based Genwi for an undisclosed amount, a move that will help the Indian IT firm strengthen its digital offering portfolio. The acquisition of San Jose-based Genwi by Persistent Systems further fortifies its leadership team with a focus on compelling experiences that are fundamental to "the embrace of digital transformation", Persistent said in a statement.



NBCC– BUY


Target (Rs) : 1100

Buy zone (Rs) : 997-980

Stop loss (Rs) :940

Beta : 1.39

Technical Outlook:

• The stock has been trading in a narrow range (850-1050) for past many weeks and was moving in a channel. It has taken breakout above downward sloping channel above 950.

• The stock has strong support zone around 800-850. Momentum indicator such as RSI has not turned overbought suggesting the upmove is likely to continue in the near term.

• The stock is likely to move towards the target area of 1100


• National Building corporation Ltd (NBCC) is a Navaratna Enterprise under Ministry of Urban development. Its business verticals includes: Project management consultancy (PMC), Engineering Procurement & construction (EPC) and Real estate business.

• NBCC also has the potential to double its order book over the next 2-3yrs. Pipeline orders include Delhi Development Authority (DDA) of Rs150bn and similar huge opportunities like AMRUT, Housing for all & Smart cities. NBCC’s earnings grew by 18% CAGR during the last 5yrs. During FY16, Revenue and PAT has grown by 29% & 14% for 9 month.

• NBCC is likely to benefit from Govt. ambitions projects like AMRUT, Housing for all and Smart city projects. Also from Ministry of Railways, modernization of railway stations is also under consideration. NBCC is in sweet spot considering it size, limited competition and expertise in executing large projects.

• During FY16, NBCC reported revenue growth of 29% YoY at Rs37,009mn, led by strong performance from all segments. The largest segment PMC (80% of sales) grew by 25% YoY, Real estate (15% of sales) grew by 77% YoY and EPC (5% of sales) grew by 50% YoY. EBITDA margin improved by 10bps to 4.5% led by operational efficiency and PAT grew by 14% YoY to Rs1,701mn.



DABUR - BUY


Target (Rs) : 295

Buy zone (Rs) : 270-262 Stop loss (Rs) : 255 Beta : 0.50

Technical Outlook:

• The stock has taken breakout of 12 week high above 255 on weekly charts and is sustaining above 260 which is the breakout zone. This suggests up move in the stock.

• The stock has been making higher high and higher lows on weekly charts and the intermediate target for the stock is 295


• Dabur India’s domestic fast-moving consumer goods (FMCG) business grew at 8.5% during the fourth quarter of 2015-16, led by 7% volume growth. Consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) grew 21% during the quarter.

• Dabur India Ltd on Thursday reported a 16.6% rise in net profit for the quarter ended 31 March, backed by volume growth in oral care, home care foods and hair oils. Net profit for the full year increased 17.5%. The Delhi-based packaged consumer goods company reported a net profit (consolidated) of Rs.331.9 crore during the January-March quarter, up from Rs.284.86 crore in the year-ago period. Net sales for the quarter increased 10.9% to Rs.2,157.3 crore, up fromRs.1,944.8 crore a year earlier.

• It has strengthened its presence across key categories and have grown profitably by entering into newer categories, markets and sales channels. The company has set to leverage its strong herbal heritage and product portfolio to take advantage of the growing consumer preference for natural and ayurvedic products. With these initiatives, they have set the course for further growth and will continue to win and gain share across our businesses.

• Management expect that while FY17 is seen to be a better year given hope of good monsoons and pick up in rural demand in particular, the company will be able to achieve double-digit revenue growth in the second half of the year.



ASIAN PAINTS - BUY


Target (Rs) : 965

Buy zone (Rs) : 880-865

Stop loss (Rs) : 830 Beta : 0.75

Technical Outlook:

• The stock is forming a pennant on daily charts and is likely to continue its previous trend, i.e, upward movement.

• Momentum indicator RSI is also indicating that the stock is likely to move higher.

• INR 965 will be the near term target for the stock where it will find some resistance.


• Asian Paints (APL) has ventured into the branded adhesives space with launch of 3 offerings—Loctite Quick, Loctite Rapid and Loctite Tough. The adhesives space is currently dominated by Pidilite (PIDI) with 70% plus market share. APL can easily tap into this market using its existing paint dealers (~36,000) network.

• APL remains key beneficiary of recovery in urban demand and GDP revival. Recent ~2% weighted average price cut across APL’s paint portfolio will help in maintaining double digit volume growth led by higher growth in the lower segment.

• Going forward, We continue to remain fairly cautious on the domestic demand outlook. Raw material prices are expected to remain low in the near term and support margins. In the international markets, we need to look out for improvement in certain key markets like Nepal and Egypt to sustain the growth momentum. Additionally, units in Egypt and Ethiopia could be impacted on account of raw material shortage arising out of unavailability of foreign exchange



M&M FINANCE LTD -BUY


Target (Rs) : 334

Buy zone (Rs) : 300-290 Stop loss (Rs) : 280 Beta : 0.92

Technical Outlook:

• The stock has taken breakout of the descending broadening triangle with good volumes on weekly charts suggesting a strong upmove

• The stock is likely to take support in the range of 280-290.

• The immediate target for the stock will be in the range of 334


• The company reported Q4FY16 , with total income of Rs 16897 mn ( up 10% YoY), PAT of Rs 3703 mn ( up 11% YoY) for the 4th quarter whereas the total income for the whole year has grown 6% to Rs 59051 mn and PAT has declined 19% to Rs 6726 mn as against Rs 8318 mn for previous year FY15.

• The loan book has increased 11% to Rs 366.58 bn in FY16 from Rs 329.30 bn in FY15 and book value per share have also grown about 7% to Rs 107 in FY16 from Rs 99.7 in FY15.

• With the increase in loan book , GNPA and NNPA has been on a constant rise during the past 4 years which is a cause of concern and needs to be addressed.

• The key subidiaries of the company Mahindra Rural Housing Finance and Mahindra Insurance Brokers Limited have performed well with double digit growth in topline and bottomline.



HDFC BANK – BUY

Target Data Last Closing Price (Rs): 1114.6

Target (Rs) : 1225

Buy zone (Rs) : 1115-1095

Stop loss (Rs) : 1050

Beta : 1.07

Technical Outlook:

• The stock has been consolidating in the range of 950-1100 for last one year and has formed a flag pattern on weekly charts. The formation of the pattern over such a long period suggest that stock has formed base around 950 and movement above 1100 for some time will lead to next upward trajectory for the stock.

• The breakout target of the flag pattern will be around 1225 which will be the immediate resistance zone for the stock.


• HDFC Bank reported an in-line Q4FY16, with PAT of Rs 33.7bn (up 20% YoY) driven by robust 24% YoY growth in NII. Hallmark of earnings was 27% YoY growth in advances – significantly above industry’s growth rate (~11% YoY); the beat implies market share gain for HDFC in both retail and corporate segments. NIM was resilient at 4.3% and asset quality pristine.

Q4FY 16 result highlights :

• Loan growth well above industry: Growth in Advances (+27% YoY) to Rs4.65tn was driven equally by retail loans (up ~30% YoY) and wholesale loans (up 27.2% YoY). Growth in retail advances was across the board, with each sub-segment growing at a pace significantly above the system. The bank is constantly gaining market share, and we expect this trend to continue.

• Healthy pick-up in core fee income: Non-interest income growth (+13% YoY) however was tepid, dragged down by volatile streams. Nonetheless, core fee income posted healthy growth (+18% YoY) well-supported by volume increase in insurance and mutual fund units

• Healthy asset quality: Asset quality remained pristine and improved moderately, as GNPAs declined to 0.94% while NNPAs came in flat at 0.28% (0.29% in Q3FY16). Slippages were at Rs 17 bn (1.5%) and ~Rs 3.0 bn of floating provisions were drawn down to provide against agri-credit facility lent to Punjab and a large corporate account. O/s restructured loans remained stable at 0.1% of advances.



DISCLAIMER

Disclosure: We, (Amartya Ray, MBA, Kaushik Hore, B.com (H), 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 A w er hip f he ck - N

Ser e fficer irec r r e p ee - N

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



Peerless Securities Limited Registered Office:

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Phone: +91-33-2213 1407/13, Fax: +91-33-2243 6941

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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

peerless masterpicks monthly- may 2016 · pace of fall was faster than a 0.77 percent annual...

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