Author: root

Buy LG Balakrishnan stock, says CD Equisearch

CD Equisearch has a “buy” call on the stock of the auto ancillary player for a price target of Rs 565, as against the current market price of Rs 409, thus implying an upside of almost 38% from the current levels. L G Balakrishnan manufactures roller chains and undertakes metal forming, including warm & cold forging, fine blanking and machined parts.

The stock currently trades at 7.8 times FY22e EPS of Rs 52.51 and 6.5x FY23e EPS of Rs 62.83. Post tax earning is projected to grow by over 27% CAGR over the next two years on stable sales growth (sales estimated to grow by 11% this fiscal and by 9.4% in FY23.

“LG Balakrishnan’s competitive advantage in terms of product quality and market reach would enable it to further penetrate in the propitious replacement market. Risks in terms of rise in Covid 19 cases cannot be ignored. Weighing odds, we maintain our buy recommendation on the stock with revised target of Rs 565 (previous target: Rs 276) based on 9 times FY23 estimated earnings over a period of 6-9 months,” the brokerage has said.

Anmol India

Khambatta Securities has set a price target of Rs 255 on the stock of Anmol India, as against the current market price of Rs 191, which implies gains of 33%.

The company is a bulk supplier of imported coal, providing end-to-end coal supply chain management solutions. The company specialises in supplying high GCV coal, USA coal, Indonesian coal, Saudi pet coke and USA pet coke, commanding a sizeable 16% share of the USA coal market in India

“A growing and industrialising economy along with increasing urbanisation is expected to drive up energy use as coal is seen to remain India’s energy mainstay for next 30 years. India does not produce adequate quantity of coal to meet the domestic demand while various types, grades and varieties of coal are required for different end uses. As a result, coal imports are expected to remain strong going forward,” Khambatta Securities has said in its report.

“We expect Anmol to register healthy growth in sales and profits going forward, driven by high demand for imported coal as the company expands its product portfolio and geography of operations. At current levels, the Anmol stock trades at an attractive 8.8 times FY24E EPS. Assigning a target P/E multiple of 13 times FY23E EPS, we value Anmol at Rs 255, informing a BUY rating with an upside of 48%,” the brokerage has further added.

Disclaimer

The above stocks are based on the report of two brokerages mentioned above. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor

Gold prices in India depend on the international price trends, measuring factors such as US dollar index and US interest rates. Yesterday, on Friday, US Federal Reserve (Fed) Chair Jerome Powell said that they might start to reduce the monthly bond purchases programme, later this year, but will not rush to hike the interest rates now. As gold is traded against the US dollar, this announcement is going to leave significant impacts on the yellow metal’s prices. When the US Fed will start tapering later this year, it is expected that the interest rate might increase after the tapering, that is in early 2022. Hence, the end of 2021 is no more anticipating a stiff rise in gold rates, as expected before.

Why the prices might drop?

Spot gold prices till Aug 27, in the international market, was standing at a $1816.80/oz level and COMEX price was quoted at a $1,819.5s range. In India, 22 carat gold was last quoted at Rs. 4662 per gram. As the Fed Chair Powell announced the possible tapering time, the small rally in gold could end. A similar trend can be found with silver. Spot gold and silver prices might perform moderately, but future rates will be affected. With an interest rate hike, the government bond yield will rise and investors will focus on the US dollar, in addition to government bonds. This will eventually shift their concentration from gold, dragging the precious metal’s prices down, globally.

Fed’s quantitative easing (QE) policy

Due to the pandemic, the US Fed earlier was maintaining a position of quantitative easing (QE) with a US$120 billion-a-month bond-buying programme, to flood the economy with liquidity. But now, as the labour market and housing market data show the economy is gaining pace, which is giving the Fed strength to taper the asset-buying programme. The country’s labour market added 943,000 jobs in July, while the unemployment rate fell to 5.4%. July, month-on-month housing sales data showed positive results, above market expectations. Now, the Fed is ready to focus on its currency index to grow, which will drop down gold rates.

India is one of the largest consumers of gold, globally, and the RBI has purchased a record amount of gold in the recent past to store in its reserve. For the common people, to buy gold, they have to pay the basic gold prices as the Indian Bullion Jewellers Association (IBJA) fixes daily, considering the global rates, along with additional GST. Indians have to pay import duty and cess as gold is mostly imported from foreign markets. As the prices are expected to fall in the international, this will drag down gold prices in India giving more scope to common people to buy the yellow metal. If the gold rates are falling now, an investor who is planning to stay put in the long term, should not worry. Gold always performs well in the long term. When the gold rates are down in the market, it is recommended to invest. Also, a 15-20% gold investment helps an investor to diversify the portfolio, thereby mitigating market risks and keeping a hedge against inflation.