DIWALI PICKSMUHURAT TRADING 2017

� Torrent Power Limited

� Parag Milk Foods Limited

DIWALI TOP PICKS

01

Fundamental Picks Current Price Target Price

Technical Picks Current Price Target Price

� Corporate Structuring: Century Textiles & Industries Limited

� Mumbai Real Estate Play: Marathon Nextgen Realty

� Duopoly Business: Central Depository Services Limited

1306

492

390

1550 - 1800

600 - 720

500 - 600

242

270

305

360

02

Samvat 2073 was a year of all ups and downs. Starting with Demonetization, the Markets became bearish and

resulted in poor corporate numbers for India Inc. As soon as the effects of Demonetization were faded, GST

surfaced and brought along itself, a whole new set of problems. Despite the two hard resets to the Indian economy,

the monsoon was above average and this resulted in the rural economy flying at an all time high.

The Q4 FY17 and Q1 FY18 saw the rise of SIPs and the impetus it gave to the Stock Market. As one would say,

Markets may stay ahead or fall behind valuation, we are optimistic that the markets are ahead of the valuation and

that the numbers will improve from Q3 FY18 onwards. From sectoral point of view, we believe that rural India will

be an extremely bigger play and the rural incomes will multiply faster than the urban incomes will. The entire focus

of government is absolutely on betterment of life of a common man, especially the rural India. With the General

elections not so far from now, we believe that the policies will be more investor and consumer friendly, and we are

hopeful that the demand cycle will grow in the current and next fiscal.

Based on a few themes like rural India, corporate restructuring, disruptive force, and monopoly business, we have

selected 5 stocks for Muhurat Trading in Samvat 2074.

SAMVAT 2073 & 2074

We have been bullish about this stock since some time and further believe that the stock has an upside to grow by

25-35% in 1 year. CTIL is a BK Birla promoted stock, which has four business verticals – Textiles, Paper, Real Estate,

and Cement. Mr. Kumar Mangalam Birla (grandson of BK Birla) is the current Vice Chairman of the Company and is

running the day to day affairs of the company. With Km Birla taking over the running of the company, the company

has turned itself from a net loss-making company to a 100 Crore Profit in Q1 FY18. The main turnaround came

from Cement, and Paper in Q1 FY18.

Real Estate : The Game Changer: With CTIL, Mr. KM Birla announced his foraying into the Real Estate sector.

Currently a wholly owned subsidiary of CTIL, Birla Estates has 2 building in Worli – Birla Centurion and Birla Aurora,

which are leased about 75%. The rental income from Birla Estate is the only current income in CTIL, however, the

company plans to enter aggressively into the Real Estate business pan India, in an asset light model. It has plans to

enter into JV with land owners and other developers across India. In addition to this, the company has its own land

banks in Worli, Kalyan, and near Pune. The company plans to monetize these land parcels by developing these

lands. The Worli project details will be finalized once the DCR is finalized by the authorities. We believe that the

Real Estate space, which has seen a mega change with RERA coming in; reputed corporates like Tata Housing,

Mahindra Lifespaces, Godrej Properties, and Birla will become the leaders of real estate industry with ethical and

corporate responsibility.

CENTURY TEXTILES & INDUSTRIES LIMITED (CTIL)CMP: 1306. Target: 1550 - 1800

03

Cement : CTIL has a Cement plant of ~13 mtpa, and is currently run by Mr. Jayant Dua, who has worked for a long time

with Aditya Birla Group. A complete branding overhaul, packaging change, and pricing “Birla Gold” near

Ultratech/Ambuja has helped better realization in the business. The overall expertise of the Aditya Birla Group in the

Cement business has helped CTIL Cement, in increasing efficiency and bringing down the cost. We expect the Cement

realizations to be steady and in line with the cement Industry.

The above two businesses of CTIL will provide the next growth engine. The Cement and Real Estate business will

complement each other thereby bringing synergies in operations. Apart from these two sectors, the Paper and Textile

have been doing reasonably well, and we see stable business from the Paper and Textile business going forward.

Based in Mumbai, Marathon is a reputed name in the Real Estate Industry since last 50 years. With a focused

business approach in Mumbai, and a Debt Free structure, Marathon Realty is a play on Mumbai real estate. At

current land prices, the value of the land it holds is greater than the Market Cap of the Company (MCap 1100

Crore). The company is Debt Free, and has no idle money in the company. The company has 3 major projects under

pipeline which is a steady work for the next 6-7 years timeframe.

Byculla : The company has a high rise residential project [land of ~13 acres] – Monte South in Byculla with a Total

of 4 Towers, out of which, work in the 2 towers is in full swing. The approval for the other 2 towers is yet to be

received. The project is in a Joint Venture with Adani Group, and Marathon has a 40% stake in the project. With

around 5 years to completion, the management has strong reputation in Mumbai, and is entirely focused in the

Mumbai region. With excellent management pedigree, and a long standing presence in the real estate space, we are

confident that the company will be able to sell the inventory soon.

Borivli : Here the company has a land of around 26 acres, and the work is yet to commence. We are positive that

the work will commence in 2017-2018 and this project will fetch premium given the location of the project.

Marathon Nextgen Realty LimitedCMP: 492. Target 600-720

05

Bhandup : Here, the company is into Slum Rehabilitation, and overtime will be developing a whooping 28.5 Acres

of slum in Bhandup area. The work has already commenced, and is moving ahead at a great pace.

A great amount of companies hold land on books, however, these lands are being monetized, which will bring

around 2000 Crore of Cash in the next 4-5 years. We believe that 2000 crore cash flow in 4-5 years for a Market

Cap of 1100 crore is a great company to invest in. Our price target is around 600-720 for the company which puts

a Market Cap of around 1700-2000 Crore. We believe that the permission to commence work on the next two

towers in Byculla and the commencement of work in Borivli will be the two big triggers till the next Diwali.

A little long term stock, we believe CDSL is the next multi bagger in India, having all the characteristics of a

sector-stock that one might look out for. CDSL is the Depository in India which maintains stocks, fixed income

securities, and mutual funds in Demat form. In the Indian Market, there are only two depositories – CDSL and

NSDL, thereby making it a duopoly industry. CDSL operates in a regulated environment of SEBI and is prone to

multiple Audits and transparency level. Promoted by the Bombay Stock Exchange, CDSL is the only depository in

the listed space.

Business Overview : CDSL fulfills all criteria of a multi-bagger stock. The Industry has high barriers to entry, and is

heavily regulated. The business is technology oriented, and hence has the scalability inbuilt. Since last 10-12 years,

the structure of the depository has remained the same, and equity investors have grown multifold, and Demat

accounts have grown exponentially. Over the coming years, with more and more people investing, we see a

constant increase in the number of Demat accounts.

New Horizons : The Mutual Fund Industry is an entirely outdated system and works on older technology. The

clients are allotted “Folio Nos” for investment. In the past SEBI made it compulsory for all listed companies to

convert shares from physical to demat form in order to avoid theft, and fraud, and to increase efficiency by reducing

time, and maintaining electronic data of stocks. We believe that the DEMAT system in India is robust

Duopoly Business: Central Depository Services Limited: CDSLCMP: 390 Target: 500-600

07

and time-tested one. We believe that sooner or later, the Mutual Fund Units will be made compulsory in Demat, which

will see surge in Demat Numbers, thereby increasing the profitability of CDSL. Two other government initiatives –

Insurance Policy, and College/School Marksheets in Demat form are also under execution. Over time with

Digitalization, and with electronic storage of all assets, we believe that the future belongs to Demat Insurance Policy,

Demat School/College Marksheet, Demat Stocks, and Demat MF Units. This stock has all the possibilities of being the

next multi-bagger and we strongly recommend this stock for the next 8-10 Years, however, we believe that the stock

must appreciate by around 25% in the next one year as first target and 50% appreciation as second target.

08

09

OBSERVATION

In weekly timeframe TORNTPOWER is trading above major resistance line. MACD is in bullish trajectory, prices

are above long term EMA with positive sequence which suggests strong upmove to continue.

Torrent Power LimitedCMP: 242 Target: 305 – 347 Stop loss 205

10

OBSERVATION

In weekly chart PARAGMILK is trading above major resistance line and MACD is moving in bullish trajectory, prices

are above short term Exponential Moving Averages (EMA), long term EMA are turning positive which suggests

upmove in coming sessions.

Parag Milk Foods LimitedCMP: 270 Target: 360 -403 Stop loss 223

Support

Resistance

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