Vol.

: 262
28th September,2015

Index

MarketView
1 Market View:

RBI is expected to cut the rate

CompanyUpdate
2
Considering the global environment and local factors, the RBI is expected to cut the rates on

29th September, 2015. The market has already factored in the 25bps cut in advance.
Aroundthe
Economy

3 Meanwhile Prime Minister Modi is successful in convincing the western world about the
optimism he has created for the economy in the country and outside. The Silicon Valley Stal
warts are more or less agreeing about the opportunities thrown by the campaign Make in India
KnowledgeCorner 3 and Digitalize India. Defense industry in US is also enthralled by the defense strategy adopted

by the Indian government. Considering the fragile global outlook and lingering uncertainty in
MutualFund
4 China coupled with continuous selling by FII have made the strategy of selecting the stocks
more important. Even within this challenging atmosphere, some companies have achieved a

CommodityCorner5 turnaround performance in the June quarter. On back of lower commodity prices, increasing
operational efficiency and very tight financial strategy some companies have performed

wonderfully in the last one year and duly rewarded by the market. For e.g. Britannia Industries,
ForexCorner
6 CCL Product, Essell Propack, Emami, Amrutanjan, Vadilal, Kokuyo Camlin, Cipla and

Dishman Pharma. Those investors, who invest with medium to long term outlook and are lookReportCard
7 ing for midcap turnaround stories can study this interesting stocks (This is not a recommendation but a proposal to study the stocks).

The recent Rupee depreciation has clearly put the Technology sector on the investment
Editor&Contributor
horizon. The companies having good earning in Dollar terms in their overall revenue are clearly
MargiShah
going to benefit the most. The only threat will be slowing world economy and shrinking IT

budget by the big international corporate giants. Jennet Yellen has also expressed her feelings

about the rate hike in the year 2015 depending on the flow of data. Considering all this events
and a long vacation in the Chinese markets & Indian market will remain volatile within the
SpecialContributors
range of 7700 to 8100.
AsheshTrivedi
AdityaNahar

Kamal Jhaveri

MD- Jhaveri Securities

Forsuggestions,feedback
andqueries
jstreet@jhaveritrade.com

-1-

Vol.: 262
28th September,2015

Company Update : SRF Ltd.

Financial Basics

Company Basics
503806

FV (`)
EPS (`)

10.00
52.74

NSE Symbol

SRF

P/E (x)

21.74

EQUITY (` in Cr.)

57.42

P/BV (x)
BETA
RONW (%)

2.90
1.3170
10.52

BSE Code

MKT.CAP (` in Cr.)

6582.92

Share Holding Pattern

Holder's Name
Foreign
Institutions
Promoters
Non Prom.
Public & Others
Government

% Holding
16.04
12.59
52.38
0.00
15.17
3.82

Valuation : SRF Ltd. is currently trading at 15.74x FY16E EPS of Rs.72.80 and 12.51x FY17E EPS of
Rs. 91.60, valued the stock at 15xFY17E (three year average) with the target price of Rs. 1374.

Company overview
SRF Limited is multi-product, multi-business organization and industrial intermediate segment. The company
was incorporated in 1970. The business divisions of the company include Technical Textile Business, Chemical
Business, Packaging Films Business and Engineering Plastics Business. The company has 12 production plant
across the globe. Out of 12 nine in India and the remaining in Dubai, South Africa, Thailand. It is market leader in
majority of its product. SRF has strong presence in international market with exporting around 75 countries.
Investment Rational
SRF is one of the leading and sole domestic supplier of HFC 134 a and growth in passenger vehicles spur
sales
This elements contributed 23% of SRFs fluorochemicals revenues. The market-size of HFC-134a in India is
8.0KTPA, which is expected to rise with the rise of automobile and refrigerator sales. We estimate HFC-134as
consumption to clock 10.1% CAGR till FY20 as sales of passenger vehicles pick up from FY17 (HFC-134a gas is
used as refrigerants in cars). With a capacity of 17.5KTPA, SRF is the sole domestic producer of R-134a and its
market share increased to 41% in FY15. Imports have broadly remained flat at ~4,700 MT during the past 5 years.
Specialty Chemical is on strong footing
SRF is on a strong footing in Specialty Chemicals, as it is knowledge driven and has high entry barriers. We expect
the business to grow at a CAGR of 28% over FY15-17 to `1005.40 Cr. Given that it is a niche business, we believe it
will continue to enjoy PBIT margin of 35%.

Packaging Business has a good strength

The total demand for films in India is 360,000 MT/year and is growing at 10%. Capacity utilization swings
between 73% and 86%. Currently, the industry is operating at peak utilization of ~86%. With higher capacity
utilization, film manufacturers have begun enjoying higher margins.
- 2-

Vol.: 262
28th September,2015

Around The World

Weekly Market Recap :

On the global front, European Central Bank (ECB) Chief Economist Peter Praet on Monday, 21 September 2015,
reiterated the bank's readiness to modify its trillion-euro bond-buying program should economic turbulence merit action.

In China, latest data showed that a preliminary measure of Chinese factory output fell to its lowest level in six and a half
years in September 2015.

In the United States, St. Louis Fed President James Bullard and Atlanta Fed President Dennis Lockhart separately made
the case for an increase in US interest rates this year.

Market Eye Week ahead :

Among key domestic events lined up for the week, the Reserve Bank of India's (RBI) fourth bi-monthly monetary policy
review for the year 2015-16 is scheduled on Tuesday, 29 September 2015. The RBI had kept its benchmark lending rate
viz. the repo rate unchanged at 7.25% after a monetary policy review on 4 August 2015.

Shares of automobile companies will be in focus as companies start announcing monthly sales volume data for
September 2015 from Thursday, 1 October 2015.

The Nikkei India Manufacturing PMI data for the month of September 2015 is due on Thursday, 1 October 2015. The
seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) declined to 52.3 in August from 52.7 in
July.

KEY EVENTS/FACTORS TO WATCH

1. Tues: RBI monetary policy
2. Thurs: September auto sales data

Knowledge Corner :
Systematic Risk

The risk inherent to the entire market or an entire market segment. Systematic risk, also known as un diversifiable risk, volatility or
market risk, affects the overall market, not just a particular stock or industry. This type of risk is both unpredictable and impossible to
completely avoid. It cannot be mitigated through diversification, only through hedging or by using the right asset allocation strategy.

For example, putting some assets in bonds and other assets in stocks can mitigate systematic risk because an interest rate shift that
makes bonds less valuable will tend to make stocks more valuable, and vice versa, thus limiting the overall change in the portfolios
value from systematic changes. Interest rate changes, inflation, recessions and wars all represent sources of systematic risk because
they
affect the entire market. Systematic risk underlies all other investment risks.

- 3-

Vol.: 204
Vol.: 262
18th August, 2014
28th September,2015

Mutual Fund Corner

Top 10 Sector Break-Ups
Fund (%)

Fund Name
Scheme Name

Birla Sun Life MNC Fund

AMC

Birla Sun Life Asset Management Company

Type

Others

Category

Open-ended and Equity

Launch Date

December 1999

Fund Manager

Ajay Garg

Net Assets
(` In crore )

Rs. 2400.4 crore as on Aug 31, 2015

History

Automobile

20.96

Financial

17.41

FMCG

14.87

Healthcare

12.16

Engineering

10.74

Chemicals

9.78

Cons Durable

4.15

Services

3.87

Construction

1.85

Technology

0.82

2012

2013

2014

2015

267.14

294.26

502.89

589.14

TotalReturn(%)

42.37

10.15

70.90

17.15

+/CNXNifty

14.67

3.39

39.51

20.78

+/CNXMNC

14.08

2.41

28.43

9.86

7/31

6/32

6/55

52WeekHigh(Rs)

267.14

294.26

502.89

630.80

52WeekLow(Rs)

187.34

235.76

270.73

503.55

NetAssets(Rs.Cr)

364.13

412.78

852.49

Debt

4.57

ExpenseRatio(%)

2.33

2.91

2.72

Cash

-1.40

NAV(Rs)

Rank(Fund/Category)

Risk Analysis
Volatility Measures
Standard Deviation

16.42

Sharpe Ratio

1.58

Beta

0.79

R-Squared
Alpha

0.48
19.37

Composition (%)

Fund Performance v/s S&P CNX Nifty

Equity

96.83

Fund Style
Investment Style
Growth

Blend

Value

Medium
Small

Fund
CNX Nify
(Rebased to 10,000)
- 4-

Capitalization

Large

Source : - www.valueresearchonline.com

Vol.: 204
Vol.: 262
18th August, 2014
28th September,2015

Commodity Corner
BULLION
FUNDAMENTAL:Gold prices last week ended with around one percent gains as a weak U.S. dollar sparked short covering whereas silver prices settled flat as upbeat U.S. second quarter growth data added to expectations for a rate hike before the end of the year. However gains were limited as investors worried over the timing of a U.S. interest rate hike. Federal Reserve Chair Janet Yellen said after markets closed on Thursday that she expected the central bank to begin raising rates later in 2015, as long as inflation remained stable and the U.S. economy was strong enough to boost
employment. It marked the first time Yellen personally supported a 2015 rate hike since July. Yellen's stance represents a stark contrast
from her position last week when the Federal Open Market Committee only disclosed that 13 of 17 of its members were in favor of raising rates
this year. The data prompted short covering and safe-haven bids amid worries about global economic growth, which could delay the tightening of
U.S. monetary policy. U.S. equities came under pressure. Data on Friday supported the view that the Fed could begin raising rates this year. U.S. gross
domestic product rose at a 3.9 percent annual pace in the second quarter, up from 3.7 percent reported last month. Earlier in the month, the
Fed delayed a long-anticipated rise in U.S. rates, citing concerns over the global economy and improving investor sentiment towards gold. Holdings in
SPDR Gold Trust, the world's top gold- backed exchange-traded fund, rose for a fourth straight session on Friday. Gold prices have been wellsupported since the Fed decided to leave short-term interest rates unchanged last week, amid concerns over soft inflation and the effects of recent
market volatility on the U.S. economy. Russia raised its gold holdings by another 29.5 tonnes in August, adding to its reserves for a sixth straight
month, while Jordan and United Arab Emirates both emerged as buyers in July, according to International Monetary Fund data on Thursday.
Several Federal Reserve officials are scheduled to speak this week, keeping the focus of the bullion market firmly on U.S. monetary policy.
RECOMMENDATION : SELL GOLD @ 27000 SL 27450 TGT 26550-26100.SELL SILVER @ 36600 SL 37200 TGT 35800-35100.

BASE METALS
FUNDAMENTAL: Gold prices last week ended with around one percent gains as a weak U.S. dollar sparked short covering whereas silver prices
settled flat as upbeat U.S. second quarter growth data added to expectations for a rate hike before the end of the year. However gains were limited as
investors worried over the timing of a U.S. interest rate hike. Federal Reserve Chair Janet Yellen said after markets closed on Thursday that she expected the central bank to begin raising rates later in 2015, as long as inflation remained stable and the U.S. economy was strong enough to boost employment. It marked the first time Yellen personally supported a 2015 rate hike since July. Yellen's stance represents a stark contrast from her position
last week when the Federal Open Market Committee only disclosed that 13 of 17 of its members were in favor of raising rates this year. The data
prompted short covering and safe-haven bids amid worries about global economic growth, which could delay the tightening of U.S. monetary policy.
U.S. equities came under pressure. Data on Friday supported the view that the Fed could begin raising rates this year. U.S. gross domestic product
rose at a 3.9 percent annual pace in the second quarter, up from 3.7 percent reported last month. Earlier in the month, the Fed delayed a longanticipated rise in U.S. rates, citing concerns over the global economy and improving investor sentiment towards gold. Holdings in SPDR Gold Trust,
the world's top gold- backed exchange-traded fund, rose for a fourth straight session on Friday. Gold prices have been well-supported since the Fed
decided to leave short-term interest rates unchanged last week, amid concerns over soft inflation and the effects of recent market volatility on the U.S.
economy. Russia raised its gold holdings by another 29.5 tonnes in August, adding to its reserves for a sixth straight month, while Jordan and United
Arab Emirates both emerged as buyers in July, according to International Monetary Fund data on Thursday. Hedge funds and money managers raised
their bullish bets in COMEX gold futures and in the week to Sept. 22, U.S. Commodity Futures Trading Commission data showed on Friday. Several
Federal Reserve officials are scheduled to speak this week, keeping the focus of the bullion market firmly on U.S. monetary policy.
RECOMMENDATION : SELL COPPER @ 342 SL 355 TGT 334-325.SELL ZINC @ 109.00 SL 112.50 TGT 105.50-102.00. SELL NICKEL @ 668 SL
90 TGT 640-620.SELL ALUMINIUM @ 106.00 SL 108.50 TGT 102.50-100.00. SELL LEAD @ 112.00 SL 115.00 TGT 108.00-105.00.

ENERGY
FUNDAMENTAL: Crude oil prices rallied amid indications U.S. oil drillers are cutting back on production following a collapse in prices over the
summer. Industry research group Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by four last week to
640, the fourth straight weekly decline. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.
Crude oil prices have been under heavy selling pressure in recent months, as ongoing worries over the health of the global economy fueled
concerns that a global supply glut may stick around for longer than anticipated. Global oil production is outpacing demand following a boom in U.S.
shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production. The EIA said gasoline
stockpiles rose 1.4 million barrels, compared with the Reuters poll which called for a 819,000-barrel gain. In crude oil, market intelligence firm
Genscape added to positive sentiment by estimating a draw of nearly 810,000 barrels in the week ending Sept. 15 from storage tanks at Cushing,
Oklahoma, the main delivery point for U.S. crude futures, according to sources who have seen the data. Whereas natural gas prices dropped last
week as demand for the fuel was likely to remain limited after meteorologists predicted mild fall weather in much of the U.S. in the weeks ahead.
Demand for natural gas is expected to be moderate this week as cooler weather moves across the eastern part of the U.S. Meanwhile, weather in
the west will be warmer before cooling off as the week progresses. Data released Thursday showed that U.S. natural gas supplies rose much
more than expected last week. According to the Energy Information Administration, natural gas storage increased by 106 billion cubic feet, above
forecasts for a gain of 96 billion cubic feet. Supplies rose by 96 billion cubic feet in the same week last year, while the five-year average change is an
increase of 83 billion cubic feet. The EIA's next storage report slated for release on Thursday, October 1 is expected to show another hefty build of
approximately 100 billion cubic feet for the week ending September 25.
Recommendation : BUY CRUDE OIL @ 2960 SL 2850 TGT 3090-3200. SELL NAT. GAS @ 178 SL 185 TGT 172-165.

- 5-

Vol.: 262
28th September,2015

Commodity Corner

Forex Corner

Market Recap :

The Indian rupee appreciated against the dollar in

early trades on Monday, 28 September 2015 on
fresh selling of the American currency by exporters.

In the spot currency market, the Indian unit was last

seen trading at 66.07. On Thursday, the rupee had
dropped 18 paise against the US dollar to close at
66.16.

The dollar index, which measures the US currencys

strength against major currencies, was trading at
96.167, down 0.12% from its previous close of
96.269.

Market Eye Week ahead :

The USD INR pair moved in line with our expectations inched up higher but ended with a doji candle which indicates lack
of confidence among the bulls at higher levels. 66.45 is the immediate resistance on the upside and prices are likely to
reverse the direction from the same.

We expect the US dollar to meet supply pressure on rallies against the rupee. Any pullback in the USD/INR October
contract should be used to sell. Sell USD/INR September futures in the range of 66.82-66.92 with target 65.90-65.70.'

USD/INR
Level

S2

S1

CP

R1

R2

High

Low

Close

USD/INR

65.79

65.37

66.04

66.46

66.71

66.29

65.62

66.21

Level

S2

S1

CP

R1

R2

High

Low

Close

EUR/INR

73.58

72.73

74.14

74.99

75.55

74.70

73.29

74.43

Level

S2

S1

CP

R1

R2

High

Low

Close

GBP/INR

100.37

99.72

101.43

102.08

103.14

102.50

100.79

101.01

Level

S2

S1

CP

R1

R2

High

Low

Close

JPY/INR

54.75

54.12

55.10

55.73

56.08

55.45

54.47

55.38

EUR/INR

GBP/INR

JPY/INR

-- 46--

Vol.: 262
28th September,2015

J Street Recommendations Report Card

Nifty Closed fell 122 points last week and ended the week at 7868 levels. Nifty has strong resistance at 7930 and 8000.
We expect Nifty to test 7800 7725 - 7660 on downside. Weekly Support comes at 7600.

Macroeconomic data, trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee
against the dollar and crude oil price movement will dictate trend on the markets in the week ahead.

Top Fundamental Stocks

Rec. Date

CMP on Rec.

CMP

Target

Absolute
Return @
CMP

SRFLtd.

21/09/2015

1140

1122

1374

-2%

Buy

Ahluwaliacontracts

24/08/2015

235

256

368

9%

Buy

SunPharma

03/07/2015

831

861

1041

4%

Buy

InfiniteComputerSol.

20/07/2015

190

168

255

-12%

Buy

NitinSpinnersLtd.

06/07/2015

79

57

94

-27%

Buy

BankofBaroda

01/06/2015

163

184

217

13%

Buy

AmbikaCottonMills

18/05/2015

880

854

1149

-3%

Buy

SadbhavEngineering

04/05/2015

298

283

430

-5%

Buy

CARELtd.

20/04/2015

1666

1117

2250

-33%

Buy

SetcoAutomotiveLtd.

30/03/2015

242

230

304

-5%

Buy

Omkarspeciality
Chemicals

16/03/2015

152

173

251

14%

Buy

DHFL

16/02/2015

252

208

368

-17%

Buy

TVTodayNetwork

27/01/2015

222

243

337

9%

Buy

M&M

12/1/2015

1238

1221

1452

-1%

Buy

HavellsIndia

27/10/2014

274

246

346

-10%

Buy

AllCargoLogistics

05/08/2014

260

293

342

13%

Buy

PTCIndiaFin.Ser.

07/07/2014

39

43

45

11%

Buy

AdaniPort

05/07/2014

280

307

347

10%

Hold

L&T

05/07/2014

1750

1430

1866

-18%

Buy

Stocks

Status

It'snotimportantwhetheryouarerightorwrong,Itsabouthowmuchmoneyyoumakewhenyou'rerightandhow
muchyoulosewhenyou'rewrong.
- 7-

Vol.: 262
28th September,2015