Winning Strokes

As expected the markets started to rally post Christmas celebrations. I had earlier asked all through Facebook and Twitter posts, suggesting investors to buy good stocks during the market fall to take advantage of any post Christmas Rally. Those have heeded to that advice might be feeling happy.

Meanwhile, the shares of IRB Infrastructure Ltd (Rs.212.35), Suzlon Energy Ltd (Rs.8.90) and A2Z Infra Engineering (Rs.8.25) hit their respective Buyer Freezes. Congratulations to the Shareholders who bought the scrips on my recommendations.

Buy the shares of JBF Industries Ltd (Rs.20.80), for targets over Rs.50. JBF group is the second-largest manufacturer of textile-grade chips and third-largest producer of partially-oriented yarn and biaxially-oriented polyethylene terephthalate (BOPET) chips and films domestically.  

The company got badly affected due to Covid-19 Pandemic. However, the things are improving and its fundamentals are set to take a quantum jump, after the new management takes over the working machinery of the company. 

JBF Industries Ltd is engaged in the production of products in the polyester value chain, such as PET chips, which are of bottle grade, textile grade and film grade; polyester yarn, such as partially oriented yarn, polyester filament yarn, full drawn yarn and other specialised yarn; and PET films, which are of thin grade, thick grade and metallised grade. It defaulted on its debt obligations due to its weak liquidity position, according to a rating report by Care Ratings.

In 2020, RIL acquired a 37.7% stake in Alok Industries through the insolvency resolution process. It had then participated in the bidding process for the company in consortium with JM Financial ARC.

According to a Bombay Stock Exchange filing, CFM Asset Reconstruction Pvt Ltd has taken symbolic possession of all the secured assets of the Company.

Moreover, according to analysis presented by Simply Wall, JBF Industries had debt of ₹17.9b (Rs.1790 crore) at the end of March 2021, a reduction from ₹26.6b (Rs.2660 crore) over a year. However, it does have ₹1.49b in cash offsetting this, leading to net debt of about ₹16.4b (Rs.1640 crore), which I feel is looking manageable, with such a robust set up in place.

Besides, one redeeming factor for JBF Industries Ltd (Rs.21.79) is that, it turned last year's EBIT loss into a gain of Rs.1.40 billion (Rs.140 crore), over the last 12 months.

Also, according to a news in Financial Express, Reliance Industries Ltd is likely to take over stressed polyester manufacturer JBF Industries in consortium with CFM Asset Reconstruction Company (ARC).

Meanwhile, a recent report states that the Global Amorphous Polyethylene Terephthalate (PET) Market is expected to grow by $ 6.21 bn during 2021-2025, progressing at a CAGR of 5.96% during the forecast period.

By the way, why the regulators have put the scrip of this renowned Textile company, viz JBF Industries Ltd (Rs.20.80) in the T - group and not the stocks like Sintex Plastics, Sintex Industries, Urja Global, etc is beyond my comprehension. Earlier, they did the same thing, with the stock of BRFL (Rs.7.30) and if you remember, I had raised my concern during that time too...

The surveillance department of stock exchanges should explain to the investors, why a certain stock has been placed in the T - group. Otherwise, this kind of arbitrary move, can dent the confidence of the Shareholders/Investors.

#Buy the Shares of Dhanlaxmi Bank Ltd near Rs.14.10 for short term targets of Rs.17/18. SL: Rs.11.70. It has a TTM  PE of 11.23 against the Sector PE of 29.04. The Book Value Per Share is whopping Rs.28.67. Therefore, this is one of the best bank stocks for short term play. 

The figure above shows the net profits of Dhanlaxmi Bank for a certain period. The standalone September 2021 net Interest income of the bank, came at Rs.90.66 crore up 2.26% on Y-o-Y basis. 

Total income of Dhanlaxmi Bank during the July-September period of 2021-22, grew to Rs.266.59 crore from Rs.249.66 crore in the same period of 2020-21. 

Against this the market cap of the Bank is only Rs.366 crores, which shows that its stock is grossly undervalued. Photo: Moneycontrol.com.