Stock Pick From Food Processing And Chemicals Sector

DSIJ selects two aggressive stock picks in every issue, with a 15 day horizon based upon the bullish trend during that period. For this issue, we are recommending companies from the Textiles and Cement Sector

Kwality is one of the leading dairy players and is on an investment mode these days to strengthen its backward and forward integration systems. Considering its nine months' results, Kwality's net sales increased by 9.62 per cent to Rs 4285 crore in 9MFY16 as compared to same period in previous fiscal year. Its EBITDA too ascended by 18.03 per cent to Rs 285 crore in 9MFY16 on a yearly basis. Its net profit also increased by 3.85 per cent to Rs 111 crore in 9MFY16 as compared to same period in previous financial year. The company’s share of value added product has increased from 51 per cent in FY13 to 45 per cent in FY15 and has grown at CAGR of 27 per cent in the last 3 years. Dairy stocks may remain in focus due to Parag Milk Food IPO to hit markets on May 4.

UPL is a leading global generic player in the agrochemical industry. It ranks among the top-5 post patent agrochemical manufacturers in the world. For nine months ended December 31, 2015, the company's reported consolidated net profit grew by 61 per cent at Rs 746.77 crore. Its consolidated revenue for the period stood at Rs. 8,961.79 crore, registering growth of 5.85 per cent yoy. The company's operating profit jumped by 90.1 per cent at Rs 1735 crore along with operating margin expanded by 72 bps for the current period at 19.36 per cent. For 9MFY16, it has posted a volume and pricing growth of 13 and 2 per cent respectively, which we believe demonstrates the resilience of its diversified business model across products and geographies. It will help its EBITDA margin to improve and strengthen return ratios.