Recommendations From Textiles And Software Sector

The scrips in this column have been recommended  with a 15-day investment horizon in mind and carry high risk. Therefore, investors  are advised to take into account their risk appetite before investing,  as fundamentals may or may not back the recommendations.       


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VIP CLOTHING

BSE CODE 532613
Volume 16,51,38  
CMP – Rs.67.85 
Face Value Rs.2

A flagship of VIP Industries, VIP Clothing is into the business of manufacturing garments. On the financial front, the company posted a revival in PAT in Q4FY17 after two consecutive net losses. The company’s standalone revenue reported robust 33.9% QoQ and 52.8% YoY growth and PAT of Rs.1.11 crore, as against the net loss of  Rs.1.25 crore in the previous quarter and net loss of Rs.7.53 crore in the corresponding quarter of previous year. Annually, the stock has clocked 19.3% growth in revenue to Rs.232 crore. The company’s net loss narrowed down to Rs.5.8 crore, as against net loss of Rs.9.93 crore in FY16. To meet its working capital +requirement, the company is mulling to raise Rs.50 crore through rights issue. The company management expects to double its market share by next year. We recommend a BUY, for a target of Rs.85 and with a stop loss of Rs.59.

Tata Elxsi, an IT software product maker and specifically engineering design company, witnessed 14.7% and 11.9% revenue and PAT growth, respectively, in FY17. Thereby, the company posted revenue and PAT of Rs.1233 crore and Rs.173.3 crore, respectively. Moreover, quarterly numbers too contributed, with standalone revenue posting 5.4% QoQ and 10.9% YoY growth to Rs.326 crore. The company's PAT too grew, but at a tepid rate of 1.6% QoQ and 8.3% YoY to Rs.44.5 crore. Recently, the company has licensed its software platform to one of the top five global car makers, for development of driverless cars that helps it to penetrate deeper into autonomous vehicle market. With its consistency in revenue and bottomline growth and its agreement with one of the top five car makers, we recommend a BUY on the stock for a target of Rs.1864 and with a stop loss of Rs.1400.