Recommendation Auto Parts & Equipment Sector

Igarashi Motors India, an auto component manufacturer, is basically into the business of designing small permanent magnet DC motors and gear motors used in electronic throttle control, exhaust gas recirculation and turbochargers. Nine major nations accounting for 80% of total passenger car markets have proposed reduction in emissions by 20-50% over FY17-21. The company holds lower penetration, despite double digit market share worldwide. The company's Q4FY17 remained flat but posted growth in FY17 annual earnings. Its revenue and PAT growth came in at 14% and 16% to Rs.508 crore and Rs.74 crore, respectively. It has reduced its debt and is now virtually debt-free. Thus, with the government's emission regulations and consumer preference, we recommend a Buy in the scrip for a target of Rs.1125, with a stop loss of Rs.950.

ZYDUS WELLNESS
CMP: RS. 891
BSE CODE: 531335
Volume: 1014
Face Value: RS.10

A subsidiary of Cadila Healthcare, the company manufactures personal care products under famous brands like Sugarfree (94% market share), Nutralite and Everyouth Peel. It recently announced launch of Sugar Free variant Sugar Free Green which is 100% natural sugar substitute available in powders and pellets. Despite competition, the company has managed to post volume growth amid higher ad spends and supply chain management costs. Moreover, the spends have been duly compensated with lower operating and non-operating expenses, including lower cost of raw materials and lower tax rate at its Sikkim unit, respectively. Considering quarterly results, the company has reported 10% and 18% growth in revenue and PAT, respectively, in Q4FY17, as compared to the previous quarter. On an annual basis, the company posted higher single digit growth in both topline and bottomline. We therefore recommend a Buy in the scrip for a target of RS.1070, with a stop loss at RS.850