Recommendation IT Software Products And Household Appliances 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 IT Software Products And Household Appliances Sector

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DATAMATICS GLOBAL SERVICES
CMP - Rs.113
BSE CODE 532528
Volume 273529
Face Value Rs.5 

The flagship company of Delta Infosolutions majorly engaged in consulting, IT, data management and business process management service, it derives major revenues from the US (65% in FY17) and Europe (17.5%). Being a small-cap IT company, the company is placed better than Indian IT giants in the current scenario. To strengthen its position domestically, it has entered into agreement to acquire 71.1% stake in Techjini Solutions, a mobile and web application development company. Its subsidiary, Datamatics Global Services Inc. incorporated Datamatics Robotics Software Inc in the US through acquisition. Historically too the company has seen almost consistent revenue and PAT growth since FY10. The company has posted 6% and 101% revenue and PAT growth, respectively, in FY17. Hence, we recommend BUY in the scrip for a target of Rs.131 and with a stop loss of Rs.105.

CROMPTON GREAVES CONSUMER
CMP - Rs.230
BSE CODE 539876
Volume 709997
Face Value Rs.2 

 A company well-known for its electric fans and residential pumps with leading position in lighting is also penetrating fast into household appliances and agricultural pumps businesses. Currently, the company derives 28% from lighting and 72% from electrical consumer durables. During FY18, the company has divested its US power business in July 2018 and is expected to sell its power systems business in Hungary by the end of November 2018. Going forward, it is expected to focus on railway business, services business and intelligent product portfolio. Financially, it has posted robust topline and bottomline growth of 119% and 176%, respectively, in FY17. Though the company's D/E stands at 1.2, it holds favourable interest coverage of 7.9. The company has been focusing on premiumisation due to which the share of revenue from premium fans has increased to 18% from 16% in FY17. Thereby, with premiumisation retaining cost efficiencies, we recommend a BUY in the scrip for a target of Rs.264 and stop loss of Rs.212.