Hot Chips - Stock Recommendations For Your Portfolio

DSIJ selects 2 aggressive stocks picks in every issue, with a 7-15 day horizon based upon the bullish trend during that period. For this issue, we are recommending companies from the Food & Beverages and Cement sectors.

ZYDUS WELLNESS
BSE Code: 531335 | Volume: 43000 | CMP: Rs 374

Zydus Wellness has launched extensions, variants and SKUs under its already existing brands so as to fill the product gap and widen its offerings to its present loyal customer base. We believe that the company enjoys a premium position in the niche segment, and enjoys the first mover advantage in all its categories. We also believe that rising health awareness and the growing number of people with health conditions such as diabetes and blood pressure will result in wider acceptance of such products, which in turn, will boost revenues further.

The company is expected to use the distribution network of its parent company (Cadila) to utilise the prescription route to promote its products. In contrast with its peers, it had cut back on its advertisement expenditure in FY12. The management expects to revive the falling volumes and register double digit growth as the company resumes its brand campaign in Q1FY13. Investors can look at investing in the scrip from a medium-term perspective.

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JK CEMENT
BSE Code: 532644 | Volume: 21000 | CMP: Rs 139

JK Cement reported better-than expected results owing to an improvement in realisations and other income. Its revenues increased by 21 per cent on a YoY basis, backed by better realisations. The EBITDA margins improved by 720 basis points on a YoY basis. The reported PAT for the quarter stands at Rs 80.3 crore, witnessing a 50 per cent growth on the back of higher revenues and better margins.

Grey cement volumes increased by 4.2 per cent YoY to 16.01 lakh tonnes. The realisations for the grey cement business rose 15.4 per cent YoY to Rs 4010 per tonne. The EBITDA per tonne for grey cement stood at Rs 906 as compared to Rs 550 in Q4FY11. White cement volumes stood at 1 lakh tonne. The EBITDA per tonne for white cement stood at Rs 5700 as compared to Rs 5000 in Q4FY11. The company’s performance is expected to continue improving going forward too, and investors can look at the scrip from a medium-term perspective.