Hot Chips - Stock Recommendations For Your Portfolio

DSIJ selects two 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 Chemical and Metal sectors.

GUJARAT ALKALIES & CHEMICALS | BSE CODE: 530001 | Volume: 11000 | CMP: INR 141

With an installed capacity of 429000 MT, Gujarat Alkalies & Chemicals has emerged as India’s largest caustic soda producer. In the next two to three years, the company is likely to set up a 100000 TPA Chloromethane Project along with another 200000 TPA Caustic Soda Project in a Joint Venture with NALCO. 

The company has planned new projects involving investments of Rs 2600 crore to be completed in the next three to four years to diversify, add new products and expand its existing capacities. Its new sodium chlorate project at Dahej complex has reached the advance stage of implementation and is scheduled to get commissioned during the first quarter of FY 2013-14. Apart from this, the financial performance of the company has also been quite decent. In the December 2012 quarter, the company’s net profit witnessed a growth of 28.53 per cent on a YoY basis to stand at Rs 33.40 crore. One can look at the stock from a medium-term perspective.

NMDC | BSE CODE: 526371 | Volume: 144000 | CMP: INR 139

The management of NMDC is expecting to see robust iron ore shipments in the March 2013 quarter. It is slated to be around eight million tonnes. In the next two fiscals (FY14 and FY15), the shipments may reach to the tune of around 29 million tonness and 35-37 million tonnes respectively. The figures projected are based on the increase in the Chhattisgarh evacuation capacity to 25-27 million tones, led by higher rake availability with the commissioning of Uniflow dispatch line and other initiatives. 

The company’s e-auction volumes in Karnataka are also strong, operating at an annual run-rate of around 8 million tonnes, up by 47 per cent on a YoY basis. The current strategy for market determined pricing is poised to augur well for the company going forward. NMDC has denied setting aside Rs 40 billion to participate in the government disinvestment programme. This will eliminate the concerns of investors and it can act as a near-term trigger for the stock prices. One can look at the stock from a medium-term perspective.