Why I am using ‘Safe’ because it must be least affected by High Crude Price, falling Rupee, 8.19% Bond yield and wider Current Account Deficit.
NMDC (Current Market Price: 121.95 Rs, Target Price: 158 Rs. , Tenure: 1 year)
About the company:
NMDC Limited is an India-based company engaged in mining of iron ore. The Company's segments include Iron Ore, and Other minerals & services. It is also engaged in the production and sale of diamond, sponge iron and wind power. Its projects under construction include Bailadila Deposit-11/B, Kumaraswamy Iron Ore Project, 1.2 million tons per annum (MTPA) Pellet Plant at Donimalai, 3.0 million tons per annum (MTPA) Integrated Steel Plant in Chhattisgarh, Panthal Magnesite Project, Screening Plant III at Kirandul Complex, Screening Plant II at Donimalai Complex, doubling of Railway Line between Kirandul and Jagdalpur, Steel Plant at Bellary and Rail Link between Dalli-Rajhara-Rowghat-Jagdalpur Railway Line Project. It proposes to diversify into other commodities, such as steel making raw materials (coking coal, manganese ore nickel); fertilizer raw materials (rock phosphate potash), and thermal coal. It also proposes to invest in raw materials, such as tungsten and rare earth minerals.
Why NMDC: Net Profit
The stock is trading at just 10.12 times of its FY18 earnings with an eps of 12.5 (TTM). Consistent profit-making company.
2) Sales and net profit: Company’s sales revenue Stood at 2422 Cr in June 2018.
Some recent actions:
NMDC says has won race for Andhra Pradesh gold mine.
NMDC seeks exploration license for Tungsten in Australia.
NMDC iron ore production at 9.85 million tonne in April-August 2018.
NMDC records iron ore prod of 6.17 MT in C'garh.
3) Margin: Company has a massive operating at a margin of 49%, It means for every 100 Rs sales, the company is making net profit of 49 Rs. ( As compared to its peers who are making only 17%). This is something needs to be considered.
4) Dividend: You will almost receive 6–7 Rs. (on an average). Every year.
Here is a year wise record.
5) Financial ratios: ROE is 15.59% ( Peers average 8.96), ROA is 13.59% ( Peers average 1.64), ROCE is 21.11% ( Peers average 6.73%).
6) One of the best MFs are heavily invested in this stocks. Can be seen in their latest updated portfolios.
7. Business Segmentation: NMDC Ltd. key Products/Revenue Segments include:
1. Iron Ore which contributed Rs 8708.90 Crore to Sales Value (98.63 % of Total Sales),
2. Sale of services which contributed Rs 57.84 Crore to Sales Value (0.65 % of Total Sales),
3. Diamonds which contributed Rs 41.91 Crore to Sales Value (0.47 % of Total Sales),
4. Sponge Iron which contributed Rs 13.13 Crore to Sales Value (0.14 % of Total Sales).
The power which contributed Rs 7.48 Crore to Sales Value (0.08 % of Total Sales) and Other Operating Revenue which contributed Rs .38 Crore to Sales Value (0.00 % of Total Sales)for the year ending 31-Mar-2017.
8. Why safe again? : It is 72.43% owned by the Government of India, under the administrative control of the Ministry of Steel.
9.Working Capital: The company has enough working capital to works and the same can be seen in these financial ratios.
10. In this BEARISH market, This stock is BULLISH.
This stock is a value buy.
2. TATA Motors - DVR (Current Market Price: 142.40 Rs, Target Price: 180 Rs. , Tenure : 1 year)
(I have taken TATA MOTORS DVR instead of TATA MOTORS because we are getting same fundamentals and brand value in lesser cost. One should not be concerned about voting rights.) -TATA is itself a GLOBAL BRAND.
About the company:
Tata Motors Limited is an automobile company. The Company is engaged in manufacture of motor vehicles. The Company is engaged mainly in the business of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles sold by the Company. The Company's segments include automotive operations and all other operations. The Company's automotive segment operations include all activities relating to the development, design, manufacture, assembly and sale of vehicles, including vehicle financing, as well as sale of related parts and accessories. In the automotive segment, the Company manufactures and sells passenger cars, utility vehicles, light commercial vehicles, and medium and heavy commercial vehicles. The Company's all other operations segment mainly includes information technology (IT) services, and machine tools and factory automation services. The Company operates in over 160 countries across the world.
Why TATA MOTORS?
Electric cars are the future of India. But this segment is a bit complex because it takes more than just making an electric vehicle.
We have four major electric car makers: Maruti Suzuki, Mahindra & Mahindra, Tata Motors and Ashok ley
Then we come to best Battery Makers: BHEL, IOCL, Exide and Amara Raja
Then we come to the best Battery component makers: Graphite India, HEG, NALCO, Hindalco, MOIL
So, It is very hard to buy one among all, as per market conditions and valuations we can bet on TATA MOTORS (which is in pain due to lower JLR sales).
The stock has heavily beaten by the massive selloff. Maintaining a good Sales turnover.
2) Operating profit:
3) Margins are not the best but Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range last month were at 45,719 units, up 29 percent from the year-ago period. Tata Motors has recently introduced an upgraded version of Tiago, its best selling hatchback, to attract buyers in the festive season. Called Tiago NRG.
4) The company has lowest EV/EBITDA of 4.2 in the industry.
5) Cash from operating activities is always positive and consistent.
4) Mutual Fund activities:
7. Business Segmentation: Tata Motors Ltd. key Products/Revenue Segments include:
Vehicle Mounting which contributed Rs 48018.52 Crore to Sales Value (97.79 % of Total Sales),
Other Operating Revenue which contributed Rs 711.92 Crore to Sales Value (1.44 % of Total Sales),
Sale of services which contributed Rs 368.03 Crore to Sales Value (0.74 % of Total Sales).
Income from Vehicle Financing which contributed Rs 1.94 Crore to Sales Value (0.00 % of Total Sales)for the year ending 31-Mar-2017.
8. Debt Equity: The company has a Debt/Equity ratio is .64 which shows that the company has negligible debt.
9. “Stock is BULLISH on charts”.
Both Stocks are safe and can be bought now for the longer term.
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