Recommendation from Personal Care & Leather Sectors

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

GILLETTE INDIA

CMP -Rs.7785.35
BSE CODE 507815
Volume 306
Face Value Rs.10
Target Rs.8500
Stoploss Rs.7280(CLS)

Gillette India Limited is involved into the production and sale of branded packaged FMCG products in the grooming, portable power, and oral care segments. On the standalone financial front, Gillette India reported the net sales of Rs.463.97 crores for Q1FY20, which is an increase by 13.23 per cent from the net sales of Rs.409.76 crores, reported for Q1FY19. The PBDT for Q1FY20 stood at Rs.28.49 crores, depicting a decrease of 55.61 per cent from Rs.64.18 crores for Q1FY19. The net profit rose by 32.35 per cent in Q1FY20 to Rs.45.82 crores from Rs.34.62 crores in Q1Y19. The company’s net sales increased by 11.02 per cent YoY in FY19 to Rs.1861.65 crores. In FY19, the net profit was Rs.252.92 crores, an increase of 10.42 per cent from Rs.229.05 crores in FY18. The stock of the company has given a symmetrical triangle pattern breakout on the weekly scale. This breakout gets confirmed by the above 50-week average volumes. Hence, we recommend a BUY. 

RELAXO FOOTWEARS

CMP -Rs.518.95
BSE CODE 530517
Volume 6530
Face ValueRs.1
Target Rs.560
Stoploss Rs.490CLS)

Relaxo Footwears started off with the production of Hawaii slippers and subsequently diversified into manufacturing casuals, joggers, school, and leather shoes. The product range of the company includes Hawai, Canvas, Dip, Bahamas,Leatherite, Joggers, and Flite. On the standalone financial front, Relaxo posted a growth of 15 per cent in revenues in Q1FY20 to Rs.15.36 crores. The PBIDT jumped to Rs.106.42 crores in Q1FY20 from Rs.82.88 crores posted in Q1FY19, registering a growth of 28 per cent YoY. The bottom line witnessed a growth of 8 per cent YoY, as it stood at Rs.49.75 crores in Q1FY20. On the valuations front, the company is currently trading at a PE of 73.24x on its TTM earnings. The industry PE stands at 56.83x. Recently, the stock has given an ascending triangle breakout on a daily time frame, together with relatively higher volume. In addition to this, the stock formed a sizeable bullish candle on the breakout day, which adds strength to the breakout. We recommend a BUY.

(Closing price as of Oct 22, 2019)