Fundamentals

HIMACHAL FUTURISTIC COMMUNICATIONS

Ticker: 500183 BUY: Rs.27.95
Target: Rs.32

HFCL specialises in manufacturing of telecommunication equipment and optical fibre cables (OFC), which are its main revenue drivers, and intelligent power systems. It has forayed into other verticals such as railways, Smart Cities and defence in FY17. During 9MFY18, the company's revenue was up by 61.5 per cent YoY due to rise in volumes. The operating profit grew by 29.6 per cent YoY due to operating efficiency. Recently, the company bagged an advance purchase order worth Rs 579 crore from BSNL for five years, giving it strong revenue visibility. Under the Digital India initiative, for providing public Wi-Fi connectivity and building strong wireless technology with upcoming 5G wave, HFCL will be one of the biggest beneficiaries. It has also won various projects under the Smart Cities Mission. Thus, we recommend it as a BUY.




TATA MOTORS

Ticker: 500570 BUY: Rs.358
Target: Rs.412

Tata Motors is engaged in manufacturing of automobile products consisting of all types of commercial and passenger vehicles, including financing of the vehicles. The company has operations in more than 160 countries across the world. On the financial front, during 9MFY18, its revenue was up by 4.3 per cent YoY while the EBITDA and PAT jumped significantly by 24.2 per cent and 114.8 per cent , respectively. In March 2018, the company's total sales grew by 35 per cent with sales of 69,440 units due to strong performance of commercial and passenger vehicles. The volumes are expected to improve in FY19 with introduction of new variants such as Jaguar E-space, long wheelbase XE and Range Rover Sport. Also, it is planning to launch the I-Pace battery EV in mid-2018. It is trading at attractive valuation with P/E of 9x. Thus, we recommend it as a BUY.