2016: Issue 559, Week: 26th -29th December

A Weekly Update from SMC

(For private circulation only)

WISE M NEY

Brand smc 383

Time to gain wisdom & wealth

this new year.

HAPPY NEW YEAR 2017

2016

2016

trehan
six decades of excellence.

Pvt. Ltd.

CIN: U74120UP2013PTC054923

2015

From The Desk Of Editor

Contents
Equity

4-7

Derivatives

8-9

Commodity

10-13

Currency

14

IPO

15

FD Monitor

16

lobal stock market dipped and U.S. equities posted their first back-to-back daily
declines of the month on Thursday as the rally that has sent US market to record
highs since Donald Trump's U.S. election victory paused ahead of the Christmas

holiday weekend. Asian markets were seen in pressure before the Christmas as investors
were concerned over rising borrowing costs of world's two biggest economies namely; U.S.

Insurance

17

and China and also the newly elected U.S. President polices which could crimp growth of

Mutual Fund

18

developing nations. Recently Donald Trump named Peter Navarro, an economist who has
sharply criticized China's economic and military policies to head a new White House

SMC GLOBAL SECURITIES LTD.

REGISTERED OFFICES:
11 / 6B, Shanti Chamber, Pusa Road, New Delhi 110005.
Tel: 91-11-30111000, Fax: 91-11-25754365

National Trade Council. Jobless claims in U.S. rose to six month high, higher than the
expectation reflecting seasonal swings in an otherwise healthy labor market. In another
data point, Consumer spending, which accounts for more than two-thirds of US economic

MUMBAI OFFICE:
Dheeraj Sagar, 1st Floor, Opp. Goregaon sports Club, Link Road
Malad (West), Mumbai 400064

activity, rose 0.2% in November, below the estimates. U.S. economy grew at a fastest pace

Tel: 91-22-67341600, Fax: 91-22-28805606

in two years at an annualized rate of 3.5 percent for the quarter ended September 2016 as

KOLKATA OFFICE:

per revised estimates by Commerce Department.

18,Rabindra Sarani, Poddar Court, Gate No-4,5th Floor, Kolkata-700001

Tel : 91-33-39847000 Fax No : 91-33-39847004
AHMEDABAD OFFICE :
10/A, 4th Floor, Kalapurnam Building, Near Municipal Market,
C G Road, Ahmedabad-380009, Gujarat
Tel : 91-79-26424801 - 05, 40049801 - 03

Back home, Indian markets witnessed a bought of volatility and remained lackluster amid
low volumes ahead of Christmas holiday. Also the weakening rupee as against the dollar
kept market participants away from the market. It is expected that market will continue its

CHENNAI OFFICE:
Salzburg Square, Flat No.1, III rd Floor, Door No.107, Harrington Road,
Chetpet, Chennai - 600031.
Tel: 044-39109100, Fax -044- 39109111
SECUNDERABAD OFFICE:

volatile trade in coming days too. Next week we have expiry of December derivative series.
Trend in global markets, investment by foreign portfolio investors (FPIs) and domestic
institutional investors (DIIs), the movement of rupee against the dollar and crude oil price

206, 3rd Floor, above CMR Exclusive, Bhuvana Towers, S.D.Road,

Secunderabad - 500003

movement will dictate trend on the bourses in the week ahead.

Tel: 91-40-30780298/99, 39109536

DUBAI OFFICE:

On the commodity market front, before Christmas and year end, commodities rally

312, Belshalat Building, Al Karama, Dubai, P.O. Box 117210, U.A.E.

Tel: 97143963120, Mobile : 971502612483
Fax : 9714 3963122
Email ID : pankaj@smccomex.com
smcdmcc@gmail.com

appeared tired. Volume was low and investors were interested in riskier asset. Further
upside in dollar index also stole the shine of commodities. Bullion counter may remain on a
weaker side as stronger greenback and hawkish stance by Fed for next year can keep the

NEW YORK OFFICE:

Alliance Bernstein Building
1345 Avenue of the Americas
Second Floor
New York, NY 10105
Phone: (212) 878-3684
Toll-Free: (855) 589-1915

prices under pressure. Gold can face resistance of $1165 in COMEX and 27700 in MCX while it
has support near $1100 in COMEX. Crude oil upside momentum may continue further as
decision of coordinated production cut by OPEC and Non OPEC producers may continue to
give support to the prices. In base metal counter, prices may witness some selling pressure

Fax: (866) 852-4236

at higher levels amid slowdown in China imports. Consumer Confidence and Advance Goods

Printed and Published on behalf of

Trade Balance of US, CPI of Japan are few data, which are scheduled this week. Thin trading

Mr. Saurabh Jain @ Publication Address

11/6B, Shanti Chamber, Pusa Road, New Delhi-110005
Website: www.smcindiaonline.com

is expected due to holiday shortened week and the entire world is likely to be in the grip of
festival fervor.

Investor Grievance : smc@smcindiaonline.com

Printed at: S&S MARKETING
102, Mahavirji Complex LSC-3, Rishabh Vihar, New Delhi - 110092 (India)

(Saurabh Jain)

Ph.: +91-11- 43035012, 43035014, Email: ss@sandsmarketing.in

SMC Global Securities Ltd. (hereinafter referred to as SMC) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also
registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
SMC has applied with SEBI for registering as a Research Entity in terms of SEBI (Research Analyst) Regulations, 2014. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing
in securities Market.
SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of
interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or
its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company
covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.
The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.
SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any
investment decision.

Beat the street - Fundamental Analysis

CMP: 327.65

JYOTHY LABORATORIES LIMITED

VALUE PARAMETERS

Investment Rationale

Face Value (`)

52 Week High/Low
M.Cap (`Cr.)
EPS (`)
P/E Ratio (times)
P/B Ratio (times)
Dividend Yield (%)
Stock Exchange

1.00
381.00/252.60
5950.58
8.40
39.01
6.20
1.52
BSE

% OF SHARE HOLDING
Foreign
6.54 13.44

Institutions

9.65
3.45

Non Promoter Corporate

Holding

66.93

Promoters
Public & Others

` in cr

Actual

Revenue
EBITDA
EBIT
Pre-Tax Profit
Net Income
EPS
BVPS
ROE (%)

Estimate

FY Mar-16
1,644.70
220.10
188.70
197.30
158.00
8.60
46.72
19.40

FY Mar-17
1,792.00
275.60
255.00
204.80
166.70
8.98
48.27
19.70

FY Mar-18
2,034.80
313.90
293.60
255.40
205.90
11.19
52.73
22.00

Jyothy laboratories Limited (JLL) has evolved in

the manufacturing and marketing of products in

fabric care, mosquito repellant, surface cleaning,
personal care and incense sticks. The company
boasts of 10 brands in its kitty including Ujala,
Maxo, Exo, Henko, Pril, Margo, Neem, Chek and
Mr. White that are well-known and established
brands in their respective categories.

According to the management, in the next 3-4

years , the company targets to double its sales
turnover and triple its profits and also expect, as
a brand, to grow by more than 20 percent
compounded annual growth rate (CAGR) in the
next few years. The management of the company
is doing efforts towards increasing manufacturing
and supply chain efficiency, which would help the
company, improves margins.

Capex for the past 4 years has been `15-20 crore.

As the governments has extended benefits in
North East sates, the company would also focus its
expansionary plan in North East by investing Rs 50
crore in FY 2017 for Margo, Ujala and Maxo Liquid.

It is serving gradual quarter to quarter growth and

management of the company expects that with
increased investment in its brand and
differentiated products, it would further
strengthen its position in the market.

Presently, 60 per cent of its revenue come from

urban area and rest from the rural market and it
expects shares of its urban market to increase
further through products that it has acquired from
Henkel. The company's initiatives to increase its

SHEMAROO ENTERTAINMENT LIMITED

VALUE PARAMETERS
Face Value (`)
52 Week High/Low
M.Cap (`Cr.)
EPS (`)
P/E Ratio (times)
P/B Ratio (times)
Dividend Yield (%)
Stock Exchange

10.00
422.00/222.00
1011.45
21.52
17.29
2.56
0.38
BSE

% OF SHARE HOLDING
2.01
11.67

14.66

5.83

Foreign
Institutions
Govt Holding

65.82

Non Promoter Corp. Hold.

Promoters
Public & Others

` in cr

Actual
FY Mar-16
Revenue
374.90
EBITDA
109.80
EBIT
106.10
Pre-Tax Profit
85.03
Net Income
52.15
EPS
22.11
BVPS
134.24
ROE
15.30

Target Price: 414.00

Estimate
FY Mar-17 FY Mar-18
439.40
514.70
128.80
151.40
126.80
150.60
100.10
120.80
66.46
79.37
24.00
28.70
156.97
185.21
16.10
16.70

CMP: 372.10

revenue share beyond the southern market and

additional investment in power brands are among the
key factors helping it sustain a high revenue growth.

Export contributes around 3 per cent of the total

revenue and may go up to 7-8 percent. It mainly
exports to around 17 countries and recently, it has
set up a factory in Bangladesh in collaboration
with a local group.
Valuation
Gradual pickup in consumer demand, monsoon,
government initiatives and focus on rural would
further aid in improving performance of the
company. The company is confident of capturing
greater consumer mindshare which would help it
grow ahead of the market. Thus, it is expected that
the stock will see a price target of `414 in 8 to 10
months time frame on a target P/E of 37x and FY18
(E) earnings of `11.19.

P/E Chart

Target Price: 459.00

Investment Rationale
?
Shemaroo Entertainment is an established filmed
entertainment 'Content House' in the country,
active in Content Ownership, Creation,
Aggregation and Distribution with a large content
library of over 2800 titles. It is engaged in the
distribution of content for satellite channels,
physical formats and emerging digital
technologies like the Mobile, Internet,
Broadband, IPTV and DTH among others.
?
It acquires content with either perpetual rights
(complete ownership) or aggregated rights
(limited ownership) and distributes & monetizes
this content across different media platforms.
The current content library stands at around
3,000 plus titles.
?
The company is moving towards perpetual library.
It is capex heavy model. Ultimately it affects its
ROI and free cash flow. IRR is to drive up on the
back of new media growth and perpetual library.
New media Telcos support 50-55% of new media
revenue and balance is from Internet and OTT (Over
the top content) of which Youtube contributes
2/3rd growth. Moreover, The management expects
free cash flow positive in middle of 2018
?
It distributes caller ringback tones, wallpapers,
imagery, videos, games, full songs, celebrity chats,
etc. under MVAS. It has entered into agreements
with major telecom operators, namely Airtel, Tata
Teleservices, Reliance Communication, Idea, etc.
to distributes its content through other platforms
like DTH, Interactive services, IPTV.
?
On the financial ground, during the Q2FY17, it has
reported consolidated top-line increased by 21.4%
to `113.55 crore and due to decrease in raw
material cost, reported 35.50% increase in net
profit to `15.18 crore.
?
Revenue from digital media continued the upward
curve with 52% growth rate when compared to
corresponding quarter of previous year. On

Upside: 26%

Upside: 23%

sequential basis the revenue from digital media

division grew by 19%. Share of new media to
revenue improved to 21.2% vs. 17.0% in
corresponding quarter of previous year and stood
steady sequentially.
?
The company's large portion of revenue is coming
from mobile system, which is a paid eco- system,
which is good for the company. The management
has guided for a further scope of expansion in
margins led by new media deals in FY17.
Valuation
The company has grown multifold over the years by
developing excellent relationships with producers and
also the broadcasting networks, thereby becoming the
largest organized player in a historically fragmented
industry. According to the management, on the
traditional media front, the completion of last phase of
digitization will lead to higher subscription and
advertisement revenues for the broadcasters and
expects rise in broadcasters' content acquisition
budgets. Thus, it is expected that the stock will see a
price target of `459 in 8 to 10 months time frame on a
expected P/E of 16x and FY18 EPS of `28.70.

P/E Chart

Above calls are recommended with a time horizon of 8 to 10 months.

Source: Company Website Reuters Capitaline

SMC Employees participating in Paint the Cafeteria competition

held on 17th December 2016 at the cafeteria of the head office in New Delhi.