Tag Archive : Detailed Stock Analysis of Cool Stocks

Cool Stocks to watch this summer

6 Stocks which benefit from Summer Season

Detailed Stock Analysis of these Summer Stocks

Introduction

6 summer stocks to watch this summer are Voltas Ltd, Symphony Ltd, Havells India Ltd, Johnson Controls-Hitachi Air Conditioning India Ltd, Varun Beverages Ltd and Bajaj Finance Ltd. These summer stocks look attractive right now with the expectations that their June ending quarter (April-June) would be healthy.

Which Are These 6 Most Cool Stocks To Watch This Summer?

6 Cool Stocks To Watch This Summer
6 Cool Stocks To Watch This Summer

Let us analyze these 6 most summer stocks in detail.

1. Voltas Ltd

  • Voltas Limited is an Indian company specialising in air conditioning and cooling technology. The company is part of the Tata Group.
  • The company has products present in both air conditioning (AC) as well as air coolers segments. Voltas is the market leader in the AC segment. The company has also increased their focus towards the air coolers. They launched 37 new products in their air coolers segment.
  1. PE Ratio = 37.75
  2. ROCE = 21.69%
  3. ROE = 15.86%
  4. DE Ratio = 0.08
  • On all these parameters the company looks very strong.
  • The June ending quarter of Voltas may be very healthy with strong numbers looking at their business and fundamentals.

2. Symphony Ltd

  • Symphony Limited located in Ahmedabad, Gujarat, India was established in the year 1988. It manufactures products like domestic air coolers, industrial air coolers. Symphony is the market leader in air coolers segment.
  • Many articles have been written on this company, reason being its share price. The share price of even went down 50%-60%. From around Rs. 2,100 in January 2018 the share price went down till Rs. 870 in October 2018 and now has again rose up till Rs. 1,429 (as on 4th June 2019).
  • There is a huge unorganized market of air coolers, especially in the North India. The unorganized players had an edge over the prices of organized players. But after the implementation of GST, this difference in the prices has come down considerable, to just 10%-15% now. Hence, organized players must have benefited from this coupled with the hot summer, Symphony taking home the chunk as it also the market leader.
  • The market share of organized and unorganized players is almost 50%. But in coming times, the organized players can acquire healthy amount of market share in the unorganized air cooler market.
  1. PE Ratio = 100.14
  2. ROCE = 46.29%
  3. ROE = 34.77%
  4. DE Ratio = 0.28
  • Looking at the PE, the stock looks overvalued and isn’t quite justified. It received this premium valuation owing to the rally in its share price in the last 6-8 months.
  • The coming quarter result look good, after which the share price may not come down but the PE ratio may. This is because as the earning will improve, so will EPS, and thus PE ratio will come down.

3. Havells India Ltd

  • Lloyd is a part of Havells. Lloyd AC’s are performing good in the market are creating a pretty good traction for Havells. Overall Havells as a company too is also running efficiently. Lloyd keeps fluctuating between 2nd and 3rf position in the AC segment.
  • The distribution network of Havells is also very excellent.
  1. PE Ratio =  60.84
  2. ROCE = 27.61%
  3. ROE = 19.79%
  4. DE Ratio = 0.01
  • The company is a growing company and is considered among the growth companies. Because of the hot summer, Lloyd can play an important part in giving Havells India Ltd a June ending quarter.

4. Johnson Controls-Hitachi Air Conditioning India Ltd

  • Johnson Controls-Hitachi Air Conditioning India Ltd is an India-based company engaged in the business of manufacturing, selling and trading of Hitachi brand of air conditioners (ACs), refrigerators, washing machines, air purifiers, chillers and variable refrigerant flow (VRF) systems.
  • This is also a very good AC company and an well managed company overall.
  1. PE Ratio =  58.05
  2. ROCE = 29.31%
  3. ROE = 20.56%
  4. DE Ratio = 0.31
  • A very strong brand. The air conditioners of the company have very good efficiency. As a result, the stock of Johnson Control-Hitachi may also perform good in the next quarter.

5. Varun Beverages Ltd

  • Varun Beverages is the 2nd largest franchisee in the world (outside US) of carbonated soft drinks (“CSDs”) and non-carbonated beverages (“NCBs”) sold under trademarks owned by PepsiCo and a key player in the beverage industry.
  • PepsiCo CSD brands sold by us include Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Seven-Up Nimbooz Masala Soda, Evervess Soda, Sting and Gatorade. PepsiCo NCB brands sold by us include Tropicana (100%, Essentials & Delight), Tropicana Slice, Tropicana Frutz, Seven-Up Nimbooz and Quaker Oat Milk as well as packaged drinking water under the brand Aquafina.
  • Hot summers and cold drinks go hand in hand. And Varun Beverages is all about cold drinks. Varun Beverages has the franchisee to sell PepsiCo’ products in India till 2039. It was till 2022 but it got extended till 2039 last year. Thus, the earning visibility of this company are very excellent.
  1. PE Ratio =  54.83
  2. ROCE = 14.34%
  3. ROE = 15.74%
  4. DE Ratio = 1.40
  • The PE ratio is definitely on a higher side. But as the ROE is more than ROCE, which is good. The DE ratio is the only parameter of a little concern here. The company has an Interest Coverage Ratio of 3.20, which is good (An ICR above 2.5 cab be considered as comfortable).
  • The business of Varun Beverages is cyclical with June ending quarter always being a blockbuster. Thus, there are similar expectation this time too.

6. Bajaj Finance Ltd

  • Bajaj Finance Limited, a subsidiary of Bajaj Finserv, is an Indian Non-Banking Financial Company. The company deals in Consumer Finance, SME and Commercial Lending, and Wealth Management.
  • Bajaj Finance (Bajaj Finserv) can benefit from the sale of the products of Voltas, Symphony, Havells and Hitachi. Baja Finance gives out EMI cards with validity of 6 months. Thus, whenever any products of these 4 companies gets sold and using the EMI card, that time Bajaj Finance benefits of from it.
  • Bajaj Finance is very good company. It is a long term investment prospect. Rajiv Jain, the MD of the company, is managing the company very efficiently. The customer base of the company has also gown very huge.
  • During the NBFC crisis, the share price of the company went pretty down, but it eventually recovered from it and has almost doubled currently.
  1. PE Ratio =  52.34
  2. ROCE = 12.74%
  3. ROE = 20.27%
  4. DE Ratio = 1.53
  • Bajaj Finance is an indirect beneficiary. The performance of this company in this summer season can be coupled with the sakes performance of the above 4 companies.

Notes: –

  • The numbers that are used are approximate and have been rounded for presentation purposes.
  • We are not in any way saying that these are bad companies or that the stock of these companies are bad.
  • We are also not suggesting anyone to immediately go and buy the stocks or invest in the stock markets.
  • Only an analysis has been presented here. No judgments or final statements are being made here.


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