Investors may buy dlf stock for short term gains at Rs 160

Investors may buy dlf stock for short term gains at Rs 160

By Rajiv Kapoor | 30 July, 2016

A few weeks ago we had suggested the Techno Electric stock in this column as a good fundamental buy. We are pleased to announce that the stock has risen by more than 12% in two weeks and hence recommend investors to book profit at the current market price of Rs 685 and reinvest the proceeds in the Syntex Industries Ltd stock for alternative gains. The company is one of the leading providers of plastics and niche textile related products. It specialises in manufacturing of prefab and monolithic construction for mass housing. The other products that the company manufactures have a fantastic recall value—storage tanks. Syntex is synonymous with water storage tanks for decades. The company has reported a consolidated total income of Rs 1,700 crore and a net profit of Rs 76 crore for the quarter ended June 2016. To bring down the debt levels, Syntex has announced a rights issue in the ratio of 26 equity shares for every 151 equity shares at an issue price of Rs 65 per share to existing shareholders on the record date of 9 August 2016, wherein it would be raising a sum of Rs 500 crore from this issue. Being an excellent consumption story and a very good brand, any uptake in the housing sector can see the company performing with very strong numbers. The Syntex stock has recently been added for trading in the NSE futures and options segment, which suggests heavy volumes in the days ahead. Analysts are betting on the Syntex stock for short term gains, with a price target of Rs 95 in two months.

Another contra stock which looks attractive for investment is DLF Ltd from the housing sector. It is the largest real estate developer in the country and going through a long awaited restructuring exercise. The company has a 60% equity stake in DLF CyberCity Developers Ltd (DCCDL), which owns leased commercial assets across the National Capital Region. The promoters have indicated that they propose to sell a 40% stake in the rental arm and plough back a substantial amount into the company. The parent DLF has a net debt of around Rs 22,000 crore as on March 2016. Out of this, around Rs 12,300 crore are DCCDL dues. The company is expected to raise Rs 9,000-10,000 crore from the sale of this 40% stake in DCCDL and that should substantially reduce debt levels for the DLF Group. But more importantly, it should realign the promoters and minority shareholders’ interest. The office leasing market is witnessing a strong growth volume in the NCR of 10% CAGR year on year and many analysts are expecting a 14-15% rental income over the next few years for the company. This bodes well for DLF as it sees a strong performance in the years ahead on the back of debt restructuring, high rental income and marquee foreign investors jointly venturing with the company for new projects. While the stock has appreciated by nearly 25% in the last few months and is currently quoting at Rs 160 on the stock exchanges, investors can buy the DLF stock for short term gains, with an expected price of Rs 185 in three months.

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