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Samvat 2071 turned out be bearish year for the stock market as China Yuan devaluation, weak rupee, Bihar poll outcome, corporate earnings and possibility of a December rate hike by the US Federal Reserve continued to dictate its movement. In the past one year, benchmark index Sensex plunged over 5 per cent to 26265.24 on November 6, 2015.
Markets experts believe that investors would be bullish in the Samvat 2072, which will begin from November 11. Pankaj Pandey, head of research, ICICIdirect, said, “Volatility is expected to prevail on the global front as central banks across the globe recalibrate liquidity levels, India, with its higher growth rate and least political instability will continue to remain in a sweet spot among other emerging markets and continue to attract global investors. We expect Sensex earnings to grow 13.2 per cent and 18.5 per cent in 2015-16E and 2016-17E to Rs 1,539 and Rs 1,838, respectively. We believe Nifty and Sensex can touch 9,100 and 30,300, respectively, by October 2016.”
Both the stock exchanges, Bombay stock Exchange (BSE) and National Stock Exchange (NSE), will conduct a special Muhurat Trading session on account of Diwali on November 11. Trading will be conducted between 5.45 pm and 6.45 pm on the day.
For Samvat 2072, with the help of some brokerage houses we have identified 12 stocks which can generate superior returns over the next one year.
1) Bajaj Finance
Recommended By: Sharekhan
Why Buy: The brokerage house believes Bajaj Finance is the best play on India’s consumption theme and mortgage market. Sharekhan is positive on Bajaj Finance’s business model and strong earnings performance and expect it to trade at a premium to the other NBFCs.
Recommended By: Sharekhan
Why Buy: The brokerage house believes Bajaj Finance is the best play on India’s consumption theme and mortgage market. Sharekhan is positive on Bajaj Finance’s business model and strong earnings performance and expect it to trade at a premium to the other NBFCs.
2) Britannia Industries
Recommended By: Sharekhan
Why Buy: Britannia is the second largest player in the Indian biscuit market with about a 30 per cent market share. It has an aggressive growth strategy to sustain a double-digit volume growth in the biscuit segment by enhancing its product portfolio. According to Sharkhan, with its healthy balance sheet and impressive return ratios, it is a strong investment bet.
Recommended By: Sharekhan
Why Buy: Britannia is the second largest player in the Indian biscuit market with about a 30 per cent market share. It has an aggressive growth strategy to sustain a double-digit volume growth in the biscuit segment by enhancing its product portfolio. According to Sharkhan, with its healthy balance sheet and impressive return ratios, it is a strong investment bet.
3) Sangam India
Recommended By: Sharekhan
Why Buy: Sangam (India) is a dominant player in the domestic dyed poly viscose (PV) yarn market (around 25 per cent share), it has further moved up the value chain in garmenting by entering into lucrative women’s intimate & active wear segment by setting up a garmenting facility and distributing garments under its own brand name, Channel Nine. With an expected high double-digit steady growth rate in earnings over the next couple of years and increasing contribution contribution from branded branded garments garments segment segment (B 2 C business), Sharekhan sees a potential for multiple re-rating of the stock.
Recommended By: Sharekhan
Why Buy: Sangam (India) is a dominant player in the domestic dyed poly viscose (PV) yarn market (around 25 per cent share), it has further moved up the value chain in garmenting by entering into lucrative women’s intimate & active wear segment by setting up a garmenting facility and distributing garments under its own brand name, Channel Nine. With an expected high double-digit steady growth rate in earnings over the next couple of years and increasing contribution contribution from branded branded garments garments segment segment (B 2 C business), Sharekhan sees a potential for multiple re-rating of the stock.
4) Tata Motors
Recommended By: Prabhudas Lilladher
Why Buy: The bokerage house is positive on Tata Motors and have a ‘Buy’ rating with a price target of Rs 518. Prabhudas Lilladher believes that JLR faces a short-term negative outlook due to weakness in China. However, with its strong product portfolio, JLR is in a good position to counter the slowdown there as well as increase its sale in other geographies, thereby resulting in a positive outlook from a medium‐to-long-term perspective. In the India business, with M&HCV volumes already on the move, and a recovery expected in LCVs by 4QFY16, the turnaround in India operations would get completed in FY17.
Recommended By: Prabhudas Lilladher
Why Buy: The bokerage house is positive on Tata Motors and have a ‘Buy’ rating with a price target of Rs 518. Prabhudas Lilladher believes that JLR faces a short-term negative outlook due to weakness in China. However, with its strong product portfolio, JLR is in a good position to counter the slowdown there as well as increase its sale in other geographies, thereby resulting in a positive outlook from a medium‐to-long-term perspective. In the India business, with M&HCV volumes already on the move, and a recovery expected in LCVs by 4QFY16, the turnaround in India operations would get completed in FY17.
5) JK Laxmi Cement
Recommended By: Prabhudas Lilladher
Why Buy: JK Lakshmi cement is the fifth largest cement producer in North India with around 7 per cent market share in the region with a capacity of 9mtpa. This backed by one of the most efficient operations, entry into the most profitable eastern region with a capacity of 2.7mtpa, and increasing consolidation in Gujarat (around 40 per cent of its total volumes) ranks the company as one of top pick in th sector with a price target of Rs 450 at EV/T of US$100 FY17E capacity of 12m tonnes.
Recommended By: Prabhudas Lilladher
Why Buy: JK Lakshmi cement is the fifth largest cement producer in North India with around 7 per cent market share in the region with a capacity of 9mtpa. This backed by one of the most efficient operations, entry into the most profitable eastern region with a capacity of 2.7mtpa, and increasing consolidation in Gujarat (around 40 per cent of its total volumes) ranks the company as one of top pick in th sector with a price target of Rs 450 at EV/T of US$100 FY17E capacity of 12m tonnes.
6) Infosys
Recommended By: Prabhudas Lilladher
Why Buy: Prabhudas Lilladher expects Infosys to return to industry revenue growth by end FY16 and grow ahead of industry in FY17. Multiple strategic initiatives (Zero Bench, Zero Distance, ) spearheaded by Dr Sikka are at various stages of implementation and signs of early success are reflected in strong 1HFY16 revenue growth, deal wins, better client mining and efficiency benefits. The brokerage house expects full benefits to flow in by FY17-18 and that should result in Infosys leading industry growth with margin improvement. Stock is trading attractive at ~17x FY17 EPS, Prabhudas Lilladher have ‘Buy’ rating with target price of Rs 1,440.
Recommended By: Prabhudas Lilladher
Why Buy: Prabhudas Lilladher expects Infosys to return to industry revenue growth by end FY16 and grow ahead of industry in FY17. Multiple strategic initiatives (Zero Bench, Zero Distance, ) spearheaded by Dr Sikka are at various stages of implementation and signs of early success are reflected in strong 1HFY16 revenue growth, deal wins, better client mining and efficiency benefits. The brokerage house expects full benefits to flow in by FY17-18 and that should result in Infosys leading industry growth with margin improvement. Stock is trading attractive at ~17x FY17 EPS, Prabhudas Lilladher have ‘Buy’ rating with target price of Rs 1,440.
7) ITC
Recommended By ICICIdirect
Why Buy: ICICI direct have a positive stance on ITC given its focus shifting on growing FMCG business with the target to achieve Rs 1 lakh crore revenues by 2030, which translates into a 17 per cent CAGR growth. Simultaneously, a structural decline in commodity prices has increased visibility of earnings growth in segment. Furthermore, rising unrest among tobacco farmers could halt excise hike in cigarettes in the next Budget, which could be a relief in the medium term for cigarette manufacturer.
Recommended By ICICIdirect
Why Buy: ICICI direct have a positive stance on ITC given its focus shifting on growing FMCG business with the target to achieve Rs 1 lakh crore revenues by 2030, which translates into a 17 per cent CAGR growth. Simultaneously, a structural decline in commodity prices has increased visibility of earnings growth in segment. Furthermore, rising unrest among tobacco farmers could halt excise hike in cigarettes in the next Budget, which could be a relief in the medium term for cigarette manufacturer.
8) Syngene International
Recommended By: ICICIdirect
Why Buy: Syngene is well poised to cash in on growing global pharma R&D outsourcing trend. Global Pharma players are inclined to outsource some of the R&D budget to the contract research organisations (CROs) like Syngene to maintain the cost balance and new product introduction. As an Indian player, it has a significant cost advantage and skilled personnel compared to global CRO companies. It also enjoys high recall value due to its integrated service offerings coupled with consistent performance and high data integrity ethos.
Recommended By: ICICIdirect
Why Buy: Syngene is well poised to cash in on growing global pharma R&D outsourcing trend. Global Pharma players are inclined to outsource some of the R&D budget to the contract research organisations (CROs) like Syngene to maintain the cost balance and new product introduction. As an Indian player, it has a significant cost advantage and skilled personnel compared to global CRO companies. It also enjoys high recall value due to its integrated service offerings coupled with consistent performance and high data integrity ethos.
9) PNC Infratech
Recommended By: ICICIdirect
Why Buy: PNC is a North based EPC player with track record of timely/early completion of projects. With strong order book of Rs 4,000 crore (including L-1 bids), healthy order inflow pipeline from anticipated revival in road awarding, and lean balance sheet, ICICIdirect expects PNC speed up its growth trajectory. The brokerage house expects PNC Infratech’s top line and bottom line to grow at a CAGR of 20.7 per cent and 25.4 per cent during FY15-FY17E v/s 16 per cent and 17.3 per cent CAGR during FY10-15.
Recommended By: ICICIdirect
Why Buy: PNC is a North based EPC player with track record of timely/early completion of projects. With strong order book of Rs 4,000 crore (including L-1 bids), healthy order inflow pipeline from anticipated revival in road awarding, and lean balance sheet, ICICIdirect expects PNC speed up its growth trajectory. The brokerage house expects PNC Infratech’s top line and bottom line to grow at a CAGR of 20.7 per cent and 25.4 per cent during FY15-FY17E v/s 16 per cent and 17.3 per cent CAGR during FY10-15.
10 Blue Dart Express
Recommended By: ICICIdirect
Why Buy: BlueDart continues to be a market leader in the air express market with around 52 per cent market share. The brokerage house expects the implementation of GST to aid shifting from unorganised (50 per cent of the market) to organised segment in the ground express market. Furthermore, upcoming deals from e-commerce companies would lead to continued higher B2C volumes for the company. With the current 1,00,000 sq feet e-fulfillment centre boding well, additional 2-3 centers are planned by FY16. Revenue growth with continued margin expansion affirms our positive stance on the company.
Recommended By: ICICIdirect
Why Buy: BlueDart continues to be a market leader in the air express market with around 52 per cent market share. The brokerage house expects the implementation of GST to aid shifting from unorganised (50 per cent of the market) to organised segment in the ground express market. Furthermore, upcoming deals from e-commerce companies would lead to continued higher B2C volumes for the company. With the current 1,00,000 sq feet e-fulfillment centre boding well, additional 2-3 centers are planned by FY16. Revenue growth with continued margin expansion affirms our positive stance on the company.
11) HDFC Bank
Recommended By: Reliance Securities
Why Buy: HDFC Bank is the second largest private sector bank in the country with 5.4 per cent market share in advances and 5.1 per cent market share in deposits. It has 4,227 branches and more than 11,700 ATMs, reaching out to more than 100mn customers. The bank has consistently outperformed its peers on both financial and operational fronts led by the strong liability franchise, low exposure to stressed sectors and superior risk management practices. Further, recent capital raising exercise would aid the bank to aggressively grow its loan book in coming years along with implementation of BASEL III norms.
Recommended By: Reliance Securities
Why Buy: HDFC Bank is the second largest private sector bank in the country with 5.4 per cent market share in advances and 5.1 per cent market share in deposits. It has 4,227 branches and more than 11,700 ATMs, reaching out to more than 100mn customers. The bank has consistently outperformed its peers on both financial and operational fronts led by the strong liability franchise, low exposure to stressed sectors and superior risk management practices. Further, recent capital raising exercise would aid the bank to aggressively grow its loan book in coming years along with implementation of BASEL III norms.
Reliance Securities expects the bank to carve out credit growth of 25 per cent CAGR over FY16E-17E with stable NIMs resulting into earnings growth of around 26 per cent CAGR. The brokerage house has a ‘Buy’ rating on the stock with a target price of Rs 1,193.
12) IPCA Lab
Recommended By: Reliance Securities
Why Buy: Ipca Labs is a mid-sized pharma company with a track record of strong growth over the past decade. Over the years it has transformed itself into a formulations company and also has moved onto faster-growing therapies. However, the USFDA import alert on Ratlam, Indore & Silvassa facilities had caused disruptions in Europe (16 per cent of sales), institutional tender business (9 per cent of sales) and API (21 per cent of sales) in FY15 and 1HFY16. Further, currency movements in Russia impacted branded exports (8 per cent of sales). Whilst the European issues subsided during 4QFY15, the tender business will normalize from 3QFY16 and HCQS profit share (US).
Recommended By: Reliance Securities
Why Buy: Ipca Labs is a mid-sized pharma company with a track record of strong growth over the past decade. Over the years it has transformed itself into a formulations company and also has moved onto faster-growing therapies. However, the USFDA import alert on Ratlam, Indore & Silvassa facilities had caused disruptions in Europe (16 per cent of sales), institutional tender business (9 per cent of sales) and API (21 per cent of sales) in FY15 and 1HFY16. Further, currency movements in Russia impacted branded exports (8 per cent of sales). Whilst the European issues subsided during 4QFY15, the tender business will normalize from 3QFY16 and HCQS profit share (US).
Reliance Securites expects IPCA to regain its lost footing in terms of multiples, as the business prospects in the institutional business improve and as the US business improves upon resolution of USFDA issues. The brokerage house, currently has a ‘Buy’ recommendation on the stock with a target price of Rs 1,000.
(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online)
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