Leading brokerages have issued research reports on five top quality stocks with the potential for heavy gains
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PC Jeweller Initiating Coverage – Reaching Small for Winning Big |
CMP (Rs.) 367 |
Target Price (Rs.): 490 |
Potential Gain (%) : 33.2 |
Research By: Emkay |
Outlook & Valuation:We expect PCJ’s reduced focus on low margin export segment and increased investments & efforts on domestic business to pay off with domestic segment growing at 20% over FY15- 18E. Subsequently, we expect strong profitability, higher free cash flow and better return ratios. We have valued PCJ on SOTP basis assigning P/E FY17E multiples of 16x to the domestic business (40% discount to Titan) and 5x to its exports business (in line with peers), our target price works out to 490/share. We initiate coverage on PCJ with a BUY rating. |
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The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns |
Greenply Industries – Strong balance-sheet to fund expansion; debt to be in check |
CMP (Rs.): 860 |
Target Price (Rs.): NA |
Potential upside (%): NA |
Research By: Anand Rathi |
Outlook & Valuation: Strong balance-sheet to fund expansion; debt to be in check With a 30% share of the organised market and its strong brand equity, Greenply Industries leads plyboard in India. The hiving off of the laminates division has led to lower debt-equity ratio and adequate free-cash flow. The MDF capacity expansions, GST implementation, revival in real estate growth would deliver growth for the company. |
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Torrent Pharmaceuticals – Multiple drivers in place for higher growth going forward |
CMP (Rs.): 1345 |
Target Price (Rs.): 1599 |
Potential upside (%): 18.9 |
Research By: IndiaNivesh |
Outlook & Valuation: We expect Torrent Pharmaceuticals (TRP) to have sales of US$130mn for FY16E from g-Abilify opportunity. Given the market size of Abilify to be ~US$5bn on annual basis, at-risk launch and one among the few early entrants for generic version of Abilify in US market, we expect TRP to have considerable traction from this product. Accordingly, we raise our EPS estimate by 28.9% and 28% to Rs70.5 and Rs76.1 for FY16E and FY17E, respectively. We also raise PE multiple from 20x to 22x to factor robust ANDA pipeline, increased capacity post commissioning of Dahej facility, product diversification expected to be achieved in regulated markets through acquisition of Zyg Pharma and ongoing revival of Elder portfolio. We raise our price target from Rs1,190 to Rs1,599 based on FY17E earnings. With 18.9% upside from current levels, we upgrade TRP from HOLD to BUY. At CMP of Rs1,345, the stock is trading at 19.1x FY16E EPS of Rs70.5 and 17.7x FY17E EPS of Rs76.1. |
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Capital First |
CMP (Rs.) 385 |
Target Price (Rs.): 425 |
Potential Gain (%) : 10.4 |
Research By: Prabhudas Liladhar |
Outlook & Valuation: Capital First (CFL) is Warburg Pincus promoted systemically important NBFC. The company offers MSME loans, two-wheeler & consumer durable financing and wholesale loans. CFL has steadily increased the composition of retail financing from 10% in FY10 to 84% currently, while it has grown its AUMs at 25% CAGR over FY12-FY15. It is well capitalized at 23.5%, has robust asset quality with Net NPL ratios at 0.17% and is rated AA+ by the rating agencies. We estimate company’s return ratios to improve over next two years as operating leverage increases and estimate RoE to expand by 520bp to 13.5% by FY17E. We value the stock at 2.0x FY17E ABV at Rs425 per share. We initiate coverage on the stock with an ACCUMULATE rating. |
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Relaxo Footwears – Positioned in a Sweet Spot in Indian Footwear Industry |
CMP (Rs.) 848 |
Target Price (Rs.): 924 |
Potential Gain (%) : 9 |
Research By: Karvy |
Outlook & Valuation: Relaxo, with its improving product mix and aggressive advertising, is moving up the value chain and becoming strong pan India player. By signing up leading celebrities from bollywood for promoting their products, the company has build its brands and strengthening its distribution network and venturing into e-commerce channels to push the sales. At CMP of Rs. 848 per share, the stock is trading at 29x FY17E EPS. We value the company at 32.2x and arrive at target price of Rs. 924 with an upside potential of 9% with “HOLD” rating. |
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