Five top-quality stocks have been identified by leading brokerages as being worthy of a buy now
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| Inox Leisure: Growth show set to begin |
| CMP Rs. 181 |
| Target Price: 240 |
| Potential Gain (%) : 33 |
| Research By: Motilal Oswal |
| Outlook & Valuation: We believe that INOL is rightly-placed to enter the next phase of growth. With Satyam’s acquisition, company has improved its presence in North India. This will result in superior bargaining power with advertisers, leading to higher earnings growth. We expect INOL’s revenue and PAT to post 29% and 169% CAGR over FY15E-17E. We believe that an improvement in operating metrics will lead to better return ratios, and RoCE and RoE are expected to improve from 8.3% to 17.7% and 2.8% to 13.7% respectively over FY15E-17E. Further, INOL owns six properties valued at INR5b which can be monetized in the form of sale and leaseback arrangements for acquisition purposes. The stock trades at a PE multiple of 25.8x and 15.0x FY16E and FY17E EPS respectively. We value INOL at a PE multiple of 20x FY17E EPS (implied EV/EBITDA multiple of 9x FY17E EV/EBITDA), arriving at a target price of INR240.We initiate coverage on the stock with a Buy rating. |
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Samsung Galaxy S4 now at Rs 17,999+Gift card worth Rs 1000 |
| Marico Kaya – Skin care ‘Titan’ |
| CMP: Rs. 1515 |
| Target Price: Rs. 1675 |
| Potential upside (%): 10 |
| Research By: HDFC Securities |
| Outlook & Valuation: The business model is unique and impregnable. Hardly any long term capital is required as operations require negative working capital. Cash of Rs 1.8bn post demerger (from Marico) and improving OCF are adequate to fund growth over the next 3-4 years. By then, operations may well spew enough cash to continuously expand Kaya’s footprint in a grossly underpenetrated space. |
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| Suzlon Energy – Wind in its sails, again |
| CMP: Rs. 26 |
| Target Price: Rs. 34 |
| Potential upside (%): 30 |
| Research By: HDFC Securities |
| Outlook & Valuation: Having faced multiple crises over FY09-14, we believe Suzlon is on the cusp of a turnaround. It has aggressively reduced debt from its heavily levered balance sheet by divesting its German subsidiary Senvion (for Euro 1bn) and via a preferential issue of Rs 18bn to Dilip Shanghvi and Associates (DSA). These developments will enable the company to not only reduce debt but also provide much needed working capital to ramp up business in the rapidly growing Indian wind energy market. With the NDA government’s ambitious plans for renewable energy, we expect favourable policy environment for wind power to continue. Aided by significant operating and financial leverage, we expect Suzlon’s earnings to grow manifold over the next few years. Suzlon is among a handful of listed companies levered to India’s fast growing renewables industry. We initiate coverage with a BUY and TP of Rs 34/sh based on 14x FY17E EV/ EBITDA. |
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| Mahindra CIE Automotive – Merger in place…debuts consolidated numbers! |
| CMP Rs. 201 |
| Target Price: 260 |
| Potential Gain (%) : 29 |
| Research By: ICICI-Direct |
| Outlook & Valuation: Mahindra CIE Auto is a unique case of valuation considering the massive turnaround possibilities. We expect utilisation levels to improve leading to EBIT margins rising to 8% and RoCE expansion to ~15% in FY17E. We expect dividend payout of ~30%, in line with CIE’s philosophy of high dividend payouts (~30-50%). CFOs are also likely to balloon to ~Rs. 700- 800 crore (FY17E). We value MCI at 10x FY17E EV/EBITDA multiple (~25% discount to Bharat Forge), considering its steady turnaround in operations. Our target price of Rs. 260 implies an upside of ~29%. We continue to recommend BUY. |
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| Star Ferro & Cement – Leader of its own land… |
| CMP: Rs. 162 |
| Target Price: Rs. 275 |
| Potential upside (%): 70 |
| Research By: ICICI-Direct |
| Outlook & Valuation: Star Ferro Cement (SFCL) is the largest cement player in the North-East region (NER) with over 23% market share. Being located in a geographically complex region, SFCL enjoys a competitive advantage in the NER, which also imports cement from other neighbouring states leading to higher cement prices in the NER region. Demand growth in this region has consistently remained higher than the growth at pan-India level. In order to reduce imports, the company has expanded its capacity from 1.5MT in FY13 to 3.6 MT in FY15. This, in turn, has helped SFCL to gain market share in the NER. With the government’s thrust on infrastructure development, we expect demand growth in this region to remain healthy over the next 3-4 years. Given this backdrop, we expect the company to clock revenue CAGR of 25.5% in FY15-17E. We initiate coverage on Star Ferro Cement with a BUY recommendation. |
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Star ferro – Over priced…. do not agree with this recomendation…
better buy Srikalahathi at current level…