Karvy has issued research reports on four top quality stocks with the potential for heavy gains
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| NRB Bearings – Mirroring India’s Growth Story… |
| CMP (Rs.) 101 |
| Target Price (Rs.): 141 |
| Potential Gain (%) : 39.3 |
| Research By: Karvy |
| Outlook & Valuation: NRBBR well positioned to benefit from economic recovery: Industrial and investment activity are showing signs of improvement with GDP estimated to grow at 7.5-8.0% during FY16E-17E. Bearing, being a basic industry and having its application across all sectors, is well positioned to benefit from economic revival. NRBBR, well equipped with diverse product portfolio, is expected to grow (sales) at a CAGR of 10.5% between FY15-17E to Rs. 8,812 Mn, while improving EBITDA and PAT margins to 22.9% & 11.6% levels respectively. |
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| Himatsingka Seide Ltd – International business to drive the revenue growth; Margins to Improve |
| CMP (Rs.): 119 |
| Target Price (Rs.): 145 |
| Potential upside (%): 22 |
| Research By: Karvy |
| Outlook & Valuation: Himatsingka Siede (HSS) on the retail and distribution front, carrying some of the most prestigious brands continuing to explore ways to strengthen its brand portfolio in international market. Currently, US subsidiaries are in a sweet spot and are leading the group’s revenue with a contribution of 87% consolidated revenue. In the next two years, we are expecting the US revenue will ramp up from Rs.16909 Mn in FY15 to Rs.20500 Mn in FY17E. |
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| Inox Leisure Ltd – Living the Movie Experience |
| CMP (Rs.): 199 |
| Target Price (Rs.): 239 |
| Potential upside (%): 20 |
| Research By: Karvy |
| Outlook & Valuation: Inox is the second largest player in the Indian movie exhibition industry and is narrowing its gap with the industry leader PVR on most of the metrics. We value the company on the basis of EV/EBITDA and assign multiple of 10x and arrive at target price of Rs.239 with “BUY” rating for period of 9-12 months representing an upside of 20%. We have given a premium to the valuation considering the Inox’s market position in movie exhibition business and stronger balance sheet. In movie exhibition industry, EV/EBITDA valuation for the multiplexes ranges in the band of 9-13 times. |
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| Lovable Lingerie Ltd – Stable Revenue Growth, Pressure on Margins Though |
| CMP (Rs.): 295 |
| Target Price (Rs.): 320 |
| Potential upside (%): 9 |
| Research By: Karvy |
| Outlook & Valuation: High Potential being a Branded Organized Player, but Challenge Remains in Converting Potential into Performance: LLL is a focused player in the women innerwear segment of Indian apparel industry, with strong brand recall value. There are very few organized players in this industry in India and the market growth is in sector is more than 13%, Lovable has immense opportunities in this sector. We believe that if the company is able to sort out it’s issues related to distributors, it would be able to post improved revenues in the coming years, with the possibility of converting its potential into performance. |
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