Seven top-quality stocks have been identified by leading brokerages as having huge upside ranging from 17% to 81%
| Godawari Power & Ispat |
| CMP Rs. 115 |
| Target Price: 209 |
| Potential Gain (%) : 81.1 |
| Research By: Emkay |
| Outlook & Valuation: The company at the CMP of Rs 115, is stock is trading at 2.4x FY17 EPS and 3.8x FY17 EV/ EBITDA. Speedy ramp up in iron ore mining poses upside risks to our estimates. We value the company by taking an average EV/ EBITDA based valuation for FY16 and FY17. Maintain BUY with a target price of Rs 209. |
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Samsung Galaxy S4 now at Rs 17,999+Gift card worth Rs 1000 |
| TD Power Systems – Buy |
| CMP: Rs. 400 |
| Target Price: Rs. 696 |
| Potential upside (%): 73.9 |
| Research By: Emkay |
| Outlook & Valuation: Management maintained the revenue guidance for FY15E and FY16E and have also indicated of new business opportunities which are likely to be announced in the near future. Risk mitigations measures are in place to reduce the adverse impact of Euro depreciation – increasingly sourcing raw materials from Euro region and value engineering efforts directed at reducing raw material content by 4-5%. At current levels, the stock trades at 14.5X FY17EEPS. We maintain Buy with price target of Rs696/share. |
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| Bajaj Electricals – Buy |
| CMP: Rs. 225 |
| Target Price: Rs. 312 |
| Potential upside (%): 38 |
| Research By: Angel Broking |
| Outlook & Valuation: With expectations of timely execution of the existing projects in the E&P segment and volume growth rebounding in the Lightning and Consumer durable segments we expect the top-line to grow at a CAGR of 12.6% over FY2014-FY2017E. We expect the company to report a profit of `81cr in FY2017E as against a loss of `5cr in FY2014. At the CMP of Rs.225, the stock is trading at an attractive EV/Sales of 0.4x on FY2017E, which we feel factors in most of the negatives. Thus, we recommend a Buy rating on the stock with a target price of Rs.312, valuing the stock at EV/Sales of 0.6x. |
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| Nilkamal – Initiating Coverage |
| CMP Rs. 440 |
| Target Price: 566 |
| Potential Gain (%) : 28 |
| Research By: Angel Broking |
| Outlook & Valuation: We expect the company’s Plastics business to post a CAGR of 11.5% (with an upturn in the economy) over FY2014-2017E, which will aid the company to post a revenue CAGR of 9.4%, over the same period, to `2,167cr. The EBITDA margin is expected to stabilize at 7.5% in FY2015E and improve to 8.1% in FY2017E. The debt for the company is expected to reduce by `62cr over FY2014-17E, resulting in lower finance costs. Consequently, the company would post a net profit CAGR of 17.5% over FY2014-17E to `65cr, as per our estimates. At the current market price, the stock is trading at FY2017E PE of 10.1x. We initiate coverage on the stock with a Buy rating and a target price of Rs. 566, based on a target FY2017E PE of 13x. |
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| HDFC Bank – Buy |
| CMP: Rs. 1066 |
| Target Price: Rs. 1250 |
| Potential upside (%): 17.3 |
| Research By: Emkay |
| Outlook & Valuation: We favour the bank for its strong fundamentals and consistent profit growth and expect it to be the best placed of its peers in managing the challenges ahead—of capital adequacy (Basel-III norms) and credit quality. Hence, we maintain our Buy rating. At our Mar’17 target of Rs1,250, the stock would trade at PBV of 4.4x FY16e and 3.8x FY17e. Risk. Slower-than-estimated economic growth could impact business growth and asset quality. |
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| Strides Arcolab Ltd: Initiating Coverage |
| CMP: Rs. 876 |
| Target Price: Rs. 1031 |
| Potential upside (%): 17 |
| Research By: Edelweiss |
| Outlook & Valuation: Strides Arcolab (STAR) has metamorphosised from a predominantly injectable-focused company into a niche pharmaceutical generic player. With an unequivocal strategy to deepen its branded generic presence in the lucrative African market, turn the tap off unremunerative operations (anti-TB drugs) and not sacrifice profitability in pursuit of market share in the institutional segment, the company’s profitability has catapulted substantially from low double digits to 20% plus currently. Moreover, merger of Shasun Pharmaceuticals (Shasun) has accorded STAR a vertically integrated conglomerate status, which will enable it to pare sourcing costs meaningully, besides giving it access to the former’s fomidable products pipeline in the US market. Improving contribution of the high margin African branded business, uptick in the domestic branded market via Bafna Pharmaceutical’s domestic portfolio acquisition along with incremental benefits from vertical integration amply equip the company to garner higher profitability and imparts commendable growth visibility going forward. |
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| Natco Pharmaceuticals – Buy |
| CMP: Rs. 1405 |
| Target Price: Rs. – |
| Potential upside (%): – |
| Research By: Edelweiss |
| Outlook & Valuation: Natco Pharmaceuticals Ltd (NPL) reported a topline of INR 195.5 crs which was 5.8% below our estimate of INR 207.5 crs. This was mainly on account of 44% YoY de-growth witnessed in the export formulations segment led by absence of sales from the Venezuelan tender business. During the quarter, the company paid a one time settlement of INR 15.1 crs to SMS Pharma, resulting in PAT of INR 13.7 crs. Adjusting for the same, the company reported an adjusted PAT of INR 29.5 crs, lower than our estimate of INR 32.0 crs. The domestic oncology formulations segment continued to show good traction, registering a growth rate of ~28% YoY. The management has indicated for key product launches in FY 16E across various markets, which is expected to substantially boost growth momentum going forward. We believe that the company has a very impressive pipeline in the US, which is expected to contribute substantially to the company’s future growth and margins. We maintain our “BUY” recommendation. |
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I won’t touch Bajaj Electricals given any positive report, don’t trust that company at all.
I guess the same goes true with Godawari Power & Ispat