Smart Outperformance of Diwali 2017-18 picks
First, we have to compliment the wizards of Sharekhan for managing to outperform the Benchmark Indices with respect to their stock recommendations for 2017-18.
This outperformance is quite commendable because even highly distinguished PMS Fund managers were badly mauled by the Bears and suffered the ignominy of being described as the “worst performers” by Bloomberg (see PMS Portfolios Of Basant Maheshwari & Porinju Veliyath Suffer Losses & Under-perform Peers).
In contrast, in the period from Diwali 2017 to date, the 10 stocks recommended by Sharekhan managed to churn out a return of 4%.
This compares very favorably with the loss of 11% suffered by the CNX Midcap and the return of 3% given by the Nifty in the same period.
Of the 10 recommended stocks, Bata India was the outperformer with a splendid gain of 21.2%.
It is worth recalling that Bata India was earlier recommended by Porinju Veliyath on the basis that it is a “money-minting theme“.
Bata nearly doubled since then; holding in PMS – 'unorganized to organized' is still a money-minting theme in Indian markets! #ChangingIndia https://t.co/MbQuM28d2C
— Porinju Veliyath (@porinju) October 11, 2017
#SharekhanFNA #SharekhanResearch maintain Positive view with 10-12% upside on @BATA_India; Q2FY19 revenue and PAT grew in double digits; GST rate reduction, store additions, re-modelling of existing stores and launch of fashionable products would drive growth in the near term
— Sharekhan Limited (@Sharekhan) November 9, 2018
Sundram Fasteners and Mahindra &Mahindra also put up a good show with returns of 18.3% and 14% respectively.
However, KNR Constructions spoilt the show by losing 11.4%.
At this stage, we must remember that KNR Constructions is Porinju Veliyath’s ex 10-bagger stocks.
The stock has been highly recommended by Dolat Capital for massive expected gains of 135% (See Porinju Veliyath’s 10-Bagger Stock Has 135% Gain Potential: Experts).
| Company name | Reco* (Rs.) | CMP# (Rs.) | Return (%) |
|---|---|---|---|
| Aurobindo Pharma | 744.1 | 747.6 | 0.5 |
| Bajaj Finserv | 5,305.0 | 5,415.0 | 2.1 |
| Bata India | 739.5 | 895.3 | 21.2 |
| IndusInd Bank | 1,689.0 | 1,576.5 | ‐6.6 |
| KNR Constructions | 209.0 | 185.2 | ‐11.4 |
| Mahindra &Mahindra | 651.0 | 741.5 | 14.0 |
| RBL Bank | 516.0 | 505.0 | ‐2.0 |
| TV Today Network | 360.0 | 386.3 | 7.5 |
| V‐Guard Industries | 190.4 | 174.2 | ‐8.5 |
| Sundram Fasteners | 452.0 | 534.7 | 18.3 |
| Sharekhan Diwali Picks | 4.0 | ||
| Nifty return | 9,979.7 | 10,303.6 | 3.0 |
| CNX Midcap | 18,528.2 | 16,515.0 | ‐11.0 |
Stocks recommended for 2018-2019
Sharekhan’s stock recommendations for 2018-2019 also appear to have stellar quality.
There is a sensible balance between nimble footed small-caps and blue-chip behemoths.
There is also proper allocation to various sectors such as specialty chemicals, textiles, consumer, Pharma, Banking, Info Tech, Infra, Autos etc.
The list of the recommended stocks is as follows:
| Company | CMP (Rs.) | EPS (Rs.) FY19E | EPS (Rs.) FY20E | PER /PBV (x) (FY19E) | PER /PBV (x) (FY20E) | RoE (%) (FY19E) | RoE (%) (FY20E) |
|---|---|---|---|---|---|---|---|
| Aarti Industries | 1249 | 53.1 | 74.8 | 23.5 | 16.7 | 24.1 | 26.4 |
| Arvind Limited | 322 | 23.7 | 33.2 | 13.6 | 9.7 | 15.1 | 18.2 |
| Britannia Industries | 5557 | 104.3 | 129.2 | 53.3 | 43 | 32.8 | 32.4 |
| Divi's Laboratories | 1289 | 46 | 58.8 | 28 | 21.9 | 21.3 | 22.9 |
| ICICI Bank | 315 | 173.9 | 188.1 | 1.8 | 1.7 | 6.9 | 11.5 |
| IndusInd Bank | 1577 | 460.8 | 546.4 | 3.4 | 2.9 | 17.3 | 18.9 |
| Infosys Limited | 683 | 36.8 | 42.5 | 18.5 | 16.1 | 26 | 31.4 |
| Jubilant FoodWorks | 1269 | 22.4 | 27.7 | 56.8 | 45.9 | 25.3 | 25.2 |
| Larsen & Toubro | 1208 | 65.1 | 71.7 | 18.6 | 16.9 | 15.5 | 15.2 |
| L&T Infotech | 1740 | 83.6 | 94.1 | 20.8 | 18.5 | 33.3 | 30.6 |
| Reliance Industries | 1102 | 71.9 | 83.7 | 15.3 | 13.2 | 12.3 | 12.7 |
| Sundram Fasteners | 535 | 22.3 | 27.3 | 24 | 19.6 | 25.7 | 26.2 |
There is also a detailed commentary given on each stock which explains precisely, the prospects of the stock and its risk factors.
Good track record of Sharekhan
Sharekhan does have a good track record in the matter of stock recommendations.
Earlier, their model portfolio of blue-chip stocks yielded a return of 34% YoY and 46% YTD (see Sharekhan Delights With 46% YTD Gain From Model Portfolio Of Blue-Chip Stocks).
Even in 2016, Sharekhan churned out a return of 42.1% and heavily outperformed the Nifty’s return of 14.7.
So, we will have to treat their present recommendation with due respect!
Good to see hidden gem L&T infotech finally getting coverage from Sharekhan . It’s a great componder for the next three years though it has already moved from 800 to 1700 in last one year .
Sourav Mukerega has also recommended this as midcap IT top pick
From when did 4% return, well below rate of inflation, became an outperformer? What about someone’s conservative advice of Bank FD whose post tax return was better than rate of inflation?
Just by comparing with weak performing other indices, one cannot justify the returns! Unless someone posts 12%+ returns (since now we have a tax on LTCG also), its a waste to profile those on this page.