Best Stocks To Buy For 2018 | Recommendations By Nirmal Bang

2003-2007 V/s 2017 -…….. 2003-2007

Global Rally
Supported By earning growth
Supported By FII liquidity
Private Investment driving
Stable Macro Environment
2017- …….
Global Rally
Not Supported By earning growth
Supported By Domestic liquidity
Private Investment Missing
Stable Macro Environment

To sustain this rally for longer period the earning should revive strongly and Global rally should continue

Near term Outlook

US earning are likely to be better
Domestic earning likely to improve
Liquidity flow continue
No major event before budget
Near Term outlook is positive

Risks

Correction in International markets
Corporate earning should improve
Geopolitical issue
Initial Sign of pickup in inflation
Reversal of QE / Increase in interest rate in US

S Chand and Company Ltd.

CMP: Rs 520 Target: Rs 631 Investment Rationale

Highest growth in last 5 years – Over, FY12- FY17, Sales grew to Rs 684cr in FY17 led by both organic and inorganic way (CAGR 31.6% )

Presence in the growing industry will support the growth of the company

Strong Financials Support Inorganic Growth – S Chand reported constantly higher Ebitda margin of above 20% and requires limited investment in Fixed asset. From FY12-17, S Chand has invested almost around Rs 584 cr in acquisition and digital platform which lead to lower ROCE but excluding digital investment ROCE stands at 17.2% in FY17.

Dilip Buildcon Ltd

CMP: Rs 987 Target: Rs 1324 Investment Rationale

Sales of BOT/HAM projects will free capital for growth
Consistent track record of early completion of projects
Industry leading margin and ROE
Improvement in working capital cycle
Capitalizing on market opportunities in Road sector

Shemaroo Entertainment Ltd.

CMP: Rs 425 Target: Rs 612 Investment Rationale

From past few years, the company is constantly incurring high capex in buying the titles of movies, however, management guided , FY18 closing inventory to be lower than FY17 inventory, which indicates investment phase is getting over.

New media segment is high margin business growing at a CAGR of 44.4% from FY12-17

With 3585 titles, 948 perpetual rights & 2637 aggregate rights as on FY17, Shemaroo, has the largest content base in Bollywood which makes vital for a broadcaster to purchase contents from Shemaroo in order to run a meaningful Bollywood content service.

DCB Bank Ltd.

CMP: Rs 195 Target: Rs 240 Investment Rationale

With completion branch expansion plan cost to income ratio to improve and will yield good returns in the future
Healthy Growth in Net Interest Income
Stable asset quality
Well capitalised and healthy Balance Sheet