Three Stocks With Potential For Huge Gains By Amar Ambani Of IIFL

Sobha Limited: Breakout Play – BUY
CMP Rs492, Target Rs610, Upside 24%

On EV charts, we could observe that during the past few months the stock shows decent rise in volumes with thick candle bodies. This indicates a strong hand is absorbing the stock at every decline. In weekly time frame (with line chart), we could also observe the formation of triangle pattern. Proprietary study supports the indications of breakout occurring in the pattern, adding value to the bullish stance in the stock.

We recommend a BUY on the stock with 50% at current market price and the rest at declines (due to increase in volatility) for a conservative target of Rs610 with a stop loss of Rs.460 on closing basis.

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Hindustan Unilever (Q3 FY15) – BUY
CMP Rs893, Target Rs1,027, Upside 15.1%

• HUL registered ~8% yoy revenue growth at ~Rs76bn, below our expectations at ~Rs78bn mainly due to delayed winter and pipeline inventory correction. Underlying volume growth stood at 3% yoy

• A 120bps drop in raw material cost cushioned operating margins. Higher depreciation and tax outgo pulled down net profit by ~18% yoy to Rs8.6bn, below our expectation of Rs10.8bn. APAT post extraordinary items of ~Rs4bn increased by ~18% yoy to Rs12.5bn

• We believe. HUL is well placed to benefit from the sharp correction in key input prices and recovery in volume growth, which would drive ~19% EPS CAGR over FY15-17. Recommend Buy with a 9-mth target price of Rs1,027.

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Indiabulls Housing Finance (Q3 FY15) – BUY
CMP Rs572, Target Rs771, Upside 34.8%

• Loan assets growth accelerates to 23% yoy; to exceed 20-22% growth guidance for the year

• Book spread to rationalize towards incremental spreads; cost of funding has started to ease

• Asset quality intact; balance sheet remains robust

• Retain BUY with 24-month target of Rs771

Click here for the detailed report on the same.