Leading brokerages have issued research reports on three top quality stocks with the potential for heavy gains
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| Bharat Earth Movers Initiating coverage Report – Metro + Mining Equip. + Defense = All triggers in place… |
| CMP (Rs.) 1218 |
| Target Price (Rs.): 1414 |
| Potential Gain (%) : 16 |
| Research By: Angel Broking |
| Outlook & Valuation: At the current market price of Rs. 1,218/share, BEML is trading at FY2017E P/E multiple of 19.0x. Historically, since Feb-2001, BEML’s stock has traded at 1-year forward P/E multiple of 27x (excluding the time when BEML made losses). On assigning P/E multiple of 22.0x to our FY2017E EPS estimate of Rs. 64/share, we arrive at price target of `1,414, estimating 19% top-line and 529% bottom-line CAGR during FY2015-17E. Alternatively, BEML’s stock at Rs. 1,218 is trading at FY2017E EV/sales of 1.3x. At the implied price target of Rs. 1,414/share, BEML would trade at FY2017E EV/sales of 1.5x, which is at ~12% discount to its long-term average. Given the 16% upside from current levels, we initiate coverage on BEML with Buy rating. |
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| Rane Brake Lining Initiating Coverage Report – No Brake to its Ascent |
| CMP (Rs.): 282 |
| Target Price (Rs.): 336 |
| Potential upside (%): 19 |
| Research By: Angel Broking |
| Outlook & Valuation: RBL’s revenues are estimated to grow at 12% CAGR over the next two years. Upsurge in OEM volumes coupled with focus on the aftermarket segment would drive the top-line. Also, the company’s margins are expected to improve on account of operating leverage, enhanced local procurement and energy savings. Given the healthy top-line growth and margin improvement, RBL’s earnings are likely to grow at a CAGR of 17% over FY2015-2017. Its return ratios are also estimated to expand due to margin improvement and reduction in leverage. We initiate coverage on RBL with a Buy recommendation and target price of `336 (based on 12x FY2017 earnings). |
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| CCL Products (India) Ltd – Higher Profitability & Robust Cash flows |
| CMP (Rs.): 181 |
| Target Price (Rs.): 204 |
| Potential upside (%): 12.7 |
| Research By: Karvy |
| Outlook & Valuation: At CMP of Rs 181, CCLP trades at 14.6x FY17E earnings. For the past 1 year, the stock is trading at an average 2 year forward PE of 13.5x. Given the sales CAGR of 18.5% in FY14-17E driven by growth in sales volume in its India & Vietnam operations, sound cash flows and healthy return ratios, the valuations appear to be reasonable and the company is fairly valued. We assign a ‘HOLD’ rating for a price target of Rs 204 equivalent to 16.5x FY17E, arrived by mapping book value to 4.4 after discounting the future growth prospects, which represents an upside potential of 12.7%. |
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