Leading brokerages have issued research reports on three top quality stocks with the potential for heavy gains
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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The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns |
| 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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