Geojit Financial Services recommends the following stocks:
Rating: Accumulate CMP: Rs 206 TP: Rs 227
NBCC is a Navaratna Enterprise engaged in Project management consultancy (PMC), Engineering Procurement & Construction (EPC), and real estate business.
Current order backlog of Rs 75,000 crore (12x FY17 sales) provides strong visibility for the next 5 years. Order inflow guidance of Rs 25,000 crore for FY18E provides a rosy picture. Q1FY18 PAT grew by 24 percent YoY led by higher EBITDA margins and lower expenses. Execution from large redevelopment will improve revenue growth from H2FY18E. We factor earnings to grow at 42 percent CAGR over FY17-19E. We upgrade NBCC to Accumulate from Hold with a target price of Rs 227.
Rating: Buy CMP: Rs 239 TP: Rs 291
Mahindra CIE (MCIE) is among the top global forging players with a strong presence in both Europe and India. Currently, 2/3rd of the revenue comes from Europe (split between CVs & PVs) while the rest comes from India (PVs).
Diversified product portfolio, broad-based customer profile and strong geographical presence establish MCIE a preferred choice for the OEMs. Scaling up new product line to drive growth in two-wheeler business will paint a positive outlook for the company. We expect EBITDA margin to improve by 350 bps over CY16-18E led by cost control initiatives and capitalising the OEM mix. Consolidated Revenue/PAT to grow at 14 percent/57 percent CAGR over CY16-18E led by an increase in order book from OEMs & recent acquisition (BFPL).
Rating: Buy CMP: Rs 418 TP: Rs 540
JK Lakshmi Cement (JKLC) is part of JK group mainly focused in North, West and Eastern regions of India with a consolidated capacity of 12.5MT as on FY17 and is one of the most cost efficient players.
JKLC reported a healthy revenue growth of 15.9 percent in Q1FY18 aided by 8 percent growth in volume and strong 12.6 percent growth in realisation. EBITDA grew marginally by 2.4 percent YoY due to a sharp increase in fuel cost. Management expects fuel (pet coke) prices to soften going forward. Further, cost efficiency to improve due to commissioning of 7.5MW WHR (FY18), 20MW Thermal Power Plant (FY19) and Conveyor Belt (FY18) in East plant. JKLC expects demand to pick up in 2HFY18, post monsoon.
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