Investors are better off betting on stocks which can deliver benchmark beating gains.
Bulls did not disappoint investors in the first month of the new calendar year as Indian market rose to fresh record highs consistently so far in the month of January.
The rally in Indian markets is not yet over but the money is likely to be made in individual stocks. The risk-to-reward ratio with respect to indices in the short term looks limited, but the current bull run is likely to span out for next 10-15 years.
"We stand at an inflection point whereby there is a high probability that the economy and the markets will shift a gear higher in the year 2018," Sunil Subramaniam, CEO, Sundaram Mutual told Moneycontrol.
"The equity markets would increasingly look at earnings delivery given the fact that valuations are robust based on trailing returns. We strongly believe that we are still in the initial stages of a long-term bull market which can span 10 to 15 years," he said.
Investors are better off betting on stocks which can deliver benchmark beating gains. The optimism stems from the fact that earnings are likely to register double-digit gains in the in the FY19.
“We expect strong momentum to continue for equity market over FY19 due to revival in earnings after teething problems of GST, low base of demonetisation, increasing focus of government on infrastructure development even at the cost of fiscal slippage and favourable global headwinds with favourable commodity prices,” Abhinav Gupta, President - Capital Markets, Share India Securities told Moneycontrol.
“Increasing government spend will lead to higher purchasing power and we expect earnings to grow at around 17-18 percent over next year. We maintain our year-end Nifty target at 12,500 in line with current multiples and pricing in the earnings growth over the course of the year,” he said.
We have collated a list of 5 stocks from various brokerage house on stocks which could emerge as a dark horse in 2018 and beyond:
CLSA which has an outperform rating on Dr. Reddy’s Laboratories said that Dr. Reddy’s Lab could be a dark horse in 2018 if it is able to monetise its complex products pipeline in a timely manner. The stock has fallen over 21 percent in the calendar year 2017.
Global pharma consolidation will gather steam in 2018 as challenging industry dynamics in the USA drive supplier-side consolidation whereas, in India, the government’s focus on improving quality and good-manufacturing-practice compliance could increase market share at top companies.
Citigroup sees Gujarat Gas as a Dark Horse in the gas space. Gujarat Gas (GG) is one of India’s largest player in the industrial gas segment and city gas distribution (CGD) with a dominant presence in Gujarat.
The company has been rapidly expanding its reach in Gujarat by way of securing licenses to expand its CGD network across five new areas, making it to 19 districts of Gujarat, Dadra and Nagar Haveli, Thane and Palghar in Maharashtra.
The current rising environmental concerns and the government’s aim to switch to gas-based economy put companies like Gujarat gas in a sweet spot, ICICIdirect said in a report.
“We believe the company’s strong CGD network offers good demand potential due to lower CNG, residential PNG penetration and increased usage of natural gas for industrial volumes,” it said. The domestic brokerage firm has a BUY rating with a target price of Rs1000.
ICICI Securities which has a buy rating on DLF sees the real estate player emerging as a dark horse in the next 2-3 years.
DLF is the likely dark horse over the next 2-3 years in the sector, said the report. The promoter stake sale in its rental SPV to GIC Singapore being concluded, DLF is set to receive Rs140-150bn of proceeds by Q4FY18 through promoter fund infusion/QIP which will bring down DLF’s debt by half.
A fresh infusion of money would enable the company to refocus on its strategy in the residential segment, which has been a laggard over the last 4 years.
Emkay sees Tata Motors emerging as a ‘Dark Horse’ in the automobile space. Tata Motors would be our dark horse, as currency worries subside and volume growth momentum persists. Among ancillaries, Emkay like Apollo Tyres and Exide Industries, it said in a report.
The Indian automobile industry is in a sweet spot on the back of a cyclical recovery across segments. Rural India is turning out to be the growth frontier for the automobile industry, as near-normal monsoon for 2 years and receding effect of demonetization have bolstered consumer confidence.
Dynemic Products Ltd:
Rudra Shares and Stock Broking who has an Accumulate recommendation on Dynemic Products Ltd. The company is a leading global manufacturers & distributor of Food Colors, Lake Colors, and Blended Colors & US-FDA certified FD&C Dyes.
The future of Dyestuff and Dye Intermediates has good prospects in the coming years owing to its high demand. The growth of dye sector in the future will continue to depend on the performance of end-user industries like paints, textiles, printing inks, paper, plastics, and foodstuffs, said the report.
Food Processing Industries is increasing at a high growth rate in almost every country thus opening the door for the high demand for products that increases the shelf life of processed food. So the overall demand for the antioxidant is expected to increase in coming years.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.