Big fish in midcap pond: 10 stocks on Credit Suisse radar

Big fish in midcap pond: 10 stocks on Credit Suisse radar
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Big fish in midcap pond: 10 stocks on Credit Suisse radar
  • 
	Even as frontline shares have paused for a breather, investors continue to load up on second line shares, betting on them to be relatively undervalued. Brokerage house Credit Suisse has listed a set of midcap stocks that are leaders in relatively small, but growth sectors. The overall sector growth, rising market share due to their relatively dominant position, margin benefits due to increasing scale and expansion of valuation multiples are seen as the drivers for stock re-rating.
	
	Click on the next slide to find out more...

    Even as frontline shares have paused for a breather, investors continue to load up on second line shares, betting on them to be relatively undervalued. Brokerage house Credit Suisse has listed a set of midcap stocks that are leaders in relatively small, but growth sectors. The overall sector growth, rising market share due to their relatively dominant position, margin benefits due to increasing scale and expansion of valuation multiples are seen as the drivers for stock re-rating. Click on the next slide to find out more...

  • 
	Cox and Kings

	Rating: Outperform
	Current market price: Rs 141
	Target: Rs 170

	Outbound travel, a key focus area for C&K, can witness robust growth relative to inbound and domestic travel. C&K India had roughly 30% CAGR between FY06 and FY12 due to market share gains from unorganized players. This increase in market share is expected to continue. High debt levels remain the key concern in the medium term.
	 

    Cox and Kings Rating: Outperform Current market price: Rs 141 Target: Rs 170 Outbound travel, a key focus area for C&K, can witness robust growth relative to inbound and domestic travel. C&K India had roughly 30% CAGR between FY06 and FY12 due to market share gains from unorganized players. This increase in market share is expected to continue. High debt levels remain the key concern in the medium term.  

  • 
	Dish TV

	Rating: Outperform
	Current market price: Rs 81.95
	Target: Rs 82

	India is likely to go the wireless way (the way telephony went) and a large share of India’s cable & satellite (C&S) household additions in the next few years will go to DTH. Dish TV’s subscriber base is expected to grow by 15% in the next five years. Over this period, company average realization per user is seen growing from about Rs 160 to Rs 240.

    Dish TV Rating: Outperform Current market price: Rs 81.95 Target: Rs 82 India is likely to go the wireless way (the way telephony went) and a large share of India’s cable & satellite (C&S) household additions in the next few years will go to DTH. Dish TV’s subscriber base is expected to grow by 15% in the next five years. Over this period, company average realization per user is seen growing from about Rs 160 to Rs 240.

  • 
	Info Edge

	Rating: Outperform
	Current market price: Rs 367
	Target: Rs 470

	Info Edge's naukri.com is the market leader in India’s online job board market, with a traffic share of over 60%.We believe that the online recruitment classifieds market in India is poised for strong growth over the next few years driven by a large population in working age, strong growth in India’s GDP, the growing share of the services sector in India’s GDP, and  significant potential for share gains.

    Info Edge Rating: Outperform Current market price: Rs 367 Target: Rs 470 Info Edge's naukri.com is the market leader in India’s online job board market, with a traffic share of over 60%.We believe that the online recruitment classifieds market in India is poised for strong growth over the next few years driven by a large population in working age, strong growth in India’s GDP, the growing share of the services sector in India’s GDP, and  significant potential for share gains.

  • 
	Kajaria Ceramics

	Rating: Outperform
	Current market price: Rs 257
	Target: Rs 360

	Kajaria is India’s second largest tile manufacturer. Tile penetration in India is very low and consumption can benefit from the housing boom and commercial development in Tier II/III cities and higher consumer aspirations. The stock trades at 12.5 times FY14E earnings and is at a significant discount to most Indian building product companies and key Asian peers.

    Kajaria Ceramics Rating: Outperform Current market price: Rs 257 Target: Rs 360 Kajaria is India’s second largest tile manufacturer. Tile penetration in India is very low and consumption can benefit from the housing boom and commercial development in Tier II/III cities and higher consumer aspirations. The stock trades at 12.5 times FY14E earnings and is at a significant discount to most Indian building product companies and key Asian peers.

  • 
	MCX

	Rating: Outperform
	Current market price: Rs 1550
	Target: Rs 1600

	The scope of increasing penetration is high given significantly lower ratio of: (1) commodity to equity trading and (2) commodity consumed to commodity traded, in India as compared to global standards. Wider participation by FIs and Banks could help volume significantly. Additionally, product innovation and changes in derivative regulations may boost volume on the Indian exchanges.

    MCX Rating: Outperform Current market price: Rs 1550 Target: Rs 1600 The scope of increasing penetration is high given significantly lower ratio of: (1) commodity to equity trading and (2) commodity consumed to commodity traded, in India as compared to global standards. Wider participation by FIs and Banks could help volume significantly. Additionally, product innovation and changes in derivative regulations may boost volume on the Indian exchanges.

  • 
	McLeod Russel

	Rating: Outperform
	Current market price: Rs 357
	Target: Rs 390

	McLeod Russel is the largest tea producer globally. India and Sri Lanka contribute about 50% of global black tea supplies and can offer little additional supply due to limited land availability. Global demand, on the other hand, has witnessed steady growth. We expect black tea supply to lag demand for some time, helping tea prices.

    McLeod Russel Rating: Outperform Current market price: Rs 357 Target: Rs 390 McLeod Russel is the largest tea producer globally. India and Sri Lanka contribute about 50% of global black tea supplies and can offer little additional supply due to limited land availability. Global demand, on the other hand, has witnessed steady growth. We expect black tea supply to lag demand for some time, helping tea prices.

  • 
	Apollo Hospitals

	Rating: Not rated
	Current market price: Rs 812.95

	Apollo is among the largest hospital chains in India with over 50 hospitals, and sizeable presence in pharmacies. In addition to adding beds and facilities at existing hospitals, Apollo plans to add hospitals in its existing cities and expand into other Tier 2/s 3 cities. It plans to adopt a more calibrated approach to pharmacy store additions from now and plans to close non-profitable stores. 
	 

    Apollo Hospitals Rating: Not rated Current market price: Rs 812.95 Apollo is among the largest hospital chains in India with over 50 hospitals, and sizeable presence in pharmacies. In addition to adding beds and facilities at existing hospitals, Apollo plans to add hospitals in its existing cities and expand into other Tier 2/s 3 cities. It plans to adopt a more calibrated approach to pharmacy store additions from now and plans to close non-profitable stores.   

  • 
	Bata

	Rating: Not rated
	Current market price: Rs 921.40

	Bata has shifted its model from in-house manufacturing to outsourcing, and further reduced employee costs through a voluntary retirement scheme. It has exited the low value segment by selling its ‘Hawaii’ brand and has expedited the launch of premium products. Additionally, it has increased its focus on women and children wear. It closed unviable smaller-sized stores.

    Bata Rating: Not rated Current market price: Rs 921.40 Bata has shifted its model from in-house manufacturing to outsourcing, and further reduced employee costs through a voluntary retirement scheme. It has exited the low value segment by selling its ‘Hawaii’ brand and has expedited the launch of premium products. Additionally, it has increased its focus on women and children wear. It closed unviable smaller-sized stores.

  • 
	Concor (Container Corporation of India)

	Rating: Not rated
	Current market price: Rs 911.95

	Concor it operates a pan-India network of 59 terminals and wagon fleet of about 250 rakes. It has a market share of about 75% in the overall container movement by rail in India. It has pricing power being the market leader. In a scenario where acquiring further land is a daunting task, possessing terminals across India is a big advantage for the company.

    Concor (Container Corporation of India) Rating: Not rated Current market price: Rs 911.95 Concor it operates a pan-India network of 59 terminals and wagon fleet of about 250 rakes. It has a market share of about 75% in the overall container movement by rail in India. It has pricing power being the market leader. In a scenario where acquiring further land is a daunting task, possessing terminals across India is a big advantage for the company.

  • 
	Crisil

	Rating: Not rated
	Current market price: Rs 1019.95

	Crisil is the undisputed market leader in credit ratings in India with more than two thirds of Indian corporates and most banks rated by Crisil. Additionally, the company also has a sizeable presence in the rating of small and medium-sized enterprises (SME) and corporate bonds. Crisil has a diversified revenue stream with over half of its revenue coming from other countries.

    Crisil Rating: Not rated Current market price: Rs 1019.95 Crisil is the undisputed market leader in credit ratings in India with more than two thirds of Indian corporates and most banks rated by Crisil. Additionally, the company also has a sizeable presence in the rating of small and medium-sized enterprises (SME) and corporate bonds. Crisil has a diversified revenue stream with over half of its revenue coming from other countries.

  • 
	Even as frontline shares have paused for a breather, investors continue to load up on second line shares, betting on them to be relatively undervalued. Brokerage house Credit Suisse has listed a set of midcap stocks that are leaders in relatively small, but growth sectors. The overall sector growth, rising market share due to their relatively dominant position, margin benefits due to increasing scale and expansion of valuation multiples are seen as the drivers for stock re-rating.
	
	Click on the next slide to find out more...
  • 
	Cox and Kings

	Rating: Outperform
	Current market price: Rs 141
	Target: Rs 170

	Outbound travel, a key focus area for C&K, can witness robust growth relative to inbound and domestic travel. C&K India had roughly 30% CAGR between FY06 and FY12 due to market share gains from unorganized players. This increase in market share is expected to continue. High debt levels remain the key concern in the medium term.
	 
  • 
	Dish TV

	Rating: Outperform
	Current market price: Rs 81.95
	Target: Rs 82

	India is likely to go the wireless way (the way telephony went) and a large share of India’s cable & satellite (C&S) household additions in the next few years will go to DTH. Dish TV’s subscriber base is expected to grow by 15% in the next five years. Over this period, company average realization per user is seen growing from about Rs 160 to Rs 240.
  • 
	Info Edge

	Rating: Outperform
	Current market price: Rs 367
	Target: Rs 470

	Info Edge's naukri.com is the market leader in India’s online job board market, with a traffic share of over 60%.We believe that the online recruitment classifieds market in India is poised for strong growth over the next few years driven by a large population in working age, strong growth in India’s GDP, the growing share of the services sector in India’s GDP, and  significant potential for share gains.
  • 
	Kajaria Ceramics

	Rating: Outperform
	Current market price: Rs 257
	Target: Rs 360

	Kajaria is India’s second largest tile manufacturer. Tile penetration in India is very low and consumption can benefit from the housing boom and commercial development in Tier II/III cities and higher consumer aspirations. The stock trades at 12.5 times FY14E earnings and is at a significant discount to most Indian building product companies and key Asian peers.
  • 
	MCX

	Rating: Outperform
	Current market price: Rs 1550
	Target: Rs 1600

	The scope of increasing penetration is high given significantly lower ratio of: (1) commodity to equity trading and (2) commodity consumed to commodity traded, in India as compared to global standards. Wider participation by FIs and Banks could help volume significantly. Additionally, product innovation and changes in derivative regulations may boost volume on the Indian exchanges.
  • 
	McLeod Russel

	Rating: Outperform
	Current market price: Rs 357
	Target: Rs 390

	McLeod Russel is the largest tea producer globally. India and Sri Lanka contribute about 50% of global black tea supplies and can offer little additional supply due to limited land availability. Global demand, on the other hand, has witnessed steady growth. We expect black tea supply to lag demand for some time, helping tea prices.
  • 
	Apollo Hospitals

	Rating: Not rated
	Current market price: Rs 812.95

	Apollo is among the largest hospital chains in India with over 50 hospitals, and sizeable presence in pharmacies. In addition to adding beds and facilities at existing hospitals, Apollo plans to add hospitals in its existing cities and expand into other Tier 2/s 3 cities. It plans to adopt a more calibrated approach to pharmacy store additions from now and plans to close non-profitable stores. 
	 
  • 
	Bata

	Rating: Not rated
	Current market price: Rs 921.40

	Bata has shifted its model from in-house manufacturing to outsourcing, and further reduced employee costs through a voluntary retirement scheme. It has exited the low value segment by selling its ‘Hawaii’ brand and has expedited the launch of premium products. Additionally, it has increased its focus on women and children wear. It closed unviable smaller-sized stores.
  • 
	Concor (Container Corporation of India)

	Rating: Not rated
	Current market price: Rs 911.95

	Concor it operates a pan-India network of 59 terminals and wagon fleet of about 250 rakes. It has a market share of about 75% in the overall container movement by rail in India. It has pricing power being the market leader. In a scenario where acquiring further land is a daunting task, possessing terminals across India is a big advantage for the company.
  • 
	Crisil

	Rating: Not rated
	Current market price: Rs 1019.95

	Crisil is the undisputed market leader in credit ratings in India with more than two thirds of Indian corporates and most banks rated by Crisil. Additionally, the company also has a sizeable presence in the rating of small and medium-sized enterprises (SME) and corporate bonds. Crisil has a diversified revenue stream with over half of its revenue coming from other countries.

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