13 conviction picks: Reposition your portfolio

13 conviction picks: Reposition your portfolio
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13 conviction picks: Reposition your portfolio
  • 
	During CY2012, broking house Emkay's portfolio outperformed Nifty's returns of 2.1 percent by 50 bps. Taking into account future fund flows into Indian markets, it had rearranged its Conviction portfolio.
	
	Check out:

    During CY2012, broking house Emkay's portfolio outperformed Nifty's returns of 2.1 percent by 50 bps. Taking into account future fund flows into Indian markets, it had rearranged its Conviction portfolio. Check out:

  • 
	Colgate Palmolive
	
	Target price: Rs 1,400
	
	Persistent innovation and value addition in oral care segment to aid premiumization and pricing power. We estimate five-seven percent price led growth to sustain in FY13E and FY14E despite tough macro environment.

    Colgate Palmolive Target price: Rs 1,400 Persistent innovation and value addition in oral care segment to aid premiumization and pricing power. We estimate five-seven percent price led growth to sustain in FY13E and FY14E despite tough macro environment.

  • 
	Cadilla Healthcare
	
	Target price: Rs 1,000
	
	Management has guided for 25-28 percent growth in domestic business in FY13 on back of new product launches & Biochem acquisition. The company has launched 30 products in Q1FY13 and 16 in Q2FY13 which will ramp up going forward. 

    Cadilla Healthcare Target price: Rs 1,000 Management has guided for 25-28 percent growth in domestic business in FY13 on back of new product launches & Biochem acquisition. The company has launched 30 products in Q1FY13 and 16 in Q2FY13 which will ramp up going forward. 

  • 
	Dr Reddy’s
	
	Target price: Rs 2,240
	
	US business, which contributes 50 percent of the formulation revenue is the key driver for the profitability. It is expected to grow by 15 percent CAGR over FY12-14 on back of niche launches like Toprol and Propecia and increase in market share in some key products.

    Dr Reddy’s Target price: Rs 2,240 US business, which contributes 50 percent of the formulation revenue is the key driver for the profitability. It is expected to grow by 15 percent CAGR over FY12-14 on back of niche launches like Toprol and Propecia and increase in market share in some key products.

  • 
	HCL Tech
	
	Target price: 650
	
	HCLTech is on a solid footing ahead with strong revenue visibility with growth led by client mining now V/s new clients earlier. Company remains confident of sustaining rev growth within the top tier league along with maintaining/improving margins.

    HCL Tech Target price: 650 HCLTech is on a solid footing ahead with strong revenue visibility with growth led by client mining now V/s new clients earlier. Company remains confident of sustaining rev growth within the top tier league along with maintaining/improving margins.

  • 
	Hero Motocorp
	
	Target price: Rs 2,350
	
	Customers in the economy and executive segment, given their utilitarian nature, prefer tried and tested brands. HMCL has a big advantage as it owns amongst the strongest brand portfolio in the domestic motorcycle market. 

    Hero Motocorp Target price: Rs 2,350 Customers in the economy and executive segment, given their utilitarian nature, prefer tried and tested brands. HMCL has a big advantage as it owns amongst the strongest brand portfolio in the domestic motorcycle market. 

  • 
	ICICI Bank
	
	Target price: Rs 1,100
	
	Concerns over asset quality and margin maintenance had dragged stock performance in past. However, steady state balance sheet expansion with easing NPA pressure will warrant re-rating.

    ICICI Bank Target price: Rs 1,100 Concerns over asset quality and margin maintenance had dragged stock performance in past. However, steady state balance sheet expansion with easing NPA pressure will warrant re-rating.

  • 
	NMDC
	
	Target price: Rs 196
	
	NMDC would be ready to address higher demand from the rise in domestic steel capacity with its capacity expansion from 32 mtpa to 48 mtpa by FY15. Focus on evacuation facilities would help NMDC to ramp up volume Q4FY13 onwards. 

    NMDC Target price: Rs 196 NMDC would be ready to address higher demand from the rise in domestic steel capacity with its capacity expansion from 32 mtpa to 48 mtpa by FY15. Focus on evacuation facilities would help NMDC to ramp up volume Q4FY13 onwards. 

  • 
	PGCIL
	
	Target price: Rs 136
	
	PGCIL is an earnings growth (17 percent during FY12-15E) as well as a re-rating story. Stock is at 20 percent discount to broader market and 10 percent discount to NTPC despite superior earnings growth and certainty. 

    PGCIL Target price: Rs 136 PGCIL is an earnings growth (17 percent during FY12-15E) as well as a re-rating story. Stock is at 20 percent discount to broader market and 10 percent discount to NTPC despite superior earnings growth and certainty. 

  • 
	Zee Entertainment
	
	Target price: Rs 275
	
	Implementation of digitization will trigger 2.2 times jump in Zee's domestic subscription revenues over FY12-15E to Rs 2,030 crore. Robust subscription revenue with no incremental capex is likely to drive cash generation.

    Zee Entertainment Target price: Rs 275 Implementation of digitization will trigger 2.2 times jump in Zee's domestic subscription revenues over FY12-15E to Rs 2,030 crore. Robust subscription revenue with no incremental capex is likely to drive cash generation.

  • 
	Berger Paints
	
	Target price: Rs 185
	
	Poised for strong growth given inherent growth in decorative as well industrial paint segment and its increasing aggression to enhance capacity and distribution reach. We see revenue and earnings growing 14 percent and 16 percent CAGR over FY12-14E.

    Berger Paints Target price: Rs 185 Poised for strong growth given inherent growth in decorative as well industrial paint segment and its increasing aggression to enhance capacity and distribution reach. We see revenue and earnings growing 14 percent and 16 percent CAGR over FY12-14E.

  • 
	CRISIL
	
	Target price: Rs 1,050
	
	CRISIL has more than 40,000 client relations across bonds (500), BLR (9000) and SME (30000). These SMEs over next three-four years can migrate into BLR and bond rating clients which will drive ratings revenues. 

    CRISIL Target price: Rs 1,050 CRISIL has more than 40,000 client relations across bonds (500), BLR (9000) and SME (30000). These SMEs over next three-four years can migrate into BLR and bond rating clients which will drive ratings revenues. 

  • 
	Exide
	
	Target price: Rs 190
	
	With new capacity of 3.6 million for two wheelers and 1.6 million for four wheelers, Exide is favorably placed to capitalize on the uptick in the replacement demand in FY13/14. Expect 200 bps improvement in margins led by an improving product mix.

    Exide Target price: Rs 190 With new capacity of 3.6 million for two wheelers and 1.6 million for four wheelers, Exide is favorably placed to capitalize on the uptick in the replacement demand in FY13/14. Expect 200 bps improvement in margins led by an improving product mix.

  • 
	Federal Bank
	
	Target price: Rs 500
	
	Net additions to NPAs has slowed down significantly over past four quarters. With the largest branch network among old private sector banks and a healthy deposit profile, moderation in gross NPAs could trigger re-rating.

    Federal Bank Target price: Rs 500 Net additions to NPAs has slowed down significantly over past four quarters. With the largest branch network among old private sector banks and a healthy deposit profile, moderation in gross NPAs could trigger re-rating.

  • 
	During CY2012, broking house Emkay's portfolio outperformed Nifty's returns of 2.1 percent by 50 bps. Taking into account future fund flows into Indian markets, it had rearranged its Conviction portfolio.
	
	Check out:
  • 
	Colgate Palmolive
	
	Target price: Rs 1,400
	
	Persistent innovation and value addition in oral care segment to aid premiumization and pricing power. We estimate five-seven percent price led growth to sustain in FY13E and FY14E despite tough macro environment.
  • 
	Cadilla Healthcare
	
	Target price: Rs 1,000
	
	Management has guided for 25-28 percent growth in domestic business in FY13 on back of new product launches & Biochem acquisition. The company has launched 30 products in Q1FY13 and 16 in Q2FY13 which will ramp up going forward. 
  • 
	Dr Reddy’s
	
	Target price: Rs 2,240
	
	US business, which contributes 50 percent of the formulation revenue is the key driver for the profitability. It is expected to grow by 15 percent CAGR over FY12-14 on back of niche launches like Toprol and Propecia and increase in market share in some key products.
  • 
	HCL Tech
	
	Target price: 650
	
	HCLTech is on a solid footing ahead with strong revenue visibility with growth led by client mining now V/s new clients earlier. Company remains confident of sustaining rev growth within the top tier league along with maintaining/improving margins.
  • 
	Hero Motocorp
	
	Target price: Rs 2,350
	
	Customers in the economy and executive segment, given their utilitarian nature, prefer tried and tested brands. HMCL has a big advantage as it owns amongst the strongest brand portfolio in the domestic motorcycle market. 
  • 
	ICICI Bank
	
	Target price: Rs 1,100
	
	Concerns over asset quality and margin maintenance had dragged stock performance in past. However, steady state balance sheet expansion with easing NPA pressure will warrant re-rating.
  • 
	NMDC
	
	Target price: Rs 196
	
	NMDC would be ready to address higher demand from the rise in domestic steel capacity with its capacity expansion from 32 mtpa to 48 mtpa by FY15. Focus on evacuation facilities would help NMDC to ramp up volume Q4FY13 onwards. 
  • 
	PGCIL
	
	Target price: Rs 136
	
	PGCIL is an earnings growth (17 percent during FY12-15E) as well as a re-rating story. Stock is at 20 percent discount to broader market and 10 percent discount to NTPC despite superior earnings growth and certainty. 
  • 
	Zee Entertainment
	
	Target price: Rs 275
	
	Implementation of digitization will trigger 2.2 times jump in Zee's domestic subscription revenues over FY12-15E to Rs 2,030 crore. Robust subscription revenue with no incremental capex is likely to drive cash generation.
  • 
	Berger Paints
	
	Target price: Rs 185
	
	Poised for strong growth given inherent growth in decorative as well industrial paint segment and its increasing aggression to enhance capacity and distribution reach. We see revenue and earnings growing 14 percent and 16 percent CAGR over FY12-14E.
  • 
	CRISIL
	
	Target price: Rs 1,050
	
	CRISIL has more than 40,000 client relations across bonds (500), BLR (9000) and SME (30000). These SMEs over next three-four years can migrate into BLR and bond rating clients which will drive ratings revenues. 
  • 
	Exide
	
	Target price: Rs 190
	
	With new capacity of 3.6 million for two wheelers and 1.6 million for four wheelers, Exide is favorably placed to capitalize on the uptick in the replacement demand in FY13/14. Expect 200 bps improvement in margins led by an improving product mix.
  • 
	Federal Bank
	
	Target price: Rs 500
	
	Net additions to NPAs has slowed down significantly over past four quarters. With the largest branch network among old private sector banks and a healthy deposit profile, moderation in gross NPAs could trigger re-rating.

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