3 stock picks from Geojit Financial Services

TP:Rs 195                                                                               

BOB’s fundamentals are strong owing to good capital position, able management and higher provision coverage ratio. The bank has been consolidating its balance sheet and reshuffling its portfolio towards higher yielding assets.

NIMs will continue its upward trajectory and improve 20bps over FY17E-FY19E supported by a pick-up in loan growth & a fall in interest reversals. We expect slippages to decline gradually and asset quality to improve remarkably over FY17-19E which will lead to better profitability and improvement in return ratios.

Minda Industries Ltd 

Rating: BUY                                       

 CMP:Rs435                                        

TP:Rs510

Minda Industries (MIL) is a diversified auto ancillary supplier, manufacturing products such as switches, horns, lights & others, having a leadership position in switch business with a market share of 67 percent.

The diversified product portfolio, broad based customer profile and strong technological tie-ups place MIL as a preferred choice for the OEMs. Additionally, scaling up new product line to drive growth in alloy wheels & battery business will paint a positive outlook to the company. We value at 15x on FY19E EPS and arrive at a target price of Rs 510 and recommend ‘Buy’ rating.

Tata Steel

Rating: Reduce                                 

CMP:Rs452                                        

TP:Rs424                                                                               

For 9MFY17, domestic sales volume rose 13.6 percent YoY which is well above the domestic steel consumption growth of 3.5 percent. Despite demonetisation headwinds, EBITDA/t increased by Rs 3,712 QoQ to Rs 11,332 in Q3FY17 on the back of sharp improvement in demand across Ferro Alloys & Minerals and Industrial Products.

Going forward the performance is unlikely to sustain due to likely pressure on steel prices and a sharp increase in RM costs. Additionally, the ambiguity in JV with ThyssenKrupp due to opposition from German steel unions and the ongoing problems with the pension fund will continue to add pressure on Tata Steel.