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Last Updated : Nov 27, 2019 11:31 AM IST | Source: Moneycontrol.com

Foreign brokerages bullish on these 2 natural gas stocks, NBFC major; expect double-digit returns

BSE Sensex has touched a fresh record high of 41,120.28 and Nifty50 touched a new record high of 12,132.45.

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The Indian equity market ended in the red on November 27 as profit-taking, after a sharp two-day rally, pulled markets from all-time highs.

Sensex hit a record high of 41,120 before closing 67 points lower at 40,821, while the Nifty surged to a life high of 12,132 before closing 36 points lower at 12,037. Meanwhile, Nifty Bank closed at a record high of 31,718 after touching 31,850.35 during the day.

The market took cues from its global peers, as US and Asian markets continued their upward momentum on the back of positive comments by President Donald Trump on trade talks between US-China.

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On Tuesday, US President Donald Trump said that the United States and China are close to agreement on the first phase of a trade deal after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

"Going forward, the announcement of key macro data (Q2FY20 GDP) later this week could induce some volatility in the markets. On the global front, hopes of a positive outcome of the US-China trade deal have heightened which will keep the market participants on edge. Besides, investors will keep an eye on currency and crude price movement. Since the markets are near all-time high we may witness consolidation going forward," said Ajit Mishra, VP - Research, Religare Broking.

Foreign institutional investors (FIIs) have remained net buyers during the month buying equities worth Rs 13,765.40 crore, while domestic institutional investors (DIIs) sold equities of Rs 9,207.95 crore.

BSE Midcap and smallcap indices have underperform the main indices as they lost 0.48 percent and 1.08 percent, respectively in the month of November.

"We could see continuation of the current up move on the back of rebalancing of MSCI’s portfolio. Metal index is exhibiting exceptional strength; traders should keep the metal basket on their radar. Technically, above 12,040, Nifty would halt between 12,150 and 12,200 levels. Any weakness from current levels would be buying opportunity with a medium-term view," said Shrikant Chouhan, Senior Vice-President, Equity Technical Research, Kotak Securities.

Here are the three stocks in which foreign brokerages have raised the target price with an upside of 11-27 percent:

Gujarat Gas | Brokerage: Macquarie | Rating: Outperform | CMP: Rs 205 | Target: Raised to Rs 240 from Rs 210 per share

Macquarie increased its earnings estimates for Gujarat Gas by 13-15 percent for FY21/22 and forecast company's EBITDA/EPS to grow at a 14/10 percent CAGR over FY20-25.

"We raised FY21/22 EPS estimates by 13-15 percent on better margin and steady volumes," it said.

The pecking order in city gas distribution companies is Gujarat Gas, followed by Mahanagar Gas and Indraprastha Gas, said Macquarie.

Mahanagar Gas | Brokerage: Macquarie | Rating: Outperform | CMP: Rs 1,034 | Target: Raised to Rs 1,150 from Rs 1,050 per share

Macquarie increased its earnings estimates by 7-11 percent for FY21/22 and forecast the company's EBITDA/EPS to grow at a 6/5 percent CAGR over FY20-25.

"Valuations are attractive at current levels," it said.

HDFC | Brokerage: Morgan Stanley | Rating: Overweight | CMP: Rs 2,333 | Target: Raised to Rs 2,900 from Rs 2,600 per share

The research firm is of the view that return on equity (RoE) and EPS growth is poised to stage a multi-year recovery, supported by structurally stronger positioning among non-bank lenders.

It has forecasted FY20-25 EPS CAGR of 22 percent for HDFC's core lending business and expects core RoE to improve to 15.5 percent in FY22 and 18.5 percent in FY25 from 13 percent in FY20

HDFC's valuation looks attractive while a pick-up in loan growth over the next 12 months can be seen, Morgan Stanley said.
First Published on Nov 27, 2019 11:31 am
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