Anand Rathi Share and Stock Brokers recommends the following stocks:
CMP Rs 51
Target Rs 68
One of the three largest battery manufacturers in India. The company’s first product was aircraft batteries and now has extended into new businesses like Railway electronics, Defence electronics, Power electronics and other engineered products.
Battery Segment (90 percent of revenue) grew at a CAGR of 5.5percent in last five years whereas its electronics segment grew at a CAGR of 12.7percent in last five years. FY17 the company has reported sales growth of 17.4percent net margins improved marginally to 2.1percent
The company envisages to grow businesses in Railways, Solar, E-Mobility and defence products. It has also initiated a plant to manufacture prismatic Lithium Ion cells and batteries
We expect HBPS to grow at a CAGR of around 16percent in next two years.At CMP the stock is trading at 14.4xtimes FY18E earnings and 10xtimes FY19E earnings. We initiate our coverage on the stock with a BUY rating and a target price of Rs. 68 per share.
CMP Rs 1,105
Target Rs 1,400
Management was optimistic of delivering mid-teen organic growth driven by slew of product launches, a favourable base and higher brand spends (ad-spends to rise ~100bps yoy).
Along with several launches and brand extensions in the offing, and a new brand campaign would aid robust growth.
Price hikes, a better mix (Kesh King) and relatively softer input prices should aid in sustaining the margins.
Going ahead, Emami remains key beneficiary of recovery in rural demand (rural contributes ~50percent to revenue). Maintain ‘BUY’.
CMP Rs 162
Target Rs 220
Primarily IT service-centred (32 percent of revenue, 75 percent of EBITDA) focuses on three key verticals: OPD (29 percent of revenue), travel/tourism (27 percent) and retail & distribution (26 percent).
Sonata’s key differentiator is a laser-sharp focus on RoE (averaging 35percent in the last 3 years) and cash generation (paying 44percent of profits).
With only ~2percent of its US population on an H1-B visa, Sonata has limited exposure to such a visa program.Therefore, any changes in these regulations would not expand or shrink the company’s margin
With no pricing pressure due to high digital exposure, Sonata expects margins to hold, supported by greater offshoring, including digital projects
Sonata (consolidated) would grow 14percent over FY17-19 and IT services would bring 30 percent to revenue in FY19 (FY17e: 32 percent, FY16: 36 percent). We expect a 7.5 percent EBITDA margin in FY19 vs. 7.6 percent in FY17
It expects its domestic business to enjoy a steady margin (3percent+) steady RoE(30 percent, FY17 was 27 percent on investing in cloud) with limited investments.
Our 12x target PE takes into account the proportions of both businesses. We initiate coverage, with a Buy target price of Rs 220
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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