HDFC, Zee Entertainment Enterprises, NCC are on the radar of Geojit Financial Services
Geojit Financial Services recommends the following stocks:
CMP: Rs1,570 TP: Rs1,710
HDFC remains our favourite pick within housing finance companies given its competitive edge over its peers backed by strong growth in business, stable margin and well-managed asset quality. The company has successfully maintained its return ratios at healthy levels (RoE > ~20 percent & RoA > ~2.0 percent) across economic cycles. We expect this trend to continue and project 21 percent of RoE and 2.3 percent of RoA in FY19E. We believe that focus on affordable housing will lead to sustainable individual AUM growth in its core business. Further, other key components i.e. HDFC Bank, Gruh Finance, insurance and asset management businesses, too, will continue to contribute strongly to the parent’s valuation.
CMP: Rs88 TP: Rs97
NCC is operating in a well-diversified portfolio and having a presence in every segment of construction sector. In Q4FY17 the execution has been slowed down on account of payment delay from government projects due to UP election and impact of demonetisation. With UP election now past us, we expect the payment cycle to improve, resulting in pickup in execution from FY18 onwards. The healthy order book of Rs 18,088 crore which is 2.3x FY17 revenue provides strong visibility. A strong order book, easing of balance sheet through asset monetisation and pick up in execution could generate revenue growth going forward.
CMP:Rs515 TP:Rs570ZEEL reported ad revenue growth of 8.1 percent YoY in the domestic business when the industry witnessed flat-to-declining overall TV ad-spends in Q4FY17. Further, we expect ad revenue to register a healthy CAGR of 14 percent over FY17-19E as demonetisation woes are behind the industry & the management expects some deferred launches in the FMCG segment (contribute ~55 percent to the overall ad pie) to come through over the next couple of quarters. While industry is expected to post ad growth of low double-digits in FY18, ZEEL is confident of surpassing the industry ad growth. Given the strong network viewership, potential gains from the mandatory digitization & a robust balance sheet, we expect sales/EBITDA to grow at a CAGR of 8 percent/16 percent over FY17-19E.The Great Diwali Discount!
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