Investors are taking a risk-averse approach due to the corporate governance issue being faced in the banking & NBFC sector
Equity markets are likely to remain rangebound before the upcoming events in the coming few weeks, as the traders/investors are waiting for the outcome of upcoming important events such as RBI monetary policy meet, OPEC meeting during the next week and the state election results in the week after.
The markets have got some respite after RBI’s steps to inject liquidity through open market operations. This has lead to the 10-year bond yields fall to ~7.65 percent from the highs of ~8.20 percent. However, the investors are taking a risk-averse approach due to the corporate governance issue being faced in the banking and NBFC sector.
This week the auto companies will be releasing sales data for the month of November – investors are awaiting these numbers as these will include festive sales data.
Some of the stocks that we like are:
Aditya Birla Fashion & Retail | Rating: Buy | Target: Rs 239
The company posted a sharp H1FY19 turnaround with profit of Rs. 48.3 crore versus Rs. 30.3 crore net loss a year ago in H1FY18 due to management initiatives across its various divisions in.
Q2 revenue grew 11 percent YoY to Rs 2000 crore EBITDA, at Rs 142.8 crore, grew 54 percent YoY.
Pantaloons improved its merchandise, resulting in a higher gross margin and driving profitable growth in Madura Lifestyle brands through extensions and network expansion.
During the quarter, the company added six Pantaloons stores and 59 Madura Lifestyle Brand stores, taking the totals to respectively 288 and 1,897.
L&T Technology Services | Rating: Buy | Target: Rs 1,940
The company provides design and development solutions to clients across the entire value chain of product development.
The company has reported robust growth in revenues; it grew 27.1 percent in Q2FY19 to $177.2 million as against $168.9 million in Q2FY18.
The management has guided of achieving 20+ percent growth in revenues for the current year with strong growth coming from all the major segments while maintaining margins at currents levels.
Aarti Industries | Rating: Buy | Target: Rs 1,600
One of the global leaders in benzene-based chemistry through its process chemistry and scale-up engineering competencies, Aarti Industries’ revenue and profit are expected to grow at 20 percent and 22 percent CAGRs over FY18-21, driven by scale-ups in its specialty chemical and pharmaceutical businesses and the new toluene capacity.
For Q2FY19, Aarti’s revenue shot up 46.4 percent y/y to Rs 1,290 crore, chiefly due to strong volume growth and the increasing share of high-value products.
The specialty chemicals, pharmaceuticals and home- and personal-care divisions brought respectively 80 percent, 14.8 percent and 5.2 percent to revenue. The good performance and higher capacity utilisation boosted the EBIDTA margin 58bps y/y to 18.6 percent. Thus, due to the good operational performance, PAT swelled 56.6 percent y/y to Rs 120 crore.
Its capex of ~Rs 1,700 crore in the next three years, strong operating performance of all divisions, focus on R&D and strong relationships with clients would shift growth to a higher trajectory in future.
We maintain our Buy rating, with a target price of Rs 1,600 a share.
The author is Vice President - Equity Advisory, Anand Rathi Shares and Stock Brokers.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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.