Sumit Bilgaiyan
The Street could watch out for reactions to March quarter numbers of Nifty companies. HDFC Bank will announce its Q4 earnings on Saturday, while Bharti Infratel, LIC Housing Finance and Reliance Infrastructure will announce their results on Monday. Bharti Airtel and IDFC Bank will announce results on Tuesday.
Ultratech Cement and Wipro are scheduled to follow on Wednesday, while Axis Bank, Biocon and Yes Bank will announce their March quarter numbers on Thursday. IDFC and Maruti Suzuki India will declare their results on Friday.
On the macro front, the movement of the rupee against the dollar and crude oil prices will be monitored keenly as the market will react to the outcome of OPEC and non-OPEC countries' meeting. Brent crude moved closer to the USD 74 per barrel mark last week.
A spike in oil prices raises India's import bill as the country imports majority of its crude requirements. A weak rupee raises the cost of importing crude oil. The Indian rupee hit a 13-month low of 66.10 against the US dollar on April 20, after the minutes of the monetary policy panel meeting suggested that they were likely to take a more hawkish tone starting as early as June.
Globally, Germany Manufacturing Purchasing Managers Index (PMI) data for April, and US existing home sales data for March will be disclosed on Monday. US Consumer Confidence data for April and US new home sales data for March will follow on Tuesday.
Bank of Japan's (BoJ) monetary policy statement and outlook report will be released on Friday. First quarter GDP data in the US and the UK will also be made public on Friday.
Next week's trend will be decided on the basis of quarterly earnings and trends in global markets.
Here is the list of three stocks that could give up to 16 percent return:-
Radico Khaitan: Buy | Target - Rs 480 | Return - 10 percent
Radico Khaitan is one of the largest players in the Indian IMFL industry. It became the first company to conceptualize the innovative idea of offering scotch blended whisky and the first company to position 8-PM as India's premium whisky.
With improving demand scenario for liquor and execution on track, the company has witnessed a rise in volume growth, margin expansion and free cash flow (FCF) generation.
Uttar Pradesh is an important market for Radico Khaitan, where the new government has introduced the ‘go-to-market’ distribution model. This is positive for strong brands, including Radico Khaitan. The demand is recovering in both premium and regular segments.
The company has guided for volume growth of 10 percent and 4 percent in the the premium and regular segments, respectively. Margins should expand due to improving product mix and benign raw material prices. We are recommending a buy with short target price of Rs 480 and long term price target of Rs 690.
Ashok Leyland: Buy | Target - Rs 171 | Return - 10 percent
We believe Ashok Leyland has multiple levers in its favour, which will drive earnings growth. The growth momentum experienced by the domestic commercial vehicle industry in recent months is poised to continue over the next couple of years due to policy changes at the macro level, and shifting demand preference at the buyer level.
While Ashok Leyland remains well positioned to drive the recovery in the domestic commercial vehicle (CV) segment, in terms of demand, we have seen a strong shift in higher tonnage vehicles in the past few years and we believe the demand for higher tonnage CVs will continue to remain strong.
Ashok Leyland is expected to continue expanding its market share led by network expansion and new product launches. Outlook for FY19 remains positive. We remain buyers in Ashok Leyland with short term target price of Rs 171 per share.
Lambodhara Textile: Buy | Target - Rs 85 | Return - 16 percent
Lambodhara Textiles produces fancy polyester, rayon and other synthetic yarns and supplies to Siyarams, Donear, etc. The company has a current capacity of 37,856 spindles and operates at 100 percent capacity utilisation.
It has plans to expand capacity to 60,000 spindles, for which it has acquired land to build a new plant.
Exports contribute around 25 percent to the company's revenue, which has grown at a CAGR of 21.5 percent in the last 5 years. Its profitability has also improved a lot, having increased at a CAGR of 45.65 percent in the last 5 years.
The company's return ratios has also improved on the back of a better operating matrix. It’s return on equity has risen to 26.5 percent in the last 3 years. Looking at the improved return ratios and growth prospects, we are recommending a short term price target of Rs 85.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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