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Last Updated : Jan 17, 2018 06:58 PM IST | Source: Moneycontrol.com

East India Securities sees Nifty around 12,000 by year-end. Here are its 4 multibagger picks

Yes….albeit with higher volatility. Year End target is around 12000 for Nifty which is 17 X estimated Nifty EPS for FY20. We expect nifty earnings growth to be robust for next 2-3 years so a 17 multiple on forward earnings should be reasonable.

 
 
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Even as the benchmark indices are hitting fresh highs this calendar year, experts believe the momentum may continue. Having said that, Sanjeev Mohta, COO of East India Securities, believes that there could be volatility going forward.

"The year-end target for Nifty is around 12,000, which is estimated Nifty EPS for FY20. We expect Nifty earnings growth to be robust for next 2-3 years. So, a 17 times multiple on forward earnings should be reasonable," Mohta told Moneycontrol's Sunil Shankar Matkar.

The Indian market started the year on a strong note, with benchmark indices hitting a fresh record high. Do you expect the momentum to continue? What is your year-end target for Nifty? 

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Yes….albeit with higher volatility. Year-end target is around 12,000 for Nifty which is 17X estimated Nifty EPS for FY20. We expect Nifty earnings growth to be robust for next 2-3 years. So, a 17 times multiple on forward earnings should be reasonable.

Sanjeev Mohta
Sanjeev Mohta
COO|East India Securities Ltd

    Do you expect Q3 and Q4 to be better than Q2 earnings? Will India Inc. deliver double-digit earnings growth in FY19?

    Yes I expect so.

    The much-awaited full-fledged Union Budget of the Modi government for this term will be presented on February 1. What are your key expectations?

    • Relief to small taxpayers.

    • Social sector spending to increase & most if not all subsidy to be through DBT (direct benefit transfer) route

    • Thrust on housing & infra investments

    • Imposition of LTCG (long term capital gains) or increasing the LTCG timeline from 1 year to 2/3 years.


    What are the key sectors or themes that are likely to benefit the most from the Budget 2019?

    Consumption ( Auto / FMCG ),  steel and cement. 

    Do you see any fiscal slippages risk for the government?

    Marginal. This financial year it could be 3.5 percent, while for FY19, it could be around 3.2

    Midcaps rallied more than 2 percent so far this year. Do you expect that momentum to continue in the current year?

    Yes, but volatility will be much higher than CY2017.

    Crude prices have risen this year. How important is it from macroeconomy perspective?

    It will have some negative impact on Indian economy, but I do not see that denting the Bull market.

    What are your five best multibaggers for next 2-3 years or five best picks that can double the money in 2-3 years? 

    1. Nitin Spinners

      • Nitin Spinners (NSL), is a Rajasthan based manufacturer of 100% cotton yarn and knitted fabrics. Nitin has an installed capacity of 225,000 spindles

      • Strong promoter pedigree - NSL is promoted by RL Nolkha who has spent around 25 years in the Industry before setting up NSL. Over the last 25 years, the Nolkha family has grown the business very efficiently and have successfully navigated the challenges and threats. NSL’s expansions have been prudently planned in order to keep gearing in check and the management has consciously capped the interest cost to sales at 5%

      • The company has been successful in maintaining best among the industry operating metrices resulting in a healthy RoAE – 27%/24%/25% for FY15/FY16/FY17.

      • Trading at attractive valuation of 9x FY19.Westlife Development





    • Indian food retail market is the sixth-largest in the world and estimated to grow to Rs.61 trillion by 2020, posting a CAGR of more than 15% over a six-year period.

    • QSR segment contributes 16.3% to overall sales of food retail division.

    • Market share of organised standalone restaurants and chain formats is expected to increase from 23% to 28% and 7% to 10%, respectively, over the period 2016 to 2020.

    • WDL enjoys certain competitive advantages like long-term rent agreements with a longer tenure for acceleration on relative basis which leads to faster store breakeven periods.

    • The Company continued with strategic and consistent expansion of its store base by setting up 22 stores in FY17.

    • Off lately, QSR restaurants have been involved in restructuring menu and cost, along with focus on improving same store sales growth which has been visible in 2QFY18, same is likely to get leg up in 3QFY18.

    • Gaining franchisee rights of North & East region can prove to be additional bonus.Piramal Enterprises



    • In a span of just five years, PEL has evolved to become one of the largest real estate financiers in India.

    • NBFC business - largely catering to real estate developers financing is expected to remain on a robust growth path.

    • In 2013, PEL acquired 10% stake in Shriram Transport. It followed this up with the acquisition of 20% stake in Shriram Capital and 10% stake in Shriram City Union Finance in 2014. With these investments, PEL has also diversified into retail financing.

    • PEL does not offer preferred equity finance, structured finance, etc, and does not intend to diversify into those products anytime soon.

    • Post the sale of its domestic formulations business to Abbott in FY11, PEL has re- built its healthcare business. Over the last five years, healthcare revenue has grown at a CAGR of 17% to INR35.6b (~54% of total revenue) in FY16.

    • PEL is the third-largest player (after Abbott and Baxter) in the global inhalation anesthesia space.

    • PEL’s consumer product business is the 7th largest amongst all OTC companies in India. It has a good portfolio of high-ranked brands.

    • Attractively valued on STOP basis – financing business + pharma + domestic OTC + strategic stake in Shriram group.


    Agrotech Foods

    • Sales growth has picked up, clocking 22% YTD FY18 (excluding CSD) doubling the growth rate from 11% during the year-ago period.

    • Nachos is a nascent but fast growing segment in India and Agro Tech has become the No.2 player in this market.

    • The company is entering into bag snacks of different types and pack sizes.

    • Agro Tech has launched peanuts and peas under Sundrop and Diet Pop snack food under Act II.

    • Company plans to launch different flavours and spin-offs of peanut butter (combination with jelly or chocolate).

    • Peanut butter is expected to clock sales of Rs400-500m, and we expect it to touch Rs1bn by FY21.

    • The company has five plants currently and the sixth one is under construction at Chittoor.  Once the company has its “seven-plant model” in place, we should see better growth in RTE popcorn.

    • In latest analyst meet management was sounding very positive and confidence and same should translate in execution.


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    First Published on Jan 16, 2018 05:59 pm
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