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Last Updated : Jun 17, 2018 09:23 AM IST | Source: Moneycontrol.com

Economic cues to watch out for this week; these 3 stocks may return up to 44%

Sumit Bilgaiyan of Equity99 said the key factors such as rupee's movements against the US dollar and fluctuations in crude oil prices as well as developments on monsoon's progress will impact investors' risk-taking appetite.

 
 
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Sumit Bilgaiyan

Investors will watch out for global stock markets this week amid absence of any major domestic cues. On the global front, Japan’s balance of trade data for May will be disclosed on June 18. Bank of Japan’s (BoJ) monetary policy meeting minutes will be unveiled on June 20. Policymakers also kept the 10-year government bond yield target around zero percent but dropped the inflation target date for reaching 2 percent.

In the US, existing home sales data for May will be disclosed on June 20. The Bank of England (BoE) will decide on interest rate on June 21. Japan's inflation data for May will be disclosed on June 22.

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Brent crude hovers above the $75 per barrel mark. Rise 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.

Back home, investment by foreign institutional investors (FIIs) and domestic institutional investors (DIIs) will also set the course for the stock market. Other key factors such as rupee's movements against the dollar and fluctuations in crude oil prices as well as developments on the monsoon's progress will impact investors' risk-taking appetite.

Sun Pharma | Rating: Buy | Target: Rs 650 | Return: 13%

Following the VAI classification by USFDA for Halol unit last week, Sun Pharma has got EIR which indicates closure of FDA audit at Halol. It has been nearly four years since the September 2014 inspection when Halol first came under FDA scanner for non compliance resulting in zero approvals from Halol since then.

It has been a long wait for Sun to come back to full compliance and should result in quick approvals going ahead. Out of total 139 ANDA’s and 3 NDA’s pending, we believe several key filings for injectables, complex oral drugs and SPARC products are awaiting approval from Halol. Receipt of EIR is a positive development for Sun and paves way for gradual ramp up of Halol unit.

Faster approvals for Generics will help Sun to absorb overheads and support margins expansion in next couple of years, despite higher marketing spend on specialty launches.

It has made superb double bottom formation at Rs 435. After a smart move in short time, stock has strong hurdle near Rs 585-605 levels. Cross over will take it to Rs 650+ levels. Down side strong support exist at Rs 540-537 levels. We are recommending a buy on dips.

SAIL | Rating: Buy | Target: Rs 95-101| Return: 18%

SAIL has posted highest EBITDA per tonne in 4QFY18 since FY11. We think this kind of realization will continue on back of better than expected China steel demand, continuing supply limits and falling inventories. SAIL’s management is targeting 28 percent volume growth in FY19. Capacity expansion from 12.5mt to 20mt is almost complete.

FY18 volumes rose 7 percent to 14mt; management expects 18mt in FY19, sharper acceleration in 2HFY19, close to rated production in two years.

Looking at sustained realization numbers and valuation of SAIL we are recommending a buy on dips. Sail has shown a superb move from Rs 67-68 levels. Now Rs 91 will be a strong hurdle for this stock, cross over will take it to Rs 95-101 levels in very short time. Downside Rs 78-80 will be support zone for this stock. One can buy with stoploss of Rs 78.

Dynamic Industries | Rating: Buy | Target: Rs 140-150| Return: 44%

Dynamic Industries is in the business of manufacturing of Chemical and main product of the company is dye and dye stuffs. Significant revenue portion consists of exports.

The Company exports its products to Germany, the United States, South Korea, China, Taiwan, Italy, Turkey, Switzerland, Russia, Pakistan, Spain, Brazil, and Argentina.

The Company sells its products through a well-established network in different countries, which are supported by the company’s strong marketing force. The company has the plans to penetrate better into world market, especially through the customer retention and business development in the regions which have not been tapped.

Company is taking effective steps to improve operational efficiency to maintain the earnings. At present many policies are being formed/adopted by the present government, which may be beneficial to the company in future.

For FY18, its PAT zoomed 76 percent to Rs 3.08 crore on 21% higher sales of Rs 59.16 crore fetching an EPS of Rs 10.08. It has support near Rs 95-90 levels.

Upper side minor hurdle exist at Rs 117-119 levels. Cross over will take it to Rs 140-150 levels in medium term. We are recommending a strong buy.

Disclaimer: The author is Founder, Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their 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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First Published on Jun 17, 2018 09:23 am
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