Geojit betting on these 6 stocks for up to 31% return

Broking house Geojit is betting big on Nestle India, NCC, Amara Raja Batteries, Dilip Buildcon and Bharat Forge.

February 26, 2021 / 11:40 AM IST

Sensex_ The market continued to rally on February 25 amid monthly F&O expiry and positive global cues. The Sensex rose 257.62 points, or 0.51%, to close at 51,039.31, while the Nifty added 115.40 points, or 0.77%, to end at 15,097.40. We have collated five buying ideas from the broking house Geojit with an upside of up to 31 percent, calculated from February 25 closing.

Bharat Forge | Rating: Buy | LTP: Rs 620.85 | Target: Rs 723 | Upside: 16 percent. Company's strategy to shift to new technological products and ramp-up in Aluminium forging in US & India for new product development are on track and will bring value migration per vehicle in the long run. Industrial export outlook looks challenging, but we believe that the company is well placed with new products in the domestic sector. We believe the demand visibility looks attractive and expect margin expansion owing to the growth coming from the defence sector and sustained recovery in the auto space. Bharat Forge | Rating: Buy | LTP: Rs 620.85 | Target: Rs 723 | Upside: 16 percent. The company's strategy to shift to new technology products and a ramp-up in aluminium forging in the US and India for new product development are on track and will bring value migration per vehicle in the long run. The industrial export outlook looks challenging, but we believe that the company is well placed with new products in the domestic sector. We believe the demand visibility looks attractive and expect margin expansion on growth coming from the defence sector and sustained recovery in the auto space.

Dilip Buildcon | Rating: Buy | LTP: Rs 667.10 | Target: Rs 753 | Upside: 13 percent. We expect timely payment from Govt. and recovery in execution from H2FY21 will help to manage working capitals. Therefore, we increase FY21EFY22E earnings estimate by 17%/27% respectively and maintain buy rating with a target price Rs 753 based on a P/E of 13x on FY23E EPS & HAM business at 0.3x P/B of invested equity. Dilip Buildcon | Rating: Buy | LTP: Rs 667.10 | Target: Rs 753 | Upside: 13 percent. We expect timely payment from the government and recovery in execution from H2FY21 will help manage working capitals. Therefore, we increase FY21EFY22E earnings estimate by 17%/27%, respectively, and maintain a buy rating with a target price of Rs 753 based on a P/E of 13x on FY23E EPS & HAM business at 0.3x P/B of invested equity.

Amara Raja Batteries | Rating: Buy | LTP: Rs 890.35 | Target: Rs 1,129 | Upside: 26 percent. Despite pressure in margin due to lower material cost pass through to OEM, comparing to its peer Exide, the company continues to be a second formidable player behind Exide in the OEM & Aftermarket sales. This is largely led by the strong franchise network and operational efficiency. We believe the auto sector is likely to show pick up in H2FY21 owing to lower base and new launches. Considering the strong financials and larger visibility we value stock at 20x FY23 EPS and recommend buy rating with a revised target price of Rs 1,129. Amara Raja Batteries | Rating: Buy | LTP: Rs 890.35 | Target: Rs 1,129 | Upside: 26 percent. Despite pressure in margin due to lower material cost pass-through to OEM, comparing to its peer Exide, the company continues to be a second formidable player behind Exide in the OEM & aftermarket sales. This is largely led by a strong franchise network and operational efficiency. We believe the auto sector is likely to pick up in H2FY21 owing to a lower base and new launches. Considering the strong financials and larger visibility, we value stock at 20x FY23 EPS and recommend 'buy' rating with a revised target price of Rs 1,129.

NCC | Rating: Buy | LTP: Rs 91.25 | Target: Rs 120 | Upside: 31 percent. Company’s comfortable order book provides visibility for the coming years. Improving work efficiency and better margin guidelines will support earnings in the coming quarters. We therefore, maintain buy rating and value NCC at a P/E of 15x on FY23E earnings with a target of Rs 120. NCC | Rating: Buy | LTP: Rs 91.25 | Target: Rs 120 | Upside: 31 percent. The company’s comfortable order book provides visibility for the coming years. Improving work efficiency and better margin guidelines will support earnings in the coming quarters. We, therefore, maintain buy rating and value NCC at a P/E of 15x on FY23E earnings with a target of Rs 120.

Close

Nestle India | Rating: Buy | LTP: Rs 16,113.90 | Target: Rs 18,490 | Upside: 14 percent. Given increasing rural penetration, niche play, unique positioning, uninterrupted distribution, increasing utilization levels along with capacity expansion, company’s premium segments reflect high growth potential. Additionally, packaged foods segment in India proposes immense growth opportunities with youth population shifting towards health and nutrition segment. With vigorous new launches and revival of OOH segment, we expect upside potential in the stock and upgrade our rating to a buy with a rolled forward target price of Rs 18,490 based on 63x CY22E adjusted EPS. Nestle India | Rating: Buy | LTP: Rs 16,113.90 | Target: Rs 18,490 | Upside: 14 percent. Given increasing rural penetration, niche play, unique positioning, uninterrupted distribution, increasing utilization levels along with capacity expansion, the company’s premium segments reflect high growth potential. Additionally, packaged foods segment in India presents immense growth opportunities with a young population shifting to the health and nutrition segment. With vigorous new launches and revival of OOH segment, we expect upside potential in the stock and upgrade our rating to a buy with a rolled forward target price of Rs 18,490 based on 63x CY22E adjusted EPS.

Representative image KNR Constructions | Rating: Buy | LTP: Rs 208.65 | Target: Rs 259 | Upside: 24 percent. A healthy balance sheet, strong execution capability with a better operational margin will support valuation. While increasing execution efficiency and a pick-up in order inflow improved the outlook for FY22. We value the standalone business at a P/E of 15x FY23E EPS and BOT/HAM projects at 1xP/B to arrive at SOTP target price Rs 259 and maintain a buy rating.
Rakesh Patil
first published: Feb 26, 2021 11:40 am

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