The market looks ripe for a major up move in 2019. The lower trajectory of crude price, low inflation regime, softening of sovereign yields, relatively stable currency after the mayhem in INR and partial recovery in the domestic earnings (ex-PSUs) are healthy signals for the market.
On the fiscal front, while revenue-expenditure trends haven’t been optimal so far, the government has reiterated its commitment to meeting the Budget target.
Correction in stock prices, especially in the midcap and small-cap space, in the last many months, has cleaned-up excesses from the secondary market.
While some global issues like trade war will be niggle on-and-off but may not dramatically escalate to impact markets. The fear of slowdown and President Trump’s anti-hike comments may hard-press the US Fed to pause the monetary tightening process.
Indian equity attractiveness is high, vis-à-vis fixed income, gold, and property. It’s possible to see the Nifty hit the 13,000 mark in 2019 itself.
Here is a list of top 5 stocks which could give 20-40% return in the next 1 year:
KNR Construction: Buy| Target: Rs 260| LTP: Rs 199| Upside: 30%
We are upbeat on infra spending in the year 2019. KNR has an order book that’s 3x its current revenues. Track record of timely completion of projects, HAM or hybrid annuity model order wins and P/E of 10x FY20 earnings. The one-year target for the stock is placed at Rs260.
Aarti Industries: Buy| LTP: Rs 1,431| Target: Rs 1,750| Upside 22%
Tailwinds in the chemical sector will continue given issues in China. Capacity de-bottling and visibility of revenue makes Aarti, a specialty chemical company, our favourite. The stock is trading at ~23x FY20 P/E and the valuations are fairly attractive. One-year target price Rs1,750.
Britannia Industries: Buy| LTP: Rs 3,122| Target: Rs 37,80| Upside 21%
Health volume growth, focus on premium product adoption by customers, expansion of capacities, increasing distribution reach and adding geographies overseas and moderate commodity price outlook will help Britannia grow 20 percent on a YoY basis. With valuation at 42x FY21E, our one-year target price is Rs3,780.
Asian Paints: Buy| LTP: Rs 1,356| Target: Rs 1,750| Return 29%
Continued dominance in the decorative segment, ongoing expansion to double capacity in a phased manner and traction in industrial and automotive coatings segments through joint ventures makes the company a safe and steady bluechip to be invested in.
We expect 19 percent CAGR in profits between FY18-22. The stock trades at P/E of 46x FY20 earnings. The one-year target price is placed at Rs1750.
Reliance Industries: Buy| LTP: Rs 1,090| Target: Rs 1,500| Return 37%
JIO’s industry beating performance in Telecom raises hope of similar performance in other digital ventures. We’re upbeat on improving fortunes of its retailing business and strong earnings growth in core businesses of refining and petchem on account of petcoke gasification and off-gas cracker. Trades at 15x FY20 earnings. One-year target price 1500.
(The author is President and Head Of Research of YES Securities (India))
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.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.