Last Updated : Apr 17, 2019 01:09 PM IST | Source:

'Nifty fairly valued now, could touch 12,500 by FY20-end'

We would look at auto stocks more closely post elections and how monthly numbers pan out over period of 2-3 months to gauge if there is pickup in volumes.

Sunil Shankar Matkar
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At current levels, the market is fairly valued but we cannot say it's cheap valuations. We expect Nifty to touch 12,500 level by FY20, Swapnil Shah, Senior Analyst - Institutional Research at BP Wealth said in an interview to Moneycontrol's Sunil Shankar Matkar.

Edited excerpts:

Q: Analysts believe FY20 will witness way better earnings than the last two years, what are your expectations?


A: Except for the banking sector, especially SBIICICI Bank, FY20 earnings shall not far exceed that of the past two years. However, Nifty earnings are expected to grow 18 percent to around Rs 586.

Q: What is your reading on the market considering the current correction and consolidation after a steep run? Also, what is the Nifty target for FY20?

A: At current levels, the market is fairly valued but we cannot say it's cheap. We expect Nifty to touch the 12,500 level by FY20-end.

Q: What is your take on the auto sector?

A: After a steep correction, autos appear appealing in terms of valuation. However, post-election scenario will provide a clearer picture.

Q: Will broader markets outperform in 2019 H2?

A: As of now, there are no major triggers for the broader market to pick up in the second half of 2019.

Q: What factors are likely to impact markets in FY20?

A: If crude rises above current levels and sustains for a longer period then we could see pressure on the rupee. Also, scarce rainfall coupled with an increase in crude prices could lead to upward pressure on inflation.

On the global front, the deal between US and China shall also influence the direction of the market.

Q: What are you top five picks for FY20?

A: Bajaj Finance: Buy | Target: Rs 3,550 | Return: 17%

The company’s technology platform is scalable, which provides room for capturing future growth opportunities. This coupled with the strong brand franchise and execution will ensure that profitability would sustain going ahead.

Can Fin Homes: Buy | Target: Rs 460 | Return: 33%

Focus towards non-metros, improving conditions in the home market, geographical diversification of the portfolio along with various initiatives on the asset and liability side, aimed at boosting profitability and growth prospects, give us confidence in the company’s ability to realign in this challenging environment.

Punjab National Bank: Buy | Target: Rs 124 | Return: 34%

We believe that credit costs would improve going ahead and expect the ROEs to recover in the medium term. The potential stake sales in subsidiaries would be accretive, keeping us upbeat. We are valuing PNB on SOTP basis.

Hikal: Buy | Target Rs 224 | Return: 22%

We estimate 25.7 percent PAT CAGR on the back of better operational performance. Considering the expected strong growth in profitability, healthy balance sheet, improving return ratios and good corporate governance practices, we are optimistic about the long-term growth prospects of the company.

Dishman Carbogen Amcis: Buy | Target: Rs 291 | Return: 27%

DCAL has built a healthy order book in CRAMS, which is virtually full of current capacities, thus the management’s focus is shifting to improve profitability. We expect significant growth in earnings over the next couple of years (earnings CAGR of around 33 percent in FY18-21E), which will aid to generate sizable cash flows.

Disclaimer: advises users to check with certified experts before taking any investment decisions.
First Published on Apr 17, 2019 01:09 pm