The S&P BSE Sensex has fallen over 2,000 points from record highs, or by about 6 percent, but many stocks have plunged in double digits in the same period.
But, corrections like these give investors one of the best levels to enter. Indian market fell on the back of both global (crude oil, Fed rate hike, trade war fears) as well as domestic factors which include concerns over liquidity in NBFCs, fiscal concerns as well as high valuations.
Experts are of the view that if investors are planning to expand their portfolio or add more stocks, this is the right time to take their bets. Don’t follow herd mentality and liquidate holdings because bears are in control.
“Markets are often irrational in the short-term because they are based on herd mentality. But, such irrationality offers good buying opportunity of quality companies as the so-called fear is hypothetical and hence won’t last for long,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote said.
“Once the fear subsides the stocks will rebound. As Warren Buffett had quoted “The best thing that happens to us is when a great company gets into temporary trouble. We want to buy them when they're on the operating table,” he said.
If we look at what happened in the 2008 financial crisis, investors got impatient and forgot to maintain discipline when the market went into a tailspin. One big reason was that a lot of investors entered towards the top of the market in late 2007 and early 2008, and got spooked by the fall in markets and exited in a rush which resulted in large losses.
“Investors got spooked after a sudden drop in prices who entered markets in late 2007 or early 2008. However, investors who even came in during the top, but remained patient and disciplined, and continued with their SIPs/investments — would have generated handsome returns and created wealth for themselves,” Sampath Reddy, CIO, Bajaj Allianz Life told Moneycontrol.
As they say, It’s time in the market, and not timing the market — that matters, as the latter is quite difficult.
Also, the famous quote by Warren Buffet comes to mind — “The stock market is a device for transferring money from the impatient to the patient.”
We have collated a list of 10 fundamentally strong stocks on which various brokerages initiated coverage that could give 18-60 percent returns in the next 1 year from Tuesday’s closing price on the BSE:
ICICI Securities: Buy| LTP: Rs 298| Target: Rs 352| Return 18%
HDFC Securities initiated coverage on ICICI Securities with a buy recommendations and a target price of Rs 352 which translates into an upside of 18 percent.
ICICI Securities is one of the strongest retail investing platforms for direct equities (9.2 percent vol. market share). The company has retained its market leadership position despite intense competition.
It has also built a strong financial products distribution business (26.2 percent of revenues). We believe that ISEC will be a key beneficiary as financialization of savings grows.
NOCIL: Buy| LTP: Rs 163| Target: Rs 256| Return 57%
SMC Institutional Equities initiated coverage on NOCIL with a buy recommendation and a target price of Rs 256. NOCIL Ltd, part of Arvind Mafatlal Group is the largest rubber chemical manufacturer in India with a dominant 40 percent domestic market shares and 4-4.5 percent global market share.
The domestic brokerage firm expects the Revenue/EBITDA/PAT to grow at a CAGR of 16.4 percent /14.4 percent /15.9 percent over FY18-21E. While the company has delivered EBITDA margins of 27.4 percent in FY18, we have factored in 26 percent margins in the base case scenario.
LT Foods: Buy| LTP: Rs 42.10| Target: Rs 70| Return 66%
Indsec Securities and Finance Ltd initiated coverage in LT Foods Ltd with a buy recommendation and a target price of Rs 70. LT Foods is a branded specialty food Company dealing in branded basmati rice, organic foods, and rice-based convenience products.
LT Foods has historically witnessed a steady growth. Additionally, its focus on premiumization and venture into organic & VAP business are key growth drivers going ahead.
Considering the shift from unorganized to organized segment, the brokerage firm believes that LT Foods is in a good position to capitalize on the opportunity in the domestic market while it continues to witness a strong growth internationally as well.
Petronet LNG: Buy| LTP: Rs 225| Target: Rs 321| Return 42%
Ventura Securities initiated coverage on Petronet LNG with a buy recommendation with a target price of Rs 321. Petronet LNG is the largest logistic player for gas imports (which is expected to grow at a CAGR of 26 percent over the period of FY18-25), is expected to be the biggest beneficiary as India migrates to alternative fuel environment.
Surge in gas consumption due to a change in India’s energy mix to diversify its energy requirements is a big positive. The Govt is planning to raise the gas contribution in the energy mix from 7 percent in 2017 to 15 percent by 2022 and 20 percent by 2025, which translates into a 3X expansion in the mix on a base which is growing YoY.
Zydus Wellness: Buy| LTP: Rs 1428| Target: Rs 2009| Return 40%
BP Equities initiates coverage on Zydus Wellness with a buy rating and a target price of Rs 2009. Zydus Wellness Ltd the wholly owned subsidiary of Cadila Healthcare Ltd, operates into Fast Moving Consumer Goods (FMCG) space with a specific focus on customer health & wellness.
It enjoys a market leader position in 4 products segments—Face Scrubs, Face Peel Offs, Sugar substitutes & Margarine spreads. In face scrubs, face peel offs & sugar substitute—market size witnessed double-digit growth rates in all 4 quarters of FY18, compared to single-digit growth in a corresponding period of FY17.
ZWL is sitting on cash & cash equivalent and current investment, net off long-term debt, to the tune of Rs 536 crore as on March 2018. Management has been under deliberation to drive revenue growth by way of acquisition into wellness & health space to extend product portfolio.
Sheela Foam: Buy| LTP: Rs 1696| Target: Rs 2039| Return 20%
Axis Securities Ltd initiated coverage on Sheela Foam with a buy rating and a target price of Rs 2039. Sheela Foam Ltd. (SFL) is India’s largest Polyurethane foam (PU) manufacturer. They are also amongst the leaders in the mattress market and sell under the flagship brand of ‘SLEEPWELL’.
Sheela Foam is expected to be a big beneficiary of the shift in taste following urbanization and changing lifestyle. Being one of the top 3 players, SFL would be riding the growth wave due to shift from unorganized to organized segment, product innovation and under penetration. W
The brokerage firm estimate revenue to grow at CAGR of 11 percent over FY18-FY20E and PAT to grow at CAGR of 36 percent over FY18-FY20E.
MM Forgings: Buy| LTP: Rs 583| Target: Rs 809| Return 38%
Anand Rathi initiated coverage on MM Forging with a buy rating and a target price of Rs 809. The company is progressing to becoming a large component player in forgings, MM Forgings has planned vigorous capex for the next two years.
It has added higher presslines with more machining content which augurs well for its growth and profitability. While its exports are expected to grow with strong Class 8 and Class 5 trucks, its domestic business growth would be a function of the new component launches in the next two years.
Dr Lal Pathlabs: Buy| LTP: 963| Target: Rs 1184| Return 22%
IDFC Securities initiated coverage on Dr Lal Pathlabs with a buy rating and a target price of Rs Rs 963. Dr Lal PathLabs (DLPL) is one of the largest diagnostic chains in India with a pan India presence.
DLPL’s strong brand franchise, focus on service & quality and a broad basket of test offerings have enabled the company to create a leading position in North India. The company seeks to replicate this success in East and Central India (commissioning of Kolkata reference lab) and make gradual inroads in the South and West.
Focus on volume growth, backed by competitive pricing strategies and steady network expansion underpin IDFC Securities estimate of 16 percent revenue CAGR and steady 26 percent margin over FY18-21E.
Indostar Capital Finance: Buy| LTP: Rs 351| Target: Rs 593| Return 68%
LKP Securities Ltd initiated coverage on Indostar Capital Finance with a buy rating and a target price of Rs 593. Indostar Capital Finance is promoted by Mauritius based PE Everstone Group, one of well-known India & Southeast Asia focused PE firm.
The company has strategized to bring diversity in business mix and increase the size of non-corporate loans sizeably going forward. In the next 5 years, it aims AUM mix of – VF 35 percent, corporate loans 35 percent, SME 15 percent and housing loans 15 percent.
Over the FY18-22E period, the brokerage firm anticipates AUMs to grow at 50 percent CAGR which would be mainly driven by vehicle finance loans.
Crest Ventures: Buy| LTP: Rs 153| Target: Rs 317| Return 107%
Equity99 initiated coverage on Crest Ventures with a buy rating and a target price of Rs 317. The company is involved in the development and management of various real estate properties, such as residential, commercial, and township properties. The Company was formerly known as Sharyans Resources Limited and changed its name to Crest Ventures Limited in September 2014.
Crest Ventures is a diversified company having an interest in real estate, financial services, and investment & credit segment. Company's all verticals perform very well since last five years and strong performance remains to continue in next 2-3 years.
The company has successfully established its reputation by developing townships, large format retail properties, residential and commercial properties.Disclaimer: 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.