Kshitij Anand Moneycontrol News
As we step into the year 2018, expectations of investors from Indian market is high but most analysts believe that it would be the year of stocks picking and not indices.
The S&P BSE Sensex which rose 29 percent in the year 2017 might not be able to repeat the same performance in the year 2018; hence, investors should consider investing in winning stocks.
We scanned data from the S&P BSE 500 index for the past 5 years and came up with a list of 20 stocks which have delivered double digit returns in 3 out of last 5 years while there were 12 stocks which gave positive returns in 4 out of last 5 years in the March quarter.
As we step into the earnings season, all eyes will be on December quarter earnings numbers from India Inc. which will start tricking in the second week of January 2018.
Stocks which have given double digit return in at least 3 out of 5 years include names like ABB India, Balrampur Chini Mills, TVS Motor Company, Aarti Industries, Adani Enterprises, APL Apollo, Asahi India Glass, Astral Polly etc. among others.
Stocks which gave positive returns in at least 4 out of 5 years include names like Ambuja Cements, Bajaj Finance, Eicher Motors, Finolex Cables, JK Cements, UltraTech Cements, Yes Bank, Ambuja Cements, and Shriram Transport etc. among others.
The Nifty-50 Index gave 29 percent return in CY2017 and has set a high bar for 2018, especially as a large part of our 23 percent growth in net profits for FY2019 may be largely discounted in the market’s current high valuations, Kotak Institutional Equities said in a note.
“The market’s performance in CY2018 will largely depend on (1) FY2019E earnings being met (largely discounted) and (2) continued confidence in FY2020E earnings as domestic and global macro-environment factors may be less favorable than in CY2017,” it said.
Among Sensex stocks which have given positive returns in at least 3 out of 5 years include names like HDFC, IndusInd Bank, L&T, Maruti Suzuki, and Yes Bank.
Will the earnings growth bounce back in 2018?
We enter the year 2018 with lot of hopes that earnings are likely to head northward in the next 12 months after remaining flat for almost 2-3 years.
One of the key tailwinds of growth for the organised players are the benefits that are expected to trickle in, following the implementation of GST, suggest experts.
“We expect earnings growth to be 19 percent for FY19 as against the consensus estimate of 25 percent, which will result in moderation of expectations during the year. In the current Bull Run, we have not yet entered the phase where the actual earnings outpace estimated earnings resulting in positive surprise on earnings, which was observed during the FY05- FY07 phase,” ICICI Securities said in a note.
“In this context, we believe it is unlikely that growth will surprise on the upside in CY18 and, against the backdrop of stretched valuations and evolving risks, equity returns could be moderate,” it said.
Rolling forward to Mar’20 EPS, ICICI Securities revised its 1-year forward target for the Nifty50 index stands at 11,750 (based on+0.5 s.d. forward P/E multiple of 17.2x and Mar’20 EPS of Rs 682).
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
