Anand Rathi Share and Stock Brokers recommends the following stocks:
CMP 381 Target 460
Mayur Uniquoters which is the leader in the synthetic leather industry is poised to benefit from increasing demand for artificial leather in the auto sector. Supported by its auto business and exports, Mayur reported 9 percent revenue growth. It expects 10-12 percent growth in FY18 with margins holding at the present level.
The momentum in exports and the auto segment is expected to persist, supported by modest growth in the footwear division. Ongoing capex in the PU segment and shifting of the line to Mysore would further boost growth. We maintain a Buy recommendation, ascribing 20x to FY19e EPS. We retain our Buy rating, with a revised target price of Rs. 460
CMP 1125 Target 1741
In Q1FY18 YOY, Sales rose by 13.3 percent, EBITDA margins at 7.4 percent & Realizations rose by 22 percent
Healthy order-book (300cr as on 10th Aug’17), strong balance-sheet and better profitability would keep Voltamp’s earnings growth strong in the next two years.
Earnings should record a 24 percent CAGR over FY17-19. A pick-up in power distribution capex and manufacturing & capex investments would lead to a better order book.
Company’s top-10 clients brought 35 percent to revenue. The company’s dependence on TRANSCOs (SEBs) business during the year came down drastically from ~20-25 percent to ~13-14 percent of sales.
Being debt-free and possessing good working-capital management has enabled Voltamp to manage its cash-flows better and enjoy healthy return ratios.
We believe that the order book would improve with capex revival especially in sectors such as metros rails and commercial construction, and greater distribution capex.
The stock trades at 13.0x FY18e and 10.5x FY19e.We maintain a Buy rating and revise our target price to Rs.1,741 (mean multiple 18x FY19 EV/EBITDA).
CMP 450 Target 535
Sundram Fasteners limited (SFL), the largest manufacturer and exporter of high tensile fasteners, caters to auto OEMs in the two-wheeler, four-wheeler, farm equipment and commercial vehicle segments. During Q1FY18, revenue grew by 9.7 percent and EBITDA margins stood 17.5 percent
The company is moving from low margin fasteners business to high margin business. In terms of ROCE, SFL is ahead of its peers at ~30 percent.We expect SFL to grow its revenues grow by ~10-13 percent for the next two years by FY-19E. While at profit after tax levels we expect SFL to grow by between 15-18 percent in next two years.
On profitability front, we expect the company to improve its operating margins going ahead as operating leverage due to increase in value added products kicks in. At a CMP of Rs 410, SFL is trading at a P/E multiple of 21.6x its FY18E EPS and 18.5x its FY19E EPS, which is at a discount to the peer average of 32x. Thus we initiate “BUY” with target price of Rs.535 per share.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.