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The Nifty and the Sensex comfortably closed above their psychological barriers of 10,700 and 35,000, respectively, on Monday on the back of better quarterly earnings reported by India Inc, and positive global cues.
Last week, the Nifty reclaimed the 10,700 mark intraday during one of the sessions, while the S&P BSE Sensex had a touch-and-go moment with the crucial 35,000 mark. The Nifty rallied 1.2 percent and the Sensex gained 1.6 percent during the week.
The Nifty concluded the April futures and options series a tad above 10,600, with a gain of around 5 percent over its penultimate expiry. Benchmark indices broke above key resistance levels as India Inc posted a strong set of numbers for the March quarter.
From the list of companies that reported quarterly earnings last week, here are five on which brokers have 'buy' recommendations, and which could net as much as 5-30 percent on the bourses.
Shriram Transport Finance: CMP Rs 1,627
Brokerage: Emkay | Rating: Buy | Target: Rs 1818 | Returns: 12%
Shriram Transport Finance's delivered robust operating performance in Q4FY18 with NII growth of 38.1% at Rs 1,980 crore, supported by disbursement growth of 43.8% and AUM growth of 21% to Rs 95,310 crore, YoY.
We upgrade our FY19/20E earnings estimates by an average 1.3%. We believe CV cyclical uptrend and increasing share of diversified lending segments will keep growth momentum steady. We maintain buy with a revised target of Rs 1,818.
The company recommended a final dividend of Rs 6 per share (i.e. 60%) for the financial year ended March 31, 2018.
Shriram City Union Finance: CMP Rs 2395
Brokerage: HDFC Securities | Rating: Buy | Target: Rs 2527 | Returns: 5.5%
Shriram City Union Finance's 4Q results were bogged down by the shift to 90DPD. Higher provisions (2x sequentially) led to a significant miss on net earnings. Opex jumped primarily driven by higher staff costs as SCUF built up higher bench strength.
We believe there is immense potential for SCUF in the SME space given the government’s focus on this segment. Optimizing branch productivity and the maturing system of standardized sourcing and underwriting will key drivers of SME growth.
With well capitalized B/S and wide spread presence, we believe growth revival is a given. Dip in provisions and a tight leash on costs will boost return ratios 49bps over FY18-20E. Maintain buy with target of Rs 2,527.
The company recommended a final dividend of Rs 12 (i.e. 120 percent) per equity share subject to the approval of the shareholders at the ensuing annual general meeting of the company.
Reliance Nippon Life Asset Management: CMP Rs 253
Brokerage: JM Financial | Rating: Buy | Target: Rs 330 | Returns: 30%
Reliance Nippon Life Asset Management (RNAM) reported a strong quarter with PAT for 4QFY18 up 35% YoY at Rs 16200 crore. Company's profitability
witnessed a sharp uptick in 4QFY18, with PAT / QAAUM at 26bps for the quarter and 24bps for the full year FY18.
We believe the resultant compression on net revenue yields will to a large extent be offset by the strong growth in other income from PMS/ AIF/ offshore businesses which are shaping up well. We factor in a 2% / 5% earnings cut for FY19E/FY20E and value RNAM at 28x FY20E EPS to arrive at our revised 12-month target of Rs 330 per share.
Reliance Nippon Life Asset Management at its meeting held on April 25 has recommended a dividend of Re 1 per equity share.
Maruti Suzuki: CMP Rs 8783
Brokerage: JM Financial | Rating: Buy | Target: Rs 10,200 | Returns: 16%
Maruti Suzuki reported 4QFY18 with EBITDA margin at 14.2%, topline at Rs 20600 crore, which is inline, driven by 11% YoY volume growth and 3% expansion in realisation on healthy sales mix and lower discounts.
With new model launches and continued network expansion, we stay positive on company's long-term growth prospects. Maintain buy on the stock with target of Rs 10,200. Sharp rise in raw material costs, sharp yen appreciation, slower than expected demand are key risks.
Maruti Suzuki India has considered and recommended a final dividend of Rs 80 per share for the financial year 2017-18.
UPL: CMP Rs 740
Brokerage: Dolat Capital | Rating: Accumulate | Target: Rs 880 | Returns: 19%
UPL's net sales grew by 7% to Rs 5690 crore, volume growth during the quarter was 8% and exchange impact of -1%. Adjusted EBITDA grew by 9% to Rs 1220 crore higher than our estimate by 3%. PAT de-grew by a percent to Rs 740 crore.
We believe UPL should be able to grow by 12% CAGR over FY18-20E supported by growth in India and LaTAm and we expect earnings CAGR of 16% over the same period. The valuations are attractive at 16x and 14x FY19E and FY20E. We maintain accumulate with a target price of Rs 880.
The company recommended a dividend at 400% (i.e. Rs. 8 per equity share) on the equity shares of Rs 2 each, subject to approval of members at the ensuing annual general meeting.
Disclaimer: The views and investment tips expressed by brokerages 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.
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