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Last Updated : Apr 28, 2018 10:40 AM IST | Source: Moneycontrol.com

Earnings, global markets to set the trend on D-Street; 3 stocks with up to 15% return potential

On the macros side we will continue to look at bond yields and crude prices. We believe these are two biggest factors which can dampen the Indian market rally, says Sumit Bilgaiyan, Founder of Equity99.

Sumit Bilgaiyan
 
 
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Sumit Bilgaiyan

The Dalal Street could watch out for reactions of Q4 numbers of Nifty companies. HDFC, Kotak Mahindra Bank will announce Q4 earnings on April 30. Dabur and Hindustan Media Ventures will post their earnings the next day.

Market will be closed on Tuesday due to Maharashtra Day. So, we will have only four trading days in this week.

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On the macros side, the market will continue to look at bond yields and crude prices. We believe these are two biggest factors which can dampen the Indian market rally.

In US and Europe, results season is still going on. Particularly post Caterpillar and GE’s disappointing numbers we will closely watch for coming companies numbers, especially related to old economy.

In FANG stock, Facebook has posted very good set of numbers. We might see some relief rally in high beta US counters on back of this. So, in nutshell, next week's trend will be decided on the basis of quarterly earnings, trend in global markets.

Salasar Techno Engineering | Rating: Buy | Return: 15%

Salasar Techno Engineering enjoys 42% market share and all the major telecom operators are its customers having long term business relationship. The company has technical tie up with Rambol International for manufacturing and designing world class telecom towers of various qualities and range.

The current EBITDA margin is around 10%, which is expected to increase up to 11-11.5% on the back of huge order book, consistent demand and new projects for which the company has already submitted bid.

In FY17 Salasar Techno doubled its galvanizing capacity from 50,000 metric tons to 1,00,000 metric tons. Salasar Techno currently has an EV/EBIT of 9.72%.

At the current market price of Rs 387, company is trading at 11x multiple for FY19. We are recommending a buy with a target of Rs 445.

Vinyl Chemicals | Rating: Buy | Return: 9%

Vinyl Chemicals is a Pidilite group company. It is in the business of selling various speciality chemicals mainly to textile, paints and adhesive sectors. Vinyl Acetate Monomer (VAM) was manufactured in the plant located at Mahad in Raigad District, Maharashtra, India and was sold all over the world. Vinyl had major share of business of this product in India.

During 2007, the said plant was de-merged to resultant parent company Pidilite Industries for strategic reasons. However, the company's main focus remains in its product “Vinyl Acetate Monomer" (VAM). The VAM is now imported/sourced from various Global suppliers and distributed / traded in India.

Vinyl Chemicals India will maintain its major presence in the field of trading of various Speciality Chemicals in future all over the world. Currently, the stock is trading at 20x which we think is quite an attractive level given the bright future prospects and pedigree of Pidilite group.

Vinyl Chemicals will yield maximum benefits from structural changes are happening in chemical industry. Be it a production cuts from Chinese companies or continuously rising demand from Asian conglomerates. Vinyl Chemicals has all the ingredients to outpace the industry growth. We recommend a buy with a target of Rs 131.

Archidply Industries | Return: 13%

Archidply Industries is the flagship company of the Archidply group. The company is a manufacturer of wood panel products and decorative surfacing products.

The promoters of the company have been associated with plywood manufacturing for more than 30 years under the brand ‘Archidply’.

The management was responsible for the turnaround of the Mysore based particle board and plywood manufacturing unit which was shut down for seven years, before being acquired by the Archidply group. The company also has a good track record in executing projects on time.

The company started out with a single plant in Assam and has expanded the business to three facilities in Uttar Pradesh, Assam and Karnataka. The organized plywood industry is growing at a rate of 30 percent per annum driven by increased demand from institutional clients. Retail stores, corporate spaces and hospitality sector have seen huge growth and are fuelling the demand for Interior Infrastructure.

Looking at management pedigree and industry growth we believe Archidply will yield maximum benefits in coming days. We are recommending Archidply with target of Rs 108.

Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his 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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First Published on Apr 28, 2018 10:40 am
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