Gujarat Gas, Cipla among 10 stocks which brokerages have upgraded to 'buy'
After four consecutive days of down move, the market on February 19 bounced back sharply and gained over a percent amid positive global cues.
Among sectors, pharma index gained over 2 percent followed by metal, FMCG, infra and energy.
"Markets are currently dancing to the global tunes and we do not see this scenario changing anytime soon. Traders should keep a close watch on the world markets for further cues. Since we’re seeing a mixed trend on the sectoral front, the focus should be on stock selection and trade management," said Ajit Mishra, VP - Research, Religare Broking.
BSE Smallcap index and Midcap index added 1.3 percent each.
Gujarat Gas | Brokerage: ICICI Direct | Rating: Upgrade to Buy from Hold | Target: Rs 355 | Upside: 23 percent
"Gujarat Gas benefitted from the NGT order. We expect it to maintain strong sales volume contribution from industrial sales to the overall volumes. Robust increase in volumes driven by regulatory tailwinds, further penetration in existing geographical areas (GAs) and aggressive expansion in newly acquired GAs will lead to sustainable long term growth," the brokerage said.
"We roll over valuations to FY22E and revise our rating on the stock from hold to buy with a target price of Rs 355 (implying 17.6 percent potential upside from current levels)," it added.
Britannia Industries | Brokerage: Prabhudas Lilladher | Rating: Upgrade to Buy from Accumulate | Target: Rs 3,725 | Upside: 21 percent
The brokerage house expects Britannia Industries to gain disproportionately in the expected demand recovery given the investments behind distribution, innovations and new categories.
It believes that gains from new units in Guwahati and Ranjangaon provide gains exceeding 1 percent of sales and cushion any hit on margins due to input cost inflation and competition.
Prabhudas Lilladher increased FY20 EPS by 2.5 percent while tweaking FY21 and FY22 estimates by a small -0.5% to 0.2% and value the stock at 45xFY22 EPS.
UPL | Brokerage: Sharekhan | Rating: Upgrade to buy | Target: Rs 647 | Upside: 10 percent
The brokerage house believes that the company will be able to deliver revenue and earnings CAGR of 10.0 percent and 29.5 percent over FY2020-22E.
As the risk-reward matrix turns favourable, it has upgraded rating on UPL to buy with a revised price target of Rs 647 per share.
The key risks include the ongoing US-China trade war, which might have an impact on commodity prices and currency fluctuation might have an impact, as the company has a significant presence in various geographies.
CESC | Brokerage: ICICI Direct | Rating: Upgrade from Hold to Buy | Target: Rs 845 | Upside: 22 percent
Steady base business and improving financial performance of both generation and distribution companies will improve the overall consolidated PAT of the company.
The key trigger for re-rating would be the finalisation of long term, medium-term PPA for unit 1 of Dhariwal Infra and better AT&C losses control at the distribution companies.
With minimal capex, going ahead, ICICI direct expect the company to pay higher dividends to shareholders.
Symphony | Brokerage: AnandRathi | Rating: Upgrade to buy | Target: Rs 1,678 | Upside: 23 percent
Symphony continues to dominate domestic air-coolers and remains the alpha in this category despite competition from several domestic peers with well-developed brands and distribution networks, the brokerage noted.
The key moats would be the coming hot summer which is the primary driver of air-coolers domestically and a turnaround in subsidiaries, now being overhauled by Symphony based on its requirements.
Akzo Nobel India | Brokerage: ICICI Securities | Rating: Upgrade to Buy | Target: Rs 3,100 | Upside: 26 percent
ICICI Securities expect accelerated revenue trajectory for ANI under new leadership in FY2020-23. The stock trades at a discount of 45 percent to APNT and improving the quality of growth will potentially drive rerating.
The company is likely entering a phase of new launches - focusing on premium products with technology-based differentiation. While it is unlikely to focus on consumers in distemper and low-end enamels.
Emami | Brokerage: Chola Securities | Rating: Upgrade to Buy | Target: Rs 348 | Upside: 28 percent
The management expects to receive Rs 5,000 crore from the proposed divestment of the entire stake in Cement division to Nirma.
The proceeds from the deal will be used for debt reduction resulting in fall in promoter pledge holding from the current 70% to 20%.
However, sharp rise in the menthol price & crude derivatives could adversely impact the margin, prolonged slowdown in demand for consumer discretionary products.
Aditya Birla Fashion | Brokerage: AnandRathi | Rating: Upgrade to Buy | Target: Rs 294 | Upside: 7 percent
AnandRathi raised its target multiple for Pantaloons to 17x FY22e EV/EBITDA vs. 15x FY21e EV/EBITDA on account of the division’s consistently profitable growth.
It expects the company's revenue and EBITDA CAGRs of respectively 14% and 25% over FY19-22.
Cipla | Brokerage: KRChoksey | Rating: Upgrade to Buy | Target: Rs 539 | Upside: 20 percent
KRChoksey expects the company's topline to grow by CAGR of 7.2 percent over FY19-21 period and net profit to grow by CAGR of 19.2 percent.
The company's domestic business is on track after disruption in trade generics business, as significant recovery and stabilisation are seen in trade generics business.
In addition, the company has announced a change in its strategy with regards to domestic business in order to increase the depth of product offerings.
Apollo Tyres | Brokerage: Sharekhan | Rating: Upgrade to Buy from Hold | Target: Rs 200 | Upside: 33 percent
The brokerage house expects healthy a 7 percent topline growth over the next two years driven by growth in domestic business on account of economic recovery and increased infrastructure investments.
The margins are expected to improve driven by soft commodity prices and a ramp-up at Hungary operations and expect strong 28 percent earnings CAGR over FY2020-22 period as against decline anticipated in FY2020.However, export markets served from India continued to remain under pressure and declined on YoY basis in Q3FY20.
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