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SBI, Ceat among 4 stocks brokerages are betting on for handsome gains — Here's why

SMC Global Securities has a buy on Ajanta Pharma and Can Fin Homes while Choice Broking has buy on State Bank of India.

September 14, 2019 / 12:21 PM IST
 
 
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The Nifty gained strength in the last hour of trade and closed on a strong note on September 13, driven by hopes of a further stimulus by the government. The European Central Bank (ECB) stimulus and easing of US-China trade tensions also lifted sentiment.

The index recouped its previous day's losses to close above 11,050 and formed a bullish candle on daily, as well as the weekly charts, indicating strength in the market.

If the index gains further and gives strong breakout above the next resistance set at 11,141 levels, it can rally towards the crucial 11,300 levels, experts feel.

Here are the top 4 stocks which can give good returns:

SMC Global Securities

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Ajanta Pharma: Buy | CMP: Rs 1045.25 | Target: Rs 1181 | Upside: 13 percent

Ajanta Pharma is a specialty pharma formulation company. It has branded generic business in India and emerging markets, generic business in US and institution business in Africa. Many of the company's products are first to market and are leading in their sub therapeutic segments - ophthalmology, dermatology and cardiology.

In US during Q1FY20, the company received 3 ANDA final approval and filed 3 ANDA with USFDA. Out of 30 final approvals, the company has commercialised 28 products. 25 ANDAs are awaiting USFDA approval. The company plans to file 10 to 12 ANDAs during this financial year.

Dahej plant capacity utilisation stands at 30 percent and Guwahati Phase I (oral solids) stands at 65-70 percent. Furthermore, the company has given a capex guidance of Rs 350 crore for FY20. Pithampur plant, which has been earmarked for emerging markets, will begin commercialisation from Q4FY20.

The competitive edge Ajanta Pharma has built over the years, in terms of customised products for every market where it operates, continues to provide it the impetus for growth. The company continues to strengthen product portfolio through new launches, many of them being first-to-market products, offering significant patient benefits. Thus it is expected that the stock will see a price target of Rs 1,181 in eight-10 months on the PEx of 25.06 times and FY20E EPS of 47.11.

Can Fin Homes: Buy | CMP: Rs 392.40 | Target: Rs 476 | Upside: 21 percent

Can Fin Homes is a housing finance company that offers housing loan to individuals and builders/developers, and loan against property. The management of the company expects to raise loan book to Rs 23,000 crore by the end of March 2020 from Rs 19,003 crore achieved at the end of June 2019.

In terms of rate of interest, the company is well positioned between other housing finance companies (HFCs) and the bank. According to the management of the company, to gain more strength towards the market share, the company is focusing on the affordable home loan segment. Moreover, it has a track record of delivering robust financial performance. Going forward the company is likely to maintain the same on the back of healthy loan growth expectation and expansion in NIM.

Thus, it is expected that the stock will see a price target of Rs 476 in eight-10 months on an expected P/Bv of 2.93x and FY20 BVPS of Rs 162.51.

Choice Broking

State Bank of India: Buy | Target: Rs 335 | Stop loss: Rs 271 | Upside: 17 percent

On a weekly chart, the stock is taking a strong support of around Rs 262.50 level which is 78.60 percentrRetracement level of its previous up move from Rs 232.50 level to Rs 373.60 level. This suggests bounce back movement in the counter. Moreover, the stock has recently taken support of its lower band of “Broadening Rising Wedge Formation” in which the stock has been trading since many weeks, shows a northward movement in the counter.

On a daily chart, after giving healthy correction from its all time high, the stock took support at its previous bottom at 262.70 level which signifies that the stock might go up in coming trading sessions.

Furthermore, the stock has been continuously trading with its strong support of 21 Days Simple Moving Averages which shows a positive trend in the stock. A momentum indicator RSI and MACD both have shown positive crossover on the daily chart which add more bullishness to the price.

Based on the above technical structure, we are expecting an upside movement in the State Bank of India in a few trading sessions.

Ceat: Buy | Target: Rs 1030 | Stop loss: Rs 880 | Upside: Rs 11%

On a daily chart, the stock has been trading with a positive crossover of 21*50 Days Moving Average which shows a positive rhythm in the counter. Moreover, the stock has given a breakout of its Upper Band of Falling Wedge formation with above-average volume which indicates a robust upside movement in the counter.

On a weekly chart, after a healthy correction, the stock has formed a Bullish Engulfing Candlestick which is a bullish reversal formation and suggests a northward movement in the counter. On a monthly chart, the stock has taken the support of its 100 Months Moving Average which shows a bounce back movement in the counter.

A daily momentum indicator RSI reading is at 64.10 level with a positive crossover which points out for a positive breath in the counter. Based on the above technical structure, we are expecting a good upside movement in the counter in a few trading sessions.

Disclaimer: 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.
Sandip Das
first published: Sep 14, 2019 12:21 pm

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