Instead of looking at the Index, investors should focus more on stock specific opportunities and if you look for them, there are plenty available.
Indian market touched fresh record highs week-after-week helped by strong cues from global markets and domestic liquidity which continues to dominate in the year 2018.
The next big question in front of investors is – to buy stocks now or wait for declines? The general theory says that it is very tough to time the market but if investors keep a disciplined approach to investing, heavy losses could be avoided.
Instead of looking at the Index, investors should focus more on stock specific opportunities and if you look for them, there are plenty available. Sectors which are related to Indian economy should do well, suggest experts. Hence, sectors like consumption, GST-related, as well as rural focussed themes, are likely to do well in the coming years.
“Going ahead, we expect Equity market to continue to deliver consistent returns in 2018 as well on the back of stronger economic growth, recovery in corporate earnings. However the scale of returns expected would be in the range of 10-15% on the back of a high base and normalization of valuations playing out in 2018,” Siddharth Khemka, Head- Retail Research, MOSL told Moneycontrol.
“Our year-end target for Nifty is ~11450-11650. Some of the themes that we believe should do well in 2018 are Cyclicals like Cement, Infra, capital goods (benefit from the higher government spending), GST beneficiaries like jewelry retail, footwear, building material (value migration from unorganised to organised layers), rural recovery (sectors like Auto, FMCG, vehicle financing, etc.),” he said.
We have collated a list of top 10 stocks from different brokerage firms which could give multibagger returns in the next 2-3 years:
Analyst: Ravi Kataria, Managing Director, Imperative Associates Pvt. Ltd.
Talbros Automotive Components Limited:
Talbros Automotive is an industry leader in the manufacturing of Gaskets & Heat Shields, Forgings, Suspension Systems & Modules, Anti Vibration components, and Hoses. With experience and expertise, it has established a presence across all auto category from two-wheelers to Farm Equipment.
The company is expected to achieve revenues of Rs.700 crores by 2020, operating margin of 14 percent, and return on capital employed of 20%. Low leverage, higher promoter stake and lower than industry average valuations are factors imperative for investment in the company.
Ujaas Energy Ltd:
Ujaas Energy Limited has completed projects totalling 200 MW of solar power plants for corporates and retail clients. The company is also operating and maintaining more than 200 MW for its corporate clients like KRBL (KRBL), SRS, Friends Group, Rockwell, Avon Cycles, Solar Energy Corporation India or SECI.
We are expecting Ujaas’ topline to grow on the back of hybrid solar-wind policy, rooftop sales, and a gradual shift towards solar for sustainable low-cost power producing option. The company can double its EPS over the next couple of years on capacity augmentation.
Analyst: Sanjeev Mohta is the COO of East India Securities Ltd (EISL).
Nitin Spinners Ltd. (NSL), is a Rajasthan based manufacturer of 100% cotton yarn and knitted fabrics. Nitin has an installed capacity of 225,000 spindles.
Strong promoter pedigree - NSL is promoted by R. L. Nolkha who has spent around 25 years in the Industry before setting up NSL. Over the last 25 years, the Nolkha family has grown the business very efficiently and have successfully navigated the challenges and threats.
NSL’s expansions have been prudently planned in order to keep gearing in check and the management has consciously capped the interest cost to sales at 5%.
The company has been successful in maintaining best among the industry operating metrics resulting in a healthy RoAE – 27%/24%/25% for FY15/FY16/FY17. Trading at an attractive valuation of 9x FY19.
Westlife Development (WDL):
Indian food retail market is the sixth-largest in the world and estimated to grow to Rs.61trn by 2020, posting a CAGR of more than 15% over a six-year period. QSR segment contributes 16.3% to overall sales of food retail division.
WDL enjoys certain competitive advantages like long-term rent agreements with a longer tenure for acceleration on a relative basis which leads to faster store breakeven periods. The Company continued with the strategic and consistent expansion of its store base by setting up 22 stores in FY17.
Piramal Enterprises Ltd (PEL):
In a span of just five years, PEL has evolved to become one of the largest real estate financiers in India. NBFC business - largely catering to real estate developers financing is expected to remain on a robust growth path.
In 2013, PEL acquired 10% stake in Shriram Transport. It followed this up with the acquisition of 20% stake in Shriram Capital and 10% stake in Shriram City Union Finance in 2014. With these investments, PEL has also diversified into retail financing.
PEL is the third-largest player (after Abbott and Baxter) in the global inhalation anesthesia space. PEL’s consumer product business is the 7th largest amongst all OTC companies in India. It has a good portfolio of high-ranked brands.
Agrotech Foods Ltd:
Sales growth has picked up, clocking 22% YTD FY18 (excluding CSD) doubling the growth rate from 11% during the year-ago period. Nachos is a nascent but fast growing segment in India and Agro Tech has become the No.2 player in this market.
The company plans to launch different flavours and spin-offs of peanut butter (combination with jelly or chocolate). Peanut butter is expected to clock sales of Rs400-500m, and we expect it to touch Rs1bn by FY21.
The company has five plants currently and the sixth one is under construction at Chittoor. Once the company has its “seven-plant model” in place, we should see better growth in RTE popcorn.
Analyst: Abhinav Gupta, President - Capital Markets, Share India Securities
Rajoo Engineers supplies machinery for packaging products and is bound to gain with strong consumption demand and an uptick in FMCG sales.
Currently trading at higher multiples with respect to trailing multiples we confident strong sales and higher profitability due to positioning in the industry. Rajoo has maintained strong return ratios and will continue to do so.
Greaves Cotton has tied up with Piaggo to supply BS VI diesel and alternative fuel engines. Policy embargo on CV's and environmental concerns from NGT make us confident on prospects of the company.
Greaves Cotton drive a significant portion of its revenue from agri-equipment and construction equipment. This makes Company uniquely positioned to gain from all quarters of government policies. Strong return ratios make us confident on management's capabilities to deliver.
Flex Foods is an associate company of Uflex and a leader in flexible packaging technology. Flex Foods cultivates and processes food products and supplies vacuum freeze-dried, air-dried, frozen and an individually quick frozen (IQF) product range.
It sources its raw materials through contract farming through a dedicated network of 500 farmers. Strong pedigree, good product range, and low forward earning multiples make us confident of a better outlook for the stock.
First O&G company in private sector with the professional board, debt-free balance sheet and proven development/operating experience puts this company in the sweet spot with rising crude prices and gas demand in India.
The company is planning to ramp up production capacity, raise capital for inorganic growth and acquire additional acreage.
Open Acreage Licensing Program & Discovered Small Field (DSF) bid round 2 announced by the Government present excellent opportunities to grow the portfolio.Disclaimer: The views and investment tips expressed by investment experts 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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