Sensex, Nifty hit record highs ahead of Diwali; 10 cracker stocks which could give up to 38% return

On the sectoral front, S&P BSE Metals index rose 1.6 percent, followed by the S&P BSE Telecom which gained 1.4 percent, and the S&P BSE Auto index which gained 0.95 percent.

Here is a list of top 10 stocks which can give up to 38% return till next Diwali:

Brokerage Firm: Arihant Capital

Bajaj Finance: BUY| Target Rs2200| Return 13%

Bajaj Finance (BFL) is one of the leading asset finance NBFCs. It has a diversified loan portfolio with four broad categories viz. consumer finance (45% of loans), SME (37%) commercial (13%) and rural category (5%).

Assets under management (AUM) increased by 36% to Rs 60,194 crore, total income rose by 36% to Rs 10,003 crore, profit after tax rose by 44% to Rs 1,837 crore.

Structurally, we see some shift of retail savings away from bank deposits to mutual funds and insurance, which should make it easier for NBFCs like BAF. BAF’s has high-yield, a high-margin business which generates higher ROE.

CDSL: BUY| Target Rs 460| Return 22%

CDSL is India’s leading depository in terms of incremental Beneficial Owner (BO) accounts over the last 4 years and by a number of registered Depository Participants (DPs).

In terms of market share, CDSL stands second to NSDL with 44% demat account market share and NSDL with a Market share of 56%.

It earned more than 35% of revenue from annual issuer charges in FY17, which are likely to remain stable-to-growing and CDSL has invested in new business initiatives to drive growth.

Through subsidiary CDSL Ventures (CVL), it provides KYC services to capital market intermediaries with more than 1 crores KYC records and 70% market shares.

DHFL: BUY| Target Rs680| Return 27%

DHFL has a presence in 351 locations with significant penetration in tier 2/3 cities continues to remain focused towards the lower and middle income (LMI) customer.

AUM registered a growth of 20.2% from Rs 69,524 crore in Q4FY16 to Rs 83,560 Cr as on 31st March 2017 and DHFL’s AUM posted 23% CAGR over FY14-FY17.

Revenue growth 22% YOY and PAT growth 25% YOY which excluded stake sale of DHFL Pramerica Life Insurance Co Ltd (DPLI) by DHFL and till FY14 PAT growth was stable at 17% where PAT growth in FY17 improved to 25%.

The brokerage house expects the company’s AUM growth to remain above 22% over next two years.

L&T Finance Holdings: BUY| Target Rs260| Return 27%

L&T Finance Holdings Ltd (LTFH), promoted by L&T Ltd (64.2%) is a leading NBFC with a diversified lending portfolio.

Going ahead, the management intends to focus only on three segments i.e. Rural Finance, Housing Finance and Wholesale Finance.

The defocused loan book as % of total loan book has already been brought down to 4% from 8.5% and can expect that by FY2018 it will be insignificant compared to the total loan book.

Piramal Enterprises: BUY| Target Rs3350| Return 22%

The Company has created its unique positioning in the financial services space with Wholesale Lending loan book of Rs 24,975 Cr and Rs 7,157 Cr of alternative assets under management and company diversifying their loan book in the
Housing Finance Company and target to reach loan book of Rs 10,000 Cr by 2020.

In Pharma, PEL enjoys a strong presence in Global Pharma and India Consumer Products businesses with a Strong portfolio of differentiated branded generic products, API generics and vitamins presence in India consumer business is strong.

In the OTC segment from top 100 brands in India they have 6 brands in it and distribution network reach is 4.2 lakh outlet, revenue is Rs 3,000 Cr and target is to grow it to Rs 6000-7000 Cr by 2020.

Brokerage Firm: Kotak Securities

Asian Granito: BUY| Target Rs603| Return 24%

Asian Granito, promoted by Mr. Kamlesh Patel and Mr. Mukesh Patel in the year 2000, is engaged in the manufacture and sale of ceramic wall and floor tiles, vitrified tiles, digital polished glazed vitrified tiles, digital wall tiles, marble and quartz

It is the fourth largest player in tile industry and set to benefit from demand growth: Asian Granito has a capacity of 33 mn sq meter spread across 8 plants in Gujarat.

Lower power cost as compared to other players: The company acquired Artistique Ceramic Pvt. Ltd with a 70% shareholding in Crystal Ceramics and the acquired company enjoys a gas supply arrangement with ONGC significantly lower than the prevailing market price.

Cochin Shipyard: BUY| Target Rs740| Return 29%

Cochin Shipyard (COSH) is a Government promoted Miniratna company, incorporated on March 29,1972. It caters to clients engaged in the defence sector in India and clients engaged in the commercial sector worldwide.

COSH has a diversified order book at Rs 83 bn which we expect to grow at 20% CAGR with orders coming from Navy, Coast guard and commercial segment. COSH is one of the yards empanelled with the Indian Navy and the coast guard for orders.

With the improvement in commercial shipping segment, we can expect a regular flow of orders from the commercial segment. The stock trades at an attractive valuation of 19x FY19E earnings which is at a steep discount to bigger international yards having weak earnings profile.

EIL: BUY| Target Rs182| Return 20%

EIL is a public sector undertaking. It enjoys a healthy market share in the Hydrocarbon consultancy segment. It enjoys prolific relationship major oil & gas companies like HPCL, BPCL, ONGC, and IOC.

The company is well poised to benefit from a recovery in the infrastructure spending in the hydrocarbon sector. We believe that in future, the company shall inevitably benefit from MoPNG huge target of over Rs 2 trillion envisaged for various projects in next five years.

FIEM Industries: BUY| Target Rs1254| Return 38%

FIEM is one of the leading manufacturers of automotive lighting and signaling equipment for the two-wheeler segment in India. Apart from automotive lighting, FIEM’s product portfolio comprises of rear view mirrors, sheet metal parts and plastic components for two /four wheeler segment. Recently, FIEM ventured into the LED lighting business.

FIEM generates almost 95% of its automobile business revenues from the 2W segment and hence recovery in this segment will be positive for the company.

Production at FIEM’s top customers is growing at robust pace and FIEM will be a direct beneficiary of the same. Honda Motorcycle and Scooters India Limited (HMSI) and TVS Motors (TVSM) are the top clients – accounting for ~70% of FIEM’s automotive business revenues.

Genus Power Infrastructures Ltd: BUY| Target Rs75| Return 25%

Genus is the flagship company of the USD 400 million Kailash group. The company primarily manufactures and distributes Electronic Energy Meters (EEMs) and hybrid microcircuits as well as executes power distribution management projects in India and across the world.

The market for electric meters declined from Rs 28-32 bn in FY16 to Rs18-20 bn in FY17 due to uncertainty related to mode of procurement of meters. This situation is improving and we understand from the company that the volume of tendering has increased by 20 percent.

India has 200 million legacy meters and there are plans to install up to 130 million smart meters by 2021. Immediate opportunity for smart meters can come from the new power distribution franchisee licenses being allotted in various cities (Bharatpur, Kota).

GPIL plans to ramp-up its exports of meters from the current level of ~ Rs 120 mn in FY17 to Rs 1250 mn by end of FY19.

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