Moneycontrol
Get App
Last Updated : May 21, 2020 11:31 AM IST | Source: Moneycontrol.com

Slideshow | 10 stocks on brokerages' radar that can return 9-34%

Here are 10 stocks picked by the brokerages which could give 9-34 percent upside:

Sensex
1/11

Indian indices rallied 2 percent on May 20 amid mixed global cues and rising coronavirus cases in the country. The rally was supported by pharma, auto, bank and energy stocks. BSE Midcap and Smallcap indices rose a percent each. Here are 10 stocks picked by the brokerages which could give 9-34 percent upside:

Reliance Industries | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 1,713 | LTP: Rs 1,434 | Upside: 19 percent. Reliance Industries (RIL) has announced a fourth deal in which General Atlantic would invest Rs 66 billion in Jio Platforms for 1.34% equity stake. Broking house expect RJio to garner revenue/EBITDA CAGR of 22%/44% over FY20-22E along with healthy EBITDA margin expansion. Despite the price hike, the company witnessed lower-than-expected ARPU growth in 4QFY20, which was mainly due to longer validity recharge plans. It believes RJio would accrue full benefit of the price hike in FY21.
2/11

Reliance Industries | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 1,713 | LTP: Rs 1,434 | Upside: 19 percent. Reliance Industries (RIL) has announced a fourth deal in which General Atlantic would invest Rs 66 billion in Jio Platforms for 1.34% equity stake. Broking house expects Reliance Jio to garner revenue/EBITDA CAGR of 22%/44% over FY20-22E along with healthy EBITDA margin expansion. Despite the price hike, the company witnessed lower-than-expected ARPU growth in Q4 FY20, which was mainly due to longer validity recharge plans. It believes Reliance Jio would accrue full benefits of the price hike in FY21. Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

ICICI Securities | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 460 | LTP: Rs 372 | Upside: 23 percent. Company's distribution business is expanding with a wider coverage of financial products. While the macro environment is yet to turn around, cost cutting efforts should help maintain profitability. Motilal Oswal expect revenue/Opex/PAT at 8%/5%/12% CAGR over FY20-23E. While brokerage revenues could be impacted in the near term due to uncertainty in the economic environment, structural drivers are in place for long-term growth.
3/11

ICICI Securities | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 460 | LTP: Rs 372 | Upside: 23 percent. The company's distribution business is expanding with wider coverage of financial products. While the macro environment is yet to turn around, cost-cutting efforts should help maintain profitability. Motilal Oswal expects revenue/Opex/PAT at 8%/5%/12% CAGR over FY20-23E. While brokerage revenues could be impacted in the near term due to uncertainty in the economic environment, structural drivers are in place for long-term growth.

Aarti Drugs | Brokerage: AnandRathi | Rating: Buy | Target: Rs 1,028 | LTP: Rs 799 | Upside: 28 percent. Aarti Drugs is currently in a sweet spot as it will benefit from opportunities arising out of China and is the prime candidate to benefit from the government’s push for indigenous API manufacturing. However, the risks include delay in the ramp-up of the recently-added capacity and more-than-expected competition in generic APIs.
4/11

Aarti Drugs | Brokerage: AnandRathi | Rating: Buy | Target: Rs 1,028 | LTP: Rs 799 | Upside: 28 percent. Aarti Drugs is currently in a sweet spot as it will benefit from opportunities arising out of China and is the prime candidate to benefit from the government’s push for indigenous API manufacturing. However, the risks include delay in the ramp-up of the recently-added capacity and more-than-expected competition in generic APIs.

Crompton Greaves Consumer | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 240 | LTP: Rs 211 | Upside: 13 percent. Even amidst the ongoing disruption, Motilal Oswal commend company's efforts to further improve its leadership position in the Fans segment and its good start in the new category of Water heaters and Air coolers. Its strong FCF generation is under-appreciated at current valuations.
5/11

Crompton Greaves Consumer | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 240 | LTP: Rs 211 | Upside: 13 percent. Even amid the ongoing disruption, Motilal Oswal commend the company's efforts to further improve its leadership position in the fans segment and its good start in the new category of Water heaters and air coolers. Its strong FCF generation is under-appreciated at current valuations.

Escorts | Brokerage: SPA Securities | Rating: Buy | Target: Rs 989 | LTP: Rs 869 | Upside: 14 percent. Tractor industry remains relatively well placed in the current environment. Broking House expect company to continue to gain market share in the tractor segment on the back of inroads in the South and West markets and the benefits from the Kubota JV. It also expect improvement in margins aided by improving product mix, increasing localisation and benefit of operating leverage. The Revenue/EBITDA/PAT likely to grow at a CAGR of 9.3%/14.6%/ 3.7% from FY20 to FY22E.
6/11

Escorts | Brokerage: SPA Securities | Rating: Buy | Target: Rs 989 | LTP: Rs 869 | Upside: 14 percent. Tractor industry remains relatively well-placed in the current environment. Broking House expects the company to continue to gain market share in the tractor segment on the back of inroads in the south and west markets and the benefits from the Kubota JV. It also expects improvement in margins aided by improving product mix, increasing localisation and benefit of operating leverage. The Revenue/EBITDA/PAT likely to grow at a CAGR of 9.3%/14.6%/ 3.7% from FY20 to FY22E.

Cipla | Brokerage: KRChoksey | Rating: Buy | Target: Rs 700 | LTP: Rs 620 | Upside: 13 percent. Cipla’s domestic business is on track after disruption in trade generics business, as significant recovery and stabilization is seen with consecutive double-digit growth in last three quarters despite COVID-19. Broking house expect company's topline to grow by CAGR of 6.9% over FY20-22 period and net profit to grow by CAGR of 22.0%. It remains optimistic of company’s growth prospects & in the light of recent developments, it apply a higher P/E multiple of 24.5x.
7/11

Cipla | Brokerage: KRChoksey | Rating: Buy | Target: Rs 700 | LTP: Rs 620 | Upside: 13 percent. Cipla’s domestic business is on track after disruption in trade generics business, as significant recovery and stabilisation are seen with consecutive double-digit growth in the last three quarters despite COVID-19. Broking house expect the company's topline to grow by CAGR of 6.9% over FY20-22 period and net profit to grow by CAGR of 22.0%. It remains optimistic on the company’s growth prospects and in the light of recent developments, it applied a higher P/E multiple of 24.5x.

Blue Star | Brokerage: AnandRathi | Rating: Buy | Target: Rs 626 | LTP: Rs 467 | Upside: 34 percent. For FY20-22, AnandRathi model revenue/PAT registering 12%/28% CAGRs, with limited working-capital required. This could result in the RoCE expanding from 20% in FY20 to 24% in FY22.
8/11

Blue Star | Brokerage: AnandRathi | Rating: Buy | Target: Rs 626 | LTP: Rs 467 | Upside: 34 percent. For FY20-22, AnandRathi model revenue/PAT registering 12%/28% CAGRs, with limited working-capital required. This could result in the RoCE expanding from 20% in FY20 to 24% in FY22.

Phones (Representative image)
9/11

Affle India | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 1,530 | LTP: Rs 1,395 | Upside: 9 percent. ICICIdirect expects the network effect to continue to impact revenues and profitability over a sustained period leading to an RoIC of more than 6 percent over a long period. Going forward, mobile advertising is expected to increase at a CAGR of 35% in 2019-25. Further, in a post COVID world, broking house expects a significant shift among consumers to adopt digital technology across the world especially in India & other emerging markets.

Bharti Airtel | Brokerage: Sharekhan | Rating: Buy | Target: Rs 680 | LTP: Rs 594 | Upside: 14 percent. Sharkhan expect free cash flow of India wireless business of the company to improve in FY2021E as capex intensity is expected to moderate in the near term. Higher digitisation would help the company to reduce churn rate and improve ARPU. Steady EBITDA performance, scope for growth in 4G subscribers and improving free cash flow make optimistic on stock, said Sharekhan.
10/11

Bharti Airtel | Brokerage: Sharekhan | Rating: Buy | Target: Rs 680 | LTP: Rs 594 | Upside: 14 percent. Sharkhan expect free cash flow of India wireless business of the company to improve in FY2021E as capex intensity is expected to moderate in the near term. Higher digitisation would help the company to reduce the churn rate and improve ARPU. Steady EBITDA performance, scope for growth in 4G subscribers and improving free cash flow make optimistic on stock, said Sharekhan.

Representative Image
11/11

Bajaj Finance | Brokerage: Sharekhan | Rating: Buy | Target: Rs 2,700 | LTP: Rs 2,042 | Upside: 32 percent. Sharkhan believes that business normalisation and demand recovery may take time, and hence medium-term growth is likely to be slower. However, it believes that a strong balance sheet, strong risk management and prudent management make the company a strong franchise for the long run and company well-placed to ride over medium-term challenges.

First Published on May 21, 2020 11:30 am
Sections
Follow us on