The market is likely to remain in consolidation mode in next week amid corporate earnings, Delhi assembly elections results and domestic data including IIP, CPI and WPI.
After a four day rally last week, the market on February 7 witnessed profit booking as Nifty closed below 12,100 level on the back of weak global cues due to China’s deadly coronavirus crisis.
The market is likely to remain in consolidation mode in the coming sessions amid corporate earnings, Delhi assembly elections results and domestic data including IIP, CPI and WPI.
Markets could see some correction/consolidation early next week after the big gains seen this week, they could once again attempt to reach the earlier highs later, said Deepak Jasani, Head Retail Research, HDFC Securities.
Here are 10 buying ideas from brokerages in which they expect return of 12-92 percent in medium to long term:
ACC | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 1,501 | Target: Rs 1,955 | Upside: 30 percent
ACC reported a 10.26 percent quarter-on-quarter (QoQ) fall in its standalone net profit at Rs 269.2 crore for the December quarter of the year 2019 against Rs 299.97 crore in the September quarter.
Standalone revenue from operations came at Rs 4,060.3 crore in Q4CY19, up 15 percent against Rs 3,527.6 crore reported in Q3CY19.
Dolat Capital maintain its CY19E and CY20E estimates and considering healthy cash flow & RoE, net cash position, and 5.9mtpa (17.7% increase) capacity expansion, current valuation of 9.3x/ 8.4x CY20E/ CY21E EV/EBITDA is attractive.
Given ACC’s high capacity utilization at 89.1%/ 91% for CY20E/ CY21E (leaves little headroom for volume growth), sustainability of current cement realization is more important for profitability.
Aurobindo Pharma | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 546 | Target: Rs 645 | Upside: 18 percent
Aurobindo Pharma's Q3 net profit declined by 1 percent at Rs 705.3 crore versus Rs 712.2 crore in the same quarter last fiscal.
Revenue of the company was up 11.9 percent at Rs 5,895 crore against Rs 5,269 crore, YoY.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 11.2 percent at Rs 1,207.9 crore and margin was flat at 20.5 percent, YoY.
Based on integration of the Sandoz business and increasing market share for already commercialized products, we expect 15% CAGR in earnings over FY19-22E. We value the stock at 9x 12M forward earnings to arrive at price target of Rs 645, said Motilal Oswal.
Alkem Laboratories | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 2,505 | Target: Rs 2,950 | Upside: 17 percent
The company's consolidated Q3FY20 net profit jumped 89.9 percent at Rs 390 crore versus Rs 205.4 crore and revenue was up 13.3 percent at Rs 2,182 crore versus Rs 1,926 crore, YoY.
Other income of the company was at Rs 27.9 crore against Rs 7.6 crore, while tax expense was at Rs 14.7 crore versus Rs 52.6 crore, YoY.
Motilal Oswal expect 30% earnings CAGR over FY19-22E, led by 14%/17% sales CAGR in DF/US generics and improving profitability in both segments.
We value Alkem at 22x 12M forward earnings to arrive at target of Rs 2,950, it added.
UPL | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 542 | Target: Rs 647 | Upside: 19 percent
The company’s Q3 net profit stood at Rs 701 crore and revenue was at Rs 8,892 crore.
EBITDA was at Rs 2,070 crore and EBITDA margin at 23.3 percent.
The company will be able to deliver revenue and earnings CAGR of 10.0% and 29.5% over FY2020-22E, said Sharekhan.
The management maintains its guidance of revenue growth of 8-10% & EBITDA growth of 16-20% for FY2020E and expects to pare down debt by USD 500 million by the end of Q4FY2020E.
As the new season kicks off, the management expects the inventory levels to normalise by the end of Q4FY2020E resulting in improved operating cash flow position leading to debt reduction, said Sharekhan.
KEC International | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 346 | Target: Rs 415 | Upside: 20 percent
The company’s Q3FY20 net profit rose 30.7 percent at Rs 144.9 crore against Rs 110.9 crore and revenue rose 16.1 percent at Rs 3,073.1 crore versus Rs 2,646.6 crore, YoY.
According to Sharekhan, the company clocked healthy revenue growth driven by strong execution in T&D (SAE) with stable OPM. Stable operational performance along with lower tax outgo resulted in strong net earnings growth.
Its order book remains healthy providing 1.8x TTM revenues and order inflows for FY20 expected to remain at similar levels as of FY2019.
Inox Leisure | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 425 | Target: Rs 476 | Upside: 12 percent
Inox Leisure has posted 4 percent YoY declined in its consolidated December quarter net profit at Rs 35 crore versus Rs 36.4 crore in a year ago period.
Revenue rose 18.4 percent at Rs 512.9 crore against Rs 433.1 crore, YoY.
Prabhudas Lilladher believes that company's premiumisation approach and strategic initiatives to boost advertisement and F&B sales is expected to yield rich dividends and further re-rating is on the card
It keep EBITDA estimates broadly unchanged but raise target EV/EBITDA multiple to 9.2.
NCC | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 51 | Target: Rs 98 | Upside: 92 percent
NCC has reported Q3 net profit was down 37.4 percent at Rs 103.8 crore versus Rs 165.9 crore, YoY.
Revenue was down 32.5 percent at Rs 2,281.4 crore versus Rs 3,379 crore and other income was at Rs 1.6 crore Rs 37 crore, YoY.
Prabhudas Lilladher reduces revenue estimates by 12.3%/8.5%/8% for FY20E/21E/22E.
Broking house believes that with the vast experience and proven execution capabilities, the company can leverage the rising opportunities in buildings, transportation, metros, defense and airports.
It believes that with strong awarding expected in Q4, the company will be able to meet its revised order inflow and revenue guidance for FY20.
Sun Pharmaceutical Industries | Brokerage: KR Choksey | Rating: Buy | LTP: Rs 430 | Target: Rs 511 | Upside: 19 percent
Sun Pharmaceutical Industries registered a 26.44 percent year-on-year drop in consolidated profit, impacted by higher other expenses and lower forex gain with slow revenue growth.
The bottom line for the quarter stood at Rs 913.52, a decline from Rs 1,241.85 crore in the same period last year.
Revenue from operations grew by 5.36 percent year-on-year to Rs 8,154.85 crore.
KR Choksey expect Sun Pharma’s topline/bottom-line to grow by CAGR 12.3%/18.6% over the period FY19 to FY21 on back of specialty segment and strong performance by the domestic sales.
The launch of Cequa and higher sales of Levulan and Absorica will be a key positive for the company.
The share is currently trading at attractive levels of P/E of 22.2/19x on FY20/21E and apply a P/E multiple of 22.5x on FY21E adjusted EPS of Rs 22.7 to arrive at a target price of Rs 511, an upside potential of 18.7%, said KR Choksey.
Cadila Healthcare | Brokerage: KR Choksey | Rating: Buy | LTP: Rs 275 | Target: Rs 317 | Upside: 15 percent
Cadila Healthcare has registered 26.8 percent fall in its Q3 consolidated net profit at Rs 373.9 crore versus Rs 510.7 crore, while revenue was up 1.7 percent at Rs 3,638.1 crore against Rs 3,577.9 crore, YoY.
Company's top-line growth for the quarter was driven by consumer wellness segment and volume uptick in US and new product launches. India formulation business also supported in overall growth, said KR Choksey.
It expect company's topline to grow by 10.3%/9.5% over the period of FY20/21, which will be primarily driven by consumer wellness division.
The shares are currently trading at attractive levels of P/E of 18/13.1x on FY20/21E.
Aditya Birla Fashion | Brokerage: AnandRathi | Rating: Buy | LTP: Rs 260 | Target: Rs 294 | Upside: 13 percent
The company has posted consolidated net loss at Rs 38 crore in the quarter ended December 2019 against profit of Rs 70 crore in a year ago period.
Revenue of the company was up 13.2 percent at Rs 2,583 crore against Rs 2,282 crore, YoY.
Broking house upgraded its rating to a buy, with a higher target of Rs 294 (up from Rs 246) based on 22x FY22e EV/EBITDA.
It raised target multiple for Pantaloons to 17x FY22e EV/EBITDA versus 15x FY21e EV/EBITDA on account of the division’s consistently profitable growth.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.