The Bulls failed to reclaim control on D-Street in the month of August as the S&P BSE Sensex slipped nearly 800 points or 2.4 percent. But, there was plenty of stock specific action as nearly 20 stocks rose between 50-100 percent in the same period.
Most of the domestic brokerage firms such as SBI, Kotak Private Client Research, HDFC Securities, as well as Equirus have initiated coverage for the first time in certain stocks this week.
We have collated a list of top 5 stocks on which brokerage initiates coverage in August. These stocks can give up to 28 percent in next 1 year from Thursday’s closing price.
Bodal Chemicals: BUY| Target Rs 215| Return 28%
SBIcap Securities initiates a coverage on Bodal Chemicals with a buy recommendation and a target price of Rs 215.
Bodal has set its goal on building an empire in large USD 730 billion global specialty chemical market. Clear management vision, expertise in chemical manufacturing, free cash generation from existing business and backward integration will support the growth momentum.
Valuations will expand given the high ROIC, free cash flow, and growth momentum. The shares trade at 14.5x FY18 core earnings.
NBCC: BUY| Target Rs260| Return 27%
SBIcap Securities initiates a coverage on NBCC with a buy recommendation and a target price of Rs 260. With its excellent track record of implementing complex projects, NBCC has become the de-facto choice for being project management consultant (PMC) for big ticket projects to be rolled out under new government initiatives.
This is supported by a highly scalable model built on an asset light strategy, which should aid margin expansion as project execution gathers steam.
With its robust balance sheet, NBCC is a compelling growth story likely to record healthy earnings growth of 30 percent CAGR over FY17-FY20. Given the back ended earnings, we value the company at 30x FY20EPS, resulting in an 18-month target price of Rs260.
Asian Granito India: BUY| Target Rs603 | Return 32%
Kotak Securities initiated coverage on Asian Granito India Ltd with a buy rating and a target price of Rs603. 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.
With its continuous innovations for introducing value added products, access to low-cost gas, shift towards increasing B2C sales, we expect company’s revenues and PAT to grow at a CAGR of 17/42 percent between FY17-19.
We value the company at 23x P/E based on its relative comparison with companies in the same segment and riding on consumerism.
Maruti Suzuki India: Long| Target Rs8993| Return 16%
Equirus initiated coverage on Maruti Suzuki for the first time with a long rating and a target price of Rs 8993.
The brokerage firm is of the view that MSIL is a structural growth story and waiting periods on some of its large-selling models will help it trade at premium valuations, similar to what we saw in case of Eicher Motors in the past.
Driven by structural growth drivers, we expect the stock to trade at premium valuations. We forecast 16% EPS CAGR over FY17-FY20. We initiate coverage with a Long rating and a Dec 2018 target price of Rs8,993 set at 30x Dec 18 EPS.
BSE Limited: BUY| Target Rs1200| Return 23%
HDFC Securities initiates a coverage on BSE with a buy rating and a target price of Rs 1200. The Bombay Stock Exchange Ltd (BSE) is Asia’s oldest stock exchange (estd. 1875 and listed in Feb-17).
Long term investors should take cognizance of its recent (if overdue) renaissance under a market savvy management, including its recent listing. With the latest technology platform, BSE claims to be ten times faster than NSE (its much larger competitor).
BSE has been constantly innovating and investing in technology, thus will remain a valuable franchise. At 23/22x FY18/19 earnings (a significant discount to MCX (39/32x FY18/19E EPS) and at par with global averages, BSE merits a BUY.Disclaimer
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