Anand Rathi Share and Stock Brokers recommends the following stocks
FUNDAMENTAL
CMP: Rs 164
TARGET: Rs 296
Graphite India is third largest in world, excluding Chinese graphite-electrode manufacturers
The company directly depends on the steel industry. Low demand and sliding steel prices have hit realizations. We expect a turnaround in realizations, to increase ~100 percent in the next one year.
In the last six months, steel prices have recovered ~100 percent, but graphite-electrode prices have still to recover, and realizations to be better for companies such as Graphite India due to earlier fixed-price contracts.
Despite a significant drop in profitability, the company maintained strong operating cash-flows in FY16-17, of Rs 250 crore-330 crore. With greater profitability, its return ratios would significantly improve.
Operating leverage and better realisations would lead to strong earnings growth and a valuation re-rating.
We initiate coverage on Graphite India, with a Buy rating and a target price of Rs 296 (~86 percent potential). The stock trades at 13x FY18e and 5.3x FY19e EV/EBITDA.
CMP: Rs 840
TARGET: Rs 1095
UPL's Q4FY17 consolidated results for the quarter registered a growth of 20 percent at Rs 5391 crore.
EBITDA grew by 52 percent at Rs 1020.6 crore with margins expanding by 390bps at 18.9 percent. PAT grew substantially by 136 percent at Rs 728.1 crore led by decent operational performance along with increase in other income.
For FY17, revenue jumped by 16 percent at Rs 16679.8 crore while EBITDA rose by 26 percent to Rs 2923.1 crore. Net profit grew by 57 percent at Rs 1833.3 crore on y-o-y basis with margin expansion of ~11 percent.
Management has guided revenue growth of 12-15 percent in FY18 with OPM improvement in the range of 50-75 bps & capex could be to the tune of Rs 1,100 crore.
Management is more optimistic for the growth of herbicide. Next growth driver from the biologic market.
UPL decided to merge its associate company Advanta, a key global player in hybrid seeds, with the objective to gain a closer access to farmers and emerge as a complete crop solutions provider.
We continue to maintain our “BUY” rating with target price of Rs 1095.
CMP: Rs 1092
TARGET: Rs 1500
Management expects class-8 market to be reasonably buoyant – 10 percent to 15 percent higher than last year. Also US freight demand has been recovering steadily, which, in turn, has led to recovery in BFL’s Class 8 truck order book and, consequently, improvement in Class 8 truck sales. BFL expects positive growth in Class 8 business and plans to offset decline in Class 8 volumes by adding new customers, products & addressing class 6 & 7 trucks.
Early signs of improvement Commercial Business Segment:
The CV business contributes ~48 percent BFL’s operations. Strong growth is expected in Q4 FY17 in domestic CV business on account of BS4 pre buying. Also, US will see resurgence in HCV segment. M&H CV is expected to grow by ~15-20 percent in FY 17. In medium term outlook, the key trigger for commercial vehicles will be BS6 norms and Euro 6.
BFL has recently acquired Walker Forge Tennessee LLC (WFT) to bring opportunities in the US market. BFL aims to increase its revenues from Walker to USD 50-60 million over the next couple of years and USD 100 million in the longer term.
At CMP of Rs. 1050, the stock is trading at PE of 29.9x its FY18E EPS & 21.6x its FY19E EPS. We initiate our coverage on BharatForg Limited with “BUY” recommendation and target price of 1500 per share.
TECHNICAL
RECO: BUY MFSL TARGET 703 STOP LOSS: 598
MFSL has provided a breakout from a symmetrical triangular pattern with a good buy crossover in its momentum indicator MACD on the daily charts. The move prior to this triangle breakout was an impulse wave; hence, the stock is likely to inch higher from here on to achieve the minimum equality target of 703. On the lower side, the wave E of the triangle is a very crucial support; hence, one can place a stop loss below those levels.
RECO: BUY UNITED SPIRITS LTD. TARGET: 2515 STOP LOSS: 2320.
The stock has been trending higher in an upward sloping parallel channel with a buy crossover in its momentum indicator MACD on the weekly charts. The daily MACD has reversed and is likely to provide a breakout on the upside. The Bollinger bands, too, have started to expand which confirms the breakout. The stock has also provided a breakout from the downward sloping parallel channel and it has also started to form higher tops and higher bottoms thus confirming the ongoing uptrend.
RECO: BUY GLENMARK LTD TARGET: 674 STOP LOSS: 605
The stock has been consolidating in a downward sloping parallel channel and in that process the Bollinger Bands have narrowed quite a lot. The momentum indicator MACD on the daily charts is quite bullish; hence a breakout on the upward direction is quite likely. On the lower side, the channel’s lower end will act as a crucial support; hence, one can place a stop loss below those levels.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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