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Analysts bet on these 10 stocks that can return up to 29%

Here are 10 stocks where analysts initiated coverage with a buy rating in November

November 28, 2020 / 11:48 AM IST
Benchmark indices ended higher for the third consecutive week which ended on November 27. BSE Sensex gained 267.47 points or 0.60 percent to close at 44,149.72 and while the Nifty50 rose 109.95 points or 0.85 percent to end at 12,969 levels. Here are 10 stocks where analysts initiated coverage with a buy rating in November
Benchmark indices ended higher for the third consecutive week which ended on November 27. BSE Sensex gained 267.47 points or 0.60 percent to close at 44,149.72 and while the Nifty50 rose 109.95 points or 0.85 percent to end at 12,969 levels. Here are 10 stocks where analysts initiated coverage with a buy rating in November
UTI Asset Management Company JM Financial initiated coverage on UTI Asset Management Company with a buy rating and target price of Rs 700. The brokerage believes UTI AMC's strong brand recognition and retail presence, continued improvement in equity fund performance and expected improvement in profitability driven by costs moderation makes it one of the preferred plays to capitalise on the financial savings opportunity in the country.
UTI Asset Management Company | LTP: Rs 548.55 | Target: Rs 700 | Upside: 27 percent | JM Financial initiated coverage on UTI Asset Management Company with a buy rating and target price of Rs 700. The brokerage believes UTI AMC's strong brand recognition and retail presence, continued improvement in equity fund performance and expected improvement in profitability driven by costs moderation makes it one of the preferred plays to capitalise on the financial savings opportunity in the country.
Sudarshan Chemical | Company plans to become the third-largest pigment manufacturer globally by developing R&D capabilities, operational efficacy, and expanding to new geographies. Global scale is the key to success in the pigment business, said HDFC Securities. "Two major global players shifting away from the pigment business could act as a tailwind for Indian pigment manufacturers. We believe SCIL is in a sweet spot to seize this opportunity by offering products similar to those of global players. We initiate coverage on the stock with a buy recommendation," said the brokerage.
Sudarshan Chemical | LTP: Rs 470.60 | Target: Rs 550 | Upside: 17 percent | Company plans to become the third-largest pigment manufacturer globally by developing R&D capabilities, operational efficacy, and expanding to new geographies. Global scale is the key to success in the pigment business, said HDFC Securities. "Two major global players shifting away from the pigment business could act as a tailwind for Indian pigment manufacturers. We believe SCIL is in a sweet spot to seize this opportunity by offering products similar to those of global players. We initiate coverage on the stock with a buy recommendation," said the brokerage.
AU Small Finance Bank | Sharekhan initiated coverage on AU Small Finance Bank (AUSFB) and found it an attractive player operating in a niche space, having strong metrics and a promising long-term outlook. "The bank caters to the niche below-radar borrower segment (low competition andblue sky growth potential), has stable NIMs, and well-maintained asset quality," the brokerage said.
AU Small Finance Bank | LTP: Rs 839.05 | Target: Rs 1,060 | Upside: 26 percent | Sharekhan initiated coverage on AU Small Finance Bank (AUSFB) and found it an attractive player operating in a niche space, having strong metrics and a promising long-term outlook. "The bank caters to the niche below-radar borrower segment (low competition and blue sky growth potential), has stable NIMs, and well-maintained asset quality," the brokerage said.
Salzer Electronics | SEL registered a strong bounce-back in Q2 FY21 from the COVID-led slowdown in Q1 FY21. Going forward, management expects steady performance through the remainder of FY21. We have modelled resumption of growth in FY22 with margin improvement driven by expanding export revenues, better product mix and cost reduction. The company continues to focus on improving its working capital management, which will positively affect short-term borrowing requirement and consequently interest expense and cash flow," said Khambatta Securities. "Expecting improvements in return ratios and solid earnings growth in FY22, we value SEL at 8.0x FY22E EPS with a price target of Rs 162, informing a buy rating," the brokerage added.
Salzer Electronics | LTP: Rs 125.15 | Target: Rs 162 | Upside: 29 percent | Salzer Electronics registered a strong bounce-back in Q2 FY21 from the COVID-led slowdown in Q1 FY21. Going forward, management expects steady performance through the remainder of FY21. We have modelled resumption of growth in FY22 with margin improvement driven by expanding export revenues, better product mix and cost reduction. The company continues to focus on improving its working capital management, which will positively affect short-term borrowing requirement and consequently interest expense and cash flow," said Khambatta Securities.
Sharda Motor Industries | "SMIL is a leading auto-ancillary company supplying exhaust and suspension systems to major OEMs. The company is well placed to be benefited from implementation of BS VI emission norms which rolled out from April 01, 2020. Further, the JV with Eberspaecher for production of exhaust systems for commercial vehicles is likely to drive the business. This debt-free company holds substantial cash; has healthy return ratios & strong growth prospects," said Sushil Finance. Going forward, the brokerage expects company to witness value driven growth and rise in profitability on account of contributions from JV. It further expects SMIL to deliver an EPS of Rs 155.9 in FY23; assigning a target multiple of 12x we arrive at a target price of Rs 1,871 with an investment horizon of 18-24 months.
Sharda Motor Industries | LTP: Rs 1,576.35 | Target: Rs 1871 | Upside: 18 percent | Company is a leading auto-ancillary company supplying exhaust and suspension systems to major OEMs. The company is well placed to be benefited from the implementation of BS-VI emission norms which rolled out from April 01, 2020. Further, the JV with Eberspaecher for production of exhaust systems for commercial vehicles is likely to drive the business. This debt-free company holds substantial cash; has healthy return ratios & strong growth prospects," said Sushil Finance. Going forward, the brokerage expects the company to witness value-driven growth and rise in profitability on account of contributions from JV. It further expects SMIL to deliver an EPS of Rs 155.9 in FY23; assigning a target multiple of 12x we arrive at a target price of Rs 1,871 with an investment horizon of 18-24 months.
V-Mart Retail | "V-Mart a leading value fashion retailer in UP & Bihar market (56 percent of store foot-print) is well-poised to capture the significant growth potential in tier 2-4 cities with aggressive store openings. V-Mart's ethos of prudence and agility, proactive costs, cash flows and vendor management during COVID, cluster-based approach of store expansions and debt free BS provides the necessary ammunition to tap the large addressable market opportunities," Dolat Capital said. "V-Mart has aced the brick-and-mortar value fashion business with its execution prowess. It excels on sourcing, logistics and assortment. It is among the few to have profitably mastered the game via its 'better fashion at better value' OR 'Price "less" fashion' concept has created a virtuous loop. V-Mart's business strategy of keeping the ASP and gross/EBITDA margin fairly stable and pass-on the efficiencies at company/vendor level to consumers results in a formidable moat," the brokerage added.
V-Mart Retail | LTP: Rs 2,252.30 | Target: Rs 2,496 | Upside: 11 percent | "V-Mart a leading value fashion retailer in UP & Bihar market (56 percent of store foot-print) is well-poised to capture the significant growth potential in tier 2-4 cities with aggressive store openings. V-Mart's ethos of prudence and agility, proactive costs, cash flows and vendor management during COVID, cluster-based approach of store expansions and debt-free BS provides the necessary ammunition to tap the large addressable market opportunities," Dolat Capital said. "V-Mart has aced the brick-and-mortar value fashion business with its execution prowess. It excels on sourcing, logistics and assortment. It is among the few to have profitably mastered the game via its 'better fashion at better value' OR 'Price "less" fashion' concept has created a virtuous loop. V-Mart's business strategy of keeping the ASP and gross/EBITDA margin fairly stable and pass-on the efficiencies at company/vendor level to consumers results in a formidable moat," the brokerage added.
Alkem Labs | HDFC Securities initiated coverage on Alkem with a buy based on the following factors: (a) recovery in acute therapies is likely to benefit Alkem the most, given its dominant position in the segment (rank 1 in Anti-infective, rank 3 in Gastro, rank 3 in Vitamins); (b) steady market share gains in chronic (+50bps over the past five years) will contribute to higher growth and profitability; (c) rising scale in US generics ($300 million, growing at double digit CAGR) will contribute around 20 percent to FY23 EBITDA versus single digit in FY20.
Alkem Labs | LTP: Rs 2,841.65 | Target: Rs 3,315| Upside: 16 percent | HDFC Securities initiated coverage on Alkem with a buy based on the following factors: (a) recovery in acute therapies is likely to benefit Alkem the most, given its dominant position in the segment (rank 1 in Anti-infective, rank 3 in Gastro, rank 3 in Vitamins); (b) steady market share gains in chronic (+50bps over the past five years) will contribute to higher growth and profitability; (c) rising scale in US generics ($300 million, growing at double-digit CAGR) will contribute around 20 percent to FY23 EBITDA versus single digit in FY20.
Heidelberg Cement | Axis Securities initiated coverage on Heidelberg Cement India (HCIL) with a buy recommendation and a target price of Rs 230. Recently the company expanded its capacity to 6.26 mntpa from 5.4 mntpa through de-bottlenecking process which will take care of volume and revenue growth for the company for the next two years thereby enhancing revenue visibility. The company reported decent Q2FY21 results due to higher realization and controlled costs while the revenue and volume was down marginally on YoY basis. "With the capacity expansion, presence in relatively better placed Central region, better monitoring of cost drivers and increased realization, HCIL is expected to report Revenue, EBITDA and adjusted PAT CAGR of 8 percent, 14 percent and 19 percent respectively between FY20-FY23 driven by volume CAGR of 6.2 percent and improvement in realization CAGR of 2 percent between FY20-FY23. We see strong re-rating potential on the back of healthy growth," said the brokerage.
Heidelberg Cement | LTP: Rs 208.25 | Target: Rs 230 | Upside: 10 percent | Axis Securities initiated coverage on Heidelberg Cement India (HCIL) with a buy recommendation and a target price of Rs 230. Recently the company expanded its capacity to 6.26 mntpa from 5.4 mntpa through a de-bottlenecking process which will take care of volume and revenue growth for the company for the next two years thereby enhancing revenue visibility. The company reported decent Q2FY21 results due to higher realization and controlled costs while the revenue and volume were down marginally on YoY basis. "With the capacity expansion, presence in relatively better placed Central region, better monitoring of cost drivers and increased realization, HCIL is expected to report revenue, EBITDA and adjusted PAT CAGR of 8 percent, 14 percent and 19 percent respectively between FY20-FY23 driven by volume CAGR of 6.2 percent and improvement in realization CAGR of 2 percent between FY20-FY23. We see strong re-rating potential on the back of healthy growth," said the brokerage.
Mphasis
Mphasis | LTP: Rs 1,315.70 | Target: Rs 1630 | Upside: 24 percent | "Order intake continues to be strong with the company reporting net new wins of $360 million in Q2FY21 (versus $259 million QoQ/$ 174 million), marking the 3rd quarter in a row of over $200 million TCV bookings and providing confidence in growth momentum sustaining in the Direct business," JM Financial said. "Company remains confident of its prospects citing strong pipeline (+75 percent YoY) and success at client mining which has reflected in strong client metrics performance and benefit at vendor consolidation exercises in recent past. We find valuations cheap on a relative basis at 18x FY21E P/E given solid growth momentum in the direct business and predictable margin profile," the brokerage added.
Shree Digvijay Cement | "Company has been unique trendsetter in providing superior quality of ordinary & special Portland cement. Company has high growth potential in cement sector backed by: 1) Strong Brand image; 2) Monopoly in oil well cement brand 3) Better operational efficiency 4) Good Management team," said Arihant Capital Markets. The brokerage estimated SDCCL topline to grow at a CAGR of 10.6 percent over the period of FY20-22 backed by improved realization with increase in demand for cement as infrastructure and construction activity starts picking up. "Moreover low raw material cost and better operational efficiency will aid margin improvement going ahead."
Shree Digvijay Cement | LTP: Rs 59.90 | Target: Rs 75 | Upside: 25 percent | "Company has been unique trendsetter in providing superior quality of ordinary & special Portland cement. Company has high growth potential in cement sector backed by 1) Strong Brand image; 2) Monopoly in oil well cement brand 3) Better operational efficiency 4) Good Management team," said Arihant Capital Markets. The brokerage estimated SDCCL topline to grow at a CAGR of 10.6 percent over the period of FY20-22 backed by improved realization with an increase in demand for cement as infrastructure and construction activity starts picking up. "Moreover low raw material cost and better operational efficiency will aid margin improvement going ahead."
Rakesh Patil
first published: Nov 28, 2020 11:45 am

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