Angel Broking picks these 12 stocks for an upside of up to 31%

JK Lakshmi Cement, Escorts, PNC Infratech, Shriram City Union Finance, GNA Axles, HCL Technologies and PVR are among the top 12 picks by Angel Broking for an upside between 9 and 31 percent.

March 12, 2021 / 11:30 AM IST
Sensex
The benchmark indices ended in the green for the third straight session on March 10. At close, the Sensex was up 254.03 points, or 0.50 percent, at 51,279.51 and the Nifty was up 76.40 points, or 0.51 percent, at 15,174.80. FIIs net sold shares worth Rs 15.69 crore, while DIIs net acquired shares worth Rs 447.67 crore in the Indian equity market on March 10, as per the provisional data available on the NSE. Here are the 12 buying ideas from broking houses Angel Broking with an upside of up to 31 percent, calculated from the closing of March 10, 2021. "The overall undertone has been bullish but the momentum is clearly lacking in all key indices. As far as levels are concerned, 12,220 – 12,275 are to be seen as immediate hurdles. If the index has to gain any momentum in the upward direction, it is possible only after surpassing the above-mentioned resistance zone. On the flipside, 15,100 – 149,25 are the levels to watch out for," said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking. "With a near-term view, we still remain a bit sceptical and hence, advise traders to avoid aggressive bets even if the Nifty manages to breakout on the higher side. Despite indices are stuck in a range, the individual stocks are still providing better trading opportunities but going ahead, one needs to be very selective in stock picking as well," he added.
IDFC First Bank
IDFC First Bank | Rating: Buy | LTP: Rs 66.80 | Target: Rs 77 | Upside: 15 percent. We believe efforts to built a liability franchise, fresh capital infusion and provision taken on the wholesale book will help tide over this difficult time. The IDFC First Bank is trading (0.7 x FY22ABV) at a significant discount to historical average valuations. The share touched a 52-week high of Rs 69.30 and a 52-week low of Rs 17.75 on March 4, 2021 and March 24, 2020, respectively. It is trading 3.61 percent below its 52-week high and 276.34 percent above its 52-week low. The company's trailing 12-month (TTM) EPS was at Rs 0.70 per share. (Dec, 2020). The stock's price-to-earnings (P/E) ratio was 95.43. The latest book value of the company is Rs 28.56 per share. At current value, the price-to-book value of the company was 2.34.
JK Lakshmi Cement | Rating: Buy | LTP: Rs 428.30 | Target: Rs 470 | Upside: 9 percent. JK Lakshmi Cement is a predominantly north India cement company with capacity of 13.3 Mn Mt. Currently, north India is favorable location for the cement industry as it is consolidated to a large extent as well as demand and supply outlook is better compared to other locations. Q1FY21 numbers of the company were better compared to its peers due to favorable regional presence. It is also trading at a significant discount compared to other north based cement company such as JK Cement as well as historical valuation.
JK Lakshmi Cement | Rating: Buy | LTP: Rs 428.30 | Target: Rs 470 | Upside: 9 percent. JK Lakshmi Cement is a predominantly north India cement company with a capacity of 13.3 mn MT. Currently, north India is a favourable location for the cement industry as it is consolidated to a large extent and the demand and supply outlook is better compared to other locations. Q1FY21 numbers of the company were better compared to its peers due to a favourable regional presence. It is also trading at a significant discount compared to other north-based cement companies such as JK Cement as well as historical valuation.
Galaxy Surfactants | Rating: Buy | LTP: Rs 2,358.70 | Target: Rs 2,750 | Upside: 16.5 percent. Galaxy Surfactants is a market leader in oleochemical-based surfactants, which is used in personal and home care products including skin care, oral care, hair care, cosmetics, toiletries and detergent products. The company has been increasing its share of high margin specialty care products in its portfolio which now accounts for ~ 40% of its revenues while the balance is accounted for by the performance surfactant business. The company has a very strong relationship with MNC clients like Unilever, P&G, Henkel, Colgate-Palmolive and supplies raw materials to them not only in India but also in US, EU and MENA region. Though the company’s operations had been impacted due to the Covid-19 outbreak in Q1FY21, we expect revenues to bounce back strongly in Q2FY21 given the company’s exposure to the personal and home care segment and recovery in the specialty segment.
Galaxy Surfactants | Rating: Buy | LTP: Rs 2,358.70 | Target: Rs 2,750 | Upside: 16.5 percent. Galaxy Surfactants is a market leader in oleochemical-based surfactants, which is used in personal and home-care products, including skin care, oral care, hair care, cosmetics, toiletries and detergent products. The company has been increasing its share of high-margin specialty care products in its portfolio which now accounts for around 40% of its revenues while the balance is accounted for by the performance surfactant business. The company has a very strong relationship with MNC clients like Unilever, P&G, Henkel, Colgate-Palmolive and supplies raw materials to them not only in India but also in the US, EU and MENA region. Though the company’s operations were impacted due to the Covid-19 outbreak in Q1FY21, we expect revenues to bounce back strongly in Q2FY21, given the company’s exposure to the personal and home care segment and recovery in the specialty segment.
NRB Bearings | Rating: Buy | LTP: Rs 118.05 | Target: Rs 150 | Upside: 27 percent. NRB is one of the leading suppliers of bearings to auto companies and has a wide customer base. The company has also been focusing on exports markets in order to diversify its revenue base and posted a good set of numbers for Q2FY21 as revenues grew by 4.6% YoY while PAT was up by 56% YoY. The management has highlighted that exports growth should be in excess of 20% for FY21. We believe that the company is ideally placed to capture the growth revival in the auto segment while exports will be another growth avenue for the company.
NRB Bearings | Rating: Buy | LTP: Rs 118.05 | Target: Rs 150 | Upside: 27 percent. NRB is one of the leading suppliers of bearings to auto companies and has a wide customer base. The company has also been focusing on export markets to diversify its revenue base and posted a good set of numbers for Q2FY21, as revenues grew by 4.6% YoY, while PAT was up by 56% YoY. The management has highlighted that exports growth should be in excess of 20% for FY21. We believe that the company is ideally placed to capture the growth revival in the auto segment, while exports will be another growth avenue for NRB Bearings.
Escorts | Rating: Buy | LTP: Rs 1,365.45 | Target: Rs 1,573 | Upside: 15 percent. Escorts is a prominent tractor player domestically with market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as better than expected Kharif crop in 2020, we expect the tractor industry will continue to outperform the larger automobile space in FY21. The company has also reported a strong growth of 25.7% YoY in Q3FY21 which is expected to continue into the fourth quarter driven by strong demand.
Escorts | Rating: Buy | LTP: Rs 1,365.45 | Target: Rs 1,573 | Upside: 15 percent. Escorts is a prominent tractor player domestically with market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record foodgrain procurement by government agencies as well as better than expected kharif crop in 2020, we expect the tractor industry will continue to outperform the larger automobile space in FY21. The company has also reported a strong growth of 25.7% YoY in Q3FY21, which is expected to continue into the fourth quarter driven by strong demand.
Federal Bank
Federal Bank | Rating: Buy | LTP: Rs 86.10 | Target: Rs 110 | Upside: 27 percent. Federal Bank is one of India’s largest old generation private sector banks with total assets of Rs 1.9 lakh crore with deposits of Rs 1.56 lakh crore and a loan book of Rs 1.2 lakh crore in F21. The share touched a 52-week high of Rs 92.40 and a 52-week low of Rs 35.70 on March 4, 2021 and March 25, 2020, respectively. It is trading 6.82 percent below its 52-week high and 141.18 percent above its 52-week low.
PNC Infratech | Rating: Buy | LTP: Rs 259.70 | Target: Rs 340 | Upside: 31 percent. PNC Infratech is a mid-sized road EPC player with a strong and healthy order book. On an F20 basis it has a book to bill ratio of more than 3.5x. Its entire order book is from the public sector, where risk of cancellation is low. The stock is trading at discount to historical average valuations. It offers a favorable risk-reward ratio. The share touched a 52-week high of Rs 291 and a 52-week low of Rs 80.85 on 11 February, 2021 and 25 March, 2020, respectively. Currently, it is trading 10.76 percent below its 52-week high and 221.21 percent above its 52-week low.
PNC Infratech | Rating: Buy | LTP: Rs 259.70 | Target: Rs 340 | Upside: 31 percent. PNC Infratech is a mid-sized road EPC player with a strong and healthy order book. On an F20 basis it has a book to bill ratio of more than 3.5x. Its entire order book is from the public sector, where the risk of cancellation is low. The stock is trading at discount to historical average valuations. It offers a favourable risk-reward ratio. The share touched a 52-week high of Rs 291 and a 52-week low of Rs 80.85 on February 11, 2021 and March 25, 2020, respectively. It is trading 10.76 percent below its 52-week high and 221.21 percent above its 52-week low.
Carborundum Universal | Rating: Buy | LTP: Rs 493.95 | Target: Rs 600 | Upside: 21 percent. Carborundum Universal (CUMI) is part of the Murugappa group and is a leading manufacturer of abrasives, industrial ceramics, refractories, and electro minerals in India having application across diversified user industries. The company is expected to benefit from improving demand scenarios across its end user industries such as auto, auto components, engineering, basic metals, infrastructure, and power. While demand from the auto sector has been robust, we expect demand from metal industry pick up given increased economic activity.
Carborundum Universal | Rating: Buy | LTP: Rs 493.95 | Target: Rs 600 | Upside: 21 percent. Carborundum Universal (CUMI) is part of the Murugappa group and is a leading manufacturer of abrasives, industrial ceramics, refractories, and electro minerals in India having application across diversified user industries. The company is expected to benefit from improving demand scenarios across its end-user industries such as auto, auto components, engineering, basic metals, infrastructure, and power. While demand from the auto sector has been robust, we expect demand from the metal industry to pick up given the increased economic activity.
Shriram City Union Finance | Rating: Buy | LTP: Rs 1,512.60 | Target: Rs 1,800 | Upside: 19 percent. Shriram City Union Finance is part of the Shriram group and is in the high margin business of lending to small businesses which account for 57.3% of the loan book as of end FY20. The company posted a good set of numbers for the quarter due to positive surprise on the asset quality front. It reported a strong 50% sequential growth in disbursement for the quarter which led to a 3.7% qoq growth in AUM to ~ Rs 28,500 crore. We are positive on the company as we believe that the worst is over in terms of asset quality which along with positive growth momentum should lead to a rerating for the company.
Shriram City Union Finance | Rating: Buy | LTP: Rs 1,512.60 | Target: Rs 1,800 | Upside: 19 percent. Shriram City Union Finance is part of the Shriram group and is in the high-margin business of lending to small businesses, which account for 57.3% of the loan book as of end FY20. The company posted a good set of numbers for the quarter due to positive surprise on the asset quality front. It reported a strong 50% sequential growth in disbursement for the quarter which led to a 3.7% qoq growth in AUM to ~ Rs 28,500 crore. We are positive on the company as we believe that the worst is over in terms of asset quality, which, along with positive growth momentum, should lead to a rerating for the company.
HCL Technologies | Rating: Buy | LTP: Rs 987.95 | Target: Rs 1,161 | Upside: 17.5 percent. HCL Tech is amongst the top four IT services companies based out of India and provides a vast gamut of services like ADM, Enterprise solutions, Infrastructure management services etc. Management has highlighted that demand and supply related issues are now over for the company and the deal pipeline has improved significantly since September led by cloud related services. Management has guided for 2.0-3.0% qoq growth in revenue in constant currency terms for the rest of the year providing visibility.
HCL Technologies | Rating: Buy | LTP: Rs 987.95 | Target: Rs 1,161 | Upside: 17.5 percent. HCL Tech is among the top four IT services companies based out of India and provides a gamut of services like ADM, enterprise solutions and infrastructure management services. The management has highlighted that demand and supply-related issues are now over for the company and the deal pipeline has improved significantly since September led by cloud-related services. The management has guided for 2.0-3.0% qoq growth in revenue in constant currency terms for the rest of the year.
PVR | Rating: Buy | LTP: Rs 1,442.50 | Target: Rs 1,800 | Upside: 24 percent. PVR is the largest multiplex chain in India with 800+ screens across India and multiplex screens are gaining ground at the expense of single screen. Share prices have corrected significantly as most of the theaters are operating at very low capacity utilization due to the lack of any major releases due to the Covid-19 crisis. However, with a significant decrease in Covid-19 cases over the past few months we believe that it’s a matter of time before we see new releases by production houses post April 2021 which should lead to significant increase in business for the companies.
PVR | Rating: Buy | LTP: Rs 1,442.50 | Target: Rs 1,800 | Upside: 24 percent. PVR is the largest multiplex chain in India with 800+ screens across India and multiplex screens are gaining ground at the expense of single screens. Share prices have corrected significantly as most of the theaters are operating at very low capacity for want of major releases due to the Covid-19 crisis. However, with a significant decrease in cases over the past few months, we believe that it’s a matter of time before we see new releases by production houses post-April 2021, which should lead to a significant increase in business.
GNA Axles | Rating: Buy | LTP: Rs 387.05 | Target: Rs 500 | Upside: 29 percent. GNA Axles is one of the leading suppliers of rear axles to the auto industry and is expected to be one of the biggest beneficiaries of the revival in the CV cycle. The company derives 60% of its revenues from exports while the balance 40% of the company’s revenues comes from the domestic market. GNA is expected to be one of the biggest beneficiaries of strong growth outlook for truck sales in US and Europe markets which are witnessing strong recovery in demand. US which accounts for almost 40% of the company's revenues has been registering strong class 8 truck sales. At current level the stock is trading at a P/E multiple of 9xFY23E, given inexpensive valuations we believe that the stock offers value at current levels and recommend a buy on the company.
GNA Axles | Rating: Buy | LTP: Rs 387.05 | Target: Rs 500 | Upside: 29 percent. GNA Axles is one of the leading suppliers of rear axles to the auto industry and is expected to be one of the biggest beneficiaries of the revival in the CV cycle. The company derives 60% of its revenues from exports while the balance 40% comes from the domestic market. GNA is expected to be one of the biggest beneficiaries of the strong growth outlook for truck sales in the US and European markets which are witnessing a strong recovery in demand. The US, which accounts for almost 40% of the company's revenues, has been registering strong class 8 truck sales. At the current level, the stock is trading at a P/E multiple of 9xFY23E. Given the inexpensive valuations, we believe that the stock offers value at current levels and recommend a buy on the company.
Rakesh Patil
first published: Mar 12, 2021 11:30 am

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