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Brokerages name these six buying ideas for an upside of 13-40%

Arvind, Coal India and Ambuja Cements are among the six buying ideas by the brokerages with an upside of 13-40 percent.

February 23, 2021 / 01:25 PM IST
Sesnex
Market extended fall for the fifth consecutive session on February 22 with Sensex and Nifty slipping 2 percent each. Selling seen in the Pharma, IT, PSU Bank, Auto, Energy and Infra names. We have collated a six buying ideas from the various broking houses with an upside of up to 40 percent, calculated from the closing of February 22, 2021.
Arvind | Brokerage: Sharekhan | Rating: Buy | LTP: Rs | Target: Rs 95 | Upside: percent. We expect a strong recovery in FY2022, driven by strong recovery in the B2C retail industry in the domestic market, sustained growth in the AMD space, and improving demand for garmenting and denim products in export markets. The stock is trading at discounted valuations of 9.2x its FY2023E earnings and 4.3x its FY2023E EV/EBITDA. Improved visibility of sustained revenue growth, better margins and a reduction in debt in the coming years would be a key re-rating trigger for the stock.
Arvind | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 67.75 | Target: Rs 95 | Upside: 40 percent. We expect a strong recovery in FY2022, driven by strong recovery in the B2C retail industry in the domestic market, sustained growth in the AMD space, and improving demand for garmenting and denim products in export markets. The stock is trading at discounted valuations of 9.2x its FY2023E earnings and 4.3x its FY2023E EV/EBITDA. Improved visibility of sustained revenue growth, better margins and a reduction in debt in the coming years would be a key re-rating trigger for the stock.
Nesco | Brokerage: ICICI direct | Rating: Buy | LTP: Rs | Target: Rs 745 | Upside: percent. Broking firm like Nesco, given the prudent management pedigree, steady & planned expansion across verticals funded largely through internal accruals and niche profitable business model including foods/own events etc. Post a washout FY21 for exhibition, it expect gradual recovery from H1FY22 as pandemic effect fades completely. The IT park business is also likely to get a boost as occupancies improve in FY22.
Nesco | Brokerage: ICICI direct | Rating: Buy | LTP: Rs 590.45 | Target: Rs 745 | Upside: 26 percent. Broking firm like Nesco, given the prudent management pedigree, steady & planned expansion across verticals funded largely through internal accruals and niche profitable business model including foods/own events etc. Post a washout FY21 for exhibition, it expect gradual recovery from H1FY22 as pandemic effect fades completely. The IT park business is also likely to get a boost as occupancies improve in FY22.
Escorts | Brokerage: SPA Research | Rating: Buy | LTP: Rs | Target: Rs 1,577 | Upside: percent. Tractor industry remains relatively well placed in the current environment. Research house expect Escorts to continue to gain market share in the tractor segment on the back of inroads in the South and West markets and the benefits from the Kubota. It also expect improvement in margins aided by improving product mix, increasing localisation and benefit of operating leverage and expect Revenue/EBITDA/PAT to grow at a CAGR of 13.4%/32.9%/36.5% from FY20 to FY22E.
Escorts | Brokerage: SPA Research | Rating: Buy | LTP: Rs 1,282.80 | Target: Rs 1,577 | Upside: 23 percent. Tractor industry remains relatively well placed in the current environment. Research house expect Escorts to continue to gain market share in the tractor segment on the back of inroads in the South and West markets and the benefits from the Kubota. It also expect improvement in margins aided by improving product mix, increasing localisation and benefit of operating leverage and expect Revenue/EBITDA/PAT to grow at a CAGR of 13.4%/32.9%/36.5% from FY20 to FY22E.
Ambuja Cements | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs | Target: Rs 315 | Upside: percent. Company took a leap forward by aggressive addition of Waste Heat Recovery (WHR) and solar power capacity. This would make company rank among India’s Top-3 cement manufactures on renewable energy’s share from current bottom position. Ongoing expansion of 11mnt (including 6mnt in subsidiary, ACC) and further potential of 15mnt capacity with 5mnt each at ACEM’s Maratha, Bhatapara and Rabriyawas (RJ) plants, would help address investor concerns on volume growth. Company delivered solid performance on cost reduction through 1) logistic efficiencies, 2) enhanced volumes coverage under MSA, 3) raw material procurement and 4) sustainable rationalisation of fixed costs.
Ambuja Cements | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 266.95 | Target: Rs 315 | Upside: 18 percent. Company took a leap forward by aggressive addition of Waste Heat Recovery (WHR) and solar power capacity. This would make company rank among India’s Top-3 cement manufactures on renewable energy’s share from current bottom position. Ongoing expansion of 11mnt (including 6mnt in subsidiary, ACC) and further potential of 15mnt capacity with 5mnt each at ACEM’s Maratha, Bhatapara and Rabriyawas (RJ) plants, would help address investor concerns on volume growth. Company delivered solid performance on cost reduction through 1) logistic efficiencies, 2) enhanced volumes coverage under MSA, 3) raw material procurement and 4) sustainable rationalisation of fixed costs.
Nestle India | Brokerage: Geojit | Rating: Buy | LTP: Rs | Target: Rs 18,490 | Upside: percent. Given increasing rural penetration, niche play, unique positioning, uninterrupted distribution, increasing utilization levels along with capacity expansion, company’s premium segments reflect high growth potential. Additionally, packaged foods segment in India proposes immense growth opportunities with youth population shifting towards health and nutrition segment. With vigorous new launches and revival of OOH segment, broking house expect upside potential in the stock.
Nestle India | Brokerage: Geojit | Rating: Buy | LTP: Rs 16,096.30 | Target: Rs 18,490 | Upside: 15 percent. Given increasing rural penetration, niche play, unique positioning, uninterrupted distribution, increasing utilization levels along with capacity expansion, company’s premium segments reflect high growth potential. Additionally, packaged foods segment in India proposes immense growth opportunities with youth population shifting towards health and nutrition segment. With vigorous new launches and revival of OOH segment, broking house expect upside potential in the stock.
Coal India | Brokerage: Geojit | Rating: Buy | LTP: Rs | Target: Rs 155 | Upside: percent. We expect the business to perform well in the short to medium-term, as the demand from power plants would witness sharp increase once their inventory levels deplete. The long-term outlook remains positive with improvement in realization and the ability of the company to protect margins by improving efficiency.
Coal India | Brokerage: Geojit | Rating: Buy | LTP: Rs 136.25 | Target: Rs 155 | Upside: 13 percent. We expect the business to perform well in the short to medium-term, as the demand from power plants would witness sharp increase once their inventory levels deplete. The long-term outlook remains positive with improvement in realization and the ability of the company to protect margins by improving efficiency.
Rakesh Patil
first published: Feb 23, 2021 01:22 pm

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