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Escorts, PVR, Federal Bank among top 13 picks of Angel Broking for up to 31% upside
The benchmark indices closed at a record high on June 11. The steady drop in daily coronavirus cases has seen states beginning to roll back restrictions, raising hopes of complete resumption of economic activity.
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On June 11, India's benchmark indices closed at a record high supported by the metal, IT and pharma names. The Sensex closed at 52,475, while the Nifty ended at 15, 799.40. Angel Broking is betting on these 13 stocks with an upside of up to 31 percent:
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IDFC First Bank | Rating: Buy | LTP: Rs 60.35 | Target: Rs 77 | Upside: 27 percent. We believe efforts to built a liability franchise, fresh capital infusion and provision taken on the wholesale book will help to tide over this difficult time. IDFC First Bank is trading (0.7 x FY22ABV) at a significant discount to historical average valuations.
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Galaxy Surfactants | Rating: Buy | LTP: Rs 3,072 | Target: Rs 3,600 | Upside: 17 percent. The company has been increasing its share of high-margin specialty care products in its portfolio which now account for around 40 percent 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 and Colgate-Palmolive and supplies raw materials to them not only in India but also in the US, EU and MENA region.
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Escorts | Rating: Buy | LTP: Rs 1,198 | Target: Rs 1,573 | Upside: 31 percent. Escorts is a prominent tractor player domestically, with a market share of 11.3 percent as on FY21. Considering record food-grain procurement by government agencies as well expectations of a good kharif crop in 2021, we expect the tractor industry to continue to outperform the larger automobile space in FY22 with Escorts being a key beneficiary.
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Federal Bank | Rating: Buy | LTP: Rs 86.45 | 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, deposits of Rs 1.56 lakh crore and a loan book of Rs 1.2 lakh crore in F21. NPAs have remained steady for the bank over the past few years, with GNPA for Q3FY21 at 3.38 percent, while NNPA ratio stood at 1.14 percent. PCR at the end of Q3FY21 stood at around 67 percent, which we believe is adequate.
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Carborundum Universal | Rating: Accumulate | LTP: Rs 589 | Target: Rs 660 | Upside: 12 percent. 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 the demand from the metal industry to pick up given increased economic activity.
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Shriram City Union | Rating: Buy | LTP: Rs 1,710 | Target: Rs 2,100 | Upside: 23 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 percent of the loan book as of FY20. The company posted a good set of numbers for the March quarter due to a positive surprise on the asset quality front.
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GNA Axles | Rating: Buy | LTP: Rs 432 | Target: Rs 550 | Upside: 27 percent. 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 percent of the company's revenues has been registering strong Class 8 truck sales.
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PVR | Rating: Buy | LTP: Rs 1,441 | Target: Rs 1,650 | Upside: 14 percent. The share price has corrected significantly as most of the theaters are operating at very low capacity due to the lack of any major releases due to the Covid-19 crisis. However, with a significant decrease in the daily infections over the past few weeks, we believe that it’s a matter of time before we see new releases by production houses, which should lead to a significant increase in business for the companies.
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Crompton Greaves Consumer Electricals | Rating: Accumulate | LTP: Rs 431 | Target: Rs 480 | Upside: 11 percent. The company is the market leader in the domestic fan and residential water- pump business with value a market share of 24 percent and 28 percent, respectively. Over the years, Crompton Consumer has built a strong distribution network of more than 3,500 dealers. The company is leveraging its strong distribution network to expand into other product categories like water pump, lightings and small appliances.
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Ashok Leyland | Rating: Accumulate | LTP: Rs 126.75 | Target: Rs 145 | Upside: 14 percent. We believe that the company is ideally placed to capture the growth revival in the commercial vehicle segment and will be the biggest beneficiary of the government’s voluntary scrappage policy and hence rate the stock a "buy".
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Apollo Hospitals | Rating: Accumulate | LTP: Rs 3,325 | Target: Rs 3,700 | Upside: 11 percent. We expect the company to report very strong revenue growth in upcoming quarters due to higher occupancy during the second coronavirus wave in India. We expect this quarter to report vacancy levels of more than 75 percent along with that pharmacy growth and LOS to increase further.
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Godrej Properties | Rating: Accumulate | LTP: Rs 1,438 | Target: Rs 1,600 | Upside: 11 percent. We are expecting a strong recovery in the residential market in the second half of 2022. The company will benefit from the shift from unorganised to organised market as it has a great brand recognition.
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Suprajit Engineering | Rating: Buy | LTP: Rs 297 | Target: Rs 360 | Upside: 21 percent. We believe the company is the prime beneficiary of the ramp-up in production by OEMs across the globe and is well insulated from the threat of EV —is developing new products. Its premium valuations are justified in our opinion owing to a strong outlook and top-grade quality of earnings.
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