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In pics | Angel Broking bets on these 11 stocks with double-digit return

On August 6, the benchmark indices ended with nearly 1 percent gain after Reserve Bank of India (RBI) kept the repo rate unchanged at 4 percent. (LTP is closing figure of August 6)

August 07, 2020 / 09:53 AM IST
Market has rebounded sharply from the March low, with Nifty50 rose 7.5 percent each in the month of June and July 2020 on the back of mixed global and domestic data. FIIs remained net buyers in the month of May, June and July, on the other hand DIIs sold equities in the month of July, while remained net buyers in May and June 2020.
Market has rebounded sharply from the March low, with Nifty50 rising 7.5 percent each in June and July on the back of mixed global and domestic data. FIIs remained net buyers in May, June and July. On the other hand, DIIs sold equities in July while they remained net buyers in May and June..
Alembic Pharma | LTP: Rs 1,081.55 | Target: Rs 1,400 | Upside: 29 percent. Broking House expect Alembic Pharma (Apll) to grow its top line by 15-17% in the upcoming years. New product launches and volume growth will help US business to grow by 10-15% p.a for next couple of years. Company will be going to launch several products in the domestic market and 15 products in the US market. Apll already launch 3 products in Q1FY21 and expected to launch 5 products in Q2FY21. Out of 5 formulation plants and 2 API plants, company has no observation from USFDA.
Alembic Pharma | LTP: Rs 1,081.55 | Target: Rs 1,400 | Upside: 29 percent. Broking House expects Alembic Pharma (Apll) to grow its top line by 15-17 percent in coming years. New product launches and volume growth will help US business to grow by 10-15 percent p.a for next couple of years. Company will be going to launch several products in the domestic market and 15 products in the US market. Apll has already launched three products in Q1FY21 and expected to launch five products in Q2FY21. Out of five formulation plants and two API plants, the company has no observation from USFDA.
Bharti Airtel | LTP: Rs 555.50 | Target: Rs 672 | Upside: 21 percent. There is going to be some impact on subscribers from the low income group especially daily wage earners due to the lockdown. However a sharp increase in data consumption should make up for a significant portion of the loss. Therefore, expect limited impact on Bharti from the lockdown. Bharti has raised capital of USD 2bn from a QIP at `445 per share along with FCCB issues of USD 1bn in January 2020. Therefore Bharti is much better placed as compared to Vodafone Idea in terms of liquidity.
Bharti Airtel | LTP: Rs 555.50 | Target: Rs 672 | Upside: 21 percent. There is going to be some impact on subscribers from the low-income group especially daily wage earners due to the lockdown. However, a sharp increase in data consumption should make up for a significant portion of the loss. Therefore, expect limited impact on Bharti from the lockdown. Bharti has raised capital of USD 2bn from a QIP at Rs 445 per share along with FCCB issues of USD 1bn in January 2020. So, Bharti is much better placed as compared to Vodafone Idea in terms of liquidity.
Persistent Systems | LTP: Rs 967.55 | Target: Rs 1,085 | Upside: 12 percent. Company has posted a very strong set of numbers for Q1FY21 with dollar revenue growth of 3.1% qoq. Company has also reported improvement in margins due to tight cost control. Company has won a large deal during the quarter which will ramp up over the next few quarters. The new management focus on annuity deals are expected to lead to stable growth going forward. We expect the company to post revenue/EBITDA/PAT growth of 11.6%/21.4%/19.7% between FY20-FY22 given negligible impact of Covid19 on FY21 numbers, strong deal wins, ramp up of existing projects along with margin expansion.
Persistent Systems | LTP: Rs 967.55 | Target: Rs 1,085 | Upside: 12 percent. The company has posted a very strong set of numbers for Q1FY21 with dollar revenue growth of 3.1 percent QoQ. Company has also reported improvement in margins due to tight cost control. The company has won a large deal during the quarter which will ramp up over the next few quarters. The new management focus on annuity deals are expected to lead to stable growth going forward. We expect the company to post revenue/EBITDA/PAT growth of 11.6/21.4/19.7 percent between FY20-FY22 given negligible impact of COVID-19 on FY21 numbers, strong deal wins, ramp up of existing projects along with margin expansion.
L&T Infotech | LTP: Rs 2,473.20 | Target: Rs 2,838 | Upside: 14 percent. Company has a very strong presence to the BFSI & manufacturing verticals, which accounts for 45% and 17.5% of the company’s revenues and are amongst the least impacted vertical due to the shutdown on account of Covid-19. The company doesn't have a very large exposure to service oriented verticals like travel & Tourism which are amongst the worst impacted due to the Covid – 19 outbreak.
L&T Infotech | LTP: Rs 2,473.20 | Target: Rs 2,838 | Upside: 14 percent. The company has a very strong presence in the BFSI & manufacturing verticals, which accounts for 45 percent and 17.5 percent of the company’s revenues and are amongst the least impacted verticals due to the shutdown on account of COVID-19. The company does not have a very large exposure to service oriented verticals like travel & Tourism which are amongst the worst impacted due to the COVID-19 outbreak.
IPCA Laboratories | LTP: Rs 1,969.30 | Target: Rs 2,400 | Upside: 21 percent. Generics and API continues to provide revenue growth for Ipca and expected to outperform the Indian Pharmaceutical market (IPM) by 8%-10% p.a in FY22. Current capacity utilization of plants which supply to Europe is at 20% which is expected to ramp up from current levels and expect the European business to show 30-35% PAT growth.
IPCA Laboratories | LTP: Rs 1,969.30 | Target: Rs 2,400 | Upside: 21 percent. Generics and API continues to provide revenue growth for Ipca and are expected to outperform the Indian Pharmaceutical market (IPM) by 8-10 percent p.a in FY22. Current capacity utilization of plants which supply to Europe is at 20 percent which is expected to ramp up from current levels and expect the European business to show 30-35 percent PAT growth.
HDFC | LTP: Rs 1,785.65 | Target: Rs 2,075 | Upside: 16 percent. HDFC has sufficient capital (Tier-1 -16.2%) and Liquidity (Rs.30,000cr) to tide over this situation. As per NHB norms, HDFC is required to carry total provision of Rs 4,452 crore, against which actual provisions as of Q1FY2021 were at Rs 12,285 crore, which is over and above regulatory requirement and provides investor comfort. HDFC is currently available at 1.4x its FY2022E BV, which is reasonable considering its robust operating metrics, experience management, Healthy provision and sustainable business model
HDFC | LTP: Rs 1,785.65 | Target: Rs 2,075 | Upside: 16 percent. HDFC has sufficient capital (Tier-1 -16.2 percent) and Liquidity (Rs.30,000 crore) to tide over this situation. As per NHB norms, HDFC is required to carry a total provision of Rs 4,452 crore, against which actual provisions as of Q1FY2021 were at Rs 12,285 crore, which is over and above regulatory requirement and provides investor comfort. HDFC is currently available at 1.4x its FY2022E BV, which is reasonable considering its robust operating metrics, experience management, Healthy provision and sustainable business model
ICICI Bank | LTP: Rs 359.15 | Target: Rs 410 | Upside: 14 percent. ICICI Bank is clearly better positioned in the liability side (in Q1FY21, Deposit grew 21% yoy and CASA ratio of 42.5%). Moratorium % reduced from 30% to 17.7% in phase 2 and bank has provision worth of Rs 8,280 crore. Strong liability franchise, healthy asset mix, higher than 70% provision for bad asset and More than 80% of incremental lending to high rated corporate provide comfort. The bank is trading at a significant discount to historical average valuations and offers favourable risk reward from current levels.
ICICI Bank | LTP: Rs 359.15 | Target: Rs 410 | Upside: 14 percent. ICICI Bank is clearly better positioned in the liability side (in Q1FY21, Deposit grew 21 percent yoy and CASA ratio of 42.5 percent). Moratorium % reduced from 30% to 17.7% in phase 2 and bank has provision worth of Rs 8,280 crore. Strong liability franchise, healthy asset mix, higher than 70 percent provision for bad assets and More than 80 percent of incremental lending to high rated corporate provide comfort. The bank is trading at a significant discount to historical average valuations and offers favourable risk reward from current levels.
Aarti Industries | LTP: Rs 1,057.85 | Target: Rs 1,165 | Upside: 10 percent. Company has been constantly increasing its share of high margin downstream products which now accounts for 70% of the company’s revenues. Company is expanding its NCB capacity which would be utilized for manufacture of high margins downstream products. Company is well diversified across product, customer, geography and end user industry and is not likely to be impacted too much from the Covid-19 outbreak. Significant opportunity for company arising from environmental related issues in China and companies looking to diversify supply chains.
Aarti Industries | LTP: Rs 1,057.85 | Target: Rs 1,165 | Upside: 10 percent. The company has been constantly increasing its share of high margin downstream products which now accounts for 70 percent of the company’s revenues. Company is expanding its NCB capacity which would be utilised for manufacture of high margins downstream products. The company is well diversified across product, customer, geography and end user industry and is not likely to be impacted too much from the Covid-19 outbreak. Significant opportunity for company arising from environmental-related issues in China and companies looking to diversify supply chains.
Endurance Technologies | LTP: Rs 952.60 | Target: Rs 1,110 | Upside: 16 percent. The company operates 17 plants in India, 9 plants overseas and 4 R&D sites. Post Covid19, evolving consumer preference for lower ticket priced means of private transport amid pressurized incomes & awareness around social distancing are expected to act as tailwinds for domestic 2-Ws in India, 4-Ws across developed nations. Going ahead, given the company’s ability to gain new businesses & market share across categories; Angel recommend a buy for Endurance.
Endurance Technologies | LTP: Rs 952.60 | Target: Rs 1,110 | Upside: 16 percent. The company operates 17 plants in India, nine plants overseas and 4 R&D sites. Post COVID-19, evolving consumer preference for lower ticket priced means of private transport amid pressurized incomes & awareness around social distancing are expected to act as tailwinds for domestic 2-Ws in India, 4-Ws across developed nations. Going ahead, given the company’s ability to gain new businesses & market share across categories; Angel recommend a buy for Endurance.
Swaraj Engines | LTP: Rs 1,442 | Target: Rs 1,665 | Upside: 15 percent. Going forward, Angel Broking expect recovery in tractor industry (due to robust Rabi crop production, hike in MSP & the forecast of a normal monsoon) will benefit player like Swaraj Engines. The company has healthy balance sheet along with free cash flow and higher profitability. The company is trading at reasonably lower valuations.
Swaraj Engines | LTP: Rs 1,442 | Target: Rs 1,665 | Upside: 15 percent. Going forward, Angel Broking expects recovery in the tractor industry (due to robust Rabi crop production, hike in MSP & the forecast of a normal monsoon) will benefit players like Swaraj Engines. The company has a healthy balance sheet along with free cash flow and higher profitability. The company is trading at reasonably lower valuations.
IDFC First Bank | LTP: Rs 26.95 | Target: Rs 32 | Upside: 18 percent. IDFC Fist Bank, post management change has clearly outperformed in building liability franchise and retail lending. Since new management took charge, every quarter the liability franchise has been strengthened. Broking house believes that efforts to build a liability franchise, fresh capital infusion, and provision taken on the wholesale books will help to tide over this difficult time. The IDFC First Bank is trading (0.8 x FY22ABV) at a significant discount to historical average valuations.
IDFC First Bank | LTP: Rs 26.95 | Target: Rs 32 | Upside: 18 percent. IDFC Fist Bank, post management change has clearly outperformed in building liability franchise and retail lending. Since new management took charge, every quarter the liability franchise has been strengthened. Broking house believes that efforts to build a liability franchise, fresh capital infusion, and provision taken on the wholesale books will help to tide over this difficult time. The IDFC First Bank is trading (0.8 x FY22ABV) at a significant discount to historical average valuations.
Moneycontrol News
first published: Aug 7, 2020 09:53 am

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