Last Updated : Nov 11, 2020 12:21 PM IST | Source: Moneycontrol.com

ITC, Cipla and Dabur among 10 stocks that brokerages are betting on

Sonata Software, Bharti Airtel, Siyaram Silk Mills are also on the list of stocks that could give 10-33 percent return

Sensex and Nifty

Progress on the development of a coronavirus vaccine helped the indices to close at record high for the second straight session on November 10. The BSE Sensex added 680.22 points or 1.60 percent to close at 43,277.65, while Nifty was up 170.10 points or 1.37 percent at 12,631.10. As indices scale fresh highs ahead of Diwali, experts are turning cautious. Here are 10 names that brokerages are betting on: 

Ashok Leyland | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs | Target: Rs 100 | Upside: percent. Ashok Leyland’s 2QFY21 results were operationally better as EBITDA beat at Rs 804mn (PLe of Rs99mn) led by higher gross margins at 28.8% (PLe 27%). With increased inquiries from large fleet operators and financing situation improving, M&HCV segment to see gradual volume recovery from 3Q/4Q. Going in FY22 with improved economic activity and a low base, Prabhudas Lilladher expect M&HCV volume to see healthy recovery.

Ashok Leyland | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 91 | Target: Rs 100 | Upside: 10 percent. Ashok Leyland’s 2QFY21 results were operationally better as EBITDA beat at Rs 804mn (PLe of Rs99mn) led by higher gross margins at 28.8% (PLe 27%). With increased inquiries from large fleet operators and financing situation improving, M&HCV segment to see gradual volume recovery from 3Q/4Q. Going in FY22 with improved economic activity and a low base, Prabhudas Lilladher expect M&HCV volume to see healthy recovery.

Sonata Software | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs | Target: Rs 390 | Upside: percent. ICICIdirect expect the company to see improving revenues in coming quarters led by upgrades in Microsoft Dynamics and traction in ISV vertical, essential retail and commodity service. In addition, scaling of IP led revenues, rising proportion of digital, higher utilisation and offshoring is expected to boost margins in long run.

Sonata Software | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 328 | Target: Rs 390 | Upside: 19 percent. ICICIdirect expect the company to see improving revenues in coming quarters led by upgrades in Microsoft Dynamics and traction in ISV vertical, essential retail and commodity service. In addition, scaling of IP led revenues, rising proportion of digital, higher utilisation and offshoring is expected to boost margins in long run.

Affle India | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs | Target: Rs 3,500 | Upside: percent. Affle re-iterated increasing dominance of Mobile as a default channel in advertising and expect the Ad-spends to continue to shift towards Mobile as business evolves in Omni channel World. Dolat Capital believe Affle India offers a unique interplay of Digital + Mobility + Analytics theme that can offer multi-year-high-growth opportunity. With strong performance in Q2, broking house upgraded its top line CAGR over FY20-23E by 300bps to 33%.

Affle India | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 2,791| Target: Rs 3,500 | Upside: 25 percent. Affle re-iterated increasing dominance of Mobile as a default channel in advertising and expect the Ad-spends to continue to shift towards Mobile as business evolves in Omni channel World. Dolat Capital believe Affle India offers a unique interplay of Digital + Mobility + Analytics theme that can offer multi-year-high-growth opportunity. With strong performance in Q2, broking house upgraded its top line CAGR over FY20-23E by 300bps to 33%.

Minda Corporation | Brokerage: KRChoksey | Rating: Buy | LTP: Rs | Target: Rs 90 | Upside: percent. Company to benefit from BSVI as content per vehicle to increase in 2W wiring harness (strong presence with 30% market share in the 2W wiring harness segment). Broking house believe domestic business is rightly placed with various product developments, gaining market share and increase share of business with existing OEMs. It expect the recovery in the overall business to happen.

Minda Corporation | Brokerage: KRChoksey | Rating: Buy | LTP: Rs 67.75 | Target: Rs 90 | Upside: 33 percent. Company to benefit from BSVI as content per vehicle to increase in 2W wiring harness (strong presence with 30% market share in the 2W wiring harness segment). Broking house believe domestic business is rightly placed with various product developments, gaining market share and increase share of business with existing OEMs. It expect the recovery in the overall business to happen.

Siyaram Silk Mills | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs | Target: Rs 170 | Upside: percent. Despite challenging times, Siyaram Silk Mills continued to focus on stringent control on cash conversion cycles, which resulted in further reduction in debt by ~ Rs 35 crore in H1FY21. The company’s focus on strengthening balance sheet is visible with significant decline in debt from Rs 590 crore in FY18 (D/E: 0.9x) to Rs 360 crore (D/E: 0.5x) as on H1FY21. Some of the cost rationalisation measures undertaken by the company in H1FY21 are likely to sustain post normalisation of demand scenario. This would aid EBITDA margins, going forward.

Siyaram Silk Mills | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 135.55 | Target: Rs 170 | Upside: 25 percent. Despite challenging times, Siyaram Silk Mills continued to focus on stringent control on cash conversion cycles, which resulted in further reduction in debt by ~ Rs 35 crore in H1FY21. The company’s focus on strengthening balance sheet is visible with significant decline in debt from Rs 590 crore in FY18 (D/E: 0.9x) to Rs 360 crore (D/E: 0.5x) as on H1FY21. Some of the cost rationalisation measures undertaken by the company in H1FY21 are likely to sustain post normalisation of demand scenario. This would aid EBITDA margins, going forward.

Tata Consumer Products | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs | Target: Rs 623 | Upside: percent. Over FY20-23E, sales/EBITDA/ PAT is expected at CAGR of 12%/20%/24%. Broking house increased its earnings estimates for FY21 by 6% and for FY22E by 5% on better-than-expected profit from associates and JVs.

Tata Consumer Products | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 498.40 | Target: Rs 623 | Upside: 25 percent. Over FY20-23E, sales/EBITDA/ PAT is expected at CAGR of 12%/20%/24%. Broking house increased its earnings estimates for FY21 by 6% and for FY22E by 5% on better-than-expected profit from associates and JVs.

ITC

ITC | Brokerage: ICICIdirect| Rating: Buy | LTP: Rs 178.35 | Target: Rs 225 | Upside: 26 percent. Given, the completion of capex in hotels segment and ITC not venturing into many newer FMCG categories, ICICIdirect believe the capital allocation would rationalise. ITC would continue to pay 80% dividend with 20% being kept for any capex or acquisition opportunities. The company has Rs 24,000 crore of cash or equivalents.

Cipla | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs | Target: Rs 942 | Upside: percent. Change in capital allocation, phasing out of R&D investments and focus on deepening penetration in ROW forms core strategy of Cipla. Approval for gProAir and a launch of gAdvair are expected to be the key catalysts in near term. Broking house see increasing visibility over the medium-term earnings, given signs of improving execution in India and strong US build-out. Cipla remains our top pick in the large cap space.

Cipla | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 717.30 | Target: Rs 942 | Upside: 31 percent. Change in capital allocation, phasing out of R&D investments and focus on deepening penetration in ROW forms core strategy of Cipla. Approval for gProAir and a launch of gAdvair are expected to be the key catalysts in near term. Broking house see increasing visibility over the medium-term earnings, given signs of improving execution in India and strong US build-out. Cipla remains our top pick in the large cap space.

Dabur India | Brokerage: Geojit | Rating: Buy | LTP: Rs | Target: Rs 584 | Upside: percent. The company successfully launched new products despite the low availability of supply chain and labor amid lockdown. These new products, supported by pickup in economy post lockdown, increase in ad spend & digitization, and strong demand in rural market will boost the topline and bottom line in near future.

Dabur India | Brokerage: Geojit | Rating: Buy | LTP: Rs 515 | Target: Rs 584 | Upside: 13 percent. The company successfully launched new products despite the low availability of supply chain and labor amid lockdown. These new products, supported by pickup in economy post lockdown, increase in ad spend & digitization, and strong demand in rural market will boost the topline and bottom line in near future.

Bharti Airtel | Brokerage: Geojit | Rating: Buy | LTP: Rs | Target: Rs 544 | Upside: percent. Bharti Airtel benefited from continued slide in subscriber base of its peers. Improving ARPUs coupled with company’s strategy to tap exiting markets bodes well for the firm’s performance. Nonetheless, AGR overhang remains as company’s required to pay off its dues in 10% annual installmen ts.

Bharti Airtel | Brokerage: Geojit | Rating: Buy | LTP: Rs 466.40 | Target: Rs 544 | Upside: 16 percent. Bharti Airtel benefited from continued slide in subscriber base of its peers. Improving ARPUs coupled with company’s strategy to tap exiting markets bodes well for the firm’s performance. Nonetheless, AGR overhang remains as company’s required to pay off its dues in 10% annual installments.

First Published on Nov 11, 2020 12:21 pm
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