Webinar :Register now for webinar on 'Trade BankNifty in just 15 minutes a day' - By Asmita Patel
Last Updated : May 18, 2020 11:08 AM IST | Source: Moneycontrol.com

Slideshow | Cipla, ABB, Escorts among 10 buying ideas for up to 49% upside

Here are the 10 buying ideas by brokerages which could give up to 49 percent upside:

The market closed lower for the second consecutive week ended May 15 despite fiscal package announced by the government and rising concerns over increasing COVID-19 cases in the country. BSE Sensex and Nifty50 index shed 1.7 percent and 1.4 percent, respectively. FIIs sold equities worth Rs 5,951.15 crore, while DIIs bought equities worth of Rs 1,074.94 crore in the last week. Here are the 10 buying ideas by brokerages which could give up to 49 percent upside:

The market closed lower for the second consecutive week ended May 15 despite the fiscal package announced by the government and raising concerns over increasing COVID-19 cases in the country. BSE Sensex and Nifty50 index shed 1.7 percent and 1.4 percent, respectively. FIIs sold equities worth Rs 5,951.15 crore, while DIIs bought equities worth of Rs 1,074.94 crore in the week gone by. Here are the 10 buying ideas by brokerages which could give up to 49 percent upside:

Bharat Electronics | Brokerage: LKP Research | Rating: Buy | Target: Rs 100 | CMP: Rs 67 | Upside: 49 percent. The company has a humongous order book of Rs 518 billion to be delivered over the next 3-4 years, which itself provides a robust outlook and visibility over long term. We believe a cut in defence budget may impact the receivables in FY 21 in view of Covid-19, but BEL has demonstrated strong execution capability over the years and will be able to weather this storm.

Bharat Electronics | Brokerage: LKP Research | Rating: Buy | Target: Rs 100 | CMP: Rs 67 | Upside: 49 percent. The company has an order book of Rs 518 billion to be delivered over the next 3-4 years, which itself provides a robust outlook and visibility over the long term. We believe a cut in defence budget may impact the receivables in FY 21 in view of COVID-19, but BEL has demonstrated strong execution capability over the years and will be able to weather this storm.

TV Today Network | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 240 | CMP: Rs 175 | Upside: 37 percent. The extended nationwide lockdown has led to strong TV impressions across news segments. While near term ad growth could be muted given the absence of premium rates based events. Broking House expect a strong recovery in FY22 and continue the high dividend payment in absence of major capex.

TV Today Network | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 240 | CMP: Rs 175 | Upside: 37 percent. The extended nationwide lockdown has led to strong TV impressions across news segments. While near term ad growth could be muted given the absence of premium rates based events. Broking House expect a strong recovery in FY22 and continue the high dividend payment in absence of major capex.

Cipla | Brokerage: Sharekhan | Rating: Buy | Target: Rs 650 | CMP: Rs 570 | Upside: 14 percent. The domestic business, which accounts for 40% of sales is set to be the key growth driver. In the US, a strong set of product launches would fuel the growth. Sharekhan expect Cipla’s revenues and PAT to grow at a 10% and 30% CAGR over FY2020-FY2022. Currently the stock is trading at valuation of 23.7x / 18.1x its FY2021 / FY2022E earnings, which is lower than the long-term historical average multiple.

Cipla | Brokerage: Sharekhan | Rating: Buy | Target: Rs 650 | CMP: Rs 570 | Upside: 14 percent. The domestic business, which accounts for 40% of sales is set to be the key growth driver. In the US, a strong set of product launches would fuel growth. Sharekhan expect Cipla’s revenues and PAT to grow at a 10 percent and 30 percent CAGR over FY2020-FY2022. Currently the stock is trading at valuation of 23.7x / 18.1x its FY2021 / FY2022E earnings, which is lower than the long-term historical average multiple.

Manappuram Finance | Brokerage: Arihant Capital | Rating: Buy | Target: Rs 167 | CMP: Rs 127 | Upside: 31 percent. Sharp rise in gold prices in the last 1 year has aided balance sheet/profitability growth which is expected to continue. Due to company’s high yielding business, strong operating efficiency and adequately capitalized position, we believe MFL is well poised to deliver superior return ratio with RoA at +5%.

Manappuram Finance | Brokerage: Arihant Capital | Rating: Buy | Target: Rs 167 | CMP: Rs 127 | Upside: 31 percent. A sharp rise in gold prices in the last 1 year has aided balance sheet/profitability growth which is expected to continue. Due to the company’s high yielding business, strong operating efficiency and adequately capitalized position, we believe MFL is well poised to deliver superior return ratio with RoA at +5%.

ABB India | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 980 | CMP: Rs 822 | Upside: 19 percent. ABB remains a pure play on longer-term industrial automation and the ‘Make-in-India’ theme. While, given the short-cycle nature of its business and expectation of a gradual recovery coupled with the impact of fixed costs, Motilal Oswal have cut its CY20E/CY21E earnings by 60%/25%.

ABB India | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 980 | CMP: Rs 822 | Upside: 19 percent. ABB remains a pure-play on longer-term industrial automation and ‘Make-in-India’ theme. While, given the short-cycle nature of its business and expectation of a gradual recovery coupled with the impact of fixed costs, Motilal Oswal have cut its CY20E/CY21E earnings by 60%/25%.

Escorts | Brokerage: Emkay | Rating: Buy | Target: Rs 898 | CMP: Rs 824 | Upside: 9 percent. Due to the impact of the lockdown and expectation of a gradual pick-up in demand, broking house reduce the FY21 tractor volume estimate by 8% to 78,073 units, but increase FY22E volume forecast by 3% to 95,670 units. It expect 8% CAGR in revenues and 15% CAGR in earnings over FY20-22E, driven by volume up-cycle and margin expansion.

Escorts | Brokerage: Emkay | Rating: Buy | Target: Rs 898 | CMP: Rs 824 | Upside: 9 percent. Due to the impact of the lockdown and expectation of a gradual pick-up in demand, broking house has reduced the FY21 tractor volume estimate by 8% to 78,073 units, but increased FY22E volume forecast by 3% to 95,670 units. It expects 8% CAGR in revenues and 15% CAGR in earnings over FY20-22E, driven by volume up-cycle and margin expansion.

Tata Consumer Products | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 431 | CMP: Rs 351 | Upside: 22 percent. The merger of Tata Chemicals’ Consumer business with the company offers multiple synergies, including higher outlet coverage, focused new product development, stronger cash flow generation, and scale efficiencies. Broking house maintain estimates for FY21/FY22 as TCP deals in salt/tea/coffee, for which demand has not been materially impacted due to COVID-19.

Tata Consumer Products | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 431 | CMP: Rs 351 | Upside: 22 percent. The merger of Tata Chemicals’ Consumer business with the company offers multiple synergies, including higher outlet coverage, focused new product development, stronger cash flow generation, and scale efficiencies. Broking house maintains estimates for FY21/FY22 as TCP deals in salt/tea/coffee, for which demand has not been materially impacted due to COVID-19.

Mphasis | Brokerage: AnandRathi | Rating: Buy | Target: Rs 970 | CMP: Rs 844 | Upside: 15 percent. The FY20 EBIT margin was 15.9% and company aims to maintain this margin in FY21 and has initiated salary revisions/cost containments to cover a revenue shortfall. AnandRathi building in 13.6% margins in FY21, in line with industry expectations and factoring in risks from DXC.

Mphasis | Brokerage: AnandRathi | Rating: Buy | Target: Rs 970 | CMP: Rs 844 | Upside: 15 percent. The FY20 EBIT margin was 15.9% and the company aims to maintain this margin in FY21 and has initiated salary revisions/cost containments to cover a revenue shortfall. AnandRathi building in 13.6% margins in FY21, in line with industry expectations and factoring in risks from DXC.

Auto Ancillary

Suprajit Engineering | Brokerage: East India Securities | Rating: Buy | Target: Rs 155 | CMP: Rs 115 | Upside: 34 percent. Dominance in 2W OEMs, enhancing share in 4Ws, massive domestic & exports aftermarket potential and revitalizing phoenix lamps division are few triggers getting executed. This, along with diversification across auto segments would continue its consistent performance in the years ahead.

Oracle Financial Services Software | Brokerage: Dolat Capital | Rating: Buy | Target: Rs 3,100 | CMP: Rs 2,591 | Upside: 19 percent. Research house broadly maintained its earnings estimates for FY21/22E. It has factored in Licence revenue decline of about 13% in FY21 and then growth of 25% in FY22 led by pent up demand and acceleration of digital transformation as banks revive from the near term impact from COVID. It expect nearly 300bps decline in OPM in FY21E.

Oracle Financial Services Software | Brokerage: Dolat Capital | Rating: Buy | Target: Rs 3,100 | CMP: Rs 2,591 | Upside: 19 percent. Research house broadly maintained its earnings estimates for FY21/22E. It has factored in a Licence revenue decline of about 13% in FY21 and then growth of 25% in FY22 led by pent up demand and acceleration of digital transformation as banks revive from the near term impact from COVID. It expects nearly 300bps decline in OPM in FY21E.

First Published on May 18, 2020 11:03 am
Sections