Moneycontrol
Last Updated : Jun 05, 2020 02:45 PM IST | Source: Moneycontrol.com

Slideshow | ICICI Bank, Coal India, L&T, Quess Corp among 14 buying ideas

Here are the top 14 buying ideas from the brokerages:

Indian indices continued the winning streak on the fifth consecutive day on June 2 and ended near the day's high level with Nifty just shy away of the 10,000 mark. Here are the top 15 buying ideas from the brokerages:
1/15

Indian indices continued to trade in the green for the fifth consecutive day on June 2 and ended near the day's high level with Nifty just shy of the 10,000 mark. Here are the top 14 buying ideas from the brokerages:

Federal Bank | Brokerage: Emkay | Rating: Buy | Target: Rs 54 | LTP: Rs 47 | Upside: 15 percent. Emkay cut estimates for FY21/FY22 by 32/33%, factoring in lower growth/fees and higher LLP. It cut target to Rs 54 from earlier Rs 75, but retain buy due to its strong retail re-orientation, healthy liability profile, healthy capital position (Tier I at 13.2%) and lower valuations among mid-size banks. The key risks are higher-than-expected NPAs and change in top management.
2/15

Federal Bank | Brokerage: Emkay | Rating: Buy | Target: Rs 54 | LTP: Rs 47 | Upside: 15 percent. Emkay cut estimates for FY21/FY22 by 32/33%, factoring in lower growth/fees and higher LLP. It cut target to Rs 54 from earlier Rs 75, but retain buy due to its strong retail re-orientation, healthy liability profile, healthy capital position (Tier I at 13.2%) and lower valuations among mid-size banks. The key risks are higher-than-expected NPAs and a change in top management.

Aditya Birla Fashion and Retail | Brokerage: AnandRathi | Rating: Buy | Target: Rs 137 | LTP: Rs 130 | Upside: 5 percent. Broking house believes that the high fixed-cost structure would pile pressure on profitability and debt. The key monitorable would be the extent to which fixed costs are reduced in H1 FY21, which could lead to profitability bouncing back once revenue growth starts picking up in H2 FY21.
3/15

Aditya Birla Fashion and Retail | Brokerage: AnandRathi | Rating: Buy | Target: Rs 137 | LTP: Rs 130 | Upside: 5 percent. Broking house believes that the high fixed-cost structure would pile pressure on profitability and debt. The key monitorable would be the extent to which fixed costs are reduced in H1 FY21, which could lead to profitability bouncing back once revenue growth starts picking up in H2 FY21.

Coal India | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 195 | LTP: Rs 143 | Upside: 36 percent. Working capital could remain stretched with elevated receivables as cash issues due to lower demand materialize within the power value chain. Motilal Oswal has cut FY21E adjusted EBITDA estimates by 11% to account the lower e-auction prices. However, it expect company to tide over the situation in the near term given its robust cash position.
4/15

Coal India | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 195 | LTP: Rs 143 | Upside: 36 percent. Working capital could remain stretched with elevated receivables as cash issues due to lower demand materialize within the power value chain. Motilal Oswal has cut FY21E adjusted EBITDA estimates by 11% to account the lower e-auction prices. However, it expects company to tide over the situation in the near term given its robust cash position.

Orient Cement | Brokerage: AnandRathi | Rating: Buy | Target: Rs 65 | LTP: Rs 57 | Upside: 14 percent. AnandRathi expect volumes to dip 12% in FY21 and grow 10% in FY22, making for EBITDA/ton of Rs 532 in FY21, and Rs 612 in FY22. With capex postponed, it raised FY21e/22e PAT 101%/37%. The key risks are rising prices of pet-coke and diesel and extension of the lockdown.
5/15

Orient Cement | Brokerage: AnandRathi | Rating: Buy | Target: Rs 65 | LTP: Rs 57 | Upside: 14 percent. AnandRathi expects volumes to dip 12% in FY21 and grow 10% in FY22, making for EBITDA/ton of Rs 532 in FY21, and Rs 612 in FY22. With capex postponed, it raised FY21e/22e PAT 101%/37%. The key risks are rising prices of pet-coke and diesel and extension of the lockdown.

Astral Poly Technik | Brokerage: Narnolia | Rating: Buy | Target: Rs 1,068 | LTP: Rs 943 | Upside: 13 percent. The structural changes in Adhesive business in FY20 will expand the margins going ahead. Removing of a complete stockist level from the hierarchy will save around 7-8% which will help in margin expansion. Lockdown impact on March volumes for both pipes as well as adhesive business hampered the robust 4QFY20 performance. Becoming a debt free company in FY21 by repaying its debt will further save on interest cost and expand PAT in value terms.
6/15

Astral Poly Technik | Brokerage: Narnolia | Rating: Buy | Target: Rs 1,068 | LTP: Rs 943 | Upside: 13 percent. The structural changes in Adhesive business in FY20 will expand the margins going ahead. Removing of a complete stockist level from the hierarchy will save around 7-8% which will help in margin expansion. Lockdown impact on March volumes for both pipes as well as adhesive business hampered the robust 4QFY20 performance. Becoming a debt-free company in FY21 by repaying its debt will further save on interest cost and expand PAT in value terms.

Kewal Kiran Clothing | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 820 | LTP: Rs 795 | Upside: 3 percent. EBITDA margins for FY20 have dipped to 18% (vs. 22.4 in FY19). In a bid to sustain double digit topline growth, the management has alluded at a possibility of dilution in margin profile to a range of 18-19%. Despite the same, company remains one of the most profitable branded apparel players with a robust balance sheet with cash & investments worth Rs 275 crore.
7/15

Kewal Kiran Clothing | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 820 | LTP: Rs 795 | Upside: 3 percent. EBITDA margins for FY20 have dipped to 18% (vs. 22.4 in FY19). In a bid to sustain double-digit topline growth, the management has alluded at a possibility of dilution in margin profile to a range of 18-19%. Despite the same, the company remains one of the most profitable branded apparel players with a robust balance sheet with cash & investments worth Rs 275 crore.

Visaka Industries | Brokerage: ICICI Securities | Rating: Buy | Target: Rs 250 | LTP: Rs 187 | Upside: 33 percent. Factoring in Q4FY20 performance, ICICI Securities cut FY21 revenue/PAT estimates by 20%/48.5%, respectively. Improving the mix of non-cyclical businesses, lower debt and minimal capex to help improve RoCEs from 9.8% in FY20 to 11.2% in FY22E. It remain conservative amid volatile demand environment with higher uncertainty going forward.
8/15

Visaka Industries | Brokerage: ICICI Securities | Rating: Buy | Target: Rs 250 | LTP: Rs 187 | Upside: 33 percent. Factoring in Q4FY20 performance, ICICI Securities cut FY21 revenue/PAT estimates by 20%/48.5%, respectively. Improving the mix of non-cyclical businesses, lower debt and minimal capex to help improve RoCEs from 9.8% in FY20 to 11.2% in FY22E. It remains conservative amid volatile demand environment with higher uncertainty going forward.

Quess Corp | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 360 | LTP: Rs 244 | Upside: 47 percent. As the economy prepares for a gradual re-opening and enterprises look to dodge supply disruption, Motilal Oswal believe the company/sector has already passed the peak of uncertainty. As both the central and state governments look forward to liberalizing and formalizing the labor markets, Quess should be among the biggest direct beneficiaries.
9/15

Quess Corp | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 360 | LTP: Rs 244 | Upside: 47 percent. As the economy prepares for a gradual re-opening and enterprises look to dodge supply disruption, Motilal Oswal believes the company/sector has already passed the peak of uncertainty. As both the central and state governments look forward to liberalizing and formalizing the labour markets, Quess should be among the biggest direct beneficiaries.

Sun Pharma | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 540 | LTP: Rs 473 | Upside: 14 percent. While the US generics front is seeing calibrated product rationalisation, specialty segment looks promising due to robust product pipeline, steady progress. This metamorphic shift from generics to specialty, however, is likely to weigh on US growth in the near term. That said, higher contribution from specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY22.
10/15

Sun Pharma | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 540 | LTP: Rs 473 | Upside: 14 percent. While the US generics front is seeing calibrated product rationalisation, the specialty segment looks promising due to robust product pipeline, steady progress. This metamorphic shift from generics to speciality, however, is likely to weigh on US growth in the near term. That said, a higher contribution from speciality and the strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY22.

ICICI Bank | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 348 | Target: Rs 410 | Upside: 18 percent. The ability to raise sufficient liquidity at low cost would be the key criteria for banks to navigate the current situation. ICICI Bank is clearly better positioned in the liability side and trading at a significant discount to historical average valuations and offers favorable risk reward from current levels given global tailwinds.
11/15

ICICI Bank | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 348 | Target: Rs 410 | Upside: 18 percent. The ability to raise sufficient liquidity at low cost would be the key criteria for banks to navigate the current situation. ICICI Bank is clearly better positioned in the liability side and trading at a significant discount to historical average valuations and offers favourable risk-reward from current levels given global tailwinds.

HDFC | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 1,814 | Target: Rs 1,950 | Upside: 7 percent. HDFC is able to raise fund at competitive rate owing to strong operating metrics, experienced management and industry’s best credit rating. It is trading at a significant discount to historical average valuations and offers favorable risk reward from current levels given global tailwinds.
12/15

HDFC | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 1,814 | Target: Rs 1,950 | Upside: 7 percent. HDFC is able to raise fund at competitive rate owing to strong operating metrics, experienced management and industry’s best credit rating. It is trading at a significant discount to historical average valuations and offers favourable risk reward from current levels given global tailwinds.

Larsen & Toubro | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 945 | Target: Rs 1,093 | Upside: 15 percent. L&T is India’s largest EPC company with a strong presence across various verticals including Infra, Hydrocarbon and services segment. The company has a strong order backlog of Rs 3 lakh crore and majority of the order book is from the central government, state government and PSU, where risk of cancellation is low. The stock is trading at significant discount to historical average valuations and offers favorable risk reward from current levels given global tailwinds.
13/15

Larsen & Toubro | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 945 | Target: Rs 1,093 | Upside: 15 percent. L&T is India’s largest EPC company with a strong presence across various verticals including Infra, Hydrocarbon and services segment. The company has a strong order backlog of Rs 3 lakh crore and the majority of the order book is from the central government, state government and PSU, where the risk of cancellation is low. The stock is trading at a significant discount to historical average valuations and offers favourable risk reward from current levels given global tailwinds.

Escorts | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 958 | Target: Rs 1,150 | Upside: 20 percent. Escorts is a prominent tractor player domestically with market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as expectation of normal monsoon 2020, Angel Broking expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.
14/15

Escorts | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 958 | Target: Rs 1,150 | Upside: 20 percent. Escorts is a prominent tractor player domestically with a market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as the expectation of normal monsoon 2020, Angel Broking expects the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.

HeidelbergCements | Brokerage: Cholamandalam Securities | Rating: Buy | LTP: Rs 172 | Target: Rs 200 | Upside: 16 percent. Though volume growth in near term is likely to be under pressure, Cholamandalam expect company to be well placed to benefit from any revival in cement demand driven by its strong brand presence, regional focus and higher contribution from retail segment in overall sales.
15/15

HeidelbergCements | Brokerage: Cholamandalam Securities | Rating: Buy | LTP: Rs 172 | Target: Rs 200 | Upside: 16 percent. Though volume growth in the near term is likely to be under pressure, Cholamandalam expects the company to be well placed to benefit from any revival in cement demand driven by its strong brand presence, regional focus and higher contribution from the retail segment in overall sales.

First Published on Jun 3, 2020 11:40 am
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