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Slideshow | UPL and Bajaj Finserv among 15 buying ideas with 13-84% upside

Here are the top 15 stocks, in which brokerages are expecting 13-84 percent upside:
May 27, 2020 / 11:33 AM IST
Sensex
Last week Indian benchmarks ended lower for the third consecutive week amid extension of lockdown amid RBI policy announcement and mixed global cues. BSE Midcap index fell 2 percent, while BSE Small-cap and BSE Large-cap Index fell 1.5 percent and 1 percent, respectively. Here are the top 15 stocks where brokerages are expecting 13-84 percent upside:
Bajaj Auto | Brokerage: KRChoksey | Rating: Buy | Target: Rs 3,051 | LTP: Rs 2,564 | Upside: 19 percent. KRChoksey retained its positive stance on Bajaj Auto based on its resilient performance especially in the export markets and the company's ability to control costs amid plant shutdowns/ demand slowdown. In broking house view, company is well placed to benefit from the expected revival in 2-wheelers demand especially in rural markets post lockdown and remains preferred play in the 2-wheelers space.
Bajaj Auto | Brokerage: KRChoksey | Rating: Buy | Target: Rs 3,051 | LTP: Rs 2,564 | Upside: 19 percent. KRChoksey retained its positive stance on Bajaj Auto based on its resilient performance especially in the export markets and the company's ability to control costs amid plant shutdowns/ demand slowdown. In broking house view, company is well placed to benefit from the expected revival in 2-wheelers demand especially in rural markets post lockdown and remains preferred play in the 2-wheelers space.
Kalpataru Power Transmission | Brokerage: YES Securities | Rating: Buy | Target: Rs 313 | LTP: Rs 191 | Upside: 63 percent. Research house estimates sales decline of 8% with EBITDAM of 9.6% in FY21 to factor in the 2-months of lockdown & supply disruptions. Though valuation is attractive, resolution of promoter’s pledged shares remains key trigger as promoter group has gross debt of Rs 80 billion in the real estate business which is suffering from demand headwinds. It retained buy as core business remains on strong footing deriving benefits out of domestic and global transmission capex, railway electrification & value unlocking through asset divestment.
Kalpataru Power Transmission | Brokerage: YES Securities | Rating: Buy | Target: Rs 313 | LTP: Rs 196 | Upside: 59 percent. Research house estimates sales decline of 8% with EBITDAM of 9.6% in FY21 to factor in the 2-months of lockdown & supply disruptions. Though valuation is attractive, resolution of promoter’s pledged shares remains key trigger as promoter group has gross debt of Rs 80 billion in the real estate business which is suffering from demand headwinds. It retained buy as core business remains on strong footing deriving benefits out of domestic and global transmission capex, railway electrification & value unlocking through asset divestment.
Hawkins Cookers | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 4,900 | LTP: Rs 4,229 | Upside: 16 percent. ICICIdirect continue to remain structurally positive on Hawkins owing to its robust balance sheet and good promoter pedigree. The company has consistently maintained healthy dividend payouts with average ratio of 75%, however, it has not declared dividend at the moment, as it focuses on maintaining liquidity to tide over uncertainties.
Hawkins Cookers | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 4,900 | LTP: Rs 4,084 | Upside: 20 percent. ICICIdirect continue to remain structurally positive on Hawkins owing to its robust balance sheet and good promoter pedigree. The company has consistently maintained healthy dividend payouts with average ratio of 75%, however, it has not declared dividend at the moment, as it focuses on maintaining liquidity to tide over uncertainties.
VST Industries | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 4,000 | LTP: Rs 3,136 | Upside: 27 percent. Though FY21 numbers would be largely impacted by 45 days lockdown in April-May, ICICIdirect believe operations would return to normal by Q2FY21. Further, the possibility of curbs on illicit cigarettes and expectation of increasing taxation on non-cigarettes tobacco could help drive the volume growth for VST in future.
VST Industries | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 4,000 | LTP: Rs 3,137 | Upside: 27 percent. Though FY21 numbers would be largely impacted by 45 days lockdown in April-May, ICICIdirect believe operations would return to normal by Q2FY21. Further, the possibility of curbs on illicit cigarettes and expectation of increasing taxation on non-cigarettes tobacco could help drive the volume growth for VST in future.
Escorts | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 1,020 | LTP: Rs 909 | Upside: 12 percent. The company’s brand of tractors is particularly strong in the northern as well as the eastern belt of India. 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, we expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.
Escorts | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 1,020 | LTP: Rs 869 | Upside: 17 percent. The company’s brand of tractors is particularly strong in the northern as well as the eastern belt of India. 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, we expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.
Mahindra Logistics | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 300 | LTP: Rs 263 | Upside: 14 percent. With asset heavy players and startups in the logistics sector seeing greater stress in cashflow management, inflated labour cost and other expenses, the company is well placed to steer the crisis, with strong financials to take advantage of expected consolidation in the sector. While auto continues to dominate Mahindra Logistics segment, company has been steadily building up its presence in the e-commerce, freight forwarding, pharma and consumer segments.
Mahindra Logistics | Brokerage: ICICIdirect | Rating: Buy | Target: Rs 300 | LTP: Rs 258 | Upside: 16 percent. With asset heavy players and startups in the logistics sector seeing greater stress in cashflow management, inflated labour cost and other expenses, the company is well placed to steer the crisis, with strong financials to take advantage of expected consolidation in the sector. While auto continues to dominate Mahindra Logistics segment, company has been steadily building up its presence in the e-commerce, freight forwarding, pharma and consumer segments.
Strides Pharma Science | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 495 | LTP: Rs 416 | Upside: 19 percent. Broking house expect earnings to triple over FY20-22, led by new product commercialization and higher volume share gains in existing products in the US, UK, and EU, and other regulated markets. It has cut earnings estimate by 9%/6% for FY21/FY22 to factor the loss of business associated with ranitidine.
Strides Pharma Science | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 495 | LTP: Rs 410 | Upside: 20 percent. Broking house expect earnings to triple over FY20-22, led by new product commercialization and higher volume share gains in existing products in the US, UK, and EU, and other regulated markets. It has cut earnings estimate by 9%/6% for FY21/FY22 to factor the loss of business associated with ranitidine.
Hindalco Industries | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 175 | LTP: Rs 125 | Upside: 40 percent. Company's share of commodity business has declined to 25% post the Aleris acquisition with the higher margin converter business accounting for 75% of EBITDA. Motilal Oswal expect the COVID-19 impact to ease in FY22E. Also, it forecast FY22E EBITDA to rise 23% YoY to Rs 159 billion. It valued company on SOTP based on FY22 EV/EBITDA of 5.0x to India operations (commodity business), 6.0x to Novelis (high margin converter business) and 6.0x to Aleris.
Hindalco Industries | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 175 | LTP: Rs 129 | Upside: 35 percent. Company's share of commodity business has declined to 25% post the Aleris acquisition with the higher margin converter business accounting for 75% of EBITDA. Motilal Oswal expect the COVID-19 impact to ease in FY22E. Also, it forecast FY22E EBITDA to rise 23% YoY to Rs 159 billion. It valued company on SOTP based on FY22 EV/EBITDA of 5.0x to India operations (commodity business), 6.0x to Novelis (high margin converter business) and 6.0x to Aleris.
BSE | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 630 | LTP: Rs 396 | Upside: 59 percent. The company has received SEBI’s approval for e-KYC facility, which could translate into an additional income stream. The commission charged by independent financial advisors from AMCs would be routed through the BSE platform, thus, opening up another income stream.
BSE | Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 630 | LTP: Rs 387 | Upside: 62 percent. The company has received SEBI’s approval for e-KYC facility, which could translate into an additional income stream. The commission charged by independent financial advisors from AMCs would be routed through the BSE platform, thus, opening up another income stream.
Bayer CropScience | Brokerage: Prabhudas Lilladher | Rating: Buy | Target: Rs 6,010 | LTP: Rs 4,449 | Upside: 35 percent. Prabhudas Lilladher expect 10 percent revenue CAGR for the next 2 years mainly driven by turnaround in the CP business and continued leveraging of Corn portfolio. It has upgraded topline/EBITDA/APAT estimates by 3.5%/7%/8% for FY21E and 3.5%/6%/10% for FY22E and increased our target multiple from 33x to 35x considering turnaround compelled by new management and robust free cashflow generation.
Bayer CropScience | Brokerage: Prabhudas Lilladher | Rating: Buy | Target: Rs 6,010 | LTP: Rs 4,989 | Upside: 20 percent. Prabhudas Lilladher expect 10 percent revenue CAGR for the next 2 years mainly driven by turnaround in the CP business and continued leveraging of Corn portfolio. It has upgraded topline/EBITDA/APAT estimates by 3.5%/7%/8% for FY21E and 3.5%/6%/10% for FY22E and increased our target multiple from 33x to 35x considering turnaround compelled by new management and robust free cashflow generation.
JMC Projects | Brokerage: AnandRathi | Rating: Buy | Target: Rs 71 | LTP: Rs 36 | Upside: 97 percent. Broking house value the construction business at a PE multiple of 8x FY22e, and use the discounted-cash-flow (DCF)-driven valuation for the road-asset portfolio. The risk included prolonged Covid-19 impact, and consequently, any slower-than expected pace of execution and more-than-anticipated cash-flow mismatch in SPVs.
JMC Projects | Brokerage: AnandRathi | Rating: Buy | Target: Rs 71 | LTP: Rs 38.5 | Upside: 84 percent. Broking house value the construction business at a PE multiple of 8x FY22e, and use the discounted-cash-flow (DCF)-driven valuation for the road-asset portfolio. The risk included prolonged Covid-19 impact, and consequently, any slower-than expected pace of execution and more-than-anticipated cash-flow mismatch in SPVs.
Bajaj Finserv | Brokerage: Sharekhan | Rating: Buy | Target: Rs 5,322 | LTP: Rs 4,318 | Upside: 23 percent. Bajaj Finserv posted weak Q4FY2020 results, primarily due to the lockdown and high provisions. The company has witnessed consistent performance from its lending business and broking house expect its strong business model to be able to withstand near term challenges. It believes that the weakness in the stock may be an opportunity for investors to add it to their long-term portfolio.
Bajaj Finserv | Brokerage: Sharekhan | Rating: Buy | Target: Rs 5,322 | LTP: Rs 4,103 | Upside: 29 percent. Bajaj Finserv posted weak Q4FY2020 results, primarily due to the lockdown and high provisions. The company has witnessed consistent performance from its lending business and broking house expect its strong business model to be able to withstand near term challenges. It believes that the weakness in the stock may be an opportunity for investors to add it to their long-term portfolio.
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Supreme Industries | Brokerage: Sharekhan | Rating: Buy | Target: Rs 1,120 | LTP: Rs 990 | Upside: 13 percent. Even though FY2021E is going to be a weak year, Sharekhan expect gradual recovery of growth in FY2022E led by pick-up in demand in the housing and infrastructure segment and upcoming opportunities from government initiatives. The margin is expected to decline in FY2021, owing to higher inventory loss (sharp fall in PVC prices), anticipated decline in margins across the segments and a reduction in discretionary spends.
JK Lakshmi Cement | Brokerage: HDFC Securities | Rating: Buy | Target: Rs 370 | LTP: Rs 209 | Upside: 77 percent. HDFC Securities reduced EBITDA estimates for FY21/22E by 4/4% each as it factor in higher impact of Covid and build in EBITDA to decline at 3% CAGR during FY20-22E. Research house value the standalone cement bisiness at 8x FY22E EBITDA and value its 72.5% holding in Udaipur Cement Works at 20% discount.
JK Lakshmi Cement | Brokerage: HDFC Securities | Rating: Buy | Target: Rs 370 | LTP: Rs 234 | Upside: 58 percent. HDFC Securities reduced EBITDA estimates for FY21/22E by 4/4% each as it factor in higher impact of Covid and build in EBITDA to decline at 3% CAGR during FY20-22E. Research house value the standalone cement bisiness at 8x FY22E EBITDA and value its 72.5% holding in Udaipur Cement Works at 20% discount.
UPL | Brokerage: Dolat Capital | Rating: Buy | Target: Rs 620 | LTP: Rs 367 | Upside: 69 percent. The company is likely to enjoy low cost of borrowing due to diverse currency borrowing profile and broking house believes that the company will continue to grow above industry average with a strong product portfolio after Arysta’s acquisition. Company's long term prospects of growth are intact with a strong post patent & proprietary pipeline.
UPL | Brokerage: Dolat Capital | Rating: Buy | Target: Rs 620 | LTP: Rs 367 | Upside: 69 percent. The company is likely to enjoy low cost of borrowing due to diverse currency borrowing profile and broking house believes that the company will continue to grow above industry average with a strong product portfolio after Arysta’s acquisition. Company's long term prospects of growth are intact with a strong post patent & proprietary pipeline.
Rakesh Patil
first published: May 27, 2020 11:33 am

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