Last Updated : Nov 18, 2020 11:39 AM IST | Source: Moneycontrol.com

Super six buying picks by Geojit with an upside up to 22%

Manappuram Finance, SBI, Dabur India are among top six buying picks from Geojit Financial Services with an upside of up to 22 percent.

Benchmark indices ended higher for the third consecutive session at record highs on November 17 with Nifty above 12,850 level. On November 18, however, the market is trading with a negative bias as traders and investors are booking profit from the recent rally. Here are six buying ideas by Geojit Financial Services:

Benchmark indices ended higher for the third consecutive session at record highs on November 17 with Nifty above 12,850 level. On November 18, however, the market is trading with a negative bias as traders and investors are booking profit from the recent rally. Here are six buying ideas by Geojit Financial Services:

JK Lakshmi Cements | LTP: Rs | Upside: percent | Demand outlook remains uncertain in the short-term, but wih relaxation in restrictions and gradual revival in the economy, it is expected to witness healthy recovery in FY22E. Company’s subsidiary, UCWL has announced a capacity expansion of 2.5MT with a capex of Rs14bn, which is to be commissioned by Dec 2023. The stock currently trades at 6x 1Yr Fwd EV/EBITDA based on revised estimates. Geojit value at ~6.5x FY22E EV/EBITDA (2Yr Avg=6.8x) to arrive at a revised target of Rs 370, and maintain buy rating.

JK Lakshmi Cements | LTP: Rs 355| Upside: 4 percent | Demand outlook remains uncertain in the short-term, but wih relaxation in restrictions and gradual revival in the economy, it is expected to witness healthy recovery in FY22E. Company’s subsidiary, UCWL has announced a capacity expansion of 2.5MT with a capex of Rs14bn, which is to be commissioned by Dec 2023. The stock currently trades at 6x 1Yr Fwd EV/EBITDA based on revised estimates. Geojit value at ~6.5x FY22E EV/EBITDA (2Yr Avg=6.8x) to arrive at a revised target of Rs 370, and maintain buy rating.

Manappuram Finance | LTP: Rs | Upside: percent. As management is focusing more on recoveries in non gold segment, growth will be driven by gold portfolio. Movement in asset quality in the non gold segment will be a key factor to be looked into going forward. Although AUM will be pressurized due to unstable gold price, valuation are at reasonable levels. Hence alue the stock at 1.9x FY22E Adjusted BVPS and recommend buy rating with an upward target price of Rs 192.

Manappuram Finance | LTP: Rs 163.35 | Upside: 17 percent. As management is focusing more on recoveries in non gold segment, growth will be driven by gold portfolio. Movement in asset quality in the non gold segment will be a key factor to be looked into going forward. Although AUM will be pressurized due to unstable gold price, valuation are at reasonable levels. Hence alue the stock at 1.9x FY22E Adjusted BVPS and recommend buy rating with an upward target price of Rs 192.

State Bank of India | LTP: Rs | Upside: percent | With Credit-Deposit ratio of 61.27% during such cyclical lows, the bank is well positioned to deploy its excess liquidity into the credit growth. Since the bank is also adequately capitalised, Geojit believe the stock is currently trading at a discount. Therefore reiterate buy rating on the stock, with a revised target price of Rs 294 using the SOTP methodology, valuing the standalone bank at 0.7x FY22E BVPS at Rs 216 and subsidiaries at Rs 97.

State Bank of India | LTP: Rs 240.20 | Upside: 22 percent | With Credit-Deposit ratio of 61.27% during such cyclical lows, the bank is well positioned to deploy its excess liquidity into the credit growth. Since the bank is also adequately capitalised, Geojit believe the stock is currently trading at a discount. Therefore reiterate buy rating on the stock, with a revised target price of Rs 294 using the SOTP methodology, valuing the standalone bank at 0.7x FY22E BVPS at Rs 216 and subsidiaries at Rs 97.

Godrej Consumer Products | LTP: Rs | Upside: percent. Company posted double digit growth across the regions and performed better-than expected during the quarter. Geojit believe growth momentum should continue on scale up in different products categories along with the new products launches and margin expansion on reduced cost. Given current upside potential, upgraded rating to buy on the stock with a revised target price of Rs 776 based on 41x FY22E P/E.

Godrej Consumer Products | LTP: Rs 679 | Upside: 14 percent. Company posted double digit growth across the regions and performed better-than expected during the quarter. Geojit believe growth momentum should continue on scale up in different products categories along with the new products launches and margin expansion on reduced cost. Given current upside potential, upgraded rating to buy on the stock with a revised target price of Rs 776 based on 41x FY22E P/E.

Dabur India | LTP: Rs | 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. Upgraded rating to buy with a target price of Rs 584 based on 53x FY22E Adjusted EPS.

Dabur India | LTP: Rs 511.65 | Upside: 14 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. Upgraded rating to buy with a target price of Rs 584 based on 53x FY22E Adjusted EPS.

Bharti Airtel | LTP: Rs | 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 installments. Maintain a long-term optimistic outlook, and reiterate buy rating on the stock with a revised target price of Rs 544 based on SOTP.

Bharti Airtel | LTP: Rs 484.55 | Upside: 12 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. Maintain a long-term optimistic outlook, and reiterate buy rating on the stock with a revised target price of Rs 544 based on SOTP.

First Published on Nov 18, 2020 11:29 am
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