Top 10 Share Picks for the New Financial Year 2016-17..!

Top 10 Share Picks for the New Financial Year 2016-17..!

FUNDAMENTAL RECOMMENDATIONS FROM LEADING BROKERAGES

Generating healthy returns from the stock market could be challenging in the new financial year as valuations remain rich.

But if investors stick to specific stocks, they could churn out higher returns than benchmark indices. Here are the top 10 stocks recommended from five leading broking firms based on fundamentals.

ICICI DIRECT

1. BAJAJ FINSERV TARGET PRICE

Rs. 2,308

Bajaj Finserv reported an increase in loan book by 4x from FY2011-15 and also 36% growth in 9M FY16 YoY backed by a surge in earnings.

It is the most profitable and efficient player in the sector. The pick-up in the life insurance business could lead to a valuation upgrade.

At 11.6x FY2017 estimated earnings, the share is reasonably valued.

2. MAHINDRA & MAHINDRA

TARGET PRICE Rs. 1,470

M & M has launched nine vehicles this 2016-17  year. The company was affected by the loss of market share on the automotive side and the sudden decline in farm equipment business in FY2015.

 However, it has sustained profitability at a respect able level amid pressures. We value the core business at 9x EVEBITDA FY17 estimate to Rs. 909 and subsidiaries at Rs. 561

INDIANIVESH SECURITIES

3. RIL

TARGET PRICE Rs. 1,300

The capex done by RIL in the last 3 to 5 years will come into play this year and next year. The overhang of their telecom venture diminishes as it is likely to be launched soon.

RIL's GRMs and margins are very well maintained. Valuation wise it is very cheap at 10x EPS one-year forward compared to its historical average of 15x EPS one year forward.

4. TATA MOTORS

TARGET PRICE Rs. 495

China sales are not growing but JLR is doing far better in other markets like the US and Europe.

In the last three months, the local business has also started turning around. M & HCV sales have been robust and LCV is also picking up. This means that the stock is ripe for a re-rating.

ANGEL BROKING

5. AMARA RAJA BATTERIES

TARGET PRICE Rs. 1,040

Amara Raja has a strong presence across the automotive and the industrial segment and a broad OEM as well as replacement customer base. Given the economic recovery and market share gains, the company is expected to grow at a CAGR of 18% over the next 2 years.

It is a high quality stock to play the auto sector revival and has a PE of 28x its FY2017 estimated earnings.

6. JAGRAN PRAKASHAN

TARGET PRICE Rs. 189

Dainik Jagran has a strong presence in the rapidly growing Hindi market so JPL should benefit from an eventual recovery in the Indian economy.

We expect JPL to register a net sales CAGR of about 15% over FY2015-2017 because of strong growth in advertising revenue due to improvement in GDP growth and an improvement in circulation revenue.

 MOTILAL OSWAL..!

7. HPCL

TARGET PRICE Rs. 1,299

HPCL's marketing division profitability should grow rapidly because of benign commodity prices and end-product pricing flexibility.

An increase in diesel marketing margin should increase FY2016 estimated EPS by 32% as it has more marketing volumes than refining volumes. We value HPCL at 5.5x for refining and 8x for marketing.

8. SINTEX

TARGET PRICE Rs. 145

Sintex is a good play on the government's Swachh Bharat Abhiyan and CSR spending by corporates.

Q4 FY2016 is generally a strong quarter and this year there could be an improvement in Q1 FY2017 because of the 7th Pay Commission Recommendation.

We remain positive on the company for the longer term since its business fundamentals have strong potential.

 IDBI CAPITAL

9. FINOLEX INDUSTRIES TARGET

PRICE Rs. 450

We remain optimistic on company's strategy to move into the PVC piping segment, increasing revenue share of high margin fittings, debt reduction and better working capital management.

The stock currently trades at a 16.3x its FY2017 estimated earnings.

10. THE RAMCO CEMENTS

TARGET PRICE Rs. 565

Strong growth prospects, highest EBITDAtonne in industry amid cheap valuation make Ramco a compelling buy. Its performance is much better than its peers.

Further, faster recovery in Southern market will help improve its performance. At EBITDAtonne at rS. 1,488- Ramco looks like the best in India. Currently, the stock is trading at 9.5x FY18 consensus EVEBITDA and we expect a sharp rerating in the stock.

FROM ET

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