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
