Tata Motors: As forex hedges reduce, this company can potentially double the net profit between FY18E and FY20E. If this materializes, then Return On Equity (RoE) – which now stands at 12-13 percent – can move up to 18-20 percent. On potential FY20E, the stock is trading cheap at less than 7 times FY20E PE and around 3 times FY20E EV/Ebitda. The stock is suppressed on account of weak numbers. As the numbers improve in the future, the stock should deliver good gains.
Federal Bank: Once NPA issues get resolved, this bank is expected to report earnings growth at a CAGR of 25 per cent over next two to three years. The stock trades cheaply at around 1.1 times FY20E book value. At its peak, the stock traded at 2 times forward price/BV. “Better valuation and a rise in earnings could provide the necessary push for the stock to double over the next three years,” said Oza.
Jindal Stainless (Hisar): After GST rollout and imposition of 18.95 per cent countervailing duty (CVD) on Chinese imports, Kotak expects Jindal Stainless (Hisar) to garner higher market share in the coming years. “We expect revenue and PAT to grow at a CAGR of 15 per cent and 31 per cent, respectively, during the FY17-FY20E period with a return ratio in the range of over 20 per cent. The stock trades at less than 4 times FY20E EV/Ebitda. On SOTP basis, the stock is expected to t ..
UPL: This company has the potential to grow earnings at a CAGR of 17-18 per cent over next three years. It is the best diversified play in the agro-chemicals space. “UPL deserves to trade at higher multiples then the sectoral average. The company’s FY18E net profit is likely to be 5 times higher than its second biggest competitor, but still it trades at 15 times forward PE when the sectoral average is around 20 times forward PE. At 20 times forward earnings and assuming earnings ..
Jubilant Foodworks: This company should be one of the key beneficiaries of the improvement in the consumer discretionary environment in the domestic market. Jubilant Foodworks’ management is confident of maintaining the double-digit same-store sales growth (SSSG) on the back of sustained focus on product innovation and digitisation. Further reduction of losses in Dunkin Donuts and sustained operating efficiencies will drive its profitability going ahead.
Sundram Fasteners: Sundram Fasteners (SFL) is moving up the value chain and has successfully introduced new products, viz. engine components, pump assemblies, powder metal parts and shafts, which enabled it to diversify its product portfolio and increase content per vehicle, thus reducing dependence on fasteners. The company recently gained foothold to the fast emerging electric vehicles space with orders from Tesla. With the introduction of high-margin value-added products and i ..
Bajaj Finserv: The company is an attractive play on our long-term structural theme of financialisation of savings in the economy. It is the holding company for Bajaj group’s life insurance (Bajaj Allianz) and lending (Bajaj Finance) businesses. Bajaj Finance is the leader in its segment and has revolutionised the retail lending business in India, whereas the life insurance segment is progressing well to emerge out of the investment phase and has already become an industry-leading ..
ITC: ITC is among the preferred picks of Hem Securities given a 17 percent rise in the bottom line in Q3 of FY18. “The FMCG market in India is expected to grow at a CAGR of 20.6 percent and should reach $103.7 billion by 2020 from $49 billion in 2016 which provides ample opportunity for this company,” said Jain.
Federal Bank: Once NPA issues get resolved, this bank is expected to report earnings growth at a CAGR of 25 per cent over next two to three years. The stock trades cheaply at around 1.1 times FY20E book value. At its peak, the stock traded at 2 times forward price/BV. “Better valuation and a rise in earnings could provide the necessary push for the stock to double over the next three years,” said Oza.
Jindal Stainless (Hisar): After GST rollout and imposition of 18.95 per cent countervailing duty (CVD) on Chinese imports, Kotak expects Jindal Stainless (Hisar) to garner higher market share in the coming years. “We expect revenue and PAT to grow at a CAGR of 15 per cent and 31 per cent, respectively, during the FY17-FY20E period with a return ratio in the range of over 20 per cent. The stock trades at less than 4 times FY20E EV/Ebitda. On SOTP basis, the stock is expected to t ..
UPL: This company has the potential to grow earnings at a CAGR of 17-18 per cent over next three years. It is the best diversified play in the agro-chemicals space. “UPL deserves to trade at higher multiples then the sectoral average. The company’s FY18E net profit is likely to be 5 times higher than its second biggest competitor, but still it trades at 15 times forward PE when the sectoral average is around 20 times forward PE. At 20 times forward earnings and assuming earnings ..
Jubilant Foodworks: This company should be one of the key beneficiaries of the improvement in the consumer discretionary environment in the domestic market. Jubilant Foodworks’ management is confident of maintaining the double-digit same-store sales growth (SSSG) on the back of sustained focus on product innovation and digitisation. Further reduction of losses in Dunkin Donuts and sustained operating efficiencies will drive its profitability going ahead.
Sundram Fasteners: Sundram Fasteners (SFL) is moving up the value chain and has successfully introduced new products, viz. engine components, pump assemblies, powder metal parts and shafts, which enabled it to diversify its product portfolio and increase content per vehicle, thus reducing dependence on fasteners. The company recently gained foothold to the fast emerging electric vehicles space with orders from Tesla. With the introduction of high-margin value-added products and i ..
Bajaj Finserv: The company is an attractive play on our long-term structural theme of financialisation of savings in the economy. It is the holding company for Bajaj group’s life insurance (Bajaj Allianz) and lending (Bajaj Finance) businesses. Bajaj Finance is the leader in its segment and has revolutionised the retail lending business in India, whereas the life insurance segment is progressing well to emerge out of the investment phase and has already become an industry-leading ..
ITC: ITC is among the preferred picks of Hem Securities given a 17 percent rise in the bottom line in Q3 of FY18. “The FMCG market in India is expected to grow at a CAGR of 20.6 percent and should reach $103.7 billion by 2020 from $49 billion in 2016 which provides ample opportunity for this company,” said Jain.
