Markets are trading at their peak levels and hence there is very little value that one can find. However, we have recommended a few stocks that may still be able to make some money and are great stock picks in India for 2018. Here are a few of these which have the potential to give returns.
Reliance Capital This company is a part of the Anil Dhirubhai Ambani Group and has largely fallen on account of poor sentiments due the indebtedness of Reliance Communications. However, per se, the Reliance Capital stock holds tremendous value. The company runs an Asset Management Company (AMC), which manages Reliance Mutual Fund, which is among the top mutual fund houses in the country. The AMC also manages a pension fund, offshore fund and exchange traded fund. Reliance Capital is also the promoter of the insurance business which is also very big, largely including life insurance, general insurance and health insurance. R Cap has also promoted the broking business, home finance, asset reconstruction company etc. Some of these subsidiaries are doing very well and hence hold tremendous value.
Unlocking value The asset management company and the home finance company are already listed. We believe that there is tremendous value in the various businesses under R CAP, which is not reflected in the current market price of Rs 596. In fact, the R CAP stock has fallen from levels of Rs 880 to the current levels of Rs 596, and had plunged to Rs 400 on account of debt worries of group company RCOM. However, the latter is selling its assets to Jio and paying off debt, which has now improved sentiments for the ADAG group stocks. Given the robust growth likely in all areas, including home finance, asset management and insurance business, Reliance Capital offers good value at the current levels. The shares are currently quoted at Rs 596, which is way below the book value of Rs 671. The dividend yield on the stock is a decent 1.5per cent. If one can hold the shares for a couple of years it could reap good returns. R Cap is great stock to buy and hold in 2018 in India.
Kaveri Seeds This is a very small equity capital stock with almost zero debt on its books. In fact, the company is a cash rich company with almost Rs 422 crores cash in hand by the end of Sept 30, 2017. Kaveri Seeds is the largest cotton seed player in the country. For the first half ended Sept 30, 2017, the company has consistently gained market share in various states including key states of Maharashtra and Gujarat. There are a number of reasons to be optimistic on the performance of Kaveri Seeds. The company is gradually diversifying into the high margin vegetable business. It has already spent a greater deal on vegetable seed R&D and has demonstrated more than 50 variety to the farmers.
Kaveri Seeds: Huge Expansion Drive Kaveri is also expanding its distribution network beyond South and Central India. It is now moving to North, Central and Eastern India. Bihar, Gujarat, Maharashtra and Orissa would see good reach in the coming days. The company has already built an exclusive vegetable team. Coming to financials, we believe that Kaveri Seed Company can report an EPS of Rs 50 at the very least in 2018-19. This makes the stock inexpensive at the current levels of Rs 540. The company also has a very small equity capital of Rs 13 crores. Buy the stock for decent returns in 2018.
HPCL This is a more direct play on crude oil. As long as crude oil prices are at low, HPCL would continue to fire. The stock has recently fallen from levels of Rs 490 to Rs 405. The one reason to be recommending the stock is the huge dividend yields that it offers. In fact, we believe that it is highly possible that one gets a dividend of close to 4 per cent on the stock in 2018. The shares are trading at multiples close to 10 times 2018-19 EPS. However, we wish to emphasize that if crude prices remain robust than it is highly possible that we may see a downside risk on the stock. Many analysts are worried that crude could go higher. Beyond a point, it is highly possible that the rally would not last given output from shale, which would put pressure on prices all over again.
MORE WILL UPDATE SOON!!
0 comments:
Post a Comment