Sensex @ highs, inches closer to Mount 35K! 10 stocks which could give up to 40% return

The rally is not over and investors should maintain their long positions on the Nifty as the rally is likely to stretch towards 11000 ahead of the Budget, suggest experts.

Tracking gains registered on Wall Street, Asian markets along with Indian markets started on a high note. The S&P BSE Sensex rallied over 300 points to hit a fresh record high of 34,963 and was just 40 points away from hitting Mount 35K.

The Nifty surpassed its crucial resistance level placed around 10,700 and 10,750 to record a fresh high of 10,782. The rally is not over and investors should maintain their long positions on the Nifty as the rally is likely to stretch towards 11000 ahead of the Budget, suggest experts.

We have collated a list of stocks from various brokerage firms which investors could buy now or on dips for a potential upside of up to 40% in next 12 months:

ICICI Prudential Life Insurance Company: BUY| Target Rs 450| Return 11%

Geojit Financial Services initiated buy on ICICI Pru with a 12-month target price of Rs 450 as the outlook on the Indian life insurance sector remains bright. The Indian life insurance industry is on the cusp of enormous growth.

ICICI Pru Life Insurance is well-positioned to capture the strong growth and is the best play on the life insurance sector. The domestic brokerage firm expects the company to deliver 22 percent and 15 percent in return on equity and return on enterprise value in the next financial year, said the report.

It expects the new business premium to grow at a compounded rate of 20 percent over the fiscal years through March 2019. It remains an outperformer in the private life insurance despite challenging business environment.

Gujarat Pipavav Ltd: BUY| Target Rs 174| Return 9%

HSBC upgraded the stock from hold to buy and also raised its target price to Rs174 from Rs144 earlier. Gujarat Pipavav is set to receive another two weekly services. The rebound in India-China EXIM trade bodes well-given exposure to the Far East.

The earnings momentum is likely to resume an upward trend in the near future. This service wins along with improved trade outlook raised earnings estimate, said the report.

Himadri Speciality: BUY| Target Rs 245| Return 30%

ICICIdirect initiated a ‘Buy’ on Himadri Speciality with a price target of Rs 245. The growth visibility is healthy with impressive capex and firm financing plans amid robust product demand.

The debt is at a controlled level, and the debt-to-equity ratio has declined steadily. The brokerage house expects revenue, operating income, and net profit to grow at a compounded rate of 22.7 percent, 29.3 percent, and 38 percent respectively over the financial years through March 2020.

Himadri is one of the only few listed players with exposure to Electric Vehicle.

Infosys Ltd: BUY| Target Rs 1300| Return 20%

CLSA maintains a buy on Infosys post Q3 results and raised its target price to Rs1300 from Rs1230 earlier. Previous quarter’s revenue growth was in-line with estimates and steady margins.

Tax cuts drove the next two financial year’s earnings per share estimates by 2 percent.

Client mining stayed strong with solid growth in the top client. Impressive margin performance continues despite hikes and variable pay, said the note.

Persistent Systems Ltd: Outperform| Target Rs960| Return 23%

Credit Suisse maintains an outperform rating on Persistent Systems with a target price of Rs960. The company is an attractive digital play.

Persistent Systems transformed itself to address the larger enterprise digital opportunity. The brokerage firm expects digital exposure to be at least 40 percent and non-linear revenue to be 25 percent.

Increasing share of high-growth businesses is likely to drive overall growth, said the note. It expects strong earnings revival over FY18-20. The revenue/EPS is likely to grow at a CAGR of 12%/18% over FY18-20.

Bajaj Corp Ltd: Outperform| Target Rs637| Return 25%

Macquarie initiates an outperform rating on Bajaj Corp with a target price of Rs637. The brokerage firm of the view that Bajaj Corp is a major play on a rural recovery in India.

Bajaj Corp can potentially have a portfolio of hair-oil brands. Bajaj Almond Drops remains a cash cow, but the company to reduce dependence. It expects a significant ramp-up in NoMarks over FY18-20.

Rural recovery is likely to help boost volume. Bajaj Corp re-rating imminent on earnings pick-up & diversification, said the note.

Magma Fincorp Ltd: BUY| Target Rs220| Return 22%

IIFL initiates a buy recommendation on Magma Fincorp with a target price of Rs220. The business performance is at an inflection, said the note.

A larger part of business restructuring is already complete and disbursements growth is gradually improving. Improving financial performance should lead to a credit rating upgrade going forward.

The financial performance will improve with AUM growth. Higher loan growth, margins would aid revenue growth, said the note. IIFL expects disbursements, AUM, and net profit to grow at a compounded rate of 26 percent, 17 percent and 28 percent respectively over the financial years through March 2021.

The valuation is highly attractive and presents a good opportunity for entry at this point. Sanguine earnings outlook, attractive valuations strengthen investment case.

Jubilant FoodWorks Ltd: BUY| Target Rs 2300| Target 20%

BofAML maintains a buy call on Jubilant FoodWorks but raised its 12-months target price to Rs2300 from Rs2000 earlier.

The strong same-store sales growth (SSSG) profitability could drive consensus upgrade. The global investment bank expects 10 percent SSSG in the previous quarter, led by the favorable base, industry changes.

Strong earnings per share’s compounded growth rate is likely to back premium valuation. It expects earnings per share to grow at a compounded rate of 59 percent over the financial years through March 2020.

JSPL: BUY| Target Rs 375| Return 42%

Citigroup maintains buy on JSPL and raised its price target to Rs 375 from Rs 219 earlier. The operational capacity has potential to generate higher operating income.

The volume ramp-up has started to show now.But, the stock is still undervalued and the best is yet to come. It expects to break even at net profit level from the next financial year onwards.

Emami Ltd: BUY| Target Rs 1655| Return 28%

Motilal Oswal maintains a buy on Emami and raised its target price to Rs1655 from Rs1564 earlier. It is a prime play on rural demand growth and wholesale recovery.

The pace of innovation is among the best of the breed. The R&D and advertising spend are the highest among peers. The domestic brokerage firm is of the view that the international business poised to turn around. Recovery in Kesh King business is the key going forward.

It expects earnings to grow at a compounded rate of 20 percent over the financial years through March 2021. The stock remains a credible long-term play as valuations are still attractive.

MORE WILL UPDATE SOON!!