While Nifty jumped from 11,000 to 11,600 in past 7 months, these 10 NSE stocks rallied 50-180%

The Nifty 50 has taken 144 trading sessions or exact seven months to hit 11,600-mark on August 23 from first 11,000 in January 23, 2018.

2018 has been a roller coaster ride for the market. After the correction seen in February and March, everyone was taken by surprise when Nifty 50  again retested 11,000 in July. The index has jumped more than 600 points to cross 11,600-mark in the recent rally.

It had hit 11,000 for the first time on January 23, 2018.

The last record high was 11,171 on Janauary 29 followed by sharp correction till March 23 which dragged the index to 9,998.05 on closing basis. The index started recovery from last week of March but that was gradual with consolidation. The actual pace of growth increased in July and is still continuing in August.

The up move in the market has been seen despite the headwinds like US-China trade war tensions, currency war driven by Turkish lira, higher current account deficit (CAD) led by rising crude oil prices.

The drivers that are helping Sensex and Nifty hit record highs are in-line or better-than-expected Q1FY19 earnings, mormal monsoons, stabilisation after demonetisation, easing out of worries around distribution issues and GST and increase in MSP (minimum Support prices).

The government's winning of no confidence motion in the Parliament also boosted the sentiment.

Experts say the rally may continue with intermittent correction, which is part of bull run, going forward.

We have a positive view on the markets due to strong upsurge in rural demand and benefits of GST. BJP's performance in state elections will be a major determinant given anti-incumbency factor and repeated attempts of opposition to cobble up a working alliance.

The rally in the past month or so has been driven by select stocks and has not been broad-based. This is worrisome because sectors like metals, pharma, PSU oil & gas, auto, select infra and major banks did not participate.

Prabhudas Lilladher said the markets are ignoring emerging headwinds like 1) Likely increase in inflation led by higher MSP 2) cautious RBI stance on inflation by 25 bps increase in repo rates 3) escalation of trade wars between US and China and 4) impact on CAD/ currency led by rising crude (imports up 51 percent YTD).

Top 10 counters that contributed to the index rally were Reliance Industries, Hindustan Unilever, TCS, Bajaj Finance, Bajaj Finserv, M&M, Tech Mahindra, Asian Paints, Infosys and Kotak Mahindra Bank, which rallied 16-69 percent in the last seven months.

 

Among these stocks, Bajaj Finance, TCS and Reliance Industries hit their fresh intraday record high on August 23.

The major reason behind rally in above stocks was June quarter earnings which were more or less in-line or better-than-expected and also guidance for future earnings growth.

Benchmark index companies (ex-banking space) reported stellar operational performance in Q1FY19 primarily driven by robust consumer demand and low base due to transition period before GST implementation (Q1FY18). With worst behind us in the banking space, pick up in industrial activity and upbeat farm sentiment, we are eyeing over 20 percent earnings growth over FY18-20E.

Top 10 stocks which did not participate in seven-month bull run were Tata Motors, Vedanta, HPCL, BPCL, Bharti Airtel, Tata Steel, IOC, UPL, Bajaj Auto and ONGC which shed 39-17 percent.

On closing basis of both days (January 23-August 23), the Nifty 50 rallied 4.5 percent and from 11,000-11,600 levels, the upside was 5.5 percent, but overall the same performance was not seen in other indices viz Nifty 500 (flat during Jan 23-Aug 23), Nifty Midcap (down 10 percent) and Nifty Smallcap (down 19.5 percent) indices.

On earnings front, Nifty50 companies reported sales growth of 23 percent, adjusted profit growth of 11.5 percent and EBITDA growth of 20 percent margin contracted by 43 basis points in Q1FY19 YoY, but Nifty Midcap companies' performance was completely different. Sales growth was 5 percent, adjusted profit growth of nearly 25 percent, EBITDA 9.5 percent and margin expansion of 60 basis points.

In the period of seven months, only 25 percent companies out of Nifty 500 gained the momentum while the rest was in the red. Of 25 percent stocks, top 10 stocks which participated in the rally were Indiabulls Ventures, Merck, NIIT Technologies, Bajaj Finance, Firstsource Solutions, Larsen & Toubro Infotech, VIP Industries, L&T Technology Services, Page Industries and Mphasis gained 53-183 percent.

 

Undervaluation after correction in February & March, and stable to strong earnings growth caused upmove in above stocks.

Major losers among Nifty 500 stocks were Jaiprakash Power Ventures, Hindustan Construction Company, Jet Airways (India), Reliance Naval, Manpasand Beverages, Kwality, Bombay Rayon Fashions, JBF Industries, PC Jeweller and Vakrangee, which corrected 91-61 percent.

Most of these stocks corrected because of corporate governance and weak earnings performance.

In the Nifty Midcap index, about 70 stocks out of 100 gave negative returns during seven-month period which include Suzlon Energy, Bank of India, NBCC, Indiabulls Real Estate, Union Bank etc.

 

The top 10 biggest gainers apart from Indiabulls Ventures (183 percent upside) were Page Industries, Mphasis, Bata India, Hexaware, Mindtree, Exide, Berger Paints, Jubilant Foodworks and United Breweries which gained between 25 percent and 57 percent, largely driven by earnings and underperformance.

The Smallcap was the second worst performer among all NSE indices (except VIX) because of correction in 80 percent of stocks which include SREI Infrastructure, Rain Industries, Syndicate Bank, Sintex Plastics etc.

Biggest gainers among smallcaps were NIIT Technologies, VIP Industries, Infibeam Avenues, HEG, Tata Elxsi, Graphite India, Bombay Burmah Trading Corporation, Kaveri Seed Company, Lakshmi Machine Works and Cyient which gained 10-73 percent.

MORE WILL UPDATE SOON!!

Technical View: Nifty forms 'Doji' pattern; may be on verge of short term trend reversal

India VIX fell by 3.35 percent to 12.33 levels and overall lower volatility suggests that bulls could support the market on declines.

  

The Nifty 50 snapped four-day winning streak and closed rangebound session on a weak note Friday, forming an indecisive pattern known as 'Doji' on the daily candlestick charts, which also resembles 'Spinning Top' kind of pattern. On the weekly scale, the index formed bullish candle.

A 'Doji' is formed when the index opens and then closes approximately around the same level but remains volatile throughout the day which is indicated by its long shadow on either side. It appears like a cross or a plus sign.

Spinning Top is often regarded as a neutral pattern which suggests indecisiveness on the part of both bulls as well as bears. It can be formed in an uptrend as well as in a downtrend.

The Nifty 50 after opening lower at 11,566.60 managed to claw back immediately to hit an intraday high of 11,604.60, but wiped out gains in the first hour of trade itself to hit day's low of 11,532 and remained range bound for rest of the session. The index closed 25.70 points lower at 11,557.10 while it rallied 0.75 percent during the week.

Albeit Nifty 50 registered a Doji kind of indecisive formation enough sell signals emerged on lower time frame charts, post Friday’s price action, suggesting that the said index may be on the verge of a short term trend reversal.

Hence, selling shall get accelerated if it breaches the 39-day old ascending channel, whose support is placed around 11,532, which is in progress from the lows of 10,550 levels. A decisive breakdown below the said channel shall open up a new target placed around 11,350 levels.

In next trading session a close below 11,498 levels shall confirm the short term down trend there by intensifying the selling pressure further which shall eventually lead to the test of 11,340 levels.

Contrary to this a close above 11,620 shall reinstate the bullish sentiment with initial targets placed around 11,700 levels.It looks prudent on the part of traders to book profits and remain on sidelines till further signs of strength are seen in the markets.

India VIX fell by 3.35 percent to 12.33 levels and overall lower volatility suggests that bulls could support the market on declines.

On the option front, maximum Put OI is moved back 11,000 followed by 11,500 strike while maximum Call OI is at 11,600 then 11,500 strike. Put unwinding was seen at most of the immediate strike price while Call writing was seen at 11,600, 11,650 and 11,750 strikes.

The Nifty has negated its formation of higher highs - higher lows of last four sessions and formed a small Bodied indecisive candle on daily scale however weekly scale still holds its overall bullish setup. It failed to surpass 11,600 zones and witnessed a profit booking-led decline towards 11,532 marks.

He believes overall trend is still intact to positive to rangebound as it has been trading in a rising channel with the support of rising trend line.

Now it has to continue to hold above 11,550 zones to witness an upmove towards 11,635 then 11,666 while on the downside immediate major support is seen at 11,500-11,450 zones.

Bank Nifty remained under pressure for third consecutive trading session and has been underperforming the Nifty index. It has recently failed to surpass its multiple hurdle of 28,333 zones and fell towards 27,782 marks.

"The index formed a Dark Cloud cover on weekly and an early formation of Double top on daily scale which suggests that some more profit booking could be seen if it doesn't surpass immediate hurdle of 28,000 zones.

Now if it sustains below 28,128 zones then more profit booking could be seen towards 27,650 then 27,440 zones.

MORE WILL UPDATE SOON!!

These 49 stocks in NSE 500 hit fresh all-time highs in August. Did you spot them?

Three stocks more than doubled investors’ wealth so far in 2018, which include names like Indiabulls Ventures followed by Merck and NIIT Technologies.

The Nifty rallied from 11,000-levels recorded in the month of January to 11,600 in August, a gain of over 5 percent in just 7 months. Interesting?

Well, there's more. If you have not noticed, there are about 50 stocks in NSE 500 index, which hit a fresh record high in August and outperformed the index in the same period as well.

As many as 49 stocks in the NSE 500 index rose 10-200 percent in 2018 which is higher than 5.4 percent return given by Nifty from January 23 to August 23, 2018.

Stocks which rose to fresh record highs in August include names like Indiabulls Ventures, Merck, NIIT Technologies, HEG, VIP Industries, Jubilant FoodWorks, Bajaj Finance, L&T Infotech, TCS, Godrej Consumer, Avenue Supermarts, and Atul Ltd etc. among others.

Out of these 49, three stocks more than doubled investor wealth so far in 2018, which include names like Indiabulls Ventures which rose 192 percent, followed by Merck which was up 129 percent, and NIIT Technologies which gained 113 percent.

Among the Nifty stocks, TCS, RIL, HUL, Infosys, M&M, Yes Bank, IndusInd Bank, Bajaj Finance and Bajaj Finserv hit fresh lifetime highs along with Nifty which hit a fresh milestone of 11,600 levels.

As many as 72 stocks in the NSE 500 index hit a fresh 52-weeks high which include names like MindTree, Kaveri Seed Company, Dewan Housing Finance, Divi’s Laboratories, Britannia Industries, Bajaj Finserv, Dabur India, HUL, JSW Steel etc. among others.

Future Outlook:

The Nifty continued its record-setting spree as it formed an all-time high of 11,620 on Thursday. The entire up move in the index since July 2018 low (10,604) has been well-channeled signalling sustained demand at elevated levels.

Most experts feel that the up move could extend towards 11,640 and if the momentum continues it could well stretch towards 11,840 but from a one-year perspective, most experts feel that the index could well hit 12,000.

We spoke to some 12 analysts, fund managers, and money managers earlier in the month of August to access the momentum. Almost 67 percent of the poll respondents feel that the S&P BSE Sensex is likely to hover in a range of 40,000-42,000 in the next 12 months.

For Nifty, almost 100 percent of the poll respondents feel that Nifty is on track to hit 12,000 and hover in the range of 12,000-13,000 in the next 12 months.

However, most experts expressed their concerns about falling currency which depreciated to Rs 70.39/USD recently. However, experts feel the current depreciation in currency is largely due to external factors and could well top Rs 71 in the near-term.

We have always believed that there was depreciating bias to INR. However, the recent sharp movement towards 70/USD has been entirely on the account of global tensions, which are highly fickle in nature and uncertain.

The probability of INR going to 71/USD based on global events is as high as its probability of going back to 69/USD. It is too early to incorporate recent movements into our INR forecasting models.

MORE WILL UPDATE SOON!!

Q1 earnings review: Bet on these top 20 stocks that could return up to 86%

Experts expect the rally to continue going forward, but volatility may increase as we are moving closer to state and general elections.

 

The northward journey that started in July, following sideways movement in the April-June quarter (after a correction in February and March) continued in August, helping benchmark indices scale fresh highs.

In line to better-than-expected earnings, stability in crude oil prices, sustained domestic inflows and easing trade war tensions after renewed talks between the US and China boosted investor sentiment.

In the last two months, benchmark indices rallied 8 percent. The BSE Midcap and Smallcap indices rose 7 percent and nearly 6 percent, respectively, though the year-to-date performance of all these indices is mixed. The Sensex climbed over 12 percent and Nifty nearly 10 percent, but the midcap and smallcap indices lost 7 percent and 12 percent, respectively.

Experts see the rally continuing going forward, but the volatility may also increase as we are move closer to states and general elections.

If the September quarter earnings,  which will begin in October, improve further, then the market may see new highs, experts said, adding that any sharp selling could be because of global reasons and not domestic.

Analysis of the Q1 FY19 results indicate that an earnings recovery, which we were expecting in the current and next financial year, is on track. So far, results have largely been in line or better-than-market expectations.

Overall, the research house maintained its optimistic outlook on the equity market. "With the forecast of normal monsoons and firm rural demand, amid a pick-up in industrial activity, we expect the Sensex to be on track to stage an impressive earnings recovery, growing in excess of 20 percent CAGR in FY18-20e.

Inflows into domestic mutual funds remained strong despite some moderation in the last few months. Average monthly inflows into equity oriented funds, including the equity component of balanced funds in the first four months of FY19, is around Rs 14,000 crore. The same during the four months of FY18 was Rs 21,500 crore. Inflows from systematic investment plans have seen a consistent rise and stood at Rs 7,500 crore in July.

Consistent domestic inflows will prevent any significant downside and act as strong support at lower levels as seen in the last few months, where buying interest was seen at lower levels.

Prabhudas Lilladher, which also has a positive view on the markets due to strong upsurge in rural demand and benefits from implementation of the Goods & Service Tax, said performance of the Bharatiya Janata Party in state elections will be a major determinant, given anti-incumbency factor and repeated attempts by the opposition to cobble up a working alliance. Despite huge popularity of Prime Minister Narendra Modi, we remain cautious given that it is nearly impossible for the BJP to sweep the Hindi heartland in the manner it did in 2014.

Here is the list of 20 buy ideas that could return up to 86 percent in the next one-to-one-and-half-year:

Among stocks, 17 stocks corrected between 3 percent and 52 percent in 2018 so far, while three stocks JK Paper (up 37 percent), L&T (up 5 percent) and Khadim India (14 percent) gained.

RPP Infra Projects: Buy | Target: Rs 353 | Return: 63%

RPP Infra Projects (RPP) reported a weak set of numbers in Q1FY19 with sales down 11 percent YoY and PAT down 18 percent YoY. Weakness in execution was led by ongoing projects nearing completion stage. Order inflow remained strong with YTD inflow of around Rs 700 crore.

The company is guiding for Rs 650-700 crore sales with EBITDA margin of 13-14 percent for FY19. We believe the company is a good play on government’s increasing focus on improving rural infrastructure.

We have cut our earnings by around 7 percent for FY19/FY20 to factor in lower margin due to higher contribution of infrastructure in order book. We expect RPP to deliver sales and PAT CAGR of 31 / 32 percent, respectively, over FY17-20E. We maintain Buy at a target price of Rs 353.

Larsen & Toubro: Buy | Target: Rs 1,566 | Return: 18%

L&T has guided for 12-15 percent sales growth, 10-11 percent order inflow growth. Order flow for the quarter was up around 37 percent YoY to Rs 36,100 crore and order book stood at Rs 2.7 lakh crore, up 3.5 percent YoY. The domestic inflow for Q1FY19 was up 44 percent YoY while international inflow was up around 19 percent YoY.

Order Inflow growth were mainly driven by infrastructure, heavy engineering & hydrocarbon. Tendering activity continues to be strong in domestic market while outlook in international markets is on improving trend.

In domestic markets public sector continues to drive order inflows while private sector is on wait & watch mode.

J Kumar Infra: Buy | Target: Rs 357 | Return: 62%

Order book at the end of Q1FY19 stood at Rs 8,320 crore. The company won Rs 1,290 crore worth orders in Q1FY19 and Rs 1,520 crore worth orders in August. It is targeting an order book of Rs 10,000-12,000 crore by year-end. It has bid for projects worth Rs 3,000 crore.

Bid pipeline includes Delhi-Dwarka Expressway, additional work coming up in Delhi and Mumbai Metro, Mumbai-Ahmedabad High Speed Corridor line, regular work from MMRDA and CIDCO. Plan to bid for NHAI – EPC projects in and around Delhi. Focus on transportation and metro segment as JKIL sees huge opportunities in this space.

Bharat Electronics: Buy | Target: Rs 150 | Return: 27%

Order book at the end of Q1FY19 stood at around Rs 41,650 crore (up 1.4 percent YoY). Order inflow for the quarter stood at Rs 3,600 crore, up 48 percent.

BEL expects the order inflow to remain healthy at Rs 10,000-15,000 crore for the next few years, given the healthy pipeline. The company expects sales to grow at around 12-15 percent CAGR over the next five years.

BEL is investing in capex to support execution of strong order book; it is also looking at R&D spend at 10-12 percent of sales to maintain technological edge and retain leadership position in strategic electronics.

Major orders expected in FY19 include Akash Missile Systems (7 Sqdn) and Long range surface-to-air missile. These orders got delayed and now are expected to be finalised in FY19.

Raymond: Buy | Target: Rs 1,278 | Return: 63%

Despite muted quarter (Q1FY19), the company has strong prospects ahead in the core businesses followed by its turnaround performance in the non-core segments as well.

We believe that the company has more potential to offer in the upcoming years. With improving margins and improvement in operational efficiency, we maintain our target price to Rs 1,278 per share.

JK Paper: Buy | Target: Rs 251 | Return: 34%

The robust demand outlook and rising consumerism bodes well for the Indian paper industry, which is expected to maintain its growth momentum in the near future. Rapid urbanisation and transformation in lifestyle habits have resulted in a larger offtake of packaged products. Market leadership in branded copier paper segment, focus on value added products, improving profitability and robust outlook for the Indian paper industry are the key positives for the company.

The recent acquisition of Sirpur Paper Mill will provide synergistic advantage both in terms of a strategically located manufacturing facility and access to raw material. We value the company at 12x its FY20 (E) EPS of INR20.89 and upgrade target price of Rs 251 (earlier target price Rs 173).

Khadim India: Buy | Target: Rs 946 | Return: 23%

On the back of favorable policies by the government towards development of businesses in India coupled with aggressive organic growth, KIL is expecting a healthy growth of 10-12 percent per year for a period of 5 years.

Aggressive brand building policies would lead to the company accruing 12-13 percent EBITDA in a period of next 3 years. Healthy revenue growth, mix improvement, operating leverage benefits and lower interest costs may drive 23 percent earnings CAGR over FY18-20E. Considering the same-store-sales (SSG) growth and margin expansion we assign a P/E multiple of 30 (x) on FY20E EPS Rs 31.54, to arrive at a target price of Rs 946.

Meghmani Organics: Buy | Target: Rs 125 | Return: 35%

The outlook for the company remains strong for the upcoming years, backed by the aggressive expansion plans taken up by the company in the past few years and positive market condition. The diversified business model of the company shields the companies earnings from any unfavourable situation.

The company has robust execution capabilities and with the increased utilisation and demand for its products it will continue to hold a strong position in the Indian chemical industry. However, the softening of caustic soda prices and increase in raw material prices of pigments and other chemicals due to volatility in crude oil prices may impact the company’s performance. With this, we cut the target price to Rs 125 from Rs 140, maintaining the Strong Buy rating.

Thermax: Buy | Target: Rs 1,420 | Return: 43%

Company’s key strategy has been to protect its business from cyclicality of the India's capital goods sector. Through selective internationalisation of the product businesses and strategic expansion of its product manufacturing footprint, the company has progressed well in this direction.

With the help of its new capacities, company is well positioned to benefit from domestic and global demand recovery and expected to generate positive cash flow in future.

On the back of increased traction in order inflow, capacity expansion and acquisition of Babcock and Wilcox, we expect FY19 and FY20 to witness strong growth. We continue to maintain Buy rating with a target price of Rs 1,420.

Simplex Infrastructure: Buy | Target: Rs 600 | Return: 42%

Simplex Infrastructure results for Q1FY19 were in line with our expectations on revenues and profit front. Lower than expected margins were set off by higher other income during the quarter.

Debtors have started recovering during the quarter and further recoveries are expected in the coming quarters.

We maintain our estimates and price target of Rs 600 based on 15x FY20 estimates. Due to sharp growth expected in revenues going forward coupled with stable margins, we expect healthy growth in net profits. Cash flows are likely to improve from FY19 onwards. We maintain Buy on Simplex Infrastructure.

Maharashtra Seamless: Buy | Target: Rs 805 | Return: 63%

Post Q1FY19 result and interacting with the company’s management, we reiterate positive view on MSL stock. We sharply revise FY20 earnings estimate upwards (revise FY20 PAT by 40 percent); believe that MSL valuations can get further rerated on back of strong growth in company’s estimated consolidated profits through FY19-20E driven by recovery in demand for seamless pipes in the domestic/international market and 2) company’s leadership positioning in Indian market.

MSL stock continues to trade at attractive valuations at 4.6 FY20 EV/EBITDA. We value MSL stock at 7.5x EV/EBITDA FY20E earnings and maintain Buy with revised target price of Rs 805 per share (Rs 615 earlier).

Voltamp Transformers: Buy | Target: Rs 1,320 | Return: 42%

Voltamp reported good set of numbers for the quarter revenue and EBITDA topping our estimates. However, lower than expected other income led to profit miss.

Valuations are attractive compared to peers and more so considering that management remains prudent and has been able to preserve quality of balance sheet even through years of industry distress.

Voltamp remains one of the best stocks to play future upturn in industrial demand. Maintain Buy with marginally revised price target of Rs 1,320 (Rs 1,350 earlier), valuing the stock at 13x FY20E earnings.

Vascon Engineers: Buy | Target: Rs 48 | Return: 72%

The company is positive on its business segments and expects new sales booking from the next phase of launches in Katvi, Forest Edge, Coimbatore, etc. Further, strong EPC order book would drive revenue for EPC segment.

We have revised estimates lower for FY19E and FY20E factoring in lower revenue from real estate segment and lower order inflows guidance for EPC segment. The stock is trading at FY19E and FY20E PE of 11.4x and 7.5x based on revised EPS of Rs 2.4 and Rs 3.6 respectively. We maintain Buy on VEL with revised SOTP based target price of Rs 48 (versus Rs 52 earlier).

Magma Fincorp: Buy | Target: Rs 220 | Return: 52%

Magma Fincorp recorded a healthy performance in a seasonally weak quarter with PAT growing 75 percent YoY on IndAS basis.

We expect return on assets to improve to 2.15 percent by FY21 (versus 1.5 percent in FY18) as we believe the worst in terms of provisioning on legacy stressed assets is over.

With clean-up of legacy book and significantly lower delinquencies in book originated post Dec’15, we expect profitability trends to improve going ahead.

We forecast earnings CAGR of 30 percent over FY18-21E led by revival in loan growth and improvement in asset quality. We value Magma at 1.8x Sept’20 BV, implying a Sept’19 target price of Rs 220. We maintain Buy.

KNR Constructions: Buy | Target: Rs 285 | Return: 24%

KNR Constructions has been showing excellent pace execution for last couple of quarters and consistently been surpassing revenue expectations. Its order backlog as on 30th Jun’18 stood at Rs 5,960 crore (3.1x FY18 revenue), which includes Rs 3,980 crore of EPC orders from five HAM projects. KNRC expects to meet financial closures of these projects in coming months.

While KNRC has already obtained bank sanctions for 3 projects, land acquisition is still underway. It expects revenue flow to commence from 3QFY19 onwards from these HAM projects.

We maintain our positive view on KNRC mainly owing to healthy order book, strong balance sheet (0.2x net D/E) and sound execution credentials. We reiterate fundamental Buy recommendation on the stock with a SOTP-based target price of Rs 285.i

ITD Cementation: Buy | Target: Rs 190 | Return: 43%

Strong, 25 percent, Q1 FY19 revenue growth was a sign of the shape of things to come for ITD Cementation. Q2 FY19 is even better with even stronger revenue growth, implying execution is gathering pace with each passing quarter.

The quarter could have been better on order additions, but a healthy L1 status and a buoyant opportunity landscape suggest better days ahead. With its strong order backlog (and good progress in new orders), a buoyant opportunity landscape and a healthy balance sheet, the future looks bright.

The fall in the stock price (around 17 percent in three months, around 29 percent in six) renders it attractive. Thus, we upgrade it to a Buy.

Ahluwalia Contracts: Buy | Target: Rs 422 | Return: 36%

Q1 was muted as there was slower than expected movement on a couple of projects, for varying reasons. However, its recent strong order accretion and as projects that faced issues in Q1 get going, we see Ahluwalia set for healthy growth in the foreseeable future.

While stiff competition are points of caution, we are positive on the appealing return ratios, a healthy balance sheet and healthy revenue assurance, which drive us to maintain Buy on the stock.

Skipper: Buy | Target: Rs 242 | Return: 86%

The company’s performance at profitability level was disappointing due to multiple headwinds getting bunched up (raw material cost escalation & inventory stocking costs coupled with aggressive marketing push in polymer business). Polymer revenue grew 29.5 percent YoY as the new strategy seems to be working well for the company, albeit at the cost of margins. Polymer margins could be subdued for few more quarters.

We expect CAGR growth of 17 percent in net profit over FY18_20E. We have revised target price to Rs 242 (15.4x its FY20E EPS). The stock has fallen sharply post Q1FY19 results.

We believe that one off’s relating to engineering business will even out and the spend on sales push in polymer business is an investment to drive growth. The fall in stock price offers an excellent buying opportunity. We maintain Buy recommendation on the stock.

Brigade Enterprises: Buy | Target: Rs 299 | Return: 53%

Adoption of IND AS 115 had a negative impact on reserves of Rs 410 crore. Revenue for Q1FY19 came in at Rs 700 crore. Due to IND AS 115, revenue was higher by Rs 120 crore. EBIDTA margins increased 293bps YoY to 25.7 percent. Interest cost increased 3.4 percent YoY to Rs 62.8 crore. APAT came in at Rs 63.1 crore.

BEL held an annual showcase in Jul-18, which saw 9 new launches and has driven sales of around 0.6mn sqft (office+ residential) in Q2FY19 so far.

BEL has future plans of 13 million square feet of launches (Residential – 8 million sqft and Commercial – 5 million sqft) in addition to 2 hotels (around 300 keys). With a ramp up in the annuity portfolio we expect leasing to contribute Rs 370 crore in FY20E. We maintain Buy with SOTP-based target price of Rs 299 per share.

Ashoka Buildcon: Buy | Target: Rs 180 | Return: 27%

Considering the strong track record, robust orderbook, well funded BOT project portfolio and huge opportunities ahead, we stay positive on Ashoka’s long term prospects. Hence, we expect EPC revenues to grow robustly at 29.7 percent CAGR to Rs 4,156.2 crore.

There has even been a strong revival in traffic growth across its project portfolio, which is expected to be sustainable, going forward. We continue to maintain Buy recommendation with an SoTP based target price of Rs 180 per share.

MORE WILL UPDATE SOON!!

IT, pharma see renewed interest amid weak rupee.

IT & pharma sectors are also seeing an up move, considering reasonable valuations and factors such as rupee depreciation, which could turn favorable for such segments.

Indian equity indices are recording stellar performance since July 2018, with Sensex and Nifty touching new highs. Encouraging domestic and global cues are contributing towards the rally.

Banking names are seeing renewed interest, owing to good earnings by some lenders as well as unveiling of “SASHAKT” programme by the government. The scheme proposes to set up independent asset management companies (AMCs) and steering committees for faster resolution of bad loans in the banking system. Share prices of corporate banks have rebounded in the last few weeks during the result season.

IT & pharma sectors are also seeing an upmove, considering reasonable valuations and factors such as rupee depreciation, which could turn favorable for such segments.

The industrial production growth data has also been a positive which rose to 7% in June 2018, against a 0.3% decline in June 2017. The spike was largely because of high growth in the manufacturing sector, which after falling for five consecutive months rose in June 18 to 6.9%. Manufacturing contributes more than three-fourths to overall IIP.

IIFL Holdings | Rating: Buy | Target: Rs 910

With the aim of thriving in the evolving competitive and regulatory environment, the company has taken the momentous decision to re-organise the unified corporate structure and create independent entities focused on their core businesses.

Owner of 7 shares of IIFL Holdings will own 7 shares of IIFL Finance, 7 shares of IIFL Securities, and 1 share of IIFL Wealth post reorganization. The proposed rejig is expected to result in the unlocking of value and creating enhanced value for its

shareholders.

This move will enable each business to grow faster, attract the right talent and become more innovative & efficient.

IIFL Finance has a retail focussed diversified loan assets with a loan AUM of ₹ 33,700 Crores.

IIFL Wealth comprises wealth assets of ₹ 1,40,900 Crores from 10,000 plus high networth families.

IIFL Securities provides capital market related activities having 24 Lakh customers serviced from 1300 plus locations

NBFC’s in India are expected to see an 18% CAGR and raise their share in total credit to 19% by 2020 from 13% in FY18.

Management is expecting a growth rate of 30% to 35% year-on-year of its NBFC Business and targeting net new money to be raised on the wealth division in the region of 20% to 25% of its last year assets.

On profitability front, we expect company to report ROE of around 18.2% in FY19E and 18.8% in FY20E. Favorable product mix will result in delivering ROE going forward.

Larsen & Toubro Technology Services | Rating: Buy | Target: Rs 1,940

With the rise of enabling technologies like 5G, IoT, Artificial Intelligence etc, the digital disruption now has expanded to almost each and every part of the global industrial complex including manufacturing and process industries. This has opened a new and bigger opportunity of more than $1.1 trillion market for engineering outsourcing market.

LTTS’ has multi-sectoral presence and domain expertise enables cross-pollination of ideas and best practices leading to differentiated engineering solutions.

During the latest quarterly results, the company has reported robust growth in revenues; it grew 33.2% in Q1-FY19 to $168.9 million as against $127.6 million in Q1-FY18 in constant currency terms.

We expect LTTS to grow its consolidated revenues at CAGR of 23% for the next two years and reach ₹4895 Cr in FY19 and ₹5696 Cr in FY-20 on back of large opportunity present across capex intensive business and sustained momentum of ramping up of existing clients.

At CMP the stock is trading at 2x times FY18E consolidated earnings and 16.9x times FY19E consolidated earnings.

Deepak Nitrite | Rating: Buy | Target: Rs 346

Deepak Nitrite has reported a growth of 33% in its standalone revenues at ₹421 Cr in Q1-FY19 as against ₹316 Cr in Q1-FY18.

The PAT margins for the company during the quarter stood 5.2% at ₹21 Cr as against 2.6% at ₹8 Cr in Q1-FY18.

The Performance products segment has turned EBIT Positive for the quarter and management has guided it to be profitable for the full year.

On its progress of its Greenfield project to manufacture Phenol and Acetone – The Company’s mega-project is expected to get commissioned by third week of Aug-18 and all pre-commissioning activities have been concluded successfully. The company has incurred an amount of ₹1,400 Cr in this project.

The management has also guided to achieve 40%-60% utilizations in FY19 and around 95% utilizations from FY-20 onwards. At full utilization levels and with current spreads this project’s potential revenue generation stands at around ₹2,800 crore for the company.

MORE WILL UPDATE SOON!!

Midcaps stocks likely to outperform Nifty! 3 stocks which could give up to 17% returns in 1-6 months

The sharp up move in the last three sessions from the support area has seen the index almost testing their embarked target of 11,600.

  

The Nifty continued its record-setting spree as it formed an all-time high of 11,581 on Tuesday. The entire up move in the index since July 2018 low (10,604) has been well-channeled signalling sustained demand at elevated levels.

The index, on expected lines, rebounded during the previous week taking support at the lower band of the rising channel placed around 11,350-levels. The sharp up move in the last three sessions from the support area has seen the index almost testing their embarked target of 11,600.

The sharp up move in the last three sessions has seen the daily stochastic oscillator to enter overbought territory with reading of 93.

We expect the market to consolidate around the major resistance area of 11,600 weeks is the confluence of:

a) 138.2% external retracement of the entire decline of February-March 2018 (11,171-9,951) is placed at 11,637

b) price parity of April-May 2018 up move (9951-10929) in percentage terms as measured from June 2018 low of 10,550, at 11,595

Going ahead, we expect Nifty midcap to outperform the benchmark index as on expected lines, Nifty midcap index opened with a positive gap and maintained the higher high–low formation, indicating follow through the strength of last two week’s consolidation breakout.

As discussed earlier, the breakout confirmation of a falling wedge pattern suggests structural improvement in turn signifying acceleration of upward momentum.

This would help the Nifty midcap index to actualise the next leg of the rally (around 7-10%) as it coincides with an implicated target of falling wedge pattern at 20320 (18960-17600=1360).

Hence, one should accumulate quality midcap stocks as we expect the midcap index to remain in the limelight for the next couple of weeks.

Structurally, since the end of May 2018, Nifty rallies are getting elongated with shallow price correction supported by strong market breadth, signifying the inherent strength of the market.

This overall structural improvement makes us confident of upgrading support zone at 11340 as it is a confluence of:

a) 38.2% retracement of recent up move (10935–11565) at 11325

b) past two week’s consolidation low at 11340

Here is a list of top three stocks which could give 10-17% return in the next 1-6 months:

ITC: Buy| CMP: Rs 313| Target: Rs 345| Stop Loss: Rs 294| Return 10%| Timeframe 6 months

The share price of ITC has generated a resolute breakout above the rectangle pattern, thereby confirming a strong base formation around 250, in turn resulting in a resumption of the primary uptrend.

Currently, the stock is consolidating at higher levels to work off the excess formed during the last month’s sharp up move. We believe that the recent price activity signals a continuance of ongoing primary up trend thereby offering a fresh entry opportunity for the medium-term investors.

During July 2018, the stock witnessed a strong rally gaining from Rs 260 to Rs 307 level. In the process, it gave a breakout from the past one year’s consolidation.

After a strong breakout rally, the share price is seen taking a breather over the past three weeks. The temporary pause after a sharp rally has helped the share price to cool off the overbought conditions and in the process built a higher base, which would now act as a launch pad for the next leg of the rally.

This overall price action has taken a shape of a bullish Flag formation. A resolute breakout from the bullish Flag pattern during the current week suggests a continuance of the recent uptrend after the conclusion of the temporary breather that provides a fresh entry opportunity with a favourable risk-reward

We believe that the stock has a strong base around Rs 295 levels as it is the breakout area of the last one-year consolidation that also coinciding with bullish gap area of 27th July 2018 placed around Rs 295 levels.

The overall price development makes us believe the stock is set to resolve higher towards our target of Rs 345 being the 80% retracement level of the entire secondary phase of correction (| 368-250), placed around Rs 344.

ABB: Buy| CMP: Rs 1271| Target: Rs 1490| Stop Loss: Rs 1,125| Return 17%| Timeframe 6 months

The share price has seen a multi-fold rally (430–1526) during mid-2013 to 2015. Since then, it has undergone a secondary phase of consolidation in the broader range of Rs 1650–930.

Over the past three months, the stock is seen consolidating above the long-term 200 weeks EMA, which is currently placed at Rs 1220.

We believe it has undergone a base building process that will act as a launch pad for the next leg of the up move towards (| 1490) in coming months and provides a good entry opportunity for medium term investors.

The entire secondary phase of consolidation has been captured in a well-defined rising channel formation, signifying elevated buying demand.

Currently, the stock has been forming a strong base after retracing 80% of the last leg of up move (1018-1749) at 1163 supported by heavy volumes, indicating the presence of strong buying demand around the key value area of Rs 1130.

In a nutshell, we believe that the stock is attractively placed and offers a favourable risk-reward setup for investors that bodes well to resolve higher form here on and gradually head towards 1490 as it is near 61.8% retracement level of the last corrective move (1749-1129), around Rs 1510.

Sanofi India: Buy| CMP: Rs 6149| Target: Rs 6995| Stop Loss: Rs 5710| Return 14%| Timeframe 6 month

The share price saw a major turnaround in March 2018 as it logged a resolute breakout from multi-year consolidation (3730–4940) during 2015-18.

Prices have been inching northward post retesting aforementioned breakout level (4720), suggesting renewed buying demand at elevated levels.

The recent price activity signals acceleration of upward momentum, providing a good entry opportunity to ride the next leg of the up move.

The stock has been forming higher peak and trough since September 2017. This overall price action has been captured in an upward sloping channel formation (drawn adjoining September 2017 to May 2018 lows of 3940-4720 and projected from January highs of 5151).

Recently, the stock registered a breakout from the upper band of aforementioned channel backed by rising volumes, indicating an acceleration of upward momentum.

Based on the aforementioned technical evidence, we expect the stock to resolve higher from here on and head towards 6995 over the medium term being the measuring implication of the aforementioned rising channel (6050-5100=950 points) added to the higher band of the channel 7000 (6050+950=7000) corroborating with 161.8% extension of up move (3086 to 4950) projected from 3940, placed around 6955.

MORE WILL UPDATE SOON!!