Diwali picks: 6 brokerages recommend top stocks for Samvat 2072

Contrary to expectation of a runaway rally, Samvat 2071 has been a year of consolidation for the Indian markets. Though the benchmark indices – the S&P BSE Sensex and the CNX Nifty – managed to hit the 30,000 and 9,100 levels respectively, several global and domestic concerns saw the benchmarks lose considerable ground from their peak levels.

Samvat 2072 promises to be equally exciting as investors eye the first rate hike by the US Federal Reserve (US Fed) in several years, developments in China and the euro-zone besides domestic factors like the interest rate trajectory, policy reforms by the Narendra Modi – led government and a hope of pick up in corporate earnings.

Experts maintain a positive view on the markets, as they believe that favourable macro cues such as low inflation, declining interest rates, cheap global commodities and strong governance are likely to drive improvement in corporate performance over the next 18-24 months. 

India, they believe, is best placed within the emerging economies space and is likely to continue attracting higher fund inflows in the medium-term, notwithstanding any near-term global concerns.

Here is a compilation of stock recommendations for Samvat 2072 from top brokerages across the country:

Prabhudas Lilladher

Infosys

We expect Infosys to return to industry revenue growth by end FY16 and grow ahead of industry in FY17. The stock is trading attractive at ~17x FY17 EPS, we have BUY rating with target price of Rs 1,440

HDFC Bank

The bank is well placed to continually gain market share on back of its highly competitive base-rate and robust digital platform. HDFC Bank remains one of the top-picks for us and we maintain ‘BUY’ with a target price of Rs 1,200

State Bank of India

SBI has been focusing on retail segment and has gained market share in highly competitive mortgage business while it remains cautious on mid-corporate and SME segment. We retain BUY with a target price of Rs 350 which corresponds to 1.8x Mar-17 ABV.

 Tata Motors 

We are positive on Tata Motors and have a Buy rating with a price target of Rs518. We believe that JLR faces a short-term negative outlook due to weakness in China. However, with its strong product portfolio, JLR is in a good position to counter the slowdown there as well as increase its sale in other geographies.

Allcargo Logistics

Strong domestic presence across CFS and Project Engineering space is expected to bode well for AGL as it benefits from the domestic capex cycle recovery. AGL trades at 11.3xFY17E earnings, P/BV of 1.6x, D/E ratio of 0.11x and EV/EBITDA of 5.5x which we feel is reasonable entry point considering 20.4% CAGR PAT over FY15-FY17E period, improving return ratios and strong management bandwidth.

JK Lakshmi Cement

It is one of our top pick in the sector with a price target of Rs 450 at EV/T of US$100 FY17E capacity of 12 million tonnes

Ashoka Buildcon

We expect the EPC segment to deliver Sales and PAT CAGR of 16% and 21%, respectively, over FY15-17E and expect toll collection to grow at a CAGR of 114% over FY15-17E. We believe limited equity commitment in the current portfolio, funding from SBI Macquarie and a well-funded balance sheet makes it one of the beneficiaries of upcoming opportunities in the road sector

KOTAK SECURITIES
  Market Price (Rs) Target Price Upside (%)
Maruti Suzuki 4505 4934 9.5
Sun Pharma 870 1055 21.3
Infosys 1141 1230 7.8
ICICI Bank 278 400 43.9
Dabur India 271 308 13.7
Praj Industries 88 105 19.3
PNC Infrastructure 523 609 16.4
Century Plyboard 184 230 25.0
Engineers India 196 250 27.6
Allcargo 327 395 20.8
Supreme Industries 629 775 23.2
Source: Kotak Securities Nov 4 report  

Motilal Oswal Securities

Sintex: Target price of Rs 145

Inox Wind: Target price of Rs 546

Dewan Housing: Target price of Rs 355


Sharekhan

Top picks include Bajaj Finance, Bharat Electronics, Britannia Industries, Cadila Healthcare, IndusInd Bank, Larsen & Toubro, Maruti Suzuki, Persistent Systems, Sangam India, Zee Entertainment Enterprises


Edelweiss (Fundamental desk)

Cholamandalam Finance, NIIT Limited, Tata Motors, SRF Ltd, Strides Arcolab

ANGEL BROKING
Large-caps
  12-month target price (Rs)
Amara Raja 1,040
Ashok Leyland 111
Axis Bank 630
HCL Technologies 1,132
HDFC Bank 1,262
ICICI Bank 348
Infosys 1,306
Larsen & Toubro 1,646
LIC Housing Fin 571
Mid-caps
Inox Wind 505
Ipca Labs. 900
Jagran Prakashan 169
MT Educare 169
Radico Khaitan 119
Siyaram Silk 1,145
Surya Roshni 183
Source: Angel Broking Oct 30 report


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