Q. Any five stocks that you like with a 3-year perspective?
A. Equitas Holdings| Target: Rs 230 | Return: 79 percent
Ujjivan Financial Services| Target: Rs 495 | Return: 99 percent
Both stocks are on different themes. They are neither universal banks nor NBFC. They are small finance banks with different guidelines issued by RBI:
a) To extend 75 percent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL)
b) At least 50 percent of its loan portfolio should constitute loans and advances of up to Rs 25 lakh.
Both stocks are expected to "nail it" owing to strong demand from rural penetration. Equitas has already made its secure loan book to 70 percent and has transformed its maximum branches into banks.
Ujjivan will do the transformation in this financial year. Currently, it is available at P/BV of 1.75x and 1.87x respectively, we expect these two stocks to outperform in the coming years with a target of Rs 230 and Rs 495 initially.
Godrej Agrovet| Target: Rs 810 | Return: 56 percent
The company has launched new products in crop protection segment with capital expenditure of Rs 275 crore in the current fiscal to boost its chicken meat processing, oil palm, and agro-chemicals businesses.
Additionally, the company is setting up a palm oil processing facility to increase its production capacity with 60 tonnes per hour. Moreover, an increase in import duty on palm oil, making imports expensive and domestic production competitive, will benefit the company substantially.
Dairy margins are expected to stabilize owing to expansion towards the value-added products, though volatility in milk prices can play a spoilsport. The target for the next 2-3 years is estimated at Rs 810.
Shoppers Stop| Target: Rs 728 | Return: 55 percent
Deal with Amazon has boosted the top line of the company making it debt free leading to a strong balance sheet. Further, well build liquidity makes the stock a strong Buy candidate.
Shoppers operating margin is expected to improve in near-term by 7-8 percent with expected recovery in-store sales growth to about 5-7 percent. Additionally, Rs 150-200 crore of cash generation is expected annually in the books.
Moreover, with the advent of the festive season, the launch of "Wardrobe refresh" by the company offering over 150+ brands under one roof would add numbers to the top line. We suggest, accumulate with the target of Rs 728.
Zee Learn| Target: Rs 60 | Return: 61 percent
With MT Educare in its bucket, Zee has reported strong Q1 numbers. Limited competition in the organized segment and a disciplined execution makes it pure play in this segment.
Cash generating a business model and enjoying excellent EBITDA margins of around 38 percent for FY18, Zee could become one of the biggest organized players in the education industry. We suggest, accumulate for an initial target of Rs 60.
source:- Moneycontrol
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