1. At Rs 830 per share, this mid-cap stock is still cheap; ‘buy’ to gain upto 46%, says HDFC Securities

At Rs 830 per share, this mid-cap stock is still cheap; ‘buy’ to gain upto 46%, says HDFC Securities

Indian stock markets have emerged as one of the best performers in 2017 among the major economies of the world. As investors remain on a perpetual lookout for more prospects to invest in, we bring you a mid cap stock which may return you up to 46%.

By: | Published: November 21, 2017 5:37 PM
Photo for representational purposes only. (Image: Wikimedia Commons)

Indian stock markets have emerged as one of the best performers in 2017 among the major economies of the world. The key benchmark indices Sensex and Nifty have surged about 25% since January so far. The domestic markets are on a continuous upmove right after the slump observed exactly one year back due to demonetisation. The corporates have also been cheering as public offers are getting massive responses from almost all investor classes. About Rs 65,000 crore have been raised through the IPOs (initial public offerings) in 2017 so far, notably with some of India’s biggest public issues such as GIC’s Rs 11,370 crore, New India Assurance Rs 9,600 crore and HDFC Standard Life’s Rs 8,700 crore.

As investment is a never-ending process, market participants remain on a perpetual lookout for more prospects to invest in, we bring you a stock which may return you up to 46% in a term of 1 year only. Shares of Strides Shasun have lost about 22% of their value in 2017 but the research and brokerage firm has given a target price of Rs 1,200 from its current market price of Rs 818 which implies an upside of 46.69%. In another business restructuring, Strides Shasun has sold its India-branded business to Eris Life Sciences, for a consideration of Rs 5 billion. The business contributed only nearly 5% to the total topline in the financial year 2017 and would have required significant investment to scale it up further. This is the second such business rationalisation by Strides Shasun in the financial year 2018, along with the hive-off of the commodity API business.

“We believe that these divestments would help narrow Strides Shasun’s focus on the high potential business segments, i.e. the US and Australia, where investments are now complete, and strong growth is expected to kick-in over FY18-20E,” HDFC Securities said in a report. “We believe that this is an opportune time to invest in Strides Shasun, with strong sequential improvement likely from 2HFY18. Re-iterate BUY with a TP of Rs 1,200 (18x Sep19E + Rs 100/sh for Solara + Rs 30/sh for Biopharma),” HDFC Securities report added.

Over the last 12-18 months, STR has exited several non-core and low margin businesses (commodity APIs, India branded generic, Africa generic). With the re-structuring exercise appearing to be largely complete, we believe that STR is now poised
to deliver strong and margin accretive growth in its focus businesses.

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