The month so far remained in favour of bulls as benchmark indices BSE Sensex and NSE Nifty jumped over half a per cent during August 31 and September 23. According to market experts, continuous liquidity inflow by foreign institutional investors and US Fed decision to keep interest rate unchanged supported domestic equity markets this month. On a month-to-date basis, foreign institutional investors have poured Rs 5643.45 crore in the Indian stock markets till September 23 with gross purchases of Rs 83793.68 crore and gross sales of Rs 78150.23 crore. This week markets are likely to remain volatile ahead of F&O expiry.
On Monday, benchmark indices BSE Sensex and NSE Nifty were trading 166 points and 43.50 points down at 28502 and 8788 (at 10.59 am), respectively, in trade. Meanwhile, markets on Monday failed to get any sense of relief with the Reserve Bank of India’s Governor, Urjit Patel downplaying the risk of inflation and harping on the focus on growth. Patel reportedly said that the GST regime would not harden inflation and the growth objective will remain part of the newly constituted MPC’s mandate. Traders also shrugged off Niti Aayog Vice-Chairman Arvind Panagariya’s statement that a good monsoon, reforms and timely decision making at the Centre will definitely push India’s growth beyond the 8 per cent mark in subsequent quarters of this fiscal.
Below are some of the stocks which market experts are recommending in the present market scenario.
Recommended By: KR Choksey Shares and Securities
Target Price: Rs 263; Current market Price: 133 (as on Friday); upside: 98%
Why Buy: Kwality was incorporated in 1992 as Kwality Dairy (India). The company was set up as a backward integration unit of Kwality Ice Creams India Ltd and was acquired by Dhingra Family in 2002. Kwality is one of the fastest growing private sector dairy companies with a new range of innovative products and enjoys a large presence in Northern India. It has six processing plant with 3.2Mn liter capacity per day. KR Choksey is bullish on the shares of Kwality Ltd on account of growth and changing strategy from B2B to B2C player. As this would help expand margins. Its key strategy and focus remains on procurement model, developing branded products and brand development. “We are expecting the growth to be around 10-12 per cent in FY17E and FY18E with improvement in EBIDTA margins to 6.8 per cent in FY18E from 6.1 per cent in FY16. We assign PE of 15 times to its FY18E EPS of Rs 17.5 and recommend ‘Buy’ rating on the stock with the target price of Rs 263.”
Recommended By: Antique Stock Broking
Target Price: Rs 1,400; Current market price: Rs 1220; Upside: 15%
Why Buy: Shares of YES Bank have corrected by 10 per cent on a month-to-date basis till September 23 presumably as the bank deferred its capital raising plan. Antique Stock Broking is bullish on YES Bank and believes that bank is well on track to deliver industry leading growth/return ratios even as it diversifies its asset book and adds granularity to its liability franchise. The brokerage house believes that at current growth momentum bank will surpass 40 per cent CASA mix in 2018-19 (one year ahead of its guidance) while the normalisation in savings rate and improved asset mix will enable it to improve margins to around 3.75 per cent. Antique Stock Broking expects asset quality to remain stable and are building in 60-65 basis points of credit cost for FY17-18E respectively. The brokerage house believes that the share price of YES Bank can touch Rs 1,400.
Recommended By: Geojit BNP Paribas Financial Services
Target Price: Rs 322; Current market price: Rs 282.70 (as on Friday); Upside : 13%
Why Buy: Dabur India Ltd (Dabur), the leading Indian FMCG company, is also a world leader in Ayurveda with a portfolio of over 250 Herbal as well as Ayurvedic products. The company operates in key consumer product categories like hair care, oral care, health care, skin care, home care and foods. Dabur has a wide distribution network, covering 5.3 million retail outlets, one of the highest among FMCG companies. Geojit BNP Paribas Financial Services in reserach note said, “Dabur is poised to benefit from revival in rural growth (contributing around 45 per cent to sales) led by better monsoon. We are factoring 130 basis points increase in overall EBITDA margin to 19.3 per cent by FY18E driven by new premium offerings and prudent cost management. We initiate Dabur with a ‘Buy’ rating valuing the stock at 35 times FY18E EPS arriving at a target price of Rs 322.”
Recommended By: Sharekhan
Target Price: Rs 210; Current market price: Rs 186.95 (as on Friday); Upside : 12%
Why Buy: According to Sharekhan, V-Guard Industries witnessed a strong traction in the second half of FY2016, which is likely to sustain in the future. On the one hand, the company is adding new products regularly amid changing preferences of customers, while on the other hand, it is continuously expanding its distribution reach across India. The brokerage house believes that the debt-free company with strong earnings visibility, high return ratios (RoCE around 35 per cent and RoE of around 25 per cent) and hefty free cash flow potential is likely to command premium multiple. Moreover, potential benefits from the rollout of GST and inorganic growth opportunities are yet to reflect.