Even as we come to the end of 2017 and investors may be on the lookout for top wealth creation opportunity in 2018 and beyond, many top experts and brokerages alike are betting on the financial services space in the upcoming year. In its latest report titled- “India Market Strategy,” global firm Credit Suisse observed that while P/E for the Indian market is high, on a relative basis, it is not expensive. “We are more comfortable owning stocks that are likely to benefit from steady global growth, and in particular beneficiaries of the withdrawal of China from export markets in polluting industries. We are therefore overweight energy and metals. Together with the likely write-back of provisions in steel NPAs, we also believe the recap should benefit the stronger PSU banks, and help drive a re-rating, even if only for 2-3 years,” Credit Suisse said. We take a look at top stock bets of Geojit Financial Services for 2018.
Bank of Baroda
Bank of Baroda shares have lagged the equity benchmark Sensex in 2017, and have returned just 8% so far. Geojit is bullish on the shares with a target price of Rs 208. “Given the management’s focus on cleaning up the balance sheet and laying the foundation for sustainable growth, the gradual improvement in asset quality will lead to better profitability. As a result, we expect RoA and RoE to improve to 0.5% and 9%, respectively by FY19E. Hence, we maintain BUY rating on the stock with a target of Rs 208 and value the bank at P/ABV of 1.6x for FY19E,” the firm observed in its report. The shares were trading at Rs 165.5, down by more than 0.3%. Geojit’s target implies an upside of more than 25% from the current market prices.
Can Fin Homes
Shares of Can Fin Homes have surged by more than 54% in 2017. “Given the strong traction in loan book expansion and sustained healthy asset quality (Gross/Net NPA at 0.2%/0.0% as of FY17) and its premium valuations within the HFC space is justified. We project CFHL to deliver ~2%+ RoA over FY17-19E. We recommend BUY rating with a target price of Rs. 612 (P/ABV of 4.0x forFY19E),” Geojit Financial Services said in its report. Can Fin Homes shares were trading at Rs 479.25 on NSE this morning. Geojit’s target price implies an upside of more than 27% from the current market prices.