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 point out that the largecap space offers a lot of opportunity. Top market voices point out that the midcap and smallcap stocks have recorded stellar gains in the year, and the space appears to be overheated now. In an interview to CNBC TV18, Harsha Upadhyaya CIO-Equity, Kotak Mutual Fund said earlier this month, “On valuation front, midcap is relatively higher compared to largecaps. As asset sizes increase, the challenge increases to find value in the space.
However, funds which are mandated to invest only in midcaps will try to find opportunities within the space. Multicap portfolios where we can move across market capitalisations, our tilt is towards largecap. On similar lines, Vetri Subramaniam of UTI AMC told ET Now in September this year, “If I were an investor making allocations and just looking at where valuations are, I would have to believe that the better opportunity today lies in largecaps as compared to midcaps.” We take a look at top stock bets of Geojit Financial Services in the large cap space.
Shares of generic agro-chemicals player UPL have lagged the equity benchmark Sensex, returning just 18% in the year so far. “We expect EBITDA/PAT to grow at a strong CAGR of 17.4/13.7% over FY17-19 led by better product mix, backward integration, new product launches and rising market share in high-growth countries like Brazil & India. We value UPL at P/E of 17x on FY19E with a target price of Rs 887 and we have BUY rating for the stock,” Geojit Financial Services said in a note. UPL shares closed at Rs 762 on NSE this afternoon. Geojit’s target price implies an upside of more than 16% from the current market prices.
Shares of state-run Navaratna enterprise NBCC (India) have returned more than 55% in the year so far. “NBCC is at sweet spot considering its huge order book, limited competition and expertise in executing large projects. More potential opportunities are in pipeline from Dharvi, Railway station redevelopment and irrigation project in Maharastra. Given strong execution capability we expect FY18E EBITDA margin to improve by 34 bps to 6.8% and FY19E margin to 6.9%,” Geojit Financial Services noted. NBCC shares closed at Rs 246.75. Geojit has a target price of Rs 294 on the shares implying an upside of more than 19% from the current market prices.