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  1. Goldman Sachs is a major investor in this midcap stock; ‘Buy’ to gain up to 28%

Goldman Sachs is a major investor in this midcap stock; ‘Buy’ to gain up to 28%

A few midcap stocks in in India have nearly doubled investor wealth since January. Goldman Sachs India holds more than 1.35% stake in one such scrip as at the end of the quarter ended September-17.

By: | Published: November 29, 2017 5:10 PM
With returns of more than 84% in the year so far, the shares of Century Plyboards (India) have beaten the BSE Midcap index by two times over. (Image: Reuters)

A few midcap stocks in in India have nearly doubled investor wealth since January. With returns of more than 84% in the year so far, the shares of Century Plyboards (India) have beaten the BSE Midcap index by two times over. Interestingly, Goldman Sachs India holds more than 1.35% stake in the company as at the end of the quarter ended September-17. In its latest research report, Angel Broking has a buy rating on the shares of the company with a target price of Rs 400. The shares closed at Rs 312 on NSE, down by more than 0.45%. The brokerage firm’s target price implies an upside of more than 28% from the current market prices.

“We expect CPIL to report net revenue CAGR of ~17% to Rs 2,896 crore over FY-2017-20E owing to healthy growth in plywood and lamination business, foray into MDF and particle boards coupled with strong brand and distribution network. On the bottom-line front, we expect CAGR of ~16% to Rs 306 crore over the same period on the back of strong revenue and better margin in MDF business. At the current market price of Rs 317, the stock trades at a P/E of 23.3x its FY2020E EPS of ‘13.7. We initiate coverage on the stock with a Buy recommendation and Target Price of Rs 400 based on 29x FY20E EPS, indicating an upside of ~26% from the current levels,” Angel Broking noted in its report.

Angel Broking says that the shift from unorganised sector to organised sector will greatly benefit the company. “Going forward, we believe that the share of the organised sector would increase at a fast pace owing to the shift in market trend from the unorganized to the organized sector. With the implementation of GST, the pricing gap between the organized and unorganized players is expected to reduce, which would make the pricing of organized players equally attractive, and hence the consumer sentiment would favour the products from organised sector. The share of organized players is expected to improve from current levels, which in turn would be beneficial for branded players like CPIL,” the research firm noted in its report.

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