According to Credit Suisse, Indian markets are likely to remain volatile in 2019, as the tightening of monetary policies globally will impact the country. We take a look at top blue chip stock bets for New Year 2019.
After a volatile 2018 for the stock markets given a confluence of domestic and global factors, even as investors move on to New Year 2019, analysts and experts say that the trend is likely to continue given the closely watched Lok Sabha Polls in the year. According to Credit Suisse, this trend is likely to continue given that as tightening of monetary policies globally will impact the country. “Global equities have seen price-to-earnings multiples rise steadily in the past several years – if the unwinding of quantitative easing and rising economic as well as geopolitical uncertainty brings down these multiples, it should show up in India as well,” Credit Suisse said in a note, adding that the premium of India’s valuation multiples to that of global equities is already near an eight-year high. We bring to you top bluechip bets of Credit Suisse for New Year 2019.
Credit Suisse is bullish on infrastructure major L&T on the back of domestic pick-up, lower Middle East dependence (only 6 percent of total orders in first half of FY19) and strong cash flows. According to the global firm there is upside from divestiture and valuation at around 16x September 2020 estimates EPC earnings. Credit Suisse has a target share price of Rs 1,700. L&T shares closed at Rs 1,436 on the BSE this afternoon. Credit Suisse target share price implies an upside of 18% from the current market prices.
Taking stock of the prospects of India’s largest lender, Credit Suisse said that ICICI Bank has seen an improvement in operating performance, with loan growth picking up in Q2FY19 driven by strong growth in domestic loans. With slippages moderating and recoveries from IBC cases, reported NPAs declined in first half of FY19 and would likely decline further over the coming quarters, Credit Suisse added. Notably, the global firm said that the on the back of strong capital position as growth picks up and credit costs normalise, return on equity should improve to over 14% by FY20E. The research house has an outperform rating on the shares with a target share price of Rs 375.
State Bank of India
In case of SBI, the global firm notes that post several years of asset quality stress, the slippages are expected to moderate in the coming quarters, and the credit costs should normalise in FY20. The bank would see strong recoveries in second half on account of a couple of large cases. The firm has an outperform rating on the stock with a target share price of 350. SBI shares closed at Rs 300.40 on BSE this afternoon. The firm’s target share price implies an upside of more than 16.50% from the current market price.