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These top diwali picks by IDBI Capital may give up to 41% upside in a year

Updated : November 03, 2020 03:35 PM IST

For Samvat 2077, IDBI Capital has hand-picked 7 top stocks from both large-cap and mid-cap space. These picks are likely to outperform the broader market indices over the next 12 months and can give up to 41 percent upside in that period. How many do you own?

 APL Apollo Tubes:  The company is the largest player in the ERW pipes in India. In the past decade, APL has outperformed industry growth by gaining market share from small and unorganised players. The brokerage believes APL Apollo's management has a strategy to strengthen the balance sheet during the lockdown. It added that steel prices are unlikely to fall meaningfully hereon which bodes well for APL’s margins and expects a strong recovery in volumes and profitability from H2FY21. The brokerage sees a 20 percent upside with a target at Rs 3,740.
APL Apollo Tubes: The company is the largest player in the ERW pipes in India. In the past decade, APL has outperformed industry growth by gaining market share from small and unorganised players. The brokerage believes APL Apollo's management has a strategy to strengthen the balance sheet during the lockdown. It added that steel prices are unlikely to fall meaningfully hereon which bodes well for APL’s margins and expects a strong recovery in volumes and profitability from H2FY21. The brokerage sees a 20 percent upside with a target at Rs 3,740.
 Alembic Pharma:  As per the brokerage, US sales (43 percent of FY20 revenues) grew at 12 percent CAGR in FY16-20 to Rs 2,000 crore on the back of consistent product launches including limited competition products. Despite being a late entrant, the company has done reasonably well with a product basket of 198 ANDA filings, it added. Meanwhile, the company's EBITDA margin also improved 4 bps YoY in FY20 primarily on account of operating leverage with higher revenue. The brokerage sees a 41 percent upside with a target at Rs 1,360 per share.
Alembic Pharma: As per the brokerage, US sales (43 percent of FY20 revenues) grew at 12 percent CAGR in FY16-20 to Rs 2,000 crore on the back of consistent product launches including limited competition products. Despite being a late entrant, the company has done reasonably well with a product basket of 198 ANDA filings, it added. Meanwhile, the company's EBITDA margin also improved 4 bps YoY in FY20 primarily on account of operating leverage with higher revenue. The brokerage sees a 41 percent upside with a target at Rs 1,360 per share.
 Bayer CropScience:  The company is a part of the German-based global chemical giant Bayer Crop. The company manufactures insecticides, fungicides, and herbicides. It believes the agrochemical segment is least affected due to any natural calamity as food cultivation remains at the heart of any activity in the country. So the impact of COVID-19 on Bayer crop would be negligible unlike other most of the companies which are struggling during the pandemic, it added. The company also enjoys a unique position in the domestic agrochemical space due to its ability to offer new innovative products and these initiatives have helped the company to increase its market share in the crop protection market over the years, IDBI further noted. The brokerage sees a 28 percent upside with a target at Rs 6,850 per share.
Bayer CropScience: The company is a part of the German-based global chemical giant Bayer Crop. The company manufactures insecticides, fungicides, and herbicides. It believes the agrochemical segment is least affected due to any natural calamity as food cultivation remains at the heart of any activity in the country. So the impact of COVID-19 on Bayer crop would be negligible unlike other most of the companies which are struggling during the pandemic, it added. The company also enjoys a unique position in the domestic agrochemical space due to its ability to offer new innovative products and these initiatives have helped the company to increase its market share in the crop protection market over the years, IDBI further noted. The brokerage sees a 28 percent upside with a target at Rs 6,850 per share.
 Bharti Airtel:  The company is India's second-largest telco and has a strong market share in the premium subscribers (postpaid/high pre-paid) which places it well to take advantage of increasing data consumption and expected increase in ARPU, noted the brokerage. The brokerage sees a 37 percent upside with a target at Rs 620 per share.
Bharti Airtel: The company is India's second-largest telco and has a strong market share in the premium subscribers (postpaid/high pre-paid) which places it well to take advantage of increasing data consumption and expected increase in ARPU, noted the brokerage. The brokerage sees a 37 percent upside with a target at Rs 620 per share.
 Johnson Controls : It is the Indian subsidiary of the joint venture between Jonson Controls, USA, and Hitachi Appliances, Japan which was formed in October 2015. The company is engaged in the business of manufacturing, selling, and trading of ‘Hitachi’ brand of products including room and commercial air conditioners, refrigerators, and air purifiers. The government has taken several initiatives to promote domestic manufacturing of ACs and its components, which will help in reducing import dependence. The firm stands to gain due to its focus on backward integrated manufacturing units, India specific R&D, technology, and product development capabilities, the brokerage said. The brokerage sees a 36 percent upside with a target at Rs 2,970 per share.
Johnson Controls: It is the Indian subsidiary of the joint venture between Jonson Controls, USA, and Hitachi Appliances, Japan which was formed in October 2015. The company is engaged in the business of manufacturing, selling, and trading of ‘Hitachi’ brand of products including room and commercial air conditioners, refrigerators, and air purifiers. The government has taken several initiatives to promote domestic manufacturing of ACs and its components, which will help in reducing import dependence. The firm stands to gain due to its focus on backward integrated manufacturing units, India specific R&D, technology, and product development capabilities, the brokerage said. The brokerage sees a 36 percent upside with a target at Rs 2,970 per share.
 Nestle India:  As per the brokerage, Nestle will be least impacted by disruption from COVID-19 as 90 percent of its product portfolio falls under the essential category. Nestle, being a category leader in 85 percent of its product portfolio, will continue to gain market share driven by differentiated brand positioning and superior distribution network, it added. The brokerage sees a 22 percent upside with a target at Rs 20,820 per share.
Nestle India: As per the brokerage, Nestle will be least impacted by disruption from COVID-19 as 90 percent of its product portfolio falls under the essential category. Nestle, being a category leader in 85 percent of its product portfolio, will continue to gain market share driven by differentiated brand positioning and superior distribution network, it added. The brokerage sees a 22 percent upside with a target at Rs 20,820 per share.
 Supreme Industries:  The company is one of the largest players in the Indian PVC pipes segment with a 10 percent market share. Also, it is the second-largest plastic furniture manufacturer with a 13 percent market share in the domestic market. With a strong product portfolio and competitive edge over the peers, the firm is favorably placed to capitalise on the incremental growth in industry demand, said the brokerage. The brokerage sees a 21 percent upside with a target at Rs 1,765 per share.
Supreme Industries: The company is one of the largest players in the Indian PVC pipes segment with a 10 percent market share. Also, it is the second-largest plastic furniture manufacturer with a 13 percent market share in the domestic market. With a strong product portfolio and competitive edge over the peers, the firm is favorably placed to capitalise on the incremental growth in industry demand, said the brokerage. The brokerage sees a 21 percent upside with a target at Rs 1,765 per share.
Published : November 03, 2020 03:35 PM IST
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