The benchmark indices, Sensex and Nifty 50 have recently touched an all-time high majorly led by banking stocks and liquidity gush from the foreign investors.
The gains have been boosted by the FIIs, that have continued to pour in Indian markets in CY2019 with Rs 34,000 crore coming in March itself. Meanwhile, the Rupee has also strengthened in the last 1 month backed by FIIs inflow, and last week, RBI announced another 25 bps rate cut in the April monetary policy meeting.
Now, going forward Angel Broking believes, that the market would still be in a watchful mode till May’s election results. Post that, markets would start focusing on the sectors that the new government is laying stress on and their relevant beneficiaries.
"Overall, in the long term, the fundamentals underlying the business drive the stock returns and they are of utmost importance to the investors. We prefer to select private banks and niche consumption stocks," they said.
The brokerages advise investors to pick at the some of the overly corrected value stocks which offer a high margin of safety, and to avoid bottom fishing stocks which are facing severe corporate governance/ regulatory issues.
These are Angel Broking's top stock picks giving an upside between 25-62 percent: Inox Wind | Target Price: Rs 112 | Upside: 62 percent
We expect Inox Wind to report exponential growth in top-line and bottom-line over FY19-20 estimate. The growth would be led by changing renewable energy industry dynamics in favor of wind energy segment viz. changes in auction regime from Feed-In-Tariff (FIT) to Reverse auction regime and government’s guidance for increasing wind energy capacity from 34GW current to 140GW by 2030.
Music Broadcast | Target Price: Rs 95 | Upside: 59.4 percent
Radio Industry is protected by licenses for 15 years, thereby restricting the entry of new players. This would support the existing companies to strengthen their position and maintain a healthy growth rate. The company has grabbed the Number 1 position in Mumbai, Bengaluru, and Delhi in terms of a number of listeners. This is helping it to charge a premium rate, which results in a higher EBITDA margin of 33.6 percent.
GIC Housing Finance | Target Price: Rs 424 | Upside: 55.7 percent
Present liquidity issues will not impact the company for raising new funds considering the strong parentage. Moreover, during Q3FY19, it has reported healthy loan book growth despite liquidity issues faced by NBFCs/HFCs. The company's asset quality is on the higher side compared to other HFCs and it did not write-off any bad assets nor did it sell any bad assets to ARC, which has aided the asset quality.
Shriram Transport Finance | Target Price: Rs 1,764 | Upside: 47 percent
The company's primary focus is on financing pre-owned commercial vehicles. We expect AUM to grow at a healthy compound annual growth rate of 20 percent over FY2018-20 led by pick up in infrastructure/construction post-2019 elections, macro revival and ramp up in rural distribution.
Aditya Birla Capital | Target Price: Rs 151 | Upside: 46.5 percent
Aditya Birla Capital (ABCL) is one of the most diversified financial services entities in India. We expect financialization of savings, increasing penetration in insurance and mutual funds would ensure steady growth. Further, Banca tie-up with HDFC Bank, DBS and LVB should restore insurance business.
Ashok Leyland | Target Price: Rs 122 | Upside: 37.1 percent
During April-July 2018, Ashok Leyland has gained market share by 11 bps in the domestic market. Further, the company has reported a 46.4 percent YoY growth (against 45 percent industry growth) during the same period due to a strong pick up in construction and industrial activities.
BS-VI emission norms and the vehicle scrappage policy are among the major triggers that can provide a fillip to the commercial vehicle industry over the next couple of years. Further, in our view, the change in axle load norms will not impact the commercial vehicle demand scenario, hence the company will not witness any disruption in performance.
Jindal Steel & Power | Target Price: Rs 249 | Upside: 37 percent
The company has increased its crude steel capacity more than double in the last five years from 3.6 MTPA to 8.6 MTPA, and currently running at 65 percent utilization.
Owing to continuous demand of steel from infrastructure, housing and auto sectors along with limited addition of steel capacity in the near term and favorable government policies augur well for companies like JSPL to perform well going forward, we expect JSPL’s utilization to improve to 80-85 percent by FY20.
Safari Industries | Target Price: Rs 1,000 | Upside: 36.5 percent
Safari Industries is the third largest branded player in the Indian luggage industry. Post the management change in 2012, Safari has grown its revenue by 6 times in the last 7 years. The company's margins have more than doubled from 4.1 percent in FY14 to 9.8 percent in FY18, driven by the launch of new product categories and business. We expect it to maintain plus 9 percent margins from FY2018 onwards led by regular price hikes, shift towards an organized player and favorable industry dynamics.
Siyaram Silk Mills | Target Price: Rs 549 | Upside: 33.2 percent
The company has strong brands which cater to premium as well as popular mass segments of the market. Further, SSML entered the ladies' salwar kameez and ethnic wear segment. Going forward, we believe that the company would be able to leverage its brand equity and continue to post strong performance.
We expect Mahindra & Mahindra (M&M) to report net revenue CAGR of 12 percent to Rs 60,634 crore over FY2018-20 mainly due to healthy growth in automobile segment like utility Vehicles (on the back of new launches and facelift of some models) and strong growth in tractors segment driven by
Mahindra & Mahindra | Target Price: Rs 850 | Upside: 27.4 percent
strong brand recall and improvement in rural sentiment. Further, on the bottom-line front, we expect CAGR of 16 percent to Rs 5,429 crore over the same period on the back of margin improvement.
Parag Milk Foods | Target Price: Rs 330 | Upside: 26.5 percent
Value Added Products like cheese, whey protein enjoy higher gross margins of 25-45 percent versus 6-8 percent entailed in liquid milk. Driven by recently launched products and a higher share of value-added products, its operating margins would improve in the next few years. We expect the company to report net revenue/PAT CAGR of 17 percent/35 percent respectively over FY2018-20.
Maruti Suzuki has been able to improve its passenger vehicle market share over the last six years from 39 percent to 51 percent given its strong market understanding and unparalleled distribution. The company captured the market share despite competition from global players like VW, Renault, Nissan, Hyundai, Honda Toyota and Ford, and domestic peers like M&M & Tata.
Maruti Suzuki | Target Price: Rs 8,552 | Upside: 25.2 percent