On June 23, the benchmark indices rallied for the fourth consecutive day and ended at nearly 4-month high supported by the buying seen across sectors. Sensex was up 519.11 points or 1.49% at 35430.43, and the Nifty was up 159.80 points or 1.55% at 10471. Amid the uncertainty and high volatility in the market, brokerages have named following 10 stocks as their picks:
2/11
Escorts | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 970 | Target: Rs 1,150 | Upside: 18 percent. Escorts is a prominent tractor player domestically with market share in excess of 11%. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as expectation of normal monsoon 2020, Angel Broking expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.
3/11
Capacite's Infraprojects | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 116 | Target: Rs 162 | Upside: 39 percent. Prabhudas Lilladher believes that company is well-positioned to gain traction driven by impressive execution track record with stable margins, healthy order book, lean balance sheet with healthy return ratios, strong management pedigree and asset-light business model.
4/11
Mahindra and Mahindra | Brokerage: LKP | Rating: Buy | LTP: Rs 516 | Target: Rs 589 | Upside: 14 percent. The tractors segment will be the main driving force for M&M considering the robust demand led by several macro cues. On the SUV side the demand is still low, but expect festive season and new launches to drive its growth in H2 FY21 and FY22. M&M will continue to be the market leader in SCV segment with a strong focus on its Jeeto, Supro and Maximo brands.
Dwarikesh Sugar | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 25 | Target: Rs 38 | Upside: 52 percent. The company’s debt levels are comfortable given a large part of the Rs 650 crore debt is at the concessional interest rate. ICICIdirect believe Dwarikesh would generate Rs 300 crore of operating cash flows in the next two years, which would result in a significant reduction in high cost working capital debt. We expect strong 16.8%, 34.4% growth in revenue, earnings, respectively, during FY20-22.
6/11
Aditya Birla Fashion| Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 137 | Target: Rs 180 | Upside: 31 percent. The earnings should take another 3-6 months to show some traction, hence the stock may offer limited upside in the near term. However, it trades at FY22E EV/EBITDA multiple of 24x, which is at 15% discount to its 3-year average multiple of 29x (until Mar’20) and offers good opportunity. Further, ‘Unlock 1.0’ may also build some optimism for the stock.
7/11
Greenlam Industries | Brokerage: YES Securities | Rating: Buy | LTP: Rs 795 | Target: Rs 1,031 | Upside: 29 percent. YES Securities remain convinced that market leader like Greenlam Industries will emerge stronger from COVID scenario on the back of strong balance sheet and superior working capital & supply chain management.
8/11
AIA Engineering | Brokerage: YES Securities | Rating: Buy | LTP: Rs 1,583 | Target: Rs 1,948 | Upside: 23 percent. YES Securities assuming volumes of 240k MT (-10% yoy) in FY21 to factor in the impact of COVID-19 and expect strong volume growth in FY22 (296k MT). The company is better poised for long term growth with a successful diversification move to address product adjacencies through value added offerings like EEMS product solutions with increased throughput & power saving benefits for customers. We are building in 60bps margin expansion over FY20-22 led by benefits of INR depreciation (75% exports), launch of value added mill lining solutions & operating leverage play.
Chambal Fertlisers | Brokerage: SMC | Rating: Buy | LTP: Rs 149 | Target: Rs 181 | Upside: 21 percent. The company expects the farming sector would get a boost in FY21 with the forecast of a good monsoon. It also expects normal production in all its plants. The demand for products looks encouraging and the firm is comfortable on the logistics side also. The company does not foresee any challenge in terms of availability of manpower. It expects to comfortably meet all its obligations towards interest and term loan repayments for the current year.
10/11
KEI Industries | Brokerage: SMC | Rating: Buy | LTP: Rs 352 | Target: Rs 393 | Upside: 11 percent. Company is working on increasing exports and it is exploring more business from Africa and Middle East. Company can be a major beneficiary of the increasing demand from power, infrastructure and real estate sector. Institutional sale growth has been encouraging and management expects this division to grow in double digits, going forward.
11/11
Endurance Technologies | Brokerage: Angel Broking | Rating: Buy | LTP: Rs 899 | Target: Rs 1,015 | Upside: 13 percent. Endurance Technologies is one of India’s leading automotive component manufacturers with operations in India and Europe. It mainly caters to two and three-wheeler OEMs in India and supplies aluminum casting products to four-wheeler OEMs in Europe. Post Covid19, evolving consumer preference for lower ticket priced means of private transport amid pressurized incomes & awareness around social distancing are expected to act as tailwinds for domestic 2-Ws in India, 4-Ws across developed nations.
