Mar 25, 2016 : In the past one year, the only colour investors found on
their portfolio was 'red', but things could change over the next 12
months as the Sensex looks on course to hit a new high, say experts who
expect the market to deliver a minimum return of 10%-20%.
The S&P BSE Sensex is down by about 14 per cent since last Holi. But valuations have now come down to reasonable levels, although they are still not cheap. This will make India more attractive for foreign institutional investors (FIIs), who have already poured in over Rs 16,000 crore in Indian equity this calendar.
"The improved macroeconomic fundamentals and the government's ongoing measures and initiatives to revive the economy would continue to attract foreign investment. India has been seen as a bright spot by the foreign market players to park their funds," D K Aggarwal, Chairman and MD, SMC Investments and Advisors, told ETMarkets.com.
An increase in global liquidity, lower commodity prices, government's effort to boost consumption and a possible rate cut by the Reserve Bank of India (RBI) will provide enough push to the economy to attain a higher growth trajectory of 8 per cent and above.
"Cheaper valuation, improving consumer sentiments, strong operating margins and positive sentiments towards Indian economy would continue to keep India less vulnerable towards global conditions," Tushar Pendharkar, Equity Strategist at Right Horizons Financial Services told ETMarkets.com.
"The market is expected to remain stable and witness over 20% growth in next 12 months. We are expecting the Sensex to touch the 30,000 level by the end of FY17," he said.
ETMarkets.com collated a list of 14 stock recommendations from various experts that investors can look at with a minimum investment horizon of 12 months:
Analyst: Vikas Gupta, CIO - ArthVeda Capital
Wipro: Wipro is a cash-rich company, has low leverage and has 13 per cent of the market cap in the form of cash balance. The stock is available at an attractive EBIT yield of 10 per cent, out of which 2.0 per cent is dividend yield. The company has a wide portfolio of IT services for a huge gamut of multinational clients, all of which translates into solid top-line and robust fundamentals.
NMDC: NMDC is also a cash-rich company with negligible debt, with 52 per cent of the market-cap comprising cash balance. The stock is available at attractive EBIT yield of 59 per cent of which 17 per cent is dividend yield. It has a monopoly position in iron ore.
With the Indian market and GDP growth set to escalate in the long term on the back of depressed capacity utilisations and repressed EBIT margins, iron demand for Indian infrastructure projects is bound to increase.
ICICI Bank: Generally, the Indian financials sector is burdened with high NPA. However, ICICI Bank stands apart as a gem. The stock remains available at attractive valuations (a) undervalued on market cap per branch basis at INR 30 Cr./branch vs. peers at INR 60-90 Cr./branch; b) P/B of 1.5x) and coupled with top-notch management strikes as a potential long-term play.
MphasiS: Strong profitability (operating margins in the high teens) and net cash position of the company, leads to robust quality for MphasiS. Potential gains from fast growing US and a weak INR should additionally bolster the company. The earnings yield (on EV basis) of 11 per cent further justifies a good entry point.
Zensar Technologies: Currently, the company is sitting on a strong deal pipeline of US$592mn, with major revenues coming from the US (75%), thus depreciating INR and strengthening US economy providing further tailwinds to the business.
It is a high-quality company with more than 20 per cent ROE. Zensar is a cash-rich position with healthy net cash. The stock is available at a very attractive 11.1 per cent EBIT yield.
Analyst: D K Aggarwal, Chairman and MD, SMC Investments and Advisors
Aarti Industries: The ongoing expansion projects will help the company to increase its exports share in existing as well as new products in the global market. This will be the key growth drivers in coming years.
The demerger of pharma and home and personal care businesses would benefit the shareholders to unlock its value across various segments of the company.
Torrent Power: The company is expected to gain from four of its gas-based power plants, which will get government subsidy on the use of re-gasified liquefied natural gas (RLNG) for six months from October to March.
TV Today Network: All the channels of the group are contributing to the revenue growth of the company. As per industry estimates, subscription revenue is expected to see a growth over a period of time and company is expected to get the benefit.
Atul Auto: The growth prospects of the company reflect healthy business movement for the long-term, as the company continues to launch new products and plans to enters more markets.
The existing plant capacity of the company would increase up to the capacity of 60,000 vehicles per annum in the frame of next two years, this means an increase of 12,000 vehicles capacity from its current capacity of 48,000 vehicles.
Moreover, the management has an expansion plan to open a unit near Ahmedabad for additional installed capacity of 60,000 vehicles per annum at an estimated Capex of INR 150 crore.
Analyst: Tushar Pendharkar, Equity Strategist at Right Horizons Financial Services.
UltraTech Cement: UltraTech could witness volume growth in the cement segment due to expected rise in demand from Infra and housing segment. The segment would also get the benefit of the low base of the last couple of years. Due to recent acquisitions, UltraTech is well poised for an economic uptick.
Larsen & Toubro: Higher budgetary allocation for roads, railways and other infrastructure activities could significantly boost the earnings of L&T. The company has sufficient order book; however, execution on time would decide the further movement in the stock
Maruti Suzuki: Continued new model launches and improving affordability of cars in Indian middle class could trigger sales volume performance.
Tata Motors: There is a significant surge in CV sales volume due to an uptick in core sectors and improvement in JLR numbers are expected to trigger financial performance of the company and stock could also witness re-rating.
Tata Power: 'Power for all' kind of projects and increased focus over rural electrification would remove hurdles for power companies and Tata Power is well positioned and relatively stronger in terms of fundamentals.
The S&P BSE Sensex is down by about 14 per cent since last Holi. But valuations have now come down to reasonable levels, although they are still not cheap. This will make India more attractive for foreign institutional investors (FIIs), who have already poured in over Rs 16,000 crore in Indian equity this calendar.
"The improved macroeconomic fundamentals and the government's ongoing measures and initiatives to revive the economy would continue to attract foreign investment. India has been seen as a bright spot by the foreign market players to park their funds," D K Aggarwal, Chairman and MD, SMC Investments and Advisors, told ETMarkets.com.
An increase in global liquidity, lower commodity prices, government's effort to boost consumption and a possible rate cut by the Reserve Bank of India (RBI) will provide enough push to the economy to attain a higher growth trajectory of 8 per cent and above.
"Cheaper valuation, improving consumer sentiments, strong operating margins and positive sentiments towards Indian economy would continue to keep India less vulnerable towards global conditions," Tushar Pendharkar, Equity Strategist at Right Horizons Financial Services told ETMarkets.com.
"The market is expected to remain stable and witness over 20% growth in next 12 months. We are expecting the Sensex to touch the 30,000 level by the end of FY17," he said.
ETMarkets.com collated a list of 14 stock recommendations from various experts that investors can look at with a minimum investment horizon of 12 months:
Analyst: Vikas Gupta, CIO - ArthVeda Capital
Wipro: Wipro is a cash-rich company, has low leverage and has 13 per cent of the market cap in the form of cash balance. The stock is available at an attractive EBIT yield of 10 per cent, out of which 2.0 per cent is dividend yield. The company has a wide portfolio of IT services for a huge gamut of multinational clients, all of which translates into solid top-line and robust fundamentals.
NMDC: NMDC is also a cash-rich company with negligible debt, with 52 per cent of the market-cap comprising cash balance. The stock is available at attractive EBIT yield of 59 per cent of which 17 per cent is dividend yield. It has a monopoly position in iron ore.
With the Indian market and GDP growth set to escalate in the long term on the back of depressed capacity utilisations and repressed EBIT margins, iron demand for Indian infrastructure projects is bound to increase.
ICICI Bank: Generally, the Indian financials sector is burdened with high NPA. However, ICICI Bank stands apart as a gem. The stock remains available at attractive valuations (a) undervalued on market cap per branch basis at INR 30 Cr./branch vs. peers at INR 60-90 Cr./branch; b) P/B of 1.5x) and coupled with top-notch management strikes as a potential long-term play.
MphasiS: Strong profitability (operating margins in the high teens) and net cash position of the company, leads to robust quality for MphasiS. Potential gains from fast growing US and a weak INR should additionally bolster the company. The earnings yield (on EV basis) of 11 per cent further justifies a good entry point.
Zensar Technologies: Currently, the company is sitting on a strong deal pipeline of US$592mn, with major revenues coming from the US (75%), thus depreciating INR and strengthening US economy providing further tailwinds to the business.
It is a high-quality company with more than 20 per cent ROE. Zensar is a cash-rich position with healthy net cash. The stock is available at a very attractive 11.1 per cent EBIT yield.
Analyst: D K Aggarwal, Chairman and MD, SMC Investments and Advisors
Aarti Industries: The ongoing expansion projects will help the company to increase its exports share in existing as well as new products in the global market. This will be the key growth drivers in coming years.
The demerger of pharma and home and personal care businesses would benefit the shareholders to unlock its value across various segments of the company.
Torrent Power: The company is expected to gain from four of its gas-based power plants, which will get government subsidy on the use of re-gasified liquefied natural gas (RLNG) for six months from October to March.
TV Today Network: All the channels of the group are contributing to the revenue growth of the company. As per industry estimates, subscription revenue is expected to see a growth over a period of time and company is expected to get the benefit.
Atul Auto: The growth prospects of the company reflect healthy business movement for the long-term, as the company continues to launch new products and plans to enters more markets.
The existing plant capacity of the company would increase up to the capacity of 60,000 vehicles per annum in the frame of next two years, this means an increase of 12,000 vehicles capacity from its current capacity of 48,000 vehicles.
Moreover, the management has an expansion plan to open a unit near Ahmedabad for additional installed capacity of 60,000 vehicles per annum at an estimated Capex of INR 150 crore.
Analyst: Tushar Pendharkar, Equity Strategist at Right Horizons Financial Services.
UltraTech Cement: UltraTech could witness volume growth in the cement segment due to expected rise in demand from Infra and housing segment. The segment would also get the benefit of the low base of the last couple of years. Due to recent acquisitions, UltraTech is well poised for an economic uptick.
Larsen & Toubro: Higher budgetary allocation for roads, railways and other infrastructure activities could significantly boost the earnings of L&T. The company has sufficient order book; however, execution on time would decide the further movement in the stock
Maruti Suzuki: Continued new model launches and improving affordability of cars in Indian middle class could trigger sales volume performance.
Tata Motors: There is a significant surge in CV sales volume due to an uptick in core sectors and improvement in JLR numbers are expected to trigger financial performance of the company and stock could also witness re-rating.
Tata Power: 'Power for all' kind of projects and increased focus over rural electrification would remove hurdles for power companies and Tata Power is well positioned and relatively stronger in terms of fundamentals.
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