We have collated a list of ten trading ideas, from different experts,
which can give up to 98% return in the next 12 months or by next Diwali:
Analyst: Rahul Shah, Vice President -Equity Advisory Group, Motilal Oswal Securities
DCB: Target price set at Rs 110
DCB's new management restructured its balance sheet, improved underwriting standards with more focus on secured loans and other stringent criteria for loan approvals. NPA has showed steady improvement over FY10-14, with GNPA falling from 8.8% in FY09 to 1.7% in FY14.
DCB's current valuations of 1.7x FY15E P/ABV and 11x FY15E P/E do not reflect the bank's ability to scale up its redefined business model. We attach a fair P/ABV multiple of 2.3x FY15E, a 25% premium to comparable peers (small to medium sized banks) owing to higher advances growth, superior NIM, improving asset quality, robust earnings growth and improvement in return ratios.
Analyst: Daljeet S Kohli - Head of Research IndiaNivesh Securities
Reliance Industries Ltd: Target price set at Rs 1274
Reliance Industries would be one of the biggest beneficiaries of proposed hike in natural gas price. We believe successful discovery in MJ1 well and exploration in R-Series gas field in KG D6 block would help ramp up the production of natural gas in the next 2-3 years.
Despite a fall in international prices, petrochemicals margin would remain firm in the near term, driven by INR weakness and increase in polymer customs duty. The company's US$4bn pet coke gasification project remains on schedule for implementation by FY16 end, which will likely help in expansion on operating margin of refining business. Further, shale gas and retail business are also showing remarkable growth and likely to be a key revenue and profitability driver going ahead.
Ashiana Housing Ltd: Target price set at Rs 202
Ashiana Housing Ltd (AHL) is a unique asset light developer, with strong focus on pursuing real estate business in Tier II and III cities. Despite its focus on Tier II & III cities, AHL's financial health has not been majorly impacted by the recent economic slowdown.
We expect AHL to report FY16E RoE and RoCE of 35 per cent each. AHL is likely to report 149 per cent top-line CAGR during FY14-16E (to nearly Rs 6.9 bn), on the back of 3 projects entirely getting completed (Tree House, Utsav and Anantara) and some phases of the remaining 7 projects getting completed (Ashiana Town, Rangoli Gardens, Aangan, Gulmohar Gardens, Navrang, Vrinda Gardens, Dwarka and Umang).
We expect AHL to report 192 per cent PAT CAGR during FY14-16E. With substantial chunk of 6.8 mn sq. ft. of ongoing projects reaching revenue recognition threshold, we expect revenue visibility to sharply improve from here on.
Capital First Ltd: Target price set at Rs. 360
CFL has emerged as one of the fastest-growing NBFCs, backed by 1) clear management strategy and expertise in retail segment, 2) increasing focus on retail which is least impacted by slowdown in economy, 3) moving towards less risky segments like mortgage, consumer durables and two wheeler financing, and 4) strong promoter backing of Warburg group.
Further getting out of non-profitable business like securities and commodity broking in the last financial year and focus on core business of financing will be the key positive for the company.
We believe CLF is well placed to move on to the next stage of growth. Going forward, the company aims to focus on improving productivity from existing network. Thus, leveraging the cost to income ratio is likely to result in a healthy bottom-line growth.
Meghmani Organics Ltd: Target price set at Rs.34
Meghmani Organics Ltd, a leading global generic agrochemicals player and one of the largest blue pigments producers in the world, is seeing a significant business turnaround after many years of dismal performance.
With uptick in agrochemical cycle, the following triggers should lead to business turnaround: (1) margin expansion on the back of stabilization of recently commenced facilities, (2) better profitability in absence of incremental capex should lead to commencement of debt repayment, (3) With permissions in place from state-level Pollution Control Board, Meghmani is well positioned to ramp-up operations to peak capacity.
Also, (4) Implementation of stringent pollutions norms in China makes Indian agrochemical and pigments business attractive, and (5) ability to attract new order wins from MNC clients given that all safety and environment certifications are in place.
On account of industry down cycle and levered balance sheet of the company, the Meghmani stock has been trading at lower 1-year forward EV/EBITDA multiple of 3.9x. With revival in business cycle, we have assigned 5.9x EV/EBITDA multiple to arrive at FY16E based price target of Rs 34/share.
DCB: Target price set at Rs 110
DCB's new management restructured its balance sheet, improved underwriting standards with more focus on secured loans and other stringent criteria for loan approvals. NPA has showed steady improvement over FY10-14, with GNPA falling from 8.8% in FY09 to 1.7% in FY14.
DCB's current valuations of 1.7x FY15E P/ABV and 11x FY15E P/E do not reflect the bank's ability to scale up its redefined business model. We attach a fair P/ABV multiple of 2.3x FY15E, a 25% premium to comparable peers (small to medium sized banks) owing to higher advances growth, superior NIM, improving asset quality, robust earnings growth and improvement in return ratios.
Analyst: Daljeet S Kohli - Head of Research IndiaNivesh Securities
Reliance Industries Ltd: Target price set at Rs 1274
Reliance Industries would be one of the biggest beneficiaries of proposed hike in natural gas price. We believe successful discovery in MJ1 well and exploration in R-Series gas field in KG D6 block would help ramp up the production of natural gas in the next 2-3 years.
Despite a fall in international prices, petrochemicals margin would remain firm in the near term, driven by INR weakness and increase in polymer customs duty. The company's US$4bn pet coke gasification project remains on schedule for implementation by FY16 end, which will likely help in expansion on operating margin of refining business. Further, shale gas and retail business are also showing remarkable growth and likely to be a key revenue and profitability driver going ahead.
Ashiana Housing Ltd: Target price set at Rs 202
Ashiana Housing Ltd (AHL) is a unique asset light developer, with strong focus on pursuing real estate business in Tier II and III cities. Despite its focus on Tier II & III cities, AHL's financial health has not been majorly impacted by the recent economic slowdown.
We expect AHL to report FY16E RoE and RoCE of 35 per cent each. AHL is likely to report 149 per cent top-line CAGR during FY14-16E (to nearly Rs 6.9 bn), on the back of 3 projects entirely getting completed (Tree House, Utsav and Anantara) and some phases of the remaining 7 projects getting completed (Ashiana Town, Rangoli Gardens, Aangan, Gulmohar Gardens, Navrang, Vrinda Gardens, Dwarka and Umang).
We expect AHL to report 192 per cent PAT CAGR during FY14-16E. With substantial chunk of 6.8 mn sq. ft. of ongoing projects reaching revenue recognition threshold, we expect revenue visibility to sharply improve from here on.
Capital First Ltd: Target price set at Rs. 360
CFL has emerged as one of the fastest-growing NBFCs, backed by 1) clear management strategy and expertise in retail segment, 2) increasing focus on retail which is least impacted by slowdown in economy, 3) moving towards less risky segments like mortgage, consumer durables and two wheeler financing, and 4) strong promoter backing of Warburg group.
Further getting out of non-profitable business like securities and commodity broking in the last financial year and focus on core business of financing will be the key positive for the company.
We believe CLF is well placed to move on to the next stage of growth. Going forward, the company aims to focus on improving productivity from existing network. Thus, leveraging the cost to income ratio is likely to result in a healthy bottom-line growth.
Meghmani Organics Ltd: Target price set at Rs.34
Meghmani Organics Ltd, a leading global generic agrochemicals player and one of the largest blue pigments producers in the world, is seeing a significant business turnaround after many years of dismal performance.
With uptick in agrochemical cycle, the following triggers should lead to business turnaround: (1) margin expansion on the back of stabilization of recently commenced facilities, (2) better profitability in absence of incremental capex should lead to commencement of debt repayment, (3) With permissions in place from state-level Pollution Control Board, Meghmani is well positioned to ramp-up operations to peak capacity.
Also, (4) Implementation of stringent pollutions norms in China makes Indian agrochemical and pigments business attractive, and (5) ability to attract new order wins from MNC clients given that all safety and environment certifications are in place.
On account of industry down cycle and levered balance sheet of the company, the Meghmani stock has been trading at lower 1-year forward EV/EBITDA multiple of 3.9x. With revival in business cycle, we have assigned 5.9x EV/EBITDA multiple to arrive at FY16E based price target of Rs 34/share.
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