For the just ended trading week, Nifty and Sensex touched a fresh high primarily pushed by technology stocks and now the focus shall shift to banking names with results of some of the banks due to be announced during the next week. Volatility will inch higher next week as some of the 12 index companies are slated to announce their earnings for Q1FY22.
Now as is well known high enough returns from the equities could be generated by remaining invested in them for a considerably longer time span, here are two stock picks by HDFC Securities:
1. Ashoka Buildcon:
The firm from the real estate space has been retained with a 'Buy' call while the target price has been increased from the earlier Rs. 168 to Rs. 175. Last the stock traded at a price of Rs. 107.60, suggesting an upside of as much as 63% from the last retailing price.
Ashoka Buildcon is majorly into highway development in India. Further it is an integrated player in the area of EPC ,BOT & HAM and comprises a portfolio of 39 PPP projects. This is the largest with any private player in the country.
"Ashoka Buildcon (ASBL) reported 4QFY21 revenue/EBITDA/APAT at INR 14/2/1.5bn, beating our estimates by 14/32/43% on execution and margin outperformance. Labour efficiency has recovered to 90-95% after hitting a trough at 70% in April-21. The company expects commodity price impact to be minimal, given the escalation clauses in much of the order book", added the brokerage report.
- Margin outperformance with EBITDA coming in at INR 2bn (+56/+91% YoY/QoQ, 32% beat)
- Order book at INR 81.7bn; INR 60-70bn inflow guidance for FY22. Company is on the hunt for international ventures as well.
- Consolidated gross/net debt stood at INR 62/54bn (Rs 60/55bn QoQ)
|No. of Shares (mn)||281|
|MCap (INR bn) / ($ mn)||27/368 6|
|Avg traded value (INR mn)||205|
|52 Week high / low INR||119/50|
2. Somany Ceramics:
The tile company has given a ‘Buy' recommendation by HDFC Securities for a target price of Rs. 940. Price as at the time of stock recommendation (July 14) was Rs. 664 and now at the close of July 16, 2021, the scrip settled close to its 52-week high price at Rs. 673.6. This implies an upside of 39.5% from the last traded price.
Somany Ceramics is India's second-largest tiles player. We like it for its increased focus on retail sales through a robust distribution and showroom network across India and expanding share of premium tiles sales, said the brokerage report.
While demand pangs hit the industry growth from FY17- 21, the recovery in real estate Q3FY21 onwards and continued export growth are expected to bolster the industry's and SOMC's revenue growth.
"We value SOMC at 13x (five-year mean multiple) its Jun'23E consolidated EBITDA, leading to a target price of INR 940/share. We initiate coverage on SOMC with a BUY rating", said HDFC Securities.
|No. of Shares (mn)||42|
|MCap (INR bn) / ($ mn)||28/378|
|6 month Avg traded value (INR mn)||67|
|52 Week high / low INR||669/111|
|Stock's relative performance 12month||474%|
Stock market investments are risky. Please do your own analysis considering your risk profile and financial goals before betting on any investment product. Greynium, neither the brokerage nor the author will be responsible for any losses made on any investment call taken basis the above report. The above report is taken from HDFC Securities.