As the year draws to a close and markets are at record highs, it's time to evaluate your portfolio and see if any changes are desirable. Here are 2 stocks picks from broking houses that may yields good returns in the medium to long term. Investors also need to exercise some caution, given that markets are at record levels.
Edelweiss has placed a "buy" call on the stock of Navin Flourine with a target price of Rs 2,817 on the stock. Navin Fluorine has announced capex of Rs 195 crores to set up a multi-purpose plant (MPP) for its Specialty Chemicals business at Dahej through its wholly owned subsidiary Navin Fluorine Advanced Sciences Ltd.
"The company will manufacture five products initially at the Dahej MPP, which are agrochemical intermediates for recently commercialized molecules. The company has been working on these products for the last two years - piloting and R&D has been completed. These products require complex fluorination and multi-step synthesis.
NFIL has material supply agreement/LOI in place from customers (mix of domestic and overseas) and is the sole supplier of these products from India. The molecules manufactured at the Dahej MPP could be potentially larger than those manufactured at NFIL's Surat MPP. Thus, a few of these molecules may require dedicated reactors as they scale up, allowing the MPP to be used for manufacturing products in the pipeline (another seven agro and pharma intermediates)," Edelweiss has stated in its report.
Navin Flourine: Price target of Rs 2,817
According to the broking house, the management commentary (post the capex announcement) spells out an impressive growth trajectory for the company.
"The MPP will manufacture a new set of products for agro/pharma segments, which will be intermediates for newly commercialized molecules. The project will be commissioned in H1FY23E with expected peak annual revenue of INR260-280cr. Revenues could see a further upside from volumes scaling up for few products in the future. We maintain our ‘BUY' rating on NFIL and upgrade our target price of to Rs 2,817," Edelweiss has stated.
The shares of Navin Flourine were last seen trading at Rs 2,620 on the NSE.
Sharekhan has a "buy" call on the stock of NTPC on accounts of its risk averse regulated business model provides earnings visibility (expect a 19% PAT CAGR over FY2021E-FY2023E) as robust commercialisation target (5-6 GW annually) would drive strong growth in regulated equity base.
"We expect gradual re-rating led by improving operational performance (PAF at 90% plus and higher PLF for coal-based power plants), 15% CAGR guidance over FY21-23 in regulated equity, and better mix of renewable energy to allay concern of ESG. Management is confident to reduce receivable to Rs. 16,000 crore by Q4FY2021 (versus Rs. 19,164 crore in Q2FY2021) as discoms are expected to clear dues of power generation companies under power sector relief package," the brokerage firm has stated.
NTPC: Price target of Rs 140
Sharekhan has maintained a "Buy" rating on NTPC with a revised target price of Rs. 140, as valuation remains attractive at 0.8x is FY2023E P/BV (46% discount to historical multiple) despite improved earnings visibility and dividend yield of 6-7%. Buyback price of Rs. 115 (close to FY2020 book value) would provide support to the stock price
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About the author
Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains equities, mutual funds, tax planning and commodities.