Markets have been rallying in the last few months, and are rallying to new peaks. However, there are many stocks that are near 52-week lows, while other have hit 52-week lows. Will these stocks recover sharply from here? Some of these stocks maybe a little over their 52-week lows.
Shares in Tata Motors slumped to a new 52-week low of Rs 374 and have recovered slightly to Rs 385. At the current levels many brokerages have upgraded their targets on the stock, despite dismal quarterly numbers from the major. The belief is that margins of Jaguar Land Rover (JLR) is likely to improve going forward. The commercial vehicles business in India, which has been gradually losing market share may see a revival. In fact, the company's domestic sales for the month of August 2017 jumped by a staggering 26 per cent. The growth had largely to do with ramp-up of BS4 production across segments and passing on the benefits of the Goods and Services Tax to consumers. HDFC Securities has recently placed a buy call on the stock. "The model mix is likely to turn favourable with the ramp-up of sales for Discovery and Velar, thereby improving margins. Post commissioning of the Slovakia plant, capex intensity for JLR is likely to reduce from FY19," the firm has said.
Nomura too has placed a buy call on the stock. "The strong new launch pipeline should drive double-digit volume growth for JLR. EBITDA margins should also improve, largely in FY19F, as unfavourable hedges expire and product mix," the firm has said.
Amara Raja Batteries
Along with Exide Amara Raja Batteries dominates the industrial and automotive battery space. In fact, the Amara Raja Batteries has been gaining market share in the last few years. What will drive growth at Amara Raja Batteries is the gradual expansion that is taking place. The company is increasing its two-wheeler battery capacity from 11 million units (FY17) to 25 mn units per annum (pa) by FY20. In the four wheeler space it has already increased its capacity last year. This should drive growth in the coming years at the company. In fact, the company should report an EPS of Rs 38 by 2018-19. This makes the price a little expensive at Rs 789. So, one needs to wait for declines to buy into the stock. The 52-week low of the share is Rs 750, which is only marginally lower than the current market price.
Coal India is trading at Rs 244, which is marginally higher than its 52-week low price of Rs 236. The current market price offers great scope for appreciation in the stock, given the huge dividend yield of almost 7-8 per cent on the shares. The company is a cash rich and debt free company, which makes the stock even more interesting to buy at the current levels.
The company has a monopoly business and we believe that coal prices are headed higher in the coming days. in fact, production at the company has also been seeing a gradual uptick. Coal India announced that production in the month of August, at 37.63 million tonnes, was higher than what it had targetted (36.96 million tonnes) for the month. The stock is a good bet near its 52-week lows.
TV Today owns and operates the Aaj Tak and Headlines Today news channels in Hindi and English respectively. The stock has recently hit a 52-week low of Rs 214, as against the current market price of Rs 260. The company has a good business model and remains inexpensive at the current levels. In fact, the stock trades at a p/e of just about 12-13 times one year forward earnings. This is rather cheap for a media company, where valuations are way higher. A good stock to accumulate keeping a long term perspective in mind. The company recently saw its net profits slump to Rs 19.39 crores for the quarter ending June 30, 2017, but, that was largely on account of one of interest expenses.
Tata Motors DVR
The Tata Motors DVR is trading just 3 per cent above its 52-week low of Rs 213. The DVR is currently trading at Rs 219.50. The Tata Motors DVRs offer you 5 per cent more dividend than equity shares.
The DVRs are a play on the performance of the company and that has not been too great in the last few quarters. However, if there is a sharp recovery in the performance of the JLR, we could see the DVRs rally. A good bet at the current levels.
NMDC is a stock that is into iron ore mining, with majority of shares being held by the Government of India. The stock touched a 52-week low of Rs 96 and is currently trading at Rs 134. The company is not a bad bet as at the current price as the dividend yield on the stock works to around 7 per cent. This is of course if the company retains the same dividend as last year.
The stock is also trading at very decent valuations of around 10 times price to earnings multiple. Not a bad bet at the current levels.
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