Markets have been hovering around the same range for many weeks now. However, there are some stocks that have the potential to rally. Here are some great long term stock picks in India. These are largely taken from some of the top brokerages in the country.
Bank of Baroda
Geojit sees good potential in the stock of Bank of Baroda and has set a price target of Rs 200 on the stock. The brokerage firm sees an EPS of Rs 16.2 in FY 2019 for Bank of Baroda, which takes the p/e to around 10 times at the current levels.
Geojit expects consolidation in the loan book to continue for the next couple of quarters, and the firm says that they continue to like the bank owing to its better capital position, able management and higher provision coverage ratio. Further, gradual improvement in asset quality will lead to better profitability.
"As a result, we expect the RoA and RoE to improve to 0.5% and 8%, respectively by FY19E. Hence, we continue to maintain BUY rating with a revised upwards target price of Rs 200 and value the bank at P/ABV of 1.4x for FY19E," the brokerage firm has said.
Edelweiss has placed a buy on the stock of Ashoka Buildcon with a price target of 263, against the current market price of Rs 183. The firm believes that the valuations of the Ashoka Buildcon remain healthy.
"With the Kharar-Ludhiana HAM project starting, we believe revenue traction will continue. We expect revenue traction to sustain with work commencing on the Kharar-Ludhiana HAM project," the firm has said in its research report. Another reason why Edelweiss is recommending buying the stock of Ashoka Buildon is the order book position. The company ended FY17 with an order book of INR70bn (3.6x TTM EPC revenue), imparting robust revenue visibility in the years to come.
Valuations of Ashoka Buildcon
Edelweiss has said that their SOTP-based target price stands at Rs 263. Rs 175/share from EPC business (13x FY19E P/E) and balance from BOT projects (DCF valuation). "We maintain a buy" the firm has said.
Coming to the EPS Ashoka Buildcon according to Edelweiss estimates can do an EPS of Rs 17 by 2019. This should probably take the p/e to around 10-11 times at the current market price of Rs 183. The firm has also pointed out that the tax rate in FY18/19 will be 20-25% due to Sec 80(IA) benefits on EPC projects.
ICICI Direct has recommended buying the stock of Wabco with a price target of Rs 6,610 from the current market price of Rs 5,770. Wabco, according to the brokerage firm would be one of the major beneficiaries of an improvement in Medium and Heavy Commercial Vehicles (M&HCV) volumes, as it enjoys a leadership position (share of 85%) in the CV air braking systems.
"We expect long term growth in M&HCV volumes to be driven by 1) improving viability of fleet operators 2) government's thrust on infrastructure development & 3) Government's focus on "scrappage policy," the firm has said. According to ICICI Direct the government's focus on emission and safety would also help. The firm has also noted that Wabco will remain a preferred sourcing company for its parent, with 50 per cent probability of awarding new orders and expects exports revenue to touch Rs 1,000 crore in next three to four years.
Long term story of Wabco is intact
Wabco's business has been largely stable even when the commercial vehicle industry had, in the past, gone through downturns. With the government focusing more on safety norms, WIL is well placed to capture this growth opportunity, going forward. "Thus, we maintain our "buy" recommendation on the stock valuing it at 37x FY19E EPS, with a target price of Rs 6,610," ICICI Direct has said. A great long term stock pick in India.
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