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    3 "Must Buy" Stocks for Your Portfolio


    Indian markets continue to trade in a range, though at the current valuations the Sensex p/e on a trailing basis is still expensive. In part, it is largely on account of some large banks, which have been a drag on the indices. Here are a few stocks that could be good picks for the long-term. These stocks are taken from reports of some of the leading brokerages in the country.

    Tata Communications


    Motilal Oswal has placed a "buy" call on the stock of Tata Communications. The brokerage sees a strong order funnel as a prime reason to be buying the stock.

    "Order book continues to be robust. Over 50 per cent of the overall order book is contributed by Growth Services, which has increased from USD13m/month to USD17m/month," the firm has said.

    "The stock quotes at 7x FY20E EV/EBITDA, at 25 per cent discount to the three-year average one-year forward EV/EBITDA of 9.6x (primarily building land demerger value).  We ascribe 9x/3x to (FY20) Data/Voice EBITDA of Rs 30.2 billion, INR2.7b, arriving at a TP of INR730 (23% upside from CMP). Besides, land demerger (in the next six months) offers additional upside of Rs 176," the brokerage firm has said.

    Shares of Tata Communications last closed at Rs 594. 

    SIS India

    Edelweiss has placed a "buy" call on the shares of SIS India with a price target of Rs 1532. The brokerage firm has said that prudent M&A, improving operating efficiency, robust sector dynamics and strong competitive edge as the major reasons to be buying the stock.

    SIS India is one of the leading security companies in India. The company's security agencies in India cover all 29 states.

    On growth, SIS indicated to the brokerage firm that the FY18 growth momentum continues into FY19E.

    "We thus estimate the domestic SS and FM segments will clock FY19E sales growth of 20% and 30%, respectively.

    "We value SIS on a three-stage DCF to capture its long-term potential and thus retain 'BUY' with an unchanged target price of Rs 1,532. Our analysis shows that CMP builds in an EBITDA CAGR of ~15% for FY18-28E, which might actually come in higher around 18%," the firm has said.


    S Chand & Company

    Nirmal Bang has placed a buy call on the stock of S Chand & Company. The firm has set a target price of Rs 524 on the stock.

    "Going ahead, since S Chand, has strong brand value, and is widely present in the growing segment of the education industry, we expect, S Chand will grow by around 13.6% & 13.9% in FY19E & FY20E organically, with constant increase in the product portfolio and increase in the reach by adding new institutions.

    S Chand is also looking out for inorganic growth mainly in western and southern India. We have not included any growth in sales due to acquisition. We expect margins to improve by 74.5 bps in FY19E and remain stable in FY20E. S Chand is likely to do PAT of Rs 122.2crores & Rs 144.4 crores in FY19E & FY20E respectively. At CMP, the share is trading at EV/Ebitda of 5.7x and PE of 10.0x FY19E EPS of Rs 34.9.

    We recommend a BUY on S Chand with a target price of Rs 524, based on 15x FY19E EPS (49.7% return)," the firm has said.

    Shares of S Chand & Company last closed at Rs 351. 

    Read more about: stocks tata communications
    Story first published: Saturday, June 30, 2018, 9:13 [IST]
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