2 Stocks That Brokerages Are Recommending

Markets have been hitting successive peaks and at these levels, the markets are no longer cheap. In fact, the Sensex is now very close to the 38,400 levels, which is a new peak. Here are a few stocks that brokerages are recommending to investors.

Vascon Engineers

Kotak Securities has placed a "buy" call on the stock of Vascon Engineers. For Q1FY19 the company reported strong growth in EPC business while real estate segment reported loss due to lower revenue recognition, increased fixed cost and unfavorable project mix. The real estate revenue also got impacted due to adoption of new Ind AS 115.

Kotak Securities has said that the company is positive on its business segments and expects new sales booking from the next phase of launches in Katvi, Forest Edge, Coimbatore, etc.

"Further, strong EPC order book would drive revenue for EPC segment. We have revised our estimates lower for FY19E and FY20E factoring in lower revenue from real estate segment and lower order inflows guidance for EPC segment. The stock is trading at FY19E and FY20E PE of 11.4x and 7.5x based on revised EPS of Rs 2.4 and Rs 3.6 respectively. We maintain Buy," the brokerage firm has said.

Vascon Engineers shares were last trading at Rs 30.

Siyaram Silk Mills

ICICI Direct has placed a "buy" call on the stock of Siyaram Silk Mills. According to the brokerage firm the management addressed the key issue regarding the sluggish recovery in trade channels post implementation of GST.

Normalisation at the dealer's level is taking longer than anticipated. Also, working capital days are expected to remain elongated, keeping debt levels high in FY19E.

"Going forward, with stabilisation of trade channels, we expect working capital to ease out in FY20E and generate healthy cash flow from operations. Factoring in the performance of Q1FY19, we revise our estimate downwards for FY19E, FY20E. Going forward, we expect overall revenues to increase at 10% CAGR and PAT to grow at 17% CAGR in FY18-20E. We value SSML at Rs 650 i.e. 20x P/E on FY20E EPS of Rs 32.7 with a BUY rating on the stock," ICICI Direct has stated in its report.

The shares of Siyaram Silk Mills was last seen trading at Rs 543 on the NSE.