Nifty 18210.95 (-0.31%)
Sensex 61143.33 (-0.34%)
Nifty Bank 40874.35 (-0.88%)
Nifty IT 35503.9 (0.97%)
Nifty Financial Services 19504.75 (-0.74%)
Adani Ports 745.85 (-0.54%)
Asian Paints 3094.65 (4.20%)
Axis Bank 787.50 (-6.46%)
B P C L 427.70 (-0.78%)
Bajaj Auto 3776.50 (-0.40%)
Bajaj Finance 7482.15 (-4.75%)
Bajaj Finserv 18012.00 (-1.86%)
Bharti Airtel 702.35 (0.88%)
Britannia Inds. 3697.85 (0.14%)
Cipla 922.50 (1.65%)
Coal India 173.60 (-0.83%)
Divis Lab. 5149.35 (2.60%)
Dr Reddys Labs 4662.70 (-0.08%)
Eicher Motors 2583.90 (-0.25%)
Grasim Inds 1728.40 (-0.63%)
H D F C 2915.00 (0.12%)
HCL Technologies 1177.15 (0.89%)
HDFC Bank 1642.80 (-0.60%)
HDFC Life Insur. 693.85 (0.55%)
Hero Motocorp 2690.15 (-0.38%)
Hind. Unilever 2396.60 (-1.65%)
Hindalco Inds. 479.85 (-1.28%)
I O C L 130.80 (-0.53%)
ICICI Bank 835.00 (0.68%)
IndusInd Bank 1142.55 (-1.07%)
Infosys 1728.95 (1.48%)
ITC 238.45 (0.74%)
JSW Steel 684.90 (-1.36%)
Kotak Mah. Bank 2188.25 (-1.03%)
Larsen & Toubro 1784.55 (-0.65%)
M & M 886.80 (-0.87%)
Maruti Suzuki 7356.25 (0.81%)
Nestle India 19004.60 (-1.11%)
NTPC 141.30 (-1.33%)
O N G C 157.90 (-3.19%)
Power Grid Corpn 190.25 (-0.08%)
Reliance Industr 2627.40 (-1.26%)
SBI Life Insuran 1186.00 (1.19%)
Shree Cement 28107.75 (1.19%)
St Bk of India 519.15 (1.29%)
Sun Pharma.Inds. 825.10 (1.43%)
Tata Consumer 818.75 (1.22%)
Tata Motors 497.90 (-2.11%)
Tata Steel 1326.15 (-1.30%)
TCS 3489.75 (0.21%)
Tech Mahindra 1567.85 (0.29%)
Titan Company 2460.10 (0.22%)
UltraTech Cem. 7354.20 (1.17%)
UPL 741.50 (3.96%)
Wipro 671.10 (0.44%)

5 best stocks to invest in current volatile markets

5 best stocks to invest in current volatile markets
by Nikita Bhoota 19/03/2018

Indian stock market, post the announcement of Union Budget 2018, is in a consolidation phase. The government’s implementation of Dividend Distribution Tax (DDT) of 10% on Equity Mutual Funds along with Long Term Capital Gain Tax of 10% on gain of more than Rs1lakh from equity investments has adversely impacted investors’ confidence. Further, emergence of PSU bank scams added to the woes.

At the global level, rising US bond yield and US President Donald Trump’s proposal to impose hefty import duties of 25% on all steel products and 10% on aluminum products has created panic in the global markets. The investors fear that the imposition of these taxes will create a trade war scenario, which will have a negative impact.

In February 2018, FIIs were the net sellers, FIIs sold (net) ~Rs12,500cr in the Indian equity market against net inflows of ~Rs14,000cr during January 2018.

However, identifying good stocks for investment that will give consistent returns in the long run is a real challenge. Based on fundamentals of the company, management outlook and business prospects, we have shortlisted 5 stocks that are expected to give healthy returns in the long-run.

Biocon

Biocon is India’s largest biologics company and an established player in research business. In FY17, small molecules, CRO, branded formulations and biologics contributed 41%, 29%, 14% and 12% respectively and the rest 4% came from the licensing fees.  In India, it is the largest biologics company and has products like INSUGEN, BASALOG, CANMAb, ALZUMAb, etc. Geographically, India contributes 30% of its total revenue, while 70% comes from overseas markets. Biocon’s early entry in the biosimilars business is positive for the company. The company, with its partner Mylan, is developing total 10 biosimilars, of which 3 (Pegfilgrastim Trastuzumab and Insulin Glargine) are submitted for regulatory submission. Company’s research business i.e. Syngene, in the last year has signed two new dedicated clients and has undertaken a capex of $200mn to expand its capabilities and forward integrate. This will help Biocon to grow its profit 6x over next five years. We expect 31.7% and 73.7% CAGR in revenue and PAT over FY18-20E. Biocon is expected to witness 38.6% EBITDA CAGR during this period.  We see an upside of 30% from CMP of Rs 586 over a period of 1 year.

Year

Net Sales
(Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)

FY18E

4,086

25.2

592

9.9

59.4

FY19E

4,869

27.0

706

11.8

49.8

FY20E

7,090

27.9

1787

29.8

19.7

Source: 5 Paisa Research

JK Tyre & Industries (JKTIL)

JKTIL is leading Indian Truck and Bus Radial (TBR) and LCV tyres manufacturer with 31% market share and capacity of 32mn tyres/annum (tpa). It derives 56% revenue from replacement segment, 34% from OEMs (standalone plus Cavendish) and 10% from exports (Tornel, Mexico, capacity 7.9mn tpa). We expect current margins to sustain due to better pricing environment.  The budget announcement of raising customs duty on TBR from 10% to 15% will make imports costlier, boosting volumes for JKTIL. Imposition of anti-dumping duty on Chinese TBR tyres, Government’s thrust on infrastructure and better consumer financing will result in strong CV sales, propelling JKTIL’s volumes. Hence, we expect revenue growth of 12% yoy in FY19E vs. 6% in FY18. After spending Rs3,700cr on capex (past 3 years), only maintenance capex of Rs100cr/year would be incurred over next 2-3 years. This will reduce D/E ratio from 3x in FY17 to 1.6x in FY20E. We see an upside of 40% from CMP of Rs152 over a period of 1 year.

Year

Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr) (before EO)

EPS (Rs)

PE (x)

FY18E

8,151

8.8

94

4.1

36.7

FY19E

9,129

13.7

440

19.4

7.8

FY20E

10,224

15.4

684

30.2

5.0

Source: 5paisa Research

Larsen & Toubro (L&T)

L&T is India’s largest engineering and construction company with no real peers when compared to its breadth and depth of offerings. Infrastructure formed 47%, Hydrocarbon 10%, Heavy engineering 3%, Power electrical & Auto 33% and Others 7% as of Q3FY18 revenue. L&T is well placed to benefit from the uptick in the investment cycle. Capital expenditure is expected to pick-up in India led by resolution of bad debt, pick-up in capacity utilization and recovery in demand. L&T’s order book as of 3QFY18 stood at Rs2,70,727cr. The order inflow is likely to increase from H2FY18 led by recovery in economy. We estimate revenue CAGR of 25% over FY18-20E. We believe that L&T’s focus on improving profitability will lead to PAT CAGR of 12% over FY18-20E.  We project an upside of 13% from CMP of Rs1,267 over a period of 1 year.

Year

Net Sales (Rs Cr)

OPM (%)

Net Profit (Rs Cr)

EPS (Rs)

PE (x)

FY18E

121,729

11.0

7,364

52.6

24.1

FY19E

135,891

10.8

7,825

55.9

22.7

FY20E

152,477

11.1

9,260

66.2

19.1

Source: 5 Paisa Research

HDFC Bank

HDFC Bank is the largest private sector bank in India with a market share of 4.5% in loan book terms. The bank’s strong competitive funding profile, better loan mix, high operating efficiency, and robust capital position to drive its earnings. For Q3FY18, HDFC Bank's retail and wholesale loan mix was 55:45, while cost-to-income ratio was 41.2%. Further, GNPA & NNPA ratio as of Q3FY18 was 1.29% & 0.44% respectively. We expect the judicious mix of wholesale and retail loan assets coupled with robust CASA growth to improve margins. We believe the bank to deliver loan book growth of ~21% CAGR over FY18-20E augmented by its strong branch network and strong capital position. The bank NIM is expected to be stable at 4.5% over FY18-20E due to higher credit/deposit ratio and high yield retail segment. Considering the superior growth in advances and better loan mix, we forecast ~21% EPS CAGR over FY18-20E. We project an upside of 15% from CMP of Rs1,857 over a period of 1 year.

Year

Net profit
(Rs Cr)

BVPS (Rs)

P/BV (x)

ROE (%)

FY18E

17,900

414.5

4.5

16.7

FY19E

22,800

502.6

3.7

17.5

FY20E

27,500

608.7

3.1

17.4

Source: 5 Paisa Research

Hexaware Technologies

Hexaware Technologies Limited is the fastest growing automation led, next-generation provider of IT, BPO and Consulting services. We believe that Hexaware’s successful implementation of “Shrink IT” has aided its industry leading growth despite ramp down in the past quarter from two clients (travel vertical). The strategy has enabled it to successfully weather the dampness in Enterprise Solutions (ES).  Hexaware’s CY18 revenue growth guidance of 10-12% is conservative considering that it easily beat the revised 15% guidance (from 10%) in CY17. Moreover, it is entering CY18 with 17.6% higher order book, which would drive 15%+ revenue growth once the ramp up starts.  Overall, we see 13.6% revenue CAGR over CY17-19E aided by successful strategy implementation and likely bottoming out of ES. We expect margins to be stable, despite pressures, aided by operating leverage and estimate PAT CAGR of 13.8% over CY17-19E. We expect an upside of 20% from CMP of Rs370 over a period of 1 year.

Year

Net Sales
(Rs Cr)

OPM (%)

Net Profit after EO (Rs Cr)

EPS (Rs)

PE (x)

CY17

3,942

16.6

500

16.6

22.3

CY18E

4,507

16.6

576

19.1

19.4

CY19E

5,090

16.7

647

21.4

17.3

Source: 5 Paisa Research

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8 big mistakes to avoid in a falling stock market

8 big mistakes to avoid in a falling stock market
01/04/2018

Everyone prefers to invest in a bullish stock market. However, investing in a bearish market is seen as a challenge for investors.

Stock markets have been facing a lot of volatility these days, hence, investors should keep a check of what they do and don’t. Panic leads to hasty moves, as a result paying a hefty price. However, if one is cautious of the commonly made mistakes (listed below), it may help in reducing losses to a great extent.

1). Don’t fixate on a price: Investors tend to anchor on a price, at which they bought the stock. They should carefully analyze the reasons for the falling stock and plan their next move accordingly. They must realize that the price at which the stock is bought is not necessarily perceived as its fair value by the market.

2). Say ‘No’ to buying more to average: Even though this concept has its own benefits, keep reminding yourself that this works only if the fundamentals of the stock are strong. The method of averaging is one of the trusted techniques in stock trading.

3). Be well researched regarding the market updates: Do not ignore any significant development happening in the market based on over confidence. Be well informed and take decisions according to the market trends. Your judgement without information may not always be correct.

4). Don’t be a value picker: Buying stocks at their 52-week low may seem a good bargain, but it might turn out to be a value trap. Markets can be unreasonable for longer periods of time than one can think of.

5). Do not make leveraged bets:  Leverage requires that the investment should earn a return, which is at least equivalent to the interest paid on the borrowed capital (if you have borrowed). However, in case of market dips, it can accrue huge losses too.
There’s a high degree of uncertainty involved in the stock market, which can drive the trends either ways – it can bring panic if one is risking the money that they cannot afford to lose. Alternatively, it can force one to close their positions by limiting their options, if they are buying on margin.

6). Don’t alter your financial plans: It is a human tendency to panic and react frantically in the state of stress. Don’t change your investment decisions and existing portfolios based on the current market trends. Keep a clear sight of your asset allocation.

7). Do not stop your Systematic Investment Plans: One should not stop their SIPs during a bear market. The primary purpose of SIP is to encourage buying more units at lower prices and reaping benefits when the market rebounds. Stopping SIPs at that point interrupts the compounding benefit of equities and affect the long term goals.

8). Do not over diversify your portfolio – One should not over diversify his portfolio that too in multiple companies of the same sector. Though this might help one to limit their downside to an extent, but won’t be of much help in the long run. Diversification beyond a point leads to greater risks, and it becomes difficult to monitor the stocks.

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The ‘right’ way to exit a losing trade

Exit a losing trade

Every trader has his share of bad trades in his portfolio and you do not need all your stocks to be multi-baggers to be successful in the share market. While gains from a stock have no upper limit, the loss from a stock is limited to the value invested in it. Exiting a losing stock is not only a financial loss for a trader, but also an emotional or psychological loss. It is human tendency not to accept losses readily. We have a few recommendations that will help you exit a declining trade.

Let’s take a look

Use stops to restrict your financial losses

Stops are calculated, pre-determined price levels at which the investor chooses to go short or sell his stocks to limit losses. When the stock price hits the stop loss price, a sell order is executed and the stock is automatically sold at that price. Stop loss orders work well as they define the losses beforehand and the loss amount is in the control of the investor. Have a personalized stop loss strategy and use it effectively to limit your losses while investing in stocks.

Keep a check on the stock even after exiting to find a re-entry point

Once you exit a position, keep an eye on it to identify any bullish indication of reversal, which can be a potential re-entry point. Using stops, you might sometimes exit your position because of price volatility. In no time, you may find the prices rising again. However, using proper stops is proven to be effective as it limits your losses in most cases. Analyze the charts, study the candlestick patterns, and re-enter, only, if it coincides with your research and not in hope or revenge. If there is no valid reason to re-enter the trade after the initial exit, walk away and search for new opportunities.

Do not emotionally connect with your stock picks

You should accept your wrong picks and move on rather than lingering onto the stock in the hope of a rebound. You need to monitor and notice the developments around your shares continuously, and if stocks are taking the wrong direction, you will sometimes need to book losses and accept your wrong stock picks. Don’t fall in love with your shares, sell them if the fundamentals do not appear correct and restrict your losses. Booking losses or hedging them at an early stage can help minimize losses.

Accept responsibility and analyze your mistakes and find out where your investment plan can be improved

This will help reduce the chances of the same happening again. Handling trading losses well is a leading characteristic of successful investors. Treat a failure as an opportunity to learn and improve it in your next move. Many opportunities are waiting out there in the market for you to find and grab hold of.

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5 Stocks for next week 8th Jan-12th Jan 2018

5 Stocks for next week 8th Jan-12th Jan 2018
by Gautam Upadhyaya 01/05/2018

AJANTA PHARMA - BUY

Stock AJANTA PHARMA
Recommendation The stock has managed to give a breakout from its sideways consolidation on the daily chart. The stock has also shown good strength on the daily and weekly MACD Histogram.
Buy/Sell Range Target Stop Loss
Buy(cash) 1518-1525 1590 1474
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 Day M.A
AJANTPHARM 13385 1870/1106 1418

JUST DIAL - BUY

Stock JUST DIAL
Recommendation The stock has given a flag pattern breakout and has also breached the declining trend line backed by a surge in volumes on the daily chart. The stock has taken support along the 10-day EMA on the weekly chart. 
Buy/Sell Range Target Stop Loss
Buy(cash 548-552 584 527
NSE Code Market Cap(Rs in Cr) 52-week High / low 200 Day M.A
JUSTDIAL 3697 619/326 459

NIIT TECH - Buy

Stock NIIT TECH
Recommendation The stock has given a breakout from its sideways consolidation on the daily chart backed by a surge in volumes; the stock has also taken support along the rising trend line on the daily chart.
Buy/Sell Range Target Stop Loss
Buy(cash) 666-671 698 648
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 M.A
NIITTECH 4085 696/401 558

INDUSIND BANK - BUY

Stock INDUSIND BANK
Recommendation The stock has managed to give a breakout above the declining trend line on the daily chart and has managed to give a breakout from its sideways consolidation on the weekly chart. The stock has also witnessed bullish crossover on the daily MACD indicator which affirms our positive view on the stock.
Buy/Sell Range Target Stop Loss
Buy (cash) 1690-1700 1758 1657
NSE Code Market Cap(Rs in Cr) 52-week High / low 200 M.A
INDUSINDBK 101955 1818/1137 1562

INDIAN OIL CORPORATION - SELL

Stock INDAIN OIL CORPORATION
Recommendation The stock is in a lower top lower bottom chart structure on the daily chart and has given a close below its support levels. The weakness shown on the MACD histogram accentuates our negative view on the stock.
Buy/Sell Range Target Stop Loss
SELL-Jan Futures 385-387 374 393.2
NSE Code Market Cap(Rs in Cr) 52-week High /low 200 M.A
IOC 186369 462/341 393

Research Disclaimer

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Top 5 ELSS for 2018

Top 5 ELSS for 2018
by Jitender Singh 01/05/2018

Equity Linked Savings Scheme (ELSS) is a type of equity mutual fund in which investments up to Rs1.5 lakh per financial year are tax deductible under section 80C. In other words, investors don’t have to pay tax on investment up to Rs.1.5 lakh in ELSS. By investing in ELSS, an investor in the 30% tax bracket can save Rs.46,350 as tax.

Below table exhibits the amount of tax one can save by investing Rs.1.5 lakh in ELSS for different tax slabs.

Tax Bracket 5% 20% 30%
Tax Saving Rs.7,725 Rs.30,900 Rs.46,350

*Includes 3% cess also

Besides tax benefits, ELSS investments also offer other benefits discussed below.

  1. Wealth creation with tax-saving – Historically, it has been seen that ELSS schemes have given significantly higher returns than other tax saving schemes like PPF, 5-year FD, EPF, etc.
  2. Shortest lock-in period – ELSS has a lock-in period of 3 years, which is the shortest among all tax-saving instruments.
  3. Tax free capital gains: The long-term capital gains from investment are tax-free.
  4. Dividends are tax-free: Dividends received are tax-free in the hands of the investor right from the year of investment.
  5. Low investment amount: Investors can start investing with Rs500 in lump sum or via SIP in ELSS. Since it is difficult to invest a lump sum amount in one go, SIP helps a person to invest small amounts at regular intervals. SIP payment is auto-debited from your bank account every month.

ELSS is the best way to save tax and create wealth in the long term. Below are the top 5 recommended ELSS funds.

Scheme Name Fund Manager Corpus (cr) 1 Y (%) 3 Y (%) 5 Y (%)
Aditya Birla SL Tax Relief '96(G) Ajay Garg Rs.4,349 41.6 16.3 21.6
Axis LT Equity Fund(G) Jinesh Gopani Rs.15,408 35.7 12.2 22.4
DSPBR Tax Saver Fund-Reg(G) Rohit Singhania Rs.3,571 34.4 15.6 20.1
IDFC Tax Advt(ELSS) Fund-Reg(G) Daylynn Pinto Rs.798 52.2 17.4 21.6
Reliance Tax Saver (ELSS) Fund(G) Ashwani Kumar Rs.10,157 44.2 13.3 22.4

1 year returns are absolute; 3 year and 5 year returns are CAGR.
AUM as of November 2017, Returns are as on January 02, 2018

Aditya Birla SL Tax Relief ‘96 Fund

  • Aditya Birla SL Tax Relief ‘96 Fund does tactical allocation between large cap and mid-= cap stocks to ensure optimal risk reward.
  • As of November 2017, the fund has invested ~37% of its AUM in large cap stocks, ~55% in mid cap stocks and ~7% in small cap stocks to generate higher returns.

Axis Long Term Equity Fund

  • Axis Long Term Equity mutual fund  invests in companies with sustainable profit growth to generate wealth over 3-4 years.
  • Besides, the fund manager follows bottom-up approach to select the companies.
  • As of November 2017, the fund has invested ~66% of its AUM in large cap stocks while ~30% in mid cap stocks to generate alpha.

DSPBR Tax Saver Fund

  • DSPBR Tax Saver Fund primarily invests in large cap stocks with some tactical allocation to midcap and small cap stocks to generate higher returns.
  • The fund manager follows buy-and-hold strategy for majority of the portfolio. He also takes active and tactical calls to exploit the market opportunities.
  • As of November 2017, the fund has invested ~71% of its AUM in large cap stocks and ~22% in mid cap stocks to generate higher returns.

IDFC Tax Advantage (ELSS) Fund

  • IDFC Tax Advantage (ELSS) Fund does tactical allocation between large cap, mid cap and small cap stocks to generate higher returns.
  • As of November 2017, the fund has invested ~46% of its AUM in large cap stocks, 29% in mid cap stocks and 20% in small cap stocks in order to generate higher returns.

Reliance Tax Saver (ELSS) Fund

  • Reliance Tax Saver (ELSS) Fund does tactical allocation between large cap, mid cap and small cap stocks to generate high returns.
  • The fund invests in potential leaders with high growth prospects.
  • Generally, the fund takes 2-3 sector call at a time and invests in high conviction mid cap stocks.
  • As of November 2017, the fund has invested ~60% of its AUM in large cap stocks, 25% in mid cap stocks and 15% in small cap stocks in order to generate higher returns.

Research Disclaimer

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5 Stock Tips This Dussehra

5 Stock Tips This Dussehra
by Nikita Bhoota 02/06/2018

Dussehra is considered to be an auspicious festival in India. On this day, Lord Rama has killed Ravana. This festival signifies the victory of good over the evil. Similarly, an investor can overcome their loss-making investments by adding the right stocks in their portfolio. Based on research, fundamentals and valuations, we recommend the following stocks for investment this Dussehra.

Infosys

Infosys is the second largest IT Company in India. The company’s service lines are more focused on discretionary spends like ADM and ERP constituting 67% of the revenues. On the vertical front, BFSI accounts for 33% of the revenue. Geographically, North America contributes ~61.9% of the revenue followed by Europe (~22.5%) in FY17. We expect 11% revenue CAGR over FY17-19E due to pickup in BFSI and retail segment supported by higher customer spends in the US. Similarly, large deal wins will keep the growth momentum. We expect 8% EBITDA CAGR over FY17-FY19E due to increasing focus on cost optimization. We expect 5% PAT CAGR of over FY17-FY19E. The appointment of Mr Nandan Nilekani as the non-executive chairman would restore a sense of security among investors, employees, and clients. We expect an upside of 15% from CMP of Rs 898 over a period of 1 year.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x) BVPS (Rs) P/BV (x)
FY17 68,485 27.2 14,353 62.5 14.4 296.2 3.0
FY18E 70,746 26.6 14,326 62.4 14.4 358.6 2.5
FY19E 76,058 27.1 14,993 65.3 13.8 423.9 2.1

Source: 5paisa research

Aurobindo Pharma

Aurobindo Pharma Limited (Aurobindo) manufactures generic pharmaceuticals and active pharmaceutical ingredients in India. The company's product portfolio is spread across six major therapeutic categories of antibiotics, anti-retrovirals (ARV), CVS, CNS, gastroenterological, pain management, and anti-allergic.  It derived 79% of revenue from generic pharmaceuticals and remaining from active pharmaceutical ingredients in FY17. Geographically, US business contributes 44% to Aurobindo’s total revenue.  We expect 20% revenue CAGR over FY17-FY19E due to strong pipeline of 134 products which majorly includes niche and high value products. Clearance to unit 7 in Hyderabad is also beneficial for the company. Further, recent approval for serum and tablet formulations of gRenvela will also boost the revenues. We expect margins to improve by 110 bps as strategic backward integration of marketing with API manufacturing is expected to reduce the intensity of ongoing pricing pressure. We expect 28% PAT CAGR over FY17-FY19E. We expect an upside of 15% from CMP of Rs 698 over a period of 1 year.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x) BVPS (Rs) P/BV (x)
FY17 15,089 23.1 2,301 39.3 17.5 161.0 4.3
FY18E 16,301 23.2 2,386 40.7 16.9 201.7 3.4
FY19E 18,173 25.5 2,947 50.3 13.7 252.0 2.7

Source: 5paisa research

Manappuram Finance

Manappuram Finance is an NBFC, offering gold loans, microfinance, housing loans and commercial vehicle loans. Its AUM comprised of gold loan (81.4%), microfinance (13.14%), housing finance (2.2%) and others (1%) in FY17. We expect income to grow at 28% CAGR over FY17-FY19E on account of pickup in gold segment. The company is strongly focusing on short-term gold loans owing to current volatility in gold prices. Manappuram is also focusing on housing finance and microfinance and targets to derive 50% of revenue from these segments in next three years. We expect AUM to grow at 20% CAGR over FY17-FY19E. We expect GNPA to remain flat at 0.8% in FY18E. We expect an upside of 18% from CMP of Rs 95 over a period of 1 year.

Year NII (Rs Cr) Net Profit (Rs Cr) EPS (Rs) ROE (%) P/BV
FY17 1,943 726 1.7 24.8 2.8
FY18E 2,185 836 2.0 24.9 2.5
FY19E 2,489 959 2.3 24.9 2.1

Source: 5paisa research

Titan

Titan Company is India’s leading player in branded jewellery, watches and precision eyewear. Its revenue consists of Jewellery (78%), Watches (15%), Eyewear (3%) and others (4%) in FY17. We expect 42% revenue CAGR over FY17-FY19E on account of sub-brand Rivaah in wedding jewellery segment. With this, Titan targets to reach 40% market share in FY21E vs 22% in FY17E. Additionally, the entry in high value studded jewellery will also support the revenue growth. Recently, government has fixed GST rate of 3% (expected 5%) on gold which bodes well for the company. We expect EBITDA margins to improve by 90bps over FY17-FY19E on account of cost saving initiatives by the company. Titan is a debt free company which lends financial stability. We expect 60% PAT CAGR over FY17-FY19E. We expect an upside of 15% from CMP of Rs 587 over a period of 1 year.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x) BVPS (Rs) P/BV (x)
FY17 12,614 9.5 761 8.6 68.5 48.6 12.1
FY18E 15,075 9.9 1,019 11.5 51.1 60.0 9.8
FY19E 17,968 10.4 1,285 14.5 40.6 74.5 7.9

Source: 5paisa research

Asian Paints Ltd (ASL)

Asian Paints is the largest paint manufacturer in India with market share of 53% in decorative paints and has a strong dealer network of ~45000 dealers. We expect revenue CAGR of 14% over FY17-FY19E on account of strong demand for decorative paints due to shorter repainting cycle (repainting forms 65% of the decorative paint demand). ASL is working on 2 Greenfield projects (Mysuru-6,00,000 KL and Vishakhapatnam- 5,00,000KL) to expand its decorative paint capacity.  The first phase of both the capacities- 3,00,000 KL will be completed by FY19E. GST will reduce the tax arbitrage for the unorganized segment (30% of industry) and will provide additional benefit to the organized players in the long run. We expect EBITDA CAGR of 14% over FY17-FY19E due to shift from distemper to external emulsion (high margin) in decorative paint business. We expect PAT CAGR of 11% over FY17-FY19E. We expect an upside of 15% from CMP of Rs 1161 over a period of 1 year.

Year Net Sales (Rs Cr) OPM (%) Net Profit(Rs Cr) EPS (Rs) PE (x) BVPS (Rs) P/BV (x)
FY17 15,290 19.8 2026 21.1 55 79.3 15.1
FY18E 17,244 19.6 2173 22.7 51 93.8 12.8
FY19E 19,908 19.9 2533 26.4 44 110.7 10.8

Source: 5paisa research