Category: Personal Finance

1. Suprajit Engineering:

Angel Broking has recommended the scrip of auto ancillary firm for a target price of Rs. 360 and the price at the time of recommendation has been Rs. 285 (closing price of scrip on July 7, 2021). Notably Suprajit Engineering is a small cap stock with a market capitalization of Rs. 3646 crore. Last the stock traded at a price of Rs. 310.3

Low cost, diversified exposure and net cash position a big-positive for the auto ancillary firm

Suprajit Engineering (SEL) is the largest supplier of automotive cables to the domestic OEMS with presence across both 2Ws and PVs. Over the years, SEL has evolved from a single product/client company in India to having a diversified exposure which coupled with its proposition of low-cost player has enabled it to gain market share and more business from existing customers, said the brokerage firm.

The brokerage firm in its report said the firm in recent years has outperformed (posting positive growth vs low double-digit declines for the domestic 2W and PV industry in FY21). The company believes that consolidation of vendors and new client additions would help in maintaining the trend of market/wallet share gains. SEL has grown profitably over the years and as a result boast a strong balance sheet (net cash).

“We believe SEL is prime beneficiary of ramp-up in production by OEMs across the globe and is well insulated from threat of EV (is developing new products). Its premium valuations are justified in our opinion owing to strong outlook and top grade quality of earnings.”, adds the brokerage report.

2. GNA Axles:

Angel Broking is again bullish on this small cap scrip from the auto ancillary space. The scrip as on June 30, 2021 commanded a market cap of Rs. 834 crore.

The brokerage states that the company is a major supplier of rear axles to the commercial vehicles industry and is seen as the top beneficiary of the revival in the commercial vehicle (CV) cycle. Major portion i.e. as much as 60% revenues are accounted for from the company’s exports while the remaining comes from the domestic markets.

Robust truck sales outlook in US and Europe markets to benefit GNA Axles

“GNA is expected to be one of the biggest beneficiaries of strong growth outlook for truck sales in US and Europe markets which are witnessing strong recovery in demand. US which accounts for almost 40% of the company’s revenues has been registering strong class 8 truck sales. The venture into the SUV axle would provide the company with new growth avenues while the recovery in the domestic CV cycle also bodes well for the company. At current level the stock is trading at a P/E multiple of 11.8x FY23E EPS estimate of Rs. 39″, added the brokerage firm.

The broking house sees the target of Rs. 550 for the stock i.e. an upside of 19% from the price when the scrip was given a ‘Buy’ i.e. from Rs. 462 levels. As of writing this report, the stock has hit a fresh 52-week high in today’s trade of Rs. 505.95.

3. Escorts:

For the tractor major the brokerage firm sees the stock price to scale to Rs. 1573 i.e. a substantial upside from Rs. 1204 (the closing price as on July 7, 2021). The stock last traded at a price of Rs. 1197.2. The company today announced a final dividend of Rs. 5 per share for FY21. The company for the FY commanded a market share of 11.3 percent.

Record procurement of food grain by government agencies major advantage for tractor company

In the broader automobile segment, the company is seen to outperform as there is huge traction in food procurement by government agencies as well as good Kharif crop in 2021. Also, there is seen good earnings visibility for the company after the company has entered into a strategic partnership with Kubota Corporation of Japan (one of the global leaders in farm machinery and implements).

Notably Escorts is a mid-cap auto company with market capitalization of Rs. 16,948 crore.

4. Ashok Leylamd (ALL):

The brokerage firm in its report stated that Ashok Leyland is the top player in India CV industry with a 32% market share in the MHCV segment. The company also has a strong presence in the fast growing LCV segment. Demand for MHCV was adversely impacted post peeking out due to multiple factors including changes in axel norms, increase in prices due to implementation of BS 6 norms followed by sharp drop in demand due the ongoing Covid-19 crisis. While demand for the LCV segment has been growing smartly post the pandemic, demand for the MHCV segment has also started to recover over the past few months before the 2nd lockdown while demand for buses are expected to remain muted due to greater preference for personal transportation.

Company best placed to benefit from the CV segment revival

“We believe that the company is ideally placed to capture the growth revival in CV segment and will be the biggest beneficiary of the Government’s voluntary scrappage policy and hence rate the stock a buy”, added the brokerage report.

This is again a mid-cap auto company with a market cap of Rs. 35,410 crore as on June 30, 2021.

Disclaimer

All of the above stocks are picked from brokerage report of Angel Broking. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.

UTI Flexi Cap Fund

This fund has a 5-star rating from Value Research and CRISIL. It has generated a whopping 61% returns in 1-year. However, you should not read too much into returns, given the fact that markets have rallied in the last 1-year following a collapse in the first half of last year after the Covid outbreak.

The UTI Flexi Cap Fund as the name suggests invests in companies with different market capitalizations, so to that extent the fund manager of the mutual fund scheme has the flexibility.

UTI Flexi Cap Fund is managed by Ajay Tyagi and has assets under management of almost Rs 18,000 crores. SIPs in the fund are not too expensive and can be started with a sum of Rs 1,000 every month. Markets are expected to consolidate at these levels and if earnings done catch-up there could be a sharp downturn. It is therefore advisable to go for SIPs, as you can average the cost should the markets take a turn for the worse. UTI Flexicap has a lot of holdings in the financial sector and the performance of the fund would be linked to the economy, as banking stocks are a proxy for the economy.

Mirae Asset Largecap Fund

Before we suggest the Mirae Asset Largecap fund, we would like to inform readers once again that markets are clearly overpriced and hence you need to be cautious. The market-cap to GDP ratio has touched 105, against a historical average of 79 and on other parameters like price to earnings multiples for Nifty companies are also expensive. Hence, the best way to invest is through SIPs.

Mirae Asset Largecap Fund is a fund that invests its money in largecap stocks. It has been rated 5-star by Value Research, Morningstar and CRISIL. The 1-year returns from the fund is a whopping 51% over the last 1-year, and the 5-year returns are16% on an annualized basis. For investors who want to stay invested for a long period of time this is a good bet. Ideally, large cap equity funds can generate good returns over a long period of time like 5-years, but it is hard to predict where the markets would be 5-years from now.

Mirae Largecap Fund has holdings in stocks like Infosys, HDFC Bank, ICICI Bank, Reliance Industries and Axis Bank.

Axis Bluechip Fund

This fund is an eternal favorite of most analysts. The fund has been rated as 5-star by CRISIL, Value Research and Morningstar. In fact, Axis Bluechip Fund has given a returns of 44% in the last 1-year and the 5-year returns from the fund is 16% on an annualized basis.

Investors can look at investing in the fund through the Systematic Investment Plan route as a lumpsum investment is full of risks. The expense ratio of the fund is around 1.77%.

Over the years the fund has augmented good collections and now its assets under management are a huge Rs 28,000 crores. The top 10 stocks of the fund account for 65% of the portfolio, which means the investment in stocks is very concentrated around its top 10 holdings, which includes names like Infosys, HDFC Bank, Bajaj Finance, ICICI Bank and Tata Consultancy Services.

A SIP can be started in the fund with a sum of Rs 500 and 6 cheques.

Disclaimer

Mutual fund investment is subject to risk associated with the stock markets and hence investors need to be very careful. Neither the author, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on a decision to buy into the schemes based on the above article.

India’s top broking firm Sharekhan with a significant amount of retail investors is betting on 2 stocks for long term returns. The first is the stock of Indian Hotels and the second is the stock of Mahindra Lifespace. Let’s take a look at why the brokerage is bullish on these two stocks. First let us tell readers that the markets are highly priced at these levels and hence do thorough research before investing.

According to Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd equity markets so far has shown strong resilience even though it faces headwinds from the advent of a possible third COVID wave, persistent inflation readings prompting a potential rate increase, and volatility around the US Fed taper talk.

“It has been consolidating for quiet sometime due to lack of trigger. Q1FY22 earnings season has started off and would continue to provide stock specific action. Also it may give some direction to the market as investors would eye management commentary to gauge scale of economic recovery. Since restrictions this time around was localized and less stringent v/s the lockdown in CY20, we expect the impact in 1QFY22 to be contained. We expect earnings momentum to accelerate in FY22 as the pace of vaccinations picks up and the economy opens up further. Consistent earnings delivery v/s expectations are critical for further outperformance in our view,” he says.

Indian Hotels

Sharekhan says that Indian Hotels has a strong focus on building an asset-light model and recovery in the business environment, which will help the hotel major to recover to 80% of pre-COVID levels in FY2023 and clock strong profitability.

“In FY2022, the company is focusing on keeping its balance sheet lean with no major capital investments. Stock is currently trading at 25x its FY2023E EV/EBIDTA. Any sustained improvement in the business fundamentals and reduction in debt as planned would further re-rate the stock. We maintain a Buy recommendation on the stock with a revised price target of Rs. 182. Among hotels, Indian Hotels is one of the better plays in the unlock theme due to a relatively stable balance sheet, strong room inventory and brand recognition,” the brokerage has said.

The shares of Indian Hotels last closed at Rs 148, against Sharekhan’s target price of Rs 182. This is at least a 25% upside from the current levels.

Mahindra Lifespace Developers

Real estate shares are soaring and Sharekhan says to “buy” this real estate stock. The firm has set a price target of Rs 795 on the stock.

“Mahindra Lifespace Developers is poised to scale up its sales and execution over the next two to three years with a strong management team at the helm of having a credible experience in its respective fields. Further, the company is expected to benefit from the government’s relentless focus on affordable housing segments, rising affordability levels, favourable state government policies for real estate, and ample inorganic growth opportunities in the sector. The company’s low gearing (current consolidated net debt to equity at just 0.07 times with 7.1% cost of debt) can be utilised to raise debt to fund inorganic expansion and land acquisitions. Overall, we believe MLDL is poised to generate strong presales and execution ramp-up over the next 2-3 years,” the broking firm has said.

Disclaimer

Investors are advised caution before investing in the stocks above and should only invest if they are able to bear losses. Greynium Information Technologies, the author and the brokerage firm should not be held liable for any losses suffered on account of the decisions based on the above article. Please consult a professional advisor.