Friday, 23 June 2017

3 hot stock picks from Geojit Financial Services

JK Lakshmi Cement, Bharat Electronics, and ITC are on the radar of Geojit Financial Services

Geojit Financial Services recommends the following stocks:

JK Lakshmi Cement Ltd              Rating: Buy                CMP: Rs491

STOCK MARKET TIPSJK Lakshmi Cement (JKLC) is a part of JK group mainly focused in north, west and eastern regions of India with a consolidated capacity of 12.5 MT as on FY17 and is one of the most cost-efficient players. TODAY FREE TRAILS TIPS

The company has completed its major capex of Rs 3,000 crore as on FY17 and the balance sheet is likely to improve going forward due to improvement in cash flow. We expect D/E to improve to 1.3x from current 1.6x. Cost efficiency is likely to improve due to commissioning of 100 percent captive power and Conveyor Belt at its East plant. We expect EBITDA margin is likely to improve from the current 12.6 percent to 15.2 percent by FY19 and PAT is expected to grow at 56 percent CAGR over FY17-19.

Bharat Electronics Ltd                      Rating: Buy                CMP: Rs 166

Bharat Electronics Ltd (BEL) is a Navaratna enterprise having 37 percent market share in Indian Defence Electronics. BEL’s core capabilities are in radar & weapons systems, defence communication & electronic warfare.

BEL will emerge as key beneficiary from on-going defence modernisation programmes & GoI focus on indigenisation. Order inflow in Q4FY17 grew by 172 percent YoY to Rs 10,000 crore. The current order backlog of Rs 40,000 crore is 5.3x FY17 sales, which has significantly improved the earnings outlook. We factor order book to grow at 15 percent CAGR, consequently earnings is expected to grow by 14 percent CAGR over FY17-FY19E. We value BEL at P/E of 22x on FY19E on improved order inflow outlook.

ITC Ltd           Rating: Buy               CMP: Rs311

ITC is a diversified conglomerate, present across categories– cigarettes, other FMCG, hotels, paper & agri-business. ITC is a market leader in the cigarettes category with volume market share  of ~75 percent.

Given its leadership position in cigarette category, continuous investment behind brand building & innovations in other FMCG business, we maintain positive stance on the stock. Cigarettes business (which contributes ~50 percent to revenues) registered a growth of 4.8 percent YoY in Q4FY17 led by realisation growth on account of price hikes undertaken by ITC post excise hike. Notably, the neutral GST rate for this category augurs well for volume growth & hence, we expect this segment to grow at revenue CAGR of ~8.7 percent over FY17-19E.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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