Thursday, 13 July 2017

3 hot stock picks by Geojit Financial Services

Suggests betting on Glenmark Pharma, PNC Infratech, and KNR Constructions

Financial Services TipsGlenmark Pharmaceuticals              

   Rating: BUY

Glenmark is an India-based pharmaceutical company with commercial presence in more than 60 countries across the globe. The company derives 63 percent of total revenues from export formulations and 28 percent from India. STOCK FREE TRAILS TIPS

With a strong presence in US (41 percent Market share) alongside registering robust US business growth in 2017 (53 percent YoY) and new product launches scheduled for FY18, the company seems attractive. Pricing pressure is likely to continue considering higher competition. However, we expect that recent sharp correction in the stock price has factored in all the negatives. We are factoring  revenue/PAT growth at a CAGR of 6percent/7 percent over FY17-19E.

PNC Infratech                                           Rating: BUY

PNC Infratech (PNC) is an Infrastructure construction, development and management company; expertise in execution of projects including highways, bridges, flyovers, airport runways, industrial areas and transmission lines.

Order book grew significantly by 72 percent YoY to Rs 9,533 crore (5.6x FY17 revenue) supported by four HAM orders of Rs 4,154 crore received in Q4FY17. Currently, the execution is in slow pace due to delay in land acquisition of orders worth Rs 25 billion from NHAI. We expect ramp up in execution from H2FY18E and factored a revenue growth of 28 percent & 23 percent in FY18E/FY19E, respectively. Robust order book and a low debt to equity of 0.9x (standalone) in FY17 provide visibility and opportunity in road segments.

KNR Constructions                                                    Rating: BUY

KNR Constructions (KNR) is a leading EPC player largely focusing on national and state highway projects. KNR has successfully executed 6,000-km road projects across 12 states in India.

Order book remain strong at 2.4x FY17 revenue and the total outstanding order book stands at Rs 3,769 crore — a growth of 9 percent YoY. We expect execution will ramp up as the construction work of Hubli-Hospet national highway has started and the revenue will start to reflect from Q1FY18. Improving execution coupled with strong order book will stimulate revenue to grow 14 percent CAGR over FY17-19E. Sound balance sheet (standalone D/E 0.1x FY17) and earnings visibility keep KNR in premium valuation.

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