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BW Businessworld

Smart Investing

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BHARAT ELECTRONICS
WHY IT WAS PICKED Its topline looks good over the next 7-8 years. Sitting on cash which is 50 per cent of total market cap. Good buy at Rs 1,485 upside Up to 28 per cent

2. BANK OF BARODA
WHY IT WAS PICKED Has one of the lowest credit costs and the highest return on investment (RoA) amongst public sector banks. At Rs 720, shares are at 1.1 times forward price to book
upside Up to 25 per cent

3. COAL INDIA
WHY IT WAS PICKED It has decided to reopen abandoned mines that will help the company to increase volumes. Cash on books is over 30 per cent of current market cap. It is among the few large cap stocks with dividend yield of 2 per cent 
upside Up to 34.5 per cent 

4. EID PARRY
WHY IT WAS PICKED Largest integrated sugar company in South India. Will benefit from export of sugar
upside Up to 30 per cent

5. MAHINDRA & MAHINDRA
WHY IT WAS PICKED The company's return on capital employed (ROCE) is high at 27-28 per cent. The shares are trading at ~13.5 x FY13 earning per share (EPS) upside Up to 32 per cent











H. Parandekar, CEO, Karvy Private Wealth (BW pic by Subhabrata Das)

1. ICICI BANK
WHY IT WAS PICKED The bank is in expansion mode. Focus on corporate business should lead to healthy growth going forward. Expected lisitng of ICICI Prudential Life Insurance offers substantial value upside Up to 49 per cent

2. COAL INDIA
WHY IT WAS PICKED Will enhance production over the next three years given its large coal reserves and past production record upside Up to 25 per cent

3. MAHINDRA & MAHINDRA
WHY IT WAS PICKED Rising rural incomes, improving credit and diversifying usage of tractors is driving the tractor demand in India which will benefit the company
upside Up to 27 per cent

4. ITC
WHY IT WAS PICKED Positive on ITC's diversified business model. Expect the cigarette business to witness strong growth
upside Up to 13 per cent

5. PAGE INDUSTRIES
WHY IT WAS PICKED Market leader in the innerwear segment. Growing at 30 per cent CAGR on the back of increased consumer preference for branded products upside Up to 23 per cent











Motilal Oswal, CMD, Motilal Oswal Securities (BW pic by Subhabrata Das)

1. JINDAL STEEL AND POWER
WHY IT WAS PICKED It has one of the best iron ore and coal resources in India, with assets spread over various mineral-rich countries. It has lined up growth in both steel (4x in four years) and power (10x in 10 years). Stock is trading at attractive 9.6xFY13 earnings
upside Up to 36.5 per cent

2. STATE BANK OF INDIA
WHY IT WAS PICKED SBI enjoys a competitive edge with franchise of 18,500+ branches. Expect earning CAGR of 25 per cent over FY11-13. Standalone RoA to improve from 0.7 per cent in FY11 and ~0.9 per cent in FY12-13. Maintain buy with a target price of Rs 2,700
upside Up to 60 per cent

3. MARUTI SUZUKI
WHY IT WAS PICKED Improving product mix and higher localisation will drive margins in long run. Valuations are below average on trough earnings. Buy with target price of Rs 1,220
upside Up to 30 per cent
break-page-break
4. INFOSYS TECHNOLOGIES
WHY IT WAS PICKED It has positioned itself as a high value player in the IT services industry. The company's strategy of moving up the value chain while aggressively targeting new markets will help hold margins in a narrow band. We expect earnings to grow by 15 per cent in FY13
upside Up to 21.5 per cent

5. CIPLA
WHY IT WAS PICKED Improving capacity utilisation will boost margins and return ratios over the next two years. Its manufacturing infrastructure, strong chemistry skills and huge inhaler capacity makes it a partner of choice for global MNCs; it is ramping up their generics and emerging market presence upside Up to 14 per cent











S. Mukherjea, Head Equities, Ambit Capital (BW Archive)

1. VST Industries
WHY IT WAS PICKED We expect it to give 25 per cent earnings per share growth in the next year. Volumes are expected to grow by 10-15 per cent due to shift in consumption from beedi  to cigarettes. It is a high dividend yield company trading at 50-60 per cent discount to its peer ITC upside Up to 20-25 per cent

2. EICHER MOTORS
WHY IT WAS PICKED It is sitting on huge cash, 45 per cent of market cap is cash. It enjoys leadership in the 6-14 tonne segment, with a 35 per cent market share. Its revenues will increase with supply of engines to Volvo in Europe.
Chance of a buy-back of shares by Volvo and an upside from the bike business make it a good buy upside Up to 25-30 per cent

3. GSK CONSUMER HEALTHCARE
WHY IT WAS PICKED Horlicks is a strong brand and has good recall value. We are expecting more international brands to come into India. Overall a re-rating story upside Up to 20 per cent

4. OBEROI REALTY
WHY IT WAS PICKED It is sitting on cash and has a land bank for another 2-3 years. It has established good footwork in Mumbai. It undertakes good governance and accounting practice. With 10 per cent of the GDP in real estate, it is a good pick among the lot. It's a high-risk high-reward stock upside Up to 30 per cent

5. TORRENT POWER
WHY IT WAS PICKED It is a cash rich company. The Dahej plant is coming up for commission and will start generating revenues. The company is expected to be in a good position as the sector is likely to witness consolidation Upside Up to 30 per cent











Alok Sama, Founder & President, Baer Capital Partners (BW pic by Umesh Goswami)

1. BHARTI AIRTEL
WHY IT WAS PICKED Mobile telephony is seeing a return of pricing power. The African business is stabilising upside NA

2. HDFC BANK
WHY IT WAS PICKED Consistent and stable earnings growth with stable net interest margins even in periods of economic downcycles upside NA

3. CIPLA
WHY IT WAS PICKED It has improved margins through higher formulation sales upside NA

4. TATA CONSULTANCY SERVICES
WHY IT WAS PICKED Largest IT & ITES service provider in India. It has strong business momemtum with earning growth at 25 per cent upside NA

5. ITC
WHY IT WAS PICKED Is the market leader in its traditional businesses of cigarettes, where volumes continue to rise











Ashith Kampani, Managing Director, JM Financial (BW pic by Subhabrata Das)

1. LARSEN & TOUBRO
WHY IT WAS PICKED One of the best engineering, procurement and construction firms. Global diversification will improve revenue mix upside Up to 25 per cent

2. INFOSYS TECHNOLOGIES
WHY IT WAS PICKED Expected to benefit from rupee depreciation. In the long term, US economic recovery will be a big positive upside Up to 25 per cent

3. STATE BANK OF INDIA
WHY IT WAS PICKED Interest rates are at their peak. When cycle changes the sector will benefit upside Up to 25 per cent

4. JAIN IRRIGATION SYSTEMS
WHY IT WAS PICKED Among a handful of agriculture companies
upside Up to 25 per cent

5. MAHINDRA & MAHINDRA
WHY IT WAS PICKED A direct auto/agri consumption linked to financial services/ tourism/ real estate and technology upside Up to 25 per cent











Dipen Shah, Head Fundamental Research, Kotak Securities (BW pic by Umesh Goswami)

1. HDFC BANK
WHY IT WAS PICKED Grew 30 per cent y-o-y in the past 38 quarters. CASA mix remained at healthy 47.3 per cent as on Q2 FY12. upside Up to15-17 per cent

2. INFOSYS TECHNOLOGIES
WHY IT WAS PICKED It's long-term commitment to increasing the proportion of non-linear revenues which will ensure profitable growth upside Up to 15-17 per cent

3. ITC
WHY IT WAS PICKED Higher market share in cigarette business, coupled with pricing power will see good revenue and earnings growth upside Up to 15-17 per cent

4. IRB INFRASTRUCTURE
WHY IT WAS PICKED Experienced player in road BOT segment. Order book of Rs 9,600 crore 
upside Up to 20-25 per cent

5. CUMMINS INDIA
WHY IT WAS PICKED Commencement of mega production site at Phaltan to ease capacity constraints and add to cash flow generation upside Up to 20-25 per cent

(This story was published in Businessworld Issue Dated 23-01-2012)