Indian share markets staged a sensible recovery in the calendar year 2020, rallying about 84 per cent from the March lows. In today’s session, BSE Sensex and Nifty 50 hit their respective record higher levels of 47865.56 and 14,010.15, respectively. On a year-to-date (YTD) basis, headline indices have delivered 15 per cent returns. According to analysts at ICICI Direct Research, the resilient domestic setup points towards a recovery in important macroeconomic information viz. GDP, Infrastructure spending post a weak year. “CY21 presents an opportunity where the basic tenet of asset allocation and sectoral/security selection will be tested and identification of micro themes across segments will hold the key,” the report noted.
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For CY21, ICICI Direct Research expects mid-caps and smaller caps to achieve reasonably more than the substantial caps. Its thesis is primarily based on the reality that delta in earnings development through a recovery phase will be higher in mid-caps and smaller caps vis-à-vis substantial caps whereas various expansion in the former will provide further alpha for capital appreciation. Other macro components like benign interest prices and structural price rationalisation measures will also help operating and monetary leverage for this category.
1. Phillips Carbon Black: The brokerage noted that Philips Carbon Black has a healthful balance sheet, capital effective business enterprise model (RoCE, RoE more than 15%) and generates robust money flow from operations With a ‘buy’ rating to PCBL, the brokerage firm has offered a target value of Rs 210, implying an upside of 23 per cent. It has valued it at 10x P/E on FY23E EPS of Rs 21.
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2. PNC Infratech: ICICI Direct Research is positive on PNC Infratech due to its powerful order book position, robust execution capabilities, constant operating margins, and healthful return ratios. It will take PNC Infratech to jump 26 per cent to hit the target value of Rs 220 apiece pegged by the brokerage firm.
3. Divi’s Laboratories: ICICI Direct Research sees an upside of 16 per cent in Divis Laboratories share value in 2021. It has offered a target value of Rs 4,425 apiece. The brokerage firm highlighted that Divi’s stays a quintessential play on Indian API/CRAMs segment with its solution offerings and execution prowess.
4. Indoco Remedies: In 2021, Indoco Remedies share value is most likely to surge 28 per cent and hit a target of Rs 380 apiece as predicted by the brokerage firm. The management has guided for important export development and margin improvement for FY21. “With better visibility, we expect the company to maintain consistency and generate strong FCF,” it mentioned.
5. Navin Fluorine International: The brokerage firm noted that the firm is organizing to enter a new segment worth chain from fluorine molecules. ICICI Direct Research believes that this can diversify business enterprise threat, to a specific extent, offered it is largely dependent on agrochemical and pharma, at present. It has offered a target value of Rs 3,040 apiece, up 17 per cent.
6. Amber Enterprises India: Manufacturer of area air conditioners (RAC), Amber Enterprises is a important supplier to top rated 10 AC brands. The brokerage firm sees a structural development story in India’s RAC contract manufacturing business along with key overseas brands deciding upon India as a manufacturing hub below their ‘China+1 strategy’. The brokerage firm has offered a target value of Rs 2,830, an upside of 19 per cent.
7. HCL Technologies: ICICI Direct Research sees 17 per cent rally in the stock value in 2021 with a target value of Rs 1,105 apiece. The brokerage firm believes that developing possibilities in cloud, automation, cyber safety are a sweet spot for HCL Technologies. Also, enhanced capital allocation policy and affordable valuation produced the brokerage firm positive on the stock.
(The stock suggestions in this story are by the respective investigation and brokerage firm. TheSpuzz Online does not bear any duty for their investment assistance. Please seek the advice of your investment advisor prior to investing.)