BSE Sensex and Nifty 50 gained practically 10 per cent so far this year to attain fresh record highs. However, amid increasing bond yields, spike in COVID-19 instances and worries more than surging commodity rates, headlines indices are now up practically 4 per cent, erasing most of the gains created in the post Budget rally. Even as corporate earnings for the third quarter have been above Street’s estimates, analysts advise investors to stay cautious and adopt a ‘buy on dips’ strategy. Domestic brokerage firm HDFC Retail Research has initiated coverage on S&P BSE 200 stock Dalmia Bharat and S&P BSE SmallCap stock Mastek Ltd. Both the broader marketplace indices S&P BSE 200 and S&P BSE SmallCap outgunned the equity benchmarks, increasing .43 per cent and .72 per cent, respectively.
Mastek Ltd: IT computer software solutions firm Mastek Ltd is expecting sturdy development from multi-year offers led by the integration of Evosys and its capability to supply finish to finish options. The brokerage firm noted that the cloud services marketplace continues to develop more rapidly than classic IT segments and Mastek has noticed a healthful chance in the digital transformation phase in the market. The acquisition of Evosys has helped the enterprise in diversifying its geographical presence, solution and service mix, along with buyer diversification. Market share gains on the back of inorganic expansion are anticipated to drive the company’s lengthy term development.
Abdul Karim, Fundamental Research Analyst, HDFC Retail Research, mentioned that the base case fair worth of the stock is Rs 1273 (12.5x FY23E EPS) and the bull case fair worth of the stock is Rs 1374 (13.5x FY23E EPS) more than the next 2 quarters. Investors are advised to get the stock on dips to Rs 1118-1122 band (11.0x FY23E EPS) and add more on dips to Rs 1016-1020 band (10.0xFY23E EPS). “At the LTP of Rs 1172, the stock trades at 11.5x FY23E EPS,” Karim added.
Dalmia Bharat Ltd: Dalmia Bharat is the fourth biggest cement producer in India with a capacity of 26.1 MTPA. Jimit Zaveri, Fundamental Research Analyst, HDFC Retail Research, expects Covid-19 led lockdown and slowdown in the economy will lead to subdued development in volumes for Dalmia Cement for FY21. The market has a higher dependence on the genuine estate and infra sector which is anticipated to be impacted due to the anticipated slowdown in the economy.
Zaveri believes that Dalmia Bharat is probably to get advantages from the sturdy marketplace share gains in Southern India and Eastern India. Also, incremental cement capacity and improved utilization to fuel additional development. The brokerage firm expects a 10 per cent CAGR development in best-line and 55 per cent EPS CAGR development more than FY20-23E. The base case fair worth of the stock is estimated at Rs 1,480, when the bull case fair worth is Rs 1,590. Investors are advised to get the stock on dips at Rs 1,370 and add more on dips at Rs 1,260 apiece.
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