Warren Buffett once said, “Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future”. This is a rational message for investors in the stock market - many experts have burned their fingers on stock market predictions. An investor doesn’t need to be a genius to be good at stock picks, but there is a lot of hard work and due diligence involved. Though no one can predict the future, brokerages try to offer their expert opinion about the best stock in the market. Here are some of the top recommendations this week:
- Wipro Recommended by Geojit BNP Paribas, HDFC Securities and ICICI Direct: Bangalore, Karnataka headquartered Wipro Ltd is a multinational corporation that provides information technology, consulting and business process services. Because of good performance and consistent revenue generation, Wipro has been recommended by Geojit BNP Paribas, HDFC Securities and ICICI Direct. Geojit BNP Paribas recommends buying this stock as revenue for Q2FY20 rose to Rs 15,126 crore (4.0% YoY), beating the street estimates by 1.6% despite delay in renewal of major contracts.
Operating profit margin expanded 350bps YoY to 17.7% resilient to decline in IT services margins to 18.1% (vs 18.4% in Q1FY20). Net profit for the quarter surged to Rs 2553 crore (35.8% YoY), driven mainly by lower tax-rate for the quarter of 18.3% (vs 22.1% in Q2FY19).
Geojit reiterates their HOLD rating on the stock with a revised target of Rs 266 based on 15.5x FY21E EPS. This stock buy recommendation was made when the price was at Rs 248.90. Since then the price of the stock has seen an incremental growth of 6.87%. Abidali Z Neemuchwala, CEO and MD of Wipro commented, "We had a good in-quarter execution on both revenues and margins. The overall growth was broad-based with 6 out of 7 industry verticals growing on a YoY basis and we signed a large deal in India aligned to our strategy of taking global offerings to India customers".
- Mastek Recommended by HDFC Securities: Headquartered at Mumbai, Maharashtra, Mastek Ltd is a global technology company offering enterprise level digital transformation services and software for large public and private enterprises in the UK, US and India. HDFC Securities recommends purchase of Mastek managed flat growth in CC terms despite challenging macro environment.
Though revenue was GBP 28.1 mn, in CC terms it was flat QoQ and de-grew 2.3% YoY. But Mastek is recovering its US business and managing Brexit uncertainty. The company will benefit from the off-shoring opportunity arising with UK public sector. HDFC Securities expect GBP growth for FY20/21/22E at 0.1/9.6/11.0% and 5.4% EPS CAGR for FY19-22E. The recommendation was made at the price of Rs 342.70 and the target price is Rs 505. Since the time of recommendation, the stock has increased by 47.36%.
- Cyient Ltd. Recommended by Motilal Oswal: Hyderabad, Telangana headquartered Cyient Ltd is focused on engineering, manufacturing, data analytics and network & operations. The company is featured among the top 30 outsourcing companies in the world as of 2018 data. Motilal Oswal recommends the purchase of this stock as revenue grew by 4.9% QoQ vs estimate of 3.1% QoQ with an increased momentum in organic revenue growth. Though EBIT margin was 9.6%, growth was driven by the services verticals of Energy and Natural Resources (9.8% QoQ), Portfolio (+6.9% QoQ), Transportation (+3.3% QoQ) and Medical (8.6% QoQ). DLM revenue at USD23.8m was higher than the estimate of USD22m. The buy recommendation was made at the price of Rs 447.65 with a target price of Rs 600. Since the recommendation was made, the price of the stock has increased by 33.90%.
- ACC Ltd Recommended by IDBI Capital: Headquartered at Mumbai, Maharashtra, ACC Ltd is one of the largest producers of cement in India. The stock price of the company contributes in calculating BSE Sensex. This is the only company to get Superbrand status in India. IDBI Capital recommends buying this stock as the company reported good set of 3QCY19 results. EBITDA was 3.2% while PAT was lower by 7.4%. IDBI Capital recommended a buy Rs 1,535.10 with a target price of Rs 1,702. Since the time of recommendation, the stock price has seen an upside of 9.56%. IDBI Capital has revised its CY20 EBITDA estimates upwards by 6.6% based on which the target price has been revised at Rs 1,702 as against the earlier target of Rs 1,598.
- Hindustan Unilever Ltd by Axis Direct: Headquartered at Mumbai, Maharashtra, Hindustan Unilever Ltd is a British-Dutch manufacturing company. Its products include foods, beverages, cleaning agents, personal care products, water purifiers and consumer goods. Axis Direct recommends a buy as the company delivered a strong Q2FY20 despite challenging scenario. EBITDA grew 16% YoY to Rs 2,443 crore led by 290 bps expansion in margin while recurring PAT grew 20% YoY to Rs 1,848 crore to led by corporate tax rate cuts. Axis Direct recommended a buy at Rs 2,103.85 with a target price of Rs 2,175. Since the recommendation was made, the stock price has increased by 3.23%.
With the beginning of Q3, major ups and downs have been observed in the share market. A sample of 69 companies which declared results for September quarter reported a 12.5% YoY rise in aggregate net profit. With respect to the performance of the companies in the second quarter, Deepak Jasani, Research Head of HDFC Securities commented, “In Q2FY20, although corporates would have lower base of profits (in the year-ago quarter), lower operating leverage in Q2FY20 (due to slow demand) would mean that margins may not show a jump.”
