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by Ritmbarah Arora

Recent news on corporate tax cuts notwithstanding, stocks have been volatile and white-knuckled in the markets in the lead-up to results. Analysts however, still have their eye on key stocks that they believe will deliver value in the coming months. See all recommendations here.

• Axis Direct Recommends NOCIL: Navi Mumbai headquartered NOCIL Ltd. offers basic organic chemicals engaged in the business of rubber chemicals. The products manufactured by the company are used by the tire industry and other rubber processing industries. Axis Direct expects the stock to be profitable as revenues and earnings are expected to grow at 9% and 13% CAGR over the FY19-21E.

The revenue and earnings growth according to the analysts, will be driven by the dominant position of NOCIL in the domestic rubber chemicals market, increase in rubber demand, robust capacity expansion, high entry barriers led by strong technical expertise and continuous R&D and foray into newer margin value added products. NOCIL recently started supplying to the US market with an initial export of 500KT of quantity. Axis Direct recommended buying of this stock when the price was Rs 104.55. Since then, the price of the stock has seen an incremental growth by 7.17% and is expected to reach a target of Rs137 after Sept 21E earnings, as per Axis Direct report. 

• Motilal Oswal Recommends Bharti Airtel: New Delhi headquartered Bharti Airtel is a global telecommunications services company. Amidst the controversial tussle of Bharti Airtel and Reliance Jio, Motilal Oswal suggests to buy the shares of Bharti Airtel which targets a price of Rs420. Though the recommendation made at Rs356.40 has seen a decline in share price of 3.13% since then, analysts say that "the ARPU accretion from broadband subscribers is likely to grow with EBITDA CAGR of 12% over FY19-21 that will drive the stock price". Out of the incremental revenue growth, 70% is expected to flow to EBITDA. 
• ICICI Securities Recommends Radico Khaitan: Headquartered at Rampur, Uttar Pradesh, Radico Khaitan Ltd. manufactures industrial alcohol, Indian Made Foreign Liquor (IMFL), country liquor and fertilizers. It is the fourth largest liquor company of India. ICICI Direct recommends a buy on this stock with a target of Rs400. The stock price has increased by 1.91% since the stock was recommended at Rs319.80.

The revenue of Radico Khaitan is expected to grow at 12% CAGR to Rs2646 crore in FY19-21E.EBITDA margins are expected to remain flat at 16.5% in FY21E with absolute EBITDA growing 12% to Rs437 crore. PAT is anticipated to grow at 24% in FY19-21 CAGR to Rs298 crore, higher than the expected growth on the EBITDA front. RoE and RoCE should remain healthy at 16.5% and 19.7% respectively in FY21.

• Ashoka Buildcon Recommended by HDFC Securities: Nashik headquartered Ashoka Builcon Ltd. is an infrastructure development company. The company is engaged in the business of construction and maintenance of roads, supporting services to land support-operation of toll roads and others. HDFC Securities suggests buying this stock with a target price of Rs 220. Though the stock has witnessed a decline of 2.46% since recommendation was made at Rs109.70, HDFC Securities' point in its favor is that it maintained 25-30% standalone revenue growth for FY20E and Rs40-60 bn of new order inflows. Ashoka Buildcon is anticipated to deliver 19.6% FY19-21E revenue CAGR which will largely be driven by EPC revenue CAGR of 21.4%.
• APL Apollo Tubes Recommended by IDBI Capital: Headquartered at Noida, APL Apollo Tubes Ltd. is a steel tube manufacturer engaged in the business of production of electric resistance welded (ERW) steel tubes. It is the only company which has pan-India presence with warehouses and branch offices in 29 cities. IDBI Capital favors the purchase of stocks in APL Apollo Tubes with a target price of Rs1,920. The stock was recommended at Rs1,309.35 post which the share value increased by 3.87%.

According to IDBI Capital analysts, APL has outperformed industry growth in the last decade by gaining market share from small and unorganised players which resulted in strong return ratio of around 19% over FY10-19. With expanded capacity in place, the volumes are expected to grow at a CAGR of 20% over FY19-21E. Also, its EBITDA are expected to grow at CAGR of 24%/45% over FY19-21E, respectively. 

Despite volatilty in markets, some analysts see short-term headwinds as a distraction from the long-term potential. Arun Kumar, Market Strategist at Reliance Securities comments, “Smart investors are nibbling on some of these stocks were value is relatively cheap with limited downside. From a time horizon of two to three years, one can accumulate some of the good stocks over the next few months."