The Baseline    
19 Nov 2019
Top Recommendations by Analysts this Week

by Ritmbarah Arora

“A smart investor is excited about the returns one gets from a bull market, and super excited about low cost investment one makes in a bear market. It’s a win-win...Volatility is an investor's best friend!” – this is Author Manoj Arora’s take on making the right investment. Based on the current market scenario, here is the list of top five stocks based on experts’ recommendations:

  • Infosys Recommended by HDFC Securities: Bangalore headquartered Infosys Limited is engaged into business consulting, information technology and outsourcing services. It is the second largest IT company in India after Tata Consultancy Services. HDFC Securities has recommended to buy Infosys at a target price of Rs 840. The price at recommendation was Rs 705.20 and since then, the stock has seen an incremental growth of 19.12%.

HDFC Securities recommended buying of this stock based on better visibility on growth, stable margin trajectory and the recent stock underperformance. Infosys is focusing on increasing its share within large accounts, chasing large public sector deals and has increased bandwidth around large deals from a deal inception stage. The company has outperformed on large account mining over the past two years. 

Infosys is however, fighting margin shrinkages in a slowing global market. Direct cost per employee increased by 7% over Q1FY19-Q1FY20, while revenue productivity increased by 1.4% resulting in 8.8% lower Gross Profit per employee.  Another risk factor remains the ongoing SEC investigation into Infosys whistleblower complaints. Adverse findings there are likely to impact the share price. 

  • Minda Industries Recommended by Axis Direct: Gurugram headquartered  Minda Industries is a supplier of automotive solutions to original equipment manufacturers. The company offers a wide range of products in various sectors of auto components. It is also engaged in the business of blow molding components and aluminium die casting.

Axis Direct recommended buying of Minda Industries after the company showed steady performance during Q2FY20. Consolidated revenues stood at Rs 1,360 crore in Q2FY20, EBITDA of Rs 167 crore was reported with EBITDA margin of 11.9%. Total Comprehensive Income of Rs 47 crore was reported on account of higher interest costs. Axis Direct recommended buying of this stock when the price was Rs 338. Since then, the stock price has seen an incremental growth of 20.61% and is expected by the analysts to reach a target price of Rs 410.

 

  • Blue Star Recommended by Nirmal Bang Institutional: Mumbai headquartered  Blue Star specializes in designing, developing, manufacturing and marketing a wide variety of products in the air conditioning and commercial refrigeration industry. It is the country’s second largest company in the air conditioning space.

Nirmal Bang Institutional recommended the buying of this stock because of healthy growth, decent margins and bright outlook. The hotter the summer, the better for Blue Star, and India has been seeing some of the hottest summers on record. Blue Star reported consolidated revenue of Rs 12.5 billion for Q2FY20, up 21% YoY. Consolidated EBITDA margin rose by 30bps YoY to 5.9%, PAT grew by 94% YoY to Rs 379 mn. Nirmal Bang recommended buying of this stock at Rs 798.10 with a target price of Rs 970. Since the time of recommendation, the stock has seen an incremental growth of 21.54%. 

 

  • KNR Constructions by Reliance Securities:  KNR Construction is a multi-domain infrastructure project development company. It undertakes engineering, procurement and construction (EPC) contracts and build-operate-transfer (BOT) projects across various verticals.

Reliance Securities recommended buying of KNR Constructions as the company continued to report a strong operating performance in Q2FY20. Revenue of the company grew by 31% YoY and 17% QoQ to Rs 5.5 billion while EBITDA margin stood at 19.7%. Reliance Securities recommended buying of this stock at Rs 245 with a target price of Rs 275. Since the time of recommendation, the stock has seen a growth of 11.47%.

 

  • PNC Infratech by BOB Capital Markets: Based out of Agra, PNC Infratech engages in infrastructure construction, development and management of major infrastructure projects including highways, flyovers, bridges, airport runways, power transmission lines and industrial area development. The company provides end-to-end infrastructure implementation solutions for engineering, procurement and construction (EPC).

BOB Capital recommended buying of this stock after the company showed strong quarter results. Core revenue ex-arbitral awards grew 92% YoY to Rs 10.7 bn, core EBITDA margin was at 13.8% and recurring PAT was reported at Rs 619 mn. Net worth of the company stood at Rs 24.1 bn and gross debt at Rs 3.8 bn. BOB Capital recommended buying of this stock at Rs 187.95 with a target price of Rs 245

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