The Baseline    
03 Dec 2019
Top Recommendations by Analysts this Week

by Ritmbarah Arora

“If you don’t study companies, you will have the same success with stocks as you do in a poker game, when you bet without looking at your cards”- Peter Lynch on investing. Before someone decides to invest in a particular company, thorough research is necessary before putting in hard earned cash.

Based on reports on Trendlyne, here are the top five stocks recommendations by analysts this week, and their rationale:

  • Symphony Ltd Recommended by Axis Direct: Headquartered in Ahmedabad, Gujarat, Symphony Ltd manufactures products like domestic air coolers and industrial air coolers. Having operations in about 60 countries, Symphony is known for the world’s largest functioning air cooler, as certified by the Guinness World Records.Axis Direct recommended buying Symphony with a target price of Rs 1,448 on November 29. The price at recommendation was Rs 1,148 and since then, the stock has seen an incremental growth of 31.1%. Symphony reported higher revenues, both on standalone and consolidated levels in Q2FY20. Revenues grew 13% YoY at Rs 272 crore as against Rs 240 crore in Q2FY19. The gross margins stood at 47.4% during the quarter over 46.3% in Q2FY19. The EBITDA margins improved to 23.2%, up 525 bps YoY while the consolidated Net PAT increased by 57% to Rs 58 crore as against Rs 37 crore in Q2FY19. Axis Direct expects the revenue of Symphony to grow at 20% CAGR between FY19-21E.

  • Bank of Baroda Recommended by Geojit BNP Paribas: Headquartered in Vadodara, Gujarat, Bank of Baroda is the third largest public sector bank and the second bank by assets in India. The bank has a network of 9583 branches and 10,442 ATMs in India and overseas. On September 17, 2018, the Government of India had announced the merger of Bank of Baroda, Vijaya Bank and Dena Bank, to create the country’s third largest lender. The merger was in effect from April 1, 2019. Geojit BNP Paribas has recommended to buy Bank of Baroda with a target price of Rs 113 on November 27. The price at recommendation was Rs 104.9 and since then, the bank’s share price has observed an incremental growth of 7.9%. Post the merger, Net Interest Margin (NIM) improved 19 bps sequentially to 2.8% led by 22 bps QoQ improvement in domestic margins. Net advances witnessed a meagre growth of 0.7% QoQ, with domestic advances flat YoY. The cost to Income ratio stood at 45.8% as against 49.2% in Q2FY20. The bank’s rating profile has improved with 26.1% of the loans falling in the BBB and below rating compared to 32.1% in Q1FY20.

  • VRL Logistics Recommended by BOB Capital Markets: Headquartered in Hubballi, Karnataka, VRL Logistics Limited has operations in around 23 states of India and 4 Union Territories. The business operation of the company includes road transportation, logistics, publishing, etc. VRL Logistics is one of the largest logistics and transport companies in India with 419 tourist buses and 3,941 transport goods vehicles. BOB Capital Markets recommended to buy VRL Logistics with a target price of Rs 330 on November 28. The company has seen an incremental growth of 17.8% since the time of recommendation at Rs 274.1. Despite a prolonged growth slowdown, competitive moats of the company are intact with a wide network, vast scale of operations, and cost and capital efficiency. BOB Capital Markets expects VRL Logistics to outperform the industry once the economic cycle turns, by virtue of its superior business model. The broker estimates a moderate 6% topline CAGR over FY19-FY22, though earnings are forecast to log a 14% CAGR due to a lower tax rate.

  • VIP Industries Recommended by IDBI Capital: Mumbai headquartered VIP Industries manufactures luggage and travel accessories. The company is the world's second largest and Asia’s largest maker of luggage and has more than 8,000 retail outlets across India and a network of retailers in 50 other countries. IDBI Capital has recommended buying VIP Industries with a target price of Rs 574 on November 28. The price at recommendation was Rs 436.9 and then, the company has observed an incremental growth of 35%.  The company is a leader in an industry dominated by unbranded players. IDBI Capitals expects the sale/EBITDA/net profits of the company to grow at a CAGR of 11%/25%/20% over FY19-22E. VIP is the leader inorganized luggage segment in India with a market share of 46%.

  • L&T Finance Holdings Recommended by Motilal Oswal: Based out of Mumbai, L&T Finance Holdings provides consumer financial products and services. The company is engaged in the business of providing auto, two-wheeler and loyalty finance loans, as well as real estate finance and wealth management services. Motilal Oswal recommended buying L&T Finance Holdings with a target price of Rs 130 on November 27. CRISIL rated the company ‘AAA’ in October 2019 on the back of a diversified loan and borrowing book. Profitability of the business has been largely intact over the past four quarters with a stable RoE of 16%. The company is poised to deliver steady retail loan growth, increasing share of AMC profits and healthy RoE. 

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