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Market largely stayed stable in the month of January after witnessing a severe
Top Picks pain in the previous few months as the crude oil price fell from the peak and the
Company CMP (`) TP (`) rupee also showed decent appreciation. Our top picks have generated a total
Banking/NBFC return of 49% since inception (i.e. October 2015), an outperformance of 13.3%
Aditya Birla Capital 81 151 over BSE100.
GIC Housing Finance 243 424
Recent budget to boost consumption – After the loss of the ruling centre party in
ICICI Bank 355 416
the 3 state elections, the market were looking concerned about the former win in
HDFC Bank 2,092 2,500
the centre election happening in May 2019. However, the recently announced
RBL Bank 578 690
budget contained measures like direct cash transfer to farmers and the other
Shriram Transport Finance 1,044 1,764
taxation sops, which will boost the consumption in the economy, especially from
Consumption
the middle class. Moreover, the fiscal deficit target at 3.4% as a % of GDP for
Amber Enterprises 727 1,135
FY2019 was also in line with the market expectations. For FY2020 also, the fiscal
Bata India 1,144 1,243
deficit target is at reasonable 3.4% which includes ` 75000 crore allocation for the
Blue Star 603 867
Income Support Scheme (PMKISAN) to farmers.
Safari Industries 776 1,000
Siyaram Silk Mills 340 606 Next few months could offer some good investment opportunities- We continue to
Parag Milk Foods 205 330 believe that the market may be in wait and watch mode till centre election. We feel
TTK Prestige 7,705 8,200 that the markets are still factoring in the current ruling party’s in the upcoming
Media/Automobiles/Online centre election and hence, any unfavorable results for the ruling centre party could
Maruti Suzuki 6,957 10,820 draw a sharp negative reaction from the markets. However, this period could also
M&M 688 1,050 offer opportunities to cherry pick some quality equity investment. We prefer select
Music Broadcast 299 475
private banks and niche consumption stocks. Investors could also pick at the some
of the overly corrected value stocks which offer high margin of safety. We also
Ashok Leyland 84 156
advise our investors to avoid bottom fishing stocks which are facing severe
Real Estate/Infra/Logistics/Power
corporate governance/ regulatory issues.
Jindal Steel 130 250
GMM Pfaudler 1,096 1,200
Top picks’ overview
KEI Industries 368 486
We recommend our top picks as the good bets to utilize this opportunity which are
Inox Wind 70 120
offering healthy returns in the next 1 year. All of our top picks are backed by sound
Pharmaceuticals
business model and are likely to do well in coming years. We remain overweight
Aurobindo Pharmaceuticals 799 890
on discretionary consumption theme with stocks like Safari Industries, TTK Prestige,
Source: Angel Research;
Note: CMP as of 02 February, 2019 Bata, and Blue Star.
Top Picks
February 5, 2019 2
Angel Top Picks | February 2019
Stock Info
Ashok Leyland
CMP 84 During April-July 2018, Ashok Leyland has gained market share by 11bps in
TP 156 domestic market. Further, the company has reported ~46.4% yoy growth
Upside 85.7% (against ~45% industry growth) during the same period due to strong pick up
Sector Financials in construction and industrial activities.
Market Cap (` cr) 24,462 BS-VI emission norms and the vehicle scrappage policy are among the major
Beta 1.6 triggers that can provide a fillip to the commercial vehicle industry over the
52 Week High / Low 167/ 79 next couple of years. Further, in our view, the change in axle load norms will
not impact the CV demand scenario; hence the company will not witness any
disruption in performance.
3 year-Chart
180 In the recent past, the stock has corrected ~30% after the announcement of
160 axle load norms (which will not have a significant impact on the industry). We
140 see buying opportunity in stock.
120
100
80
Key Financials
60 Y/E Sales OPM PAT EPS ROE P/E P/BV EV/Sales
40 March (` cr) (%) (` cr) (`) (%) (x) (x) (x)
20
-
FY2019E 32,042 10.3 1,918 6.6 22.8 12.8 2.9 0.6
FY2020E 37,488 10.5 2,303 7.9 23.0 10.7 2.5 0.5
Aug-16
Aug-17
Aug-18
Jun-16
Jun-17
Jun-18
Dec-15
Oct-16
Dec-16
Oct-17
Dec-17
Oct-18
Dec-18
Apr-16
Apr-17
Apr-18
Jan-19
Feb-16
Feb-17
Feb-18
Safari Industries
Stock Info
CMP 776 Safari Industries Ltd (Safari) is the third largest branded player in the Indian
luggage industry. Post the management change in 2012, Safari has grown
TP 1,000
its revenue by 6x in the last 7 years. This has been achieved by foraying in
Upside 28.8%
many new categories like back pack, school bags ( via acquisition of
Sector Luggage Genius and Genie) and improvement in distribution networks.
Market Cap (` cr) 1,743 Its margins have more than doubled from 4.1% in FY2014 to 9.1% in
Beta 0.3 M9FY2018, driven by launch of new product categories and business. We
52 Week High / Low 1,005/470 expect it to maintain 9%+ margins from FY2018 onwards led by regular price
hikes, shift towards organized player and favorable industry dynamics.
3 year-Chart We expect its revenue to grow by a CAGR of ~30%/60% in revenue/ earnings
over FY2018-20E on the back of growth in its recently introduced new
1200
products.
1000
May-17
Aug-17
May-18
Aug-18
Feb-16
Feb-17
Feb-18
Feb-19
Nov-16
Nov-17
Nov-18
February 5, 2019 3
Angel Top Picks | February 2019
3 year-Chart We expect Mahindra & Mahindra (M&M) to report net revenue CAGR of
~13% to ~`62,235cr over FY2018-20E mainly due to healthy growth in
1,200
automobile segment like Utility Vehicles (on the back of new launches and
1,000
facelift of some models) and strong growth in Tractors segment driven by
800 strong brand recall and improvement in rural sentiment. Further on the
600 bottom-line front, we expect CAGR of ~18% to `5600cr over the same period
400 on the back of margin improvement. Thus, we recommend a Buy rating on the
stock with target price of `1050.
200
- Key Financials
Aug-16
Aug-17
Aug-18
Jun-16
Jun-17
Jun-18
Dec-15
Oct-16
Dec-16
Oct-17
Dec-17
Oct-18
Dec-18
Apr-16
Apr-17
Apr-18
Jan-19
Feb-16
Feb-17
Feb-18
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
Source: Company, Angel Research FY2019E 54,939 13.0 5,021 42.2 14.7 16.3 2.4 8.9 1.2
FY2020E 62,235 13.0 5,991 50.4 15.4 13.7 2.1 7.8 1.0
Source: Company, Angel Research
Oct-17
Oct-18
Jan-16
Apr-16
Jul-16
Jan-17
Apr-17
Jul-17
Jan-18
Apr-18
Jul-18
Jan-19
FY2020E 5,854 6.3 201 20.9 21.0 28.8 6.1 16.1 1.0
Source: Company, Angel Research Source: Company, Angel Research
February 5, 2019 4
Angel Top Picks | February 2019
Oct-17
Oct-18
Jan-16
Apr-16
Jul-16
Jan-17
Apr-17
Jul-17
Jan-18
Apr-18
Jul-18
Jan-19
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 1,919 13.5 115 24.6 14.8 13.8 2.0 8.2 1.1
Source: Company, Angel Research FY2020E 2,207 14.0 146 31.2 16.1 10.9 1.8 6.8 1.0
Source: Company, Angel Research
10,000 Due to the favorable business mix, company has also been seeing
8,000 improvement in the margins. Company has already moved from ~11-12%
6,000 Together with higher operating leverage at Gujarat plant, increasing Nexa
outlets, and improving business mix, we believe that company has further
4,000
room to improve its margins. We have a Buy rating on the stock.
2,000
- Key Financials
Jan-16
Apr-16
Jul-16
Jan-17
Apr-17
Jul-17
Jan-18
Apr-18
Jul-18
Jan-19
Oct-16
Oct-17
Oct-18
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
Source: Company, Angel Research
FY2019E 90,185 14.7 8,714 288.5 18.1 24.1 4.4 12.6 1.9
FY2020E 103,712 15.3 10,331 342.1 18.8 20.3 3.8 10.1 1.5
Source: Company, Angel Research
February 5, 2019 5
Angel Top Picks | February 2019
Jan-17
Jan-18
Jan-19
Jul-16
Jul-17
Jul-18
May-16
May-17
May-18
Sep-16
Sep-17
Sep-18
Mar-16
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
Key Financials
Y/E NII NIM PAT EPS ABV ROA ROE P/E P/ABV
Source: Company, Angel Research March (` cr) (%) (` cr) (`) (`) (%) (%) (x) (x)
FY2019E 47,942 4.4 20,990 78.5 537 1.8 16.7 26.8 3.9
FY2020E 58,609 4.5 25,798 96.5 616 1.8 16.6 21.8 3.4
Source: Company, Angel Research
Apr-18
Jul-18
Jan-19
Feb-19
May-18
Aug-18
Sep-18
Nov-17
Jun-18
Nov-18
Oct-17
Dec-17
Mar-18
Oct-18
Dec-18
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
Source: Company, Angel Research
FY2019E 331 33.9 62 11 9.6 26.8 2.6 12.4 4.2
FY2020E 370 34.8 72 13 10.2 23.2 2.4 10.9 3.8
Source: Company, Angel Research
February 5, 2019 6
Angel Top Picks | February 2019
Oct-15
Jan-16
Oct-16
Jan-17
Oct-17
Jul-15
Apr-16
Jul-16
Apr-17
Jul-17
Feb-15
May-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Jul-16
Jul-17
Jul-18
Jan-16
Jan-17
Jan-18
Jan-19
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Source: Company, Angel Research March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 4,064 10.0 178 23.0 23.0 16.0 3.7 8.6 0.9
FY2020E 4,707 10.0 215 27.8 22.1 13.2 2.9 7.3 0.7
Source: Company, Angel Research
Oct-15
Oct-16
Oct-17
Jul-15
Jan-16
Apr-16
Jul-16
Jan-17
Apr-17
Jul-17
Feb-15
May-15
Oct-16
Oct-17
Oct-18
Apr-16
Jul-16
Apr-17
Jul-17
Apr-18
Jul-18
Jan-16
Jan-17
Jan-18
Jan-19
February 5, 2019 7
Angel Top Picks | February 2019
Jan-17
Apr-17
Jul-17
Jan-18
Apr-18
Jul-18
Jan-19
Oct-16
Oct-17
Oct-18
Inox Wind
Stock Info
Inox Wind is India’s leading wind energy solutions provider servicing IPPs,
CMP 70
Utilities, PSUs, Corporates and Retail Investors.
TP 120 We expect Inox Wind to report exponential growth in top-line and bottom-line
Upside 71.4% over FY19-20E. The growth would be led by changing renewable energy
Sector Wind-Power industry dynamics in favor of wind energy segment viz. changes in auction
Market Cap (` cr) 1,469 regime from Feed-In-Tariff (FIT) to Reverse auction regime and Government’s
guidance for increasing wind energy capacity from 34GW current to 140GW
Beta 0.3
by 2030.
52 Week High / Low 139/65
Further, being the lowest wind turbine producer globally coupled with healthy
order book of 780 MW and in dicscussion with other IPP’s for another 600
3 year-Chart MW order along with low debt equity, we believe INOX Wind is in a sweet spot
450
400
to tap the upcoming opportunity in renewable energy segments.
350
300 At the CMP of `70, Inox Wind is trading at 4.4x FY20E EPS of `16.9.
250 Considering the above positives, we assign a multiple of 7.5X on FY20EPS to
200
150
arrive at a target price of `120 (potential upside of 70% over a period of the
100 next 12-18 months)
50
-
Key Financials
Jul-16
Jul-17
Jul-18
Jan-16
May-16
Jan-17
May-17
Jan-18
May-18
Jan-19
Sep-16
Sep-17
Sep-18
Mar-16
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Source: Company, Angel Research March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 3,005 15% 228 10.3 10.2 6.8 0.7 4.0 3.2
FY2020E 4,036 15% 355 16.0 13.7 4.4 0.6 2.8 3
Source: Company, Angel Research
February 5, 2019 8
Angel Top Picks | February 2019
Jul-18
Jan-17
May-17
Jan-18
May-18
Jan-19
Sep-17
Sep-18
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
Source: Company, Angel Research FY2020E 3,219 3.6 1,195 28 196 1.3 15 20 2.9
Source: Company, Angel Research
Aug-17
Aug-18
Jun-16
Jun-17
Jun-18
Oct-16
Dec-16
Apr-17
Oct-17
Dec-17
Apr-18
Oct-18
Dec-18
Feb-17
Feb-18
FY2020E 2,706 11.1 162 19.3 15.9 12.7 2.1 9.1 0.8
Source: Company, Angel Research
Source: Company, Angel Research
February 5, 2019 9
Angel Top Picks | February 2019
Aug-17
Aug-18
Jun-16
Jun-17
Jun-18
Dec-15
Oct-16
Dec-16
Oct-17
Dec-17
Oct-18
Dec-18
Apr-16
Apr-17
Apr-18
Jan-19
Feb-16
Feb-17
Feb-18
Key Financials
Y/E NII NIM PAT EPS ABV ROA ROE P/E P/ABV
Source: Company, Angel Research
March (` cr) (%) (` cr) (`) (`) (%) (%) (x) (x)
FY2019E 26,797 3.2 5,795 9 147 0.6 5 39 2.4
FY2020E 31,339 3.3 13,264 21 164 1.3 12 17 2.2
Source: Company, Angel Research
Stock
StockInfo
Info Aditya Birla Capital
CMP
CMP 863
81 Aditya Birla Capital (ABCL) is one of the most diversified financial services
TPTP 1091
151 entities, with a presence in non-bank financing, asset management, housing
Upside
Upside 86.4%
26.4% finance, insurance and advisory businesses.
Sector
Sector Pharmaceutical
NBFC
ABFL (NBFC) business contributes highest value in our SOTP valuation. It has
Market
MarketCap
Cap(`(`cr)cr) 18,161
39025
recorded a strong CAGR of 42% over FY13-18. Despite aggressive growth in
Beta
Beta 0.7 lending and migration to 90dpd for NPA recognition, GNPA has remained at
52
52Week
WeekHigh
High/ /Low
Low 1572/807
172/79 ~1%. We believe ABFL would be able to continue to grow at 25% CAGR over
FY18-FY20E.
33year-Chart
year-Chart
250
We expect financialization of savings, increasing penetration in Insurance &
Mutual funds would ensure steady growth. Further, Banca tie-up with HDFC
200
Source: Company, Angel Research Bank, DBS and LVB should restore insurance business. We recommend a Buy
150 rating on the stock, with a price target of `151.
100
Key Financials
50
Y/E Op. Inc PAT EPS ABV ROE P/E P/BV
-
March (` cr) (` cr) (`) (`) (%) (x) (x)
Sep-17
Jun-18
Aug-18
Sep-18
Nov-17
Mar-18
Nov-18
Oct-17
Dec-17
Jan-18
Oct-18
Dec-18
Jan-19
Apr-18
Jul-18
Jul-18
Feb-18
May-18
February 5, 2019 10
Angel Top Picks | February 2019
Jul-17
Jul-18
Jan-16
May-16
Jan-17
May-17
Jan-18
May-18
Jan-19
Sep-16
Sep-17
Sep-18
Mar-16
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
Key Financials
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Source: Company, Angel Research March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 18,701 20.9 2,641 45.2 20.6 17.7 3.3 12.7 2.6
FY2020E 24,163 21.6 3,446 59.0 22.2 13.5 2.7 9.4 2.0
Source: Company, Angel Research
May-17
May-18
Feb-16
Aug-16
Feb-17
Aug-17
Feb-18
Aug-18
Feb-19
Nov-16
Nov-17
Nov-18
FY2020E 577.6 17.1 67.4 46.2 20.1 23.2 4.7 14.3 2.5
Source: Company, Angel Research
Source: Company, Angel Research
February 5, 2019 11
Angel Top Picks | February 2019
Jul-17
Jul-18
Jan-16
May-16
Jan-17
May-17
Jan-18
May-18
Jan-19
Sep-16
Sep-17
Sep-18
Nov-15
Mar-16
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 38,967 22.5 844 8.7 2.7 18.1 0.49 6.0 1.37
Source: Company, Angel Research
FY2020E 45,973 24.1 2547 26 8 6 0.45 4.3 1.04
Source: Company, Angel Research
May-16
Jul-16
Jan-17
May-17
Jul-17
Jan-18
May-18
Jul-18
Jan-19
Sep-16
Sep-17
Sep-18
Mar-16
Nov-16
Mar-17
Nov-17
Mar-18
Nov-18
February 5, 2019 12
Angel Top Picks | February 2019
Jun-17
Aug-17
Jun-18
Aug-18
Dec-15
Oct-16
Dec-16
Oct-17
Dec-17
Oct-18
Dec-18
Apr-16
Apr-17
Apr-18
Jan-19
Feb-16
Feb-17
Feb-18
Key Financials
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Source: Company, Angel Research
March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x)
FY2019E 3,005 14.5 280 21.8 16.3 52.5 8.6 32.1 4.7
FY2020E 3,494 14.7 329 25.6 16.6 44.7 7.4 27.0 4.0
Source: Company, Angel Research
Jan-19
Feb-18
Aug-18
Feb-19
Jun-18
Sep-18
Mar-18
Nov-18
Oct-18
Dec-18
FY2020E 3,438.6 7.5 140.2 45.4 12.7 16.3 2.1 7.9 0.6
Source: Company, Angel Research
Source: Company, Angel Research
February 5, 2019 13
Angel Top Picks | February 2019
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
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Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
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Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)
February 5, 2019 14