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    10 stocks to watch out for in 2020

    BT NewsFlicks

    10 stocks to watch out for in 2020

    • 1/10

    PNC InfratechTarget price: Rs 240 The company has a strong order book and witnessed stellar revenue growth in the last financial year. It has an excellent track record of early execution of projects and debtor days have improved significantly. Management has revised upwards its revenue growth guidance to 50-60% for FY20. The debt to equity ratio is at a very comfortable level despite having a strong order book growth.Technically, after breaking out from its downward sloping trend, it is continuing its upward journey where it has outperformed the midcap index. In the downside, 200-DMA of 180 has become a strong base while in the upside, it is likely to break out of the previous high of 228 where 240 would be the next target.

    (Recommended by Santosh Meena, Senior Analyst, TradingBells)

    • 2/10

    Reliance Industries

    Target price: Rs 2000
    Their core petrochemical business is doing very well and apart from core business, their two growing segments Jio and Retail are majorly contributing to the company's overall performance. IPO of Jio and Retail business will be big value unlocking for investors, which will keep share price uplifted in the coming year. Concerns over high debt are out of the window after management announced stake sale to Saudi Aramco in its refining and petrochemical business. Technically, the counter is in a strong bullish momentum which is likely to continue for the target of 2000 plus in the coming days. Any small dip will be a great buying opportunity in this counter. There are a series of bullish flag patterns to push bullish momentum higher and this texture is likely to continue.(Recommended by Santosh Meena, Senior Analyst, TradingBells)

    • 3/10

    State Bank of IndiaTarget price: Rs 425 The pace of NPA resolution through the Insolvency and Bankruptcy Code route has improved which will be a key driver for the profitability growth of the lender. It will be one of the most beneficial lenders if economic growth witnesses any uptick amid the low-interest rate environment. Other than its core performance, its subsidiaries like SBI life, SBI MF, SBI cards and SBI cap have witnessed excellent growth. The company is on the path of monetisation of subsidiaries which would lead to further unlocking of value for shareholders.       Technically, the stock was in a trading range for the last 10 years . Now, there is a good chance that it may break out in the upside which may lead to a big rally in this counter in the coming years. The target of Rs 425 looks easily achievable in 2020.(Recommended by Santosh Meena, Senior Analyst, TradingBells)

    • 4/10

    SBI Life Insurance Target Price: 1,060In Q2FY20, gross written premium rose 33.3% year-on-year, driven by new business and renewal premiums, which grew 33.8% and 32.8% YoY respectively. For H1FY20, new business margin, calculated as value of new business (VONB), which measures the profitability of new business underwritten during the period, rose 33% YoY to Rs 9,400 crore. Solvency ratio rose to 2.20 times (vs 2.17 times in Q1FY20), as against the regulatory requirement of 1.5 times while the 13M/61M persistency ratio, which indicates the stickiness of premiums, improved to 83.1%/59.6% (vs. 80.0%/55.5% in Q2FY19). In H1FY20, SBI Life's market share increased 200 bps YoY to 21.8% in terms of NBP (new business premium) among the private insurers and AUM increased 22.7% YoY to Rs 154,760 crore.(Recommended by Geojit Financial )

    • 5/10

    UltraTech Cement

    Target price: Rs 5,050
    Market mix has improved post acquisition with the North/Central-India (both regions have better utilisation outlook) contributing 45% to volumes while the share of weaker regions (the South/East) has declined. We estimate 26% compounded annual growth rate CAGR for EBITDA and 48% CAGR for EPS over FY19-21. Driven by strong operating cash flows and reduction in interest cost, RoE/RoCE should improve by 550 bps/420 bps to 13.8%/11.2% over FY19-21. It is also trading 30% cheaper than its peer, Shree Cements, with respect to historical average of 10%. We value the firm at 14 times FY21E EV/EBITDA to arrive at a target price of Rs 5,050 (implied enterprise value (EV) per tonne of $185/tonne on FY21 capacity). Maintain Buy.
    (Recommended by Motilal Oswal)

    • 6/10

    Aarti Industries Target Price: 933Aarti Industries Ltd (ARTO) is a global leader in Benzene based derivative products. The company has a diversified product portfolio with end users in pharma, agrochemicals, specialty polymers, paints and  pigments. Aarti Industries will continue to benefit from backward integration, expansion of product portfolio and shift in volume due to Chinese shutdown in the medium term. Going ahead, management focus on value added products, execution of multiyear contracts and revival in volumes from specialty chemicals and pharma segments will drive profitability. We have an accumulate rating on the stock, given strong earning visibility of 20% CAGR over FY19-21E and RoE 21%.(Recommended by Geojit Financial )

    • 7/10

    Bandhan Bank

    Target price: Rs 700
    It is one of the fastest-growing private banks and maintains a healthy return on equity of around 20%. Merger with Gruh finance will aid superior business growth and cost synergies in the business. Healthy growth in advances along with the low operating cost is the key strength for the bank.  After establishing itself as a microfinance player and subsequently obtaining a banking licence, it now enjoys the opportunities of CASA, fees, and leverage which is not available to most non-banks. Technically, after a meaningful correction, it is finding strong support around 450 area and it is moving in an up sloping channel where after taking support at the lower trendline, it is preparing for a move toward the upper trendline which is placed around 700 level.(Recommended by Santosh Meena, Senior Analyst, TradingBells) 

    • 8/10

    Dixon Technologies Target price: Rs 4,475Dixon's management remains upbeat on  sustaining   volume growth   in   consumer electronics, backed by strong order book from MI for FY21 and agreement closure with large customers soon. Subsequently, it is increasing capacity from 3.6 million to 4.8 million units.Capacity  addition  for  fully automatic  washing  machines is  on  track  and  management expects volumes to ramp up from H2FY21. The company is expecting another customer win in the semi-automatic segment, apart from the recent on-boarding of a large domestic player.  The opportunity of exports in its lighting business, which is expected to begin from FY21, can be  significant. It is believed  automation,  cost  optimisation  through indigenisation  of component procurement will drive margins further.They have  raised  FY21/22E  revenue  of  consumer  electronics  by  20%  each  and  home appliances by 8%/13%. Subsequently, we increase FY21/22 estimates for earnings before interest, tax, depreciation and amortisation (EBITDA) by 10% each. We roll forward valuations to arrive at a revised target price of Rs 4,475. (25 times FY22 earnings per share).

    (Recommended by Emkay Global)

    • 9/10

    HDFC BankTarget Price: Rs 1,412

    The bank's strong network helped in sustaining growth in advances and deposits. The bank added 211 banking outlets, to reach a total of 5,314 as on September 30 2019, of which 52% are in semi-urban and rural areas. In Q2FY20, growth in loans and advances remained strong at 19.5% YoY, with domestic retail loans contributing 52% (14.7% YoY) and domestic wholesale loans contributing 48.0% (27.4% YoY). The growth in deposits was supported by a focus on granular accounts. On asset quality front, the annualised slippage ratio improved 10 bps YoY and 30 bps QoQ to 1.7% and net NPA ratio decreased 1 bps QoQ to 0.42% during the quarter.
    (Recommended by Geojit Financial)

    • 10/10

    L&T InfotechTarget price: Rs 2100

    Large deals win is the key strength of the company where high revenue growth is visible. Despite slowdown in the banking and financial services (BFS) segment, overall growth remains strong. We expect revenue growth from the BFS segment to improve as global growth is likely to rise in FY21. It is maintaining return on equity of 34% for the last 3 Years.
    Technically, the overall texture of this counter is bullish where after a long period of consolidation, it is preparing to break out in the upside with a double bottom formation on a weekly time frame where we can see the level of 2,100 in 2020.(Recommended by Santosh Meena, Senior Analyst, TradingBells)