The Most Bullish Bets Going Into 2018

The Nifty is on track to end the year with the best gains since 2014, riding on domestic inflows. Yet, the broader NSE Nifty 500 Index has outperformed the benchmark.

Nifty 500 returned 31 percent gains compared to a 26 percent rise in the NSE Nifty 50 Index this year. As the year nears a close, BloombergQuint looks at the stocks—tracked by at least 10 analysts—that are the most preferred bets going into 2018…

Fortis Healthcare

Thirteen out of 15 analysts tracked by Bloomberg have a ‘Buy’ rating on the stock, with a target price of Rs 209 apiece and a potential upside of more than 55 percent. Ace investor Rakesh Jhunjhunwala holds more than 1 percent in the company as per the September quarter filings.

Fortis Healthcare is down 26 percent this year. JP Morgan expects that improving profitability and declining interest costs could drive earnings growth. Acquisition of Religare Healthcare Trust’s assets is accretive for its operating performance, the brokerage said.

Rural Electrification Corporation

Ten out of 17 analysts tracked by Bloomberg recommend a ‘Buy’ on the stock and suggest a potential upside of more than 38 percent to Rs 198 apiece target price. The non-banking finance company with infrastructure status has fetched nearly 17 percent returns for the year.

Inexpensive valuations, strong capital ratios and a healthy return on equity and dividend yields make REC a ‘Buy’ for UBS. The company’s loan growth remained stable at 10 percent year-on-year for the quarter ended September and is expected to improve in the second half of the financial year on a low base.

India Infoline, while initiating its coverage on the company in 2015, had said that the nodal agency status for the power sector, ability to lend for long-ventures when compared to banks and benefits of low-cost funding due to government’s support works in its favour. That still holds true for the power sector financier.

Glenmark Pharmaceuticals

Nineteen out of 34 analysts tracked by Bloomberg rate the stock a ‘Buy’, while 12 recommend ‘Hold’. The consensus upside potential is 37 percent at the target price of Rs 733 per share. That contrasts with the stock’s nearly 40 percent decline this year.

HSBC, with a ‘Hold’ rating on Glenmark, said its innovative product pipeline is a positive. JP Morgan said cost savings will help the drugmaker, while its performance in six months to March hinges on debt reduction and out-licensing opportunities.

Power Finance Corporation

Ten out of 17 analysts tracked by Bloomberg have a Buy’ rating on the stock while one recommends ‘Hold’. The consensus potential upside is nearly 36 percent with a target price of Rs 158 per share. Moving past the impact of UDAY, the company is expected to report better disbursements and loan growth in the year ending March, according to Quantum Securities.

A Kotak Securities report said PFC significantly improved its impaired loans, largely from the government sector. PFC’s overall impaired loans fell to 31 percent in the quarter ended September from 34 percent in the previous three months.

Federal Bank

Thirty-one out of 36 analysts tracked by Bloomberg rated it a ‘Buy’ with three having a ‘Hold’ rating on the stock, which fetched more than 57 percent returns this year. Analysts predict a 32 percent upside potential to a target price of Rs 137 apiece.

Rakesh Jhunjhunwala holds more than 1.85 percent stake in the private lender. UBS, which recommends a ’Buy’, expects the lender’s loan growth to improve and asset quality to remain stable.

UBS, with a ‘Buy’, expects Federal Bank’s loans to grow 22-26 percent in three years to March 2020 with lower asset quality risks and reasonable valuations.