3 Stocks Brokerages Rated New Buy And 1 Upgrade

Book publisher S Chand and Company Ltd., real estate developer Oberoi Realty Ltd. and roofing sheets maker Everest Industries Ltd., received a favourable rating from brokerages recently.

Meanwhile, country’s largest two-wheeler maker Hero MotoCorp Ltd. was upgraded by an international broking firm first time in three years.

Here’s what the brokerages had to say:

Goldman Sachs On Hero MotoCorp

• Upgraded to ‘Neutral’ from ‘Sell’; maintained price target of Rs 3,295.
• Added Hero to Sell List on December 2014.
• The risk reward is more balanced now at current levels.
• New launches hold the key for the company in the medium to long term.
• Expect volume and revenue to grow at a compounded rate of 7 percent by March 2020.
• Hero will rely on Ather Energy for its drive into the electric vehicle market.

Hero had picked up around 30 percent stake in the electric-vehicle startup in 2016.

Credit Suisse On S Chand

• Initiated ‘Outperform’ with price target of Rs 625.
• S Chand is the largest player in this market and with a strong track record.
• Leading player in attractive Indian education content market
• Expect compounded growth rate of 14 percent, 13 percent and 25 percent for revenue, operating income and earnings per share by March 2020.
• Lower borrowing cost and tax rate to accelerate earnings per share.
• Management looking at two acquisitions in Western India state board and Cambridge international board.
• Positives: large and young population, growth of private schools and increasing share of education in consumers' discretionary budget.

Motilal Oswal On Oberoi Realty

• Initiated ‘Buy’ with price target of Rs 580.
• Sharp focus and trusted brand are the key strengths.
• Company to be a key beneficiary of likely consolidation post RERA.
• Annuity business – portfolio expansion to provide consistent cash flows.
• Recent foray into affordable housing should help it enjoy tax incentives.
• Low net debt provides ample room to acquire large land parcels in the Mumbai.
• Expect revenue and net profit to grow at a compounded rate of 47 percent and 56 percent respectively by March 2020.
• High operating margins to be backed by premium pricing.
• Strong cash flow visibility for 10-12 years from ongoing/planned projects.
• Bull case price target of Rs 638.

Ventura On Everest Industries

• Initiated ‘Buy’ with price target of Rs 712.
• Government policies to promote housing sector is positive.
• Boards and Panels segment to lead to better profitability.
• Roofing - new product launches to maintain growth momentum.
• Change in product mix to boost profitability; To reduce dependence on roofing.
• Expect revenue, operating income and net profit to grow at a compounded rate of 11 percent, 53 percent and 173 percent by March 2020.
• Benefits from low base of previous financial year, which was impacted by demonetisation and high material costs.
• Margin expansion and debt repayment to boost return ratios.