ADVERTISEMENT

Two Stocks That May Gain Over 30% This Year: Brokerage View 

Brokerages initiated coverage on L&T Finance Holdings and Himadri Speciality at ‘Buy’.

A man looks up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange (BSE) in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
A man looks up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange (BSE) in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Two brokerages initiated coverage on financial services firm L&T Finance Holdings Ltd. and coal tar by-products maker Himadri Speciality Chemical Ltd. with a ‘Buy’ rating and a target price implying a potential upside of over 30 percent.

Here’s what the brokerages had to say:

Emkay On L&T Finance Holding

  • Initiated ‘Buy’ with target price of Rs 250; implying a potential upside of 39 percent from last regular trade.
  • Diversified financial services players best positioned in current landscape.
  • Lending business successfully turned around; now on strong growth footing .
  • Retailisation of balance sheet and profit and loss underway.
  • Fee engine is firing and is likely to be sustainable.
  • Return on equity drag from wholesale business likely to end.
  • Expect steady move in return on equity towards 20 percent by March 2020
  • Expect consolidated net profit to compound at 32 percent over the financial years through March 2020.
  • See further scope for valuation re-rating with improving return ratios.

IIFL On Himadri Speciality

  • Initiated ‘Buy’ with target price of Rs 240; implying a potential upside of 32 percent from last regular trade.
  • Strong competitive position in base business.
  • High-margin new products are key growth drivers; new products to add Rs 500 crore to operating income by March 2023.
  • Integrated manufacturing, R&D capabilities are key strengths.
  • Positives: strong earnings growth, high return ratios and margins.
  • Expect earning per share to grow at compound annual growth rate of 40 percent over financial year 2018-2020 and 28 percent over financial year 2018-2023.
  • Expect Himadri to continue to command premium valuations.