Forget Sensex, top 10 stocks which can give up to 100% return in next 12 months

NEW DELHI: After a smart rally seen so far in the year 2014 (up 25% YTD), the weakness in the benchmark index can be best described as consolidation. But analysts still want to remain cautious and are not ruling out a scenario in which the markets may see some more profit booking in the next couple of weeks.

The S&P BSE Sensex has plunged nearly 600 points, while the Nifty too faced some bit of selling pressure and plunged nearly 200 points in the past 6 trading sessions.

Even though the short-term trend remains bearish, analysts advise investors with a long-term view to accumulate quality stocks at lower levels as the markets still have more upside in the next couple of years.

“Clearly, we have been maintaining our cautious stance for some time now. The macro and micro conditions have not really changed as far as the Indian domestic scene is concerned. The result season will soon start,” said Mayuresh Joshi, VP, Institution, Angel Broking.

The corporate earnings are expected to remain subdued, say analysts. The data as we have been seeing through the RBI policy notes indicates that inflation is going to be sticky. The GDP, IIP data is going to have a long and slow recovery process, they say.

“So, overall domestically at least there are very few triggers even in terms of reform processes except the oil and gas reforms. If they come through in the coming month, nothing really seems to be coming through at least over the next few months,” added Joshi.

From valuation perspective also, we are trading close to long-term averages. The only respite for India probably is that from an FII perspective, most emerging markets are fairly valued - Indonesia, Thailand, and Malaysia except China, Brazil and Russia, which have their own sweet problems.

Right now, the market is trading at almost about 15-16 per cent premium to its long-term average multiple. And, if we compare it with the number last year - market was trading at a 12% or 13% discount to its long-term average.

Joshi is of the view that apart from geopolitical tensions, domestic factors back home would keep the markets more or less in a range, but in the absence of triggers, the markets will find it very difficult to cross the 8200-8250 mark on the higher side. Therefore, the specifics would be rather a stock-related approach rather than playing on the markets at least from a short to medium-term perspective.

Both the Sensex and the Nifty slipped below their crucial psychological support levels last week and are now trading in a narrow range for the past couple of days. Analysts see this move as more of a consolidation or profit booking after a sharp rally (over 25% YTD) seen so far in the year 2014.

Even though the economy has bottomed out, it will take some time for all engines to fire. Investors should now look at markets with an investment horizon of 3-5 years.

“Investors need to look at this market from a long-term perspective. Do not look at it from a short-term perspective and certainly, do not be guided by the returns of the last 12 months,” said Vetri Subramaniam, Chief Investment Officer, Religare Invesco Mutual Fund.

“So, our only recommendation to investors at this time is that rather than getting trapped into this thing about where the correction will come, continue to invest in the market in small instalments using SIPs,” he added.

We have collated a list of ten stocks which can deliver up to 100% return in the next 12 months:









Radico Khaitan: Target price set at Rs 165

IndiaNivest, which has a ‘buy’ rating on the stock, expects the stock to rally to Rs 165 in the next 12 months. Radico Khaitan’s Q1 2014-15 net profit was down by 26% compared to the corresponding period of last year. However, the management’s premiumisation drive is yielding results and its core brands, such as Magic Moments and Morpheus, are reaching new highs.

The recent fall in prices has also brought down its valuations to reasonable levels. Radico Khaitan has reportedly been in talks with global liquor majors to sell a small stake of its IMFL business and, any announcement on that front, can be a major trigger for the stock.

SKF India: Target price set at Rs 1324

ICICI Direct initiates a 'buy' recommendation on the stock with a target price of Rs 1324. A healthy balance sheet, robust cash flow, strong parentage and product profile, strong distribution network and the recovery in the end-user industry should benefit SKF India.

India Cements Ltd: Target price set at Rs 165

Nirmal Bang retains a 'buy' rating on the stock with a target price of Rs 165. The company’s plans to dissociate itself from Chennai Super Kings and turn it into a wholly-owned subsidiary in an attempt to monetise this asset to lower its debt burden bodes well.

Mangalam Cements Ltd: Target price set at Rs 337

Angel Broking has initiated a 'buy' recommendation on the stock with a target price of Rs 337. At the current market price, the stock is trading at trailing EV/tonne of $49 (on its 3.25mtpa installed capacity), which is at a large discount compared to its mid-cap peers.

Can Fin Homes: Target price set at 550

AnandRathi has placed a target of Rs 550 on the stock. Can Fin Homes, which is also an associate of Canara Bank, has grown at a CAGR of 39 per cent over FY11-14, much faster than 5.5 per cent in FY08-11. Its business model has gradually evolved with higher service levels and greater penetration.

On consistent growth, improved return ratios and attractive valuations, we feel it's an attractive long-term stock to buy. At our target price of Rs 550, the stock would trade at PBV of 2.1x FY15e and 1.7x FY16e.

Bajaj Corp Ltd: Target price set at 330

AnandRathi has placed a target of Rs 330 on the stock. Owing to aggressive advertising, launch of new SKUs and distribution expansion, the company has been able to gain market share from 38.4 per cent in FY08 to 57.9 per cent in FY14.

The company has indicated that it will be able to expand market share further to 67-68% over the next three years before any stagnation. The brokerage firm values the stock at a target price of Rs 330 and PE of 21x FY16e earnings.

Tata Global Beverages: Target: Rs 210

Religare Securities Ltd has placed a target of Rs 210 on the stock. Tata Global Beverages Ltd. (TGBL) has a portfolio of brands in tea, coffee and water across 40 countries. It is focusing on expanding the range and strengthening the presence of its flagship brands i.e. Tetley, Tata Tea and Eight O'clock coffee. The joint ventures with PepsiCo and Starbucks open up potential markets.

Crompton Greaves: Target 245

Religare Securities Limited has placed a target of Rs 245. Crompton Greaves, with its plans for demerging and listing its consumer products business, will do well. It is doing well in its engines supply business.

Suven Lifesciences: Target price set at Rs 240

Bonanza Institutional Equities has placed a target of Rs 240 on the stock. Sustained base enhancement delivering robust revenues and expanding margins mainly on account of royalty supplies from Taro continuing till FY28 and 3 intermediate supplies to commence from FY16E onwards. Target Price: 240. Time frame: 6 months.

Marico Ltd: Target price set at Rs 367

Bonanza Institutional Equities has placed a target of Rs 367 on the stock. Marico is seeing high demand and is headed for a faster growth as the GDP improves. Parachute hair oil will gain from conversion of loose oil to branded hair oil while softening of copra price will help Marico to gain further market share and improve margins. Target price: Rs 367. Time-frame: 1 year

(Views and recommendations expressed in this section are the analysts’ own and do not represent those of EconomicTimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.)