Top 12 high conviction stocks to buy in 2018

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Srilata Rao
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Top 12 high conviction stocks to buy in 2018

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Are you looking for the best stocks to buy for 2018. Here is a list of the top 12 high-conviction stock picks to buy for 2018 as recommended by experts

Brokerage: Anand Rathi Financial Services

Jamna Auto | Buy | Target price: Rs 95

Jamna Auto is the largest leaf spring manufacturer in India and the third largest globally (in terms of installed capacity). Anand Rathi Financial Services expects the company's revenues to grow at 13 per cent CAGR over the next three years owing to steep uptrend in the MHCV OEM segment and likely to draw benefits of operating leverage.

Dabur India | Buy | Target price: Rs 400

With around 70 per cent of its product range in ayurveda, natural and herbals (ANH), Dabur is amongst largest ayurveda and natural healthcare company. Factoring in the direct competition from Patanjali and channel disruption, the brokerage house believes that Dabur can still clock a CAGR of 12 per cent in revenue and 16 per cent in earnings over FY17-20. Anand Rathi recently upgraded Dabur to 'buy' with a target price of Rs 400

Deepak Nitrite | Buy | Target price: Rs 264

The company is one of the leading global players for several niche chemical products used in - colorants, petrochemicals, agrochemicals, rubber, pharmaceuticals, paper and textile. "With the completion of its Phenol project, the top line for the company is expected to almost get doubled by FY-19E," Anand Rathi Financial Services said. The brokerage has a 'buy' rating on Deepak Nitrite with a target price of Rs 264.

Analyst: Jayant Manglik, President, Religare Securities

Asian Granito India | Target price: Rs 642

Robust outlook of tiles industry (led by lower per capita consumption and expected pick up in real estate sector) augurs well for Asian Granito. Religare further believes that better product mix, focus on B2C sales and higher capacity utilization would result in improved profit growth. "Revenue and PAT are likely to increase at CAGR of around 16 per cent and around 32 per cent, respectively over FY17-20E," the brokerage said.

Nilkamal | Buy | Target price: Rs 2,097

Net revenue and PAT are likely to grow at a healthy pace, led by demand revival and company's efforts towards brand building, according to Religare. Despite higher oil prices, margins could improve at a gradual pace, led by operating leverage. Market leadership, leverage free balance sheet and healthy cash flows would provide valuation comfort.

Bharat Electronics | Buy | Target price: Rs 217

The company is likely to benefit from government's increased emphasis on 'Make in India' and higher defence capex. Strong order book (over Rs 40,000 crore) and healthy order inflow (Rs 13,000 crore) provides greater revenue visibility. Increased investment in R&D will help Bharat Electronics to retain its leadership position in the defence segment.

Brokerage: SMC Investments and Advisors

Larsen & Toubro | Buy | Target price: Rs 1,450

The company continues to focus on profitable execution of the large order book, selective order picking, on-time deliveries and operational excellence through digitalisation. The management is also emphasizing on cost competitiveness, continuous optimisation of working capital, restructuring of its business portfolio and value creation with an aim to enhance its return on equity. The government's determined efforts to revive the investment sentiment and globally, the developed economies appear hopeful of a recovery and better growth prospects. The investment climate in the company's focus market West Asia continues to provide some selective opportunities despite the oil price shock and the geo political risks. Thus, it is expected that the stock will see a price target of Rs 1,450 in eight to 10 months.

Swaraj Engines | Buy | Target price: Rs 2,284

The management of the company expects good growth for demand of domestic tractor due to government's continued thrust on agri and rural sector, which would help the company to increase market share and financial growth of the company. The central government has time and again reiterated its aim to double farm income by 2022, which has envisaged to be attained through better productivity and enhanced farm realizations. Swaraj Engines is a leading supplier of engines for the tractors to market leader, i.e. M&M. The company is one of the key players to benefit from this transition. Thus, it is expected that the stock will see a price target of Rs 2,384 in an eight to 10-month time frame.

Gati | Buy | Target price: Rs 158

With its comprehensive integrated service portfolio, Gati is distinctively positioned to support the consequent supply chain realignment. Moreover, the company's pan-India reach has been already designed on a hub and spoke model for efficiency and speed. Over the last few years, the company has undertaken significant initiatives to fortify its stronghold to deliver consistently to customers, by developing end-to-end solutions, enhancing technology capabilities and augmenting operations quality processes. Thus, it is expected that the stock will see a price target of Rs 158 in eight to 10 months.

Ahluwalia Contracts | Buy | Target price: Rs 473

The strong order backlog, combined with proven execution capabilities and low-geared balance sheet would help the company to deliver healthy growth in the foreseeable future. The government's increasing focus on the construction industry is expected to generate better order flows going forward. Thus, it is expected that the company would see good growth going forward and the stock will see a price target of Rs 473 in 8 to 10 months.

Brokerage: Reliance Securities

Apollo Tyres | Buy | Target price: Rs 305

Apollo Tyres (ATL) currently enjoys around 28 per cent market share in the TBR segment. As radialisation forms only 45 per cent of domestic TB tyre market, Reliance Securities sees a significant scope for radialisation in the domestic CV segment, which would benefit manufacturers like Apollo Tyres, going forward. The brokerage house expects ATL's market share in radial tyre segment to improve on the back of capacity expansion to meet the rising demand. Further, ATL is expected to benefit immensely with the recent imposition of Anti Dumping Duty in Chinese TBR. Looking ahead, with the likely pick-up in utilisation from Hungary unit and possible improvement in price as no new capacity is coming up in the European region except for Korea-based Nexen, Reliance Securities expects ATL's European operations to witness improvement.

Kajaria Ceramics | Buy | Target Price: Rs 851

Kajaria Ceramics (KCL) has a market share of around 10 per cent in domestic ceramic tiles industry, including the unorganised players (unorganised segment accounts for 60 per cent of domestic tiles volume). The brokerage house believes that over the years, the company has laid strong foundation for growth by focusing on creating a strong brand, new product introduction, increasing distribution footprint and higher share of JVs. Kajaria is well-placed to capitalise on the burgeoning opportunity in tiles industry in coming years. Kajaria Ceramics' own facility at Gailpur went on stream in September 2017 to manufacture high-value ceramic floor tiles with capacity of 3.5msm taking the total annual capacity of the unit to 30.1msm. Based on expected EPS of Rs 22.4, the stock currently trades at a reasonable PE multiple of 32.3x FY19E earnings.
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