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Two Stocks That May Gain Over 30% This Year: Brokerage View
Brokerages initiated coverage on L&T Finance Holdings and Himadri Speciality at ‘Buy’.
25 Jan 2018, 09:01 AM IST
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.
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