Shares to buy on May 9: Stock market experts' tips for Dalal Street investors
After showing a sharp weakness from the highs in the last session, the bloodbath continued in the market, as the Nifty showed another session of steep weakness in today's session. Stock market experts say a long negative candle was formed yesterday (back to back two candles in the last two sessions), which indicates a sharp downward reversal in the market. This downward corrective leg is likely to continue in the Nifty for the next session and could reach the next support levels of 11280 in the next couple of sessions. so, in such a tricky situation when the Sio-US tension is on rising and Chinese President Xi Jinping is going to visit US for finding solution to the escalating trade war tension. Share market experts are asking Dalal Street investors to have full idea of both fundamentals and technicals of each and every counter they are planning to take any position in them. Here are some top picks for May 9 trade session by various brokerage houses:
1] Buy BSE for 30 pct gains, advises HDFC securities
In a detail research report made by Amit Chandra and Apurva Prasad, Analyst, HDFC Securities, the BSE revenue was up 10.5% QoQ to Rs 1.16bn (against the estimated Rs 1.12) led by 12.1% QoQ rise in transaction revenue. BSE gained equity cash market share (+54 bps QoQ to 8.8%) after four quarters of fall. Interoperability of clearing corporations (effective June-19) will help BSE gain back some market share in equity cash segment. The company has taken around 20% hike in annual listing fees (42% of rev) which will boost revenue in FY20E. BSE’s grip on currency derivatives loosened this quarter (-187bps QoQ to 42.0% share). Earnings Before Interest, Taxes, Depreciation and Amortization or EBITDA margin improved to 2.1% against loss last quarter. Investments in new initiatives and drop in revenue led to steep fall in FY19 margins (6.5% against 25.7% in FY18).
On suggestion to the stock market investors in regard to BSE counter Amit Chandra and Apurva Prasad of HDFC Securities says, "From fundamental perspective, the BSE is back on track and shows an upside potential. The BSE share price is poised to show Rs 802 per stock levels in long-term perspective means around 2 months time." currently, the BSE share price is oscillating around Rs 615 per stock levels means the forecast for the BSE counter is for near 30 per cent rise in one year.
2] Buy Bharti Airtel for 15 pct gains, advises HDFC securities
Bharti Airtel’s 4QFY19 results were ahead of estimates. India revenue growth of 1.3% QoQ (wireless 4.3%) despite two days less and estimated EBITDA growth of around 9.8% were key positives. Bharti reported meaningful revenue/EBITDA growth in India business nearly after ten quarters (albeit Jio launch). Sustainability of this is key catalyst. Reiterate BUY with SoTP of Rs 374 (India Wireless @ 10x and Africa at 7.5x FY21E EBITDA).
On the suggestion to the stock market investors in regard to Bharti Airtel share price Himanshu Shah, Analyst, HDFC Securities said, "The fundamentals of the Bharti Airtel counter is strong and is poised to touch Rs 374 per stock levels." Currently, the counter is at Rs 325 per shares means an investor can get around 15 per cent if he or she decides to invest in Bharti Airtel counter as told by the HDFC expert.
3] Buy Supreme Industries for 34 pct gains, advises Elara Securities
Supreme Industries’ plastic piping segment, which contributed around 57% to total sales in FY19, posted volume growth of 14.7% and value growth of 14% for the quarter. Government initiatives, such as affordable housing, effective implementation of RERA, Swacch Bharat Mission, AMRUT Yojana and other infrastructure-related activities gave a boost to the plastic piping segment. Packaging products was up +13.6% and consumer furniture was up +3.2%, further bolstering total volume growth.
On what should be the strategy that a stock market investor can follow in regard to the Supreme Industries Akhil Parekh, Analyst at Elara Securities said, "The counter is fundamentally quite bullish and can show 1393 levels and an ivestor can buy the counter at current market levels." Currently, the supreme Industries share price is at 1020 means around 34 per cent gain can be expected if an ivestor goes with the stock market expert's view.
4] Buy Sanofi India for 17 pct gains, advises Elara Securities
Sanofi India posted revenue growth of 16.1% to INR 7.2bn in Q1CY19, well ahead of our expectations of Rs 6.7bn. Based on this good performance, we infer exports, as well as the domestic divisions, are doing well. The exports business had grown by 25% in CY18, aided by higher volume and currency tailwinds (as the EUR-INR rate was up 10% YoY in CY18), given its major exporting countries are in the EU. Management expects exports volume to be maintained in CY19.
Sanofi’s portfolio is skewed towards high-growing chronic portfolio and along with its leadership position in basal insulin provides an edge. Top products, such as Lantus, Insuman (both products used to treat diabetes) and Allerga (used to treat allergies), along with line extensions of Amaryl (used to treat diabetes) remain resilient. Further, volumes in the export business are likely to be sustainable.
On suggestion to the stock market investors in regard to Sanofi India counter Param Desai, Analyst at Elara Securities said, "At a CMP of Rs 5,630, the stock is trading at 15x CY20E EV/EBITDA, which is at a 30-40% discount to MNC peers like GSK Pharma (SSK IN, Not Rated, CMP: Rs 1,280). We reiterate Accumulate with a Target Price of Rs 6,600 based on 30x CY20E P/E. Any regulatory headwinds to drug pricing in the domestic market are risks to our call."
5] Buy Escorts Limited for 18 pct gains, advises Narnolia Financial Advisors
Escorts Limited market share has improved by 100bps YoY to 11.8% in FY19 largely due to a strong presence in Northern markets. The southern region has declined by 22%YoY in FY19. However, the management has lowered its growth guidance to 5-8% from earlier 8-10% in FY20 and also it will be tilted towards 2HFY20. The growth in 1HFY20 is expected to be subdued based on elections, high base, the decline in subsidy based volumes (largely in southern states) and low reservoir levels in central and southern regions. On the export front, the growth will be driven by European markets and with JV Kubota Corporation with volume target of 4500-5000 units with a growth of 45-50% YoY in FY20.
Going ahead experts at Narnolia Financial Advisors expect margin improvement of 40bps in line with management’s guidance of 40-50bps on the back of the decline in commodity prices, increasing export volumes and improvement in construction equipment margins. Factoring the near term demand weakness and increased debt level due to working capital requirement we reduce our FY20e EPS estimate by 6%. We value ESCORTS at 17x FY20e EPS to arrive at a target price of Rs 762 and maintain HOLD rating.
So, a stock market investor can think of these stocks picked by various brokerage firms before making any investment decision on May 9.