Image source: People vector created by pch.vector - www.freepik.com
We have been in a 'Bull Market' since the ruinous fall of March 2020 and making higher highs. Nearly all technical indicators are bullish, which is usually the case in a bull market. There are a large number of sceptics waiting for a market correction but they are just waiting, not acting. Yet, as many as 64% of stocks are still below January 2018 highs created by a booming midcap & smallcap rally.
At the time, almost all the investors must have two completely divergent thought processes run on the minds. The first is the fear-of-missing-out or FOMO. We want to be in the hot stock or the hot sector and ride the rally. We do not want to miss out on the rally that is happening, which seems to be making money for everyone else. The opposite fear is that market valuations are very high and that make us hesitate to deploy our capital fully. This bull phase may end tomorrow, and it may go on for the next five years for all we know. We are pulled in two opposite directions at the same time and do not know what to do.
Let's talk about top 5 stocks which may rise upto 50% in this Bull Run.
1) Ashoka Buildcon : Current Price ₹108
(Target Price ₹160, Tenure: 4-6 Months)
Risk Profile: High Risk
About the company: Ashoka Buildcon Limited is an India-based infrastructure development company. The Company is engaged in construction and maintenance of roads, and supporting services to land support-operation of toll roads and others. The Company operates through three segments: Construction and Contract related activities; BOT Projects, and Sales of Goods. Its Construction and Contract related activities segment consists of execution of engineering and construction projects to provide solutions in civil and electrical engineering (on turnkey basis or otherwise) to core/infrastructure sectors. The Company has projects under construction in the States of Tamil Nadu, Karnataka, Odisha and West Bengal.
Why Ashoka Builcon?
Stock P/E: 10.9 (Industry P/E 13.3) | ROCE: 20.9 % | ROE: 53.4 % | Free Cash Flow 5Yrs: ₹1,897 Cr. | PEG Ratio: 0.27 | Pledged percentage: 0.00 % | Company has delivered good profit growth of 39.82% CAGR over last 5 years
Company is expecting to receive another Rs. 4000-5000 crore order inflows in FY2022 with expected pick up in tendering from Q2FY2022. Asset monetisation to happen asset by asset versus earlier portfolio sale. While ASBL is looking to divest up to 100% stake in these projects (including under-construction), any positive outcome on the same is a key trigger for the stock going ahead.
Technical Analysis: 13 out of 28 major indicators show that this stock is Bullish on weekly charts.
2) IOL Chemicals & Pharmaceuticals Ltd Current Price ₹662
(Target Price ₹800, Tenure: 4-6 Months)
Risk Profile: High Risk
About the company: IOL Chemicals and Pharmaceuticals Limited is a pharmaceutical company. The Company is engaged in manufacturing and selling of organic chemicals and bulk drugs. It caters to both domestic and international markets. It operates through two segments: Chemicals and Drugs. The Chemicals segment produces and sells acetic anhydride, acetyl chloride, mono chloro acetic acid and iso butyl benzene.
Why IOL Chemicals?
Stock P/E: 8.75 (Industry P/E 32) | ROCE: 54.4 % | ROE: 43.1% | Free Cash Flow 5Yrs: ₹1010 Cr. | PEG Ratio: 0.13 | Debt to equity: 0.00 | Pledged percentage: 0.00 % | Interest Coverage: 99.0 | Company has delivered good profit growth of 67.35% CAGR over last 5 years
Technical Analysis: 14 out of 28 major indicators show that this stock is Bullish on daily charts.
Also read: 5 PSU Stocks to Invest for FY2022
3) Hindustan Petroleum Corporation Ltd (HPCL) Current Price ₹268
(Target Price ₹350, Tenure: 4-6 Months)
Risk Profile: Moderate
About the company: Hindustan Petroleum Corporation Limited refines and markets petroleum products in India and internationally. The company operates through Downstream Petroleum and Others segments. It offers petrol, diesel, kerosene, liquefied petroleum gas, naphtha lubricants, specialties, and greases, as well as aviation turbine fuel; and markets and exports bulk fuels, bitumen, solvents, jet and marine fuel, marine lubes, household insecticides, hexane, propylene, jute batch oil, turpentine oil, carbon black feed stock, molten sulphur, and superior kerosene oil (SKO). The company was incorporated in 1952 and is headquartered in Mumbai, India. Hindustan Petroleum Corporation Limited is a subsidiary of Oil and Natural Gas Corporation Limited.
Stock P/E: 3.57 (Industry P/E 5.95) | Book Value: ₹268 | ROCE: 19.5 % | ROE: 30.9% | Free Cash Flow 5Yrs: ₹3919 Cr. | PEG Ratio: 0.20 | Dividend Yield: 8.49 % | Pledged percentage: 0.00 % | Interest Coverage: 16 | Company has been maintaining a healthy dividend payout of 41.17%
Technical Analysis: 11 out of 28 major indicators show that this stock is Bullish on weekly charts.
4) Amara Raja Batteries Ltd
Current Price ₹727
(Target Price ₹900, Tenure: 4-6 Months)
Risk Profile: High Risk
About the company: Amara Raja Batteries Limited manufactures and sells lead-acid storage batteries for industrial and automotive applications in India. The company also offers installation, commissioning, and maintenance services. It sells its batteries under the Amaron, PowerZone, Power Stack, AmaronVolt, and Quanta brands. The company exports its products to various countries in the Indian Ocean Rim. It supplies its batteries to various customer groups, such as telecom, railways, power control, solar, and UPS; and automobile OEMs, replacement markets, and private label customers. The company was founded in 1985 and is based in Hyderabad, India.
Why Amara Raja?
Stock P/E: 19.2 (Industry P/E 33) | ROCE: 22 % | ROE: 17% | Free Cash Flow 5Yrs: ₹855 Cr. | Interest Coverage: 83.9 | Pledged percentage: 0.00 % | Company has been maintaining a healthy dividend payout of 27.50%
Technical Analysis: The stock is Bearish on charts.
Reason: In May 2021, APPCB announced closure orders for the Company’s Plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District, Andhra Pradesh due to environmental issues. Later on July 12, the Andhra Pradesh HC has extended the interim suspension of said orders of APPCB by four weeks or until further orders, whichever is earlier and the next date of hearing is scheduled on July 26, 2021. Amara Raja Batteries said that the Company has been working closely with APPCB officials for a satisfactory resolution of the matter in the interest of all stakeholders.
5) Cochin Shipyard Ltd
Current Price ₹383
(Target Price ₹450, Tenure: 4-6 Months)
Risk Profile: Moderate
About the company: Cochin Shipyard Limited is an India-based company. The Company is focused on providing cater to clients engaged in the defence sector in India and clients engaged in the commercial sector. In addition to shipbuilding and ship repair, the Company offers marine engineering training. The Company’s docks include ship repair dock and shipbuilding dock. Ship repair dock is enables to accommodate vessels with a maximum capacity of 125,000 DWT. In addition, ship repair dock offers a flexible range of products such as, tankers, product carriers, bulk carriers, passenger vessels, high bollard pull tugs, and air defence ship. Shipbuilding dock can accommodate vessels with a maximum capacity of 110,000 DWT. The Company has built a variety of vessels ranging from bulk carriers, tankers and passengers ships to offshore support vessels and port crafts.
Why Cochin Shipyard?
Stock P/E: 8.3 (Industry P/E 14) | ROCE: 22 % | ROE: 16% | Free Cash Flow 5Yrs: ₹163 Cr. | Interest Coverage: 18 | Debt to equity: 0.03 | Dividend Yield: 3.38 % | Pledged percentage: 0.00 % | Company has been maintaining a healthy dividend payout of 34.42%
Technical Analysis: 09 out of 28 major indicators show that this stock is Bullish on monthly charts.
Research Analyst (SEBI Regd.)