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FPIs pumped money into these 10 smaller stocks, too

These stocks can return between 15 per cent and 40 per cent in one year.

, ET Bureau|
Last Updated: Jan 22, 2020, 08.09 AM IST
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At current market price, Shriram Transport is attractively priced trading at 1.2 times FY21 estimated book value, according to Rahul Pandey, analyst, Karvy Stock Broking.
The majority of the flows into Indian stocks from foreign investors (FPIs) of over Rs 1 lakh crore in 2019 came into the top-performing blue-chips. Some of the flows have also trickled into mid- and small-cap stocks in this period. ET has compiled 10 smaller stocks in which FPIs have raised their stakes consistently in 2019. Bloomberg consensus estimates of analysts’ price targets show these stocks can return between 15 per cent and 40 per cent in one year.

At current market price, the stock is attractively priced trading at 1.2 times FY21 estimated book value, according to Rahul Pandey, analyst, Karvy Stock Broking. “Going ahead, profits of the company for FY19-22 is expected to be 15.3 per cent CAGR owing to moderation in provisioning amount and reduction in corporate tax rate from 34 per cent to 25.2 per cent,” he said.

According to Arjun Pasumarthi, analyst, Chola Securities, the stock is valued at Rs 376, assigning a price to adjusted book value of 1.2 times its FY21estimated numbers. “The challenging demand environment in the market coupled with management’s cautious approach towards lending, we expect loan growth to stabilize at current rate in near term and thus maintain our loan growth at 13 per cent CAGR over FY19-21”.

Redington’s execution — 11 per cent YoY revenue growth in spite of slowing economic growth and the reduction in working capital days — is commendable. Although growth in the overseas businesses has slowed, overall revenue and earnings growth remain strong. “Considering the company’s improving ROCE profile, its valuation at 8.3 times FY20 estimated EPS is attractive” said Pranav Kshatriya, analyst, Edelweiss Securities.

With visible ROE expansion to 16.4 per cent in FY21 on the back of strong AUM growth and lower operating expenses, Equitas Small Finance Bank’s valuations will gravitate towards that of other SFBs, banks and NBFCs demonstrating similar growth and profitability. “We remain positive on the stock given strong earnings growth of 53 per cent CAGR over FY19-21 and value Equitas Holdings at a 55 per cent discount to SFB, at 1.4 times FY21 adjusted book value of Rs 122, post factoring the holdco discount,” said Jehan Bhadha, analyst, Nirmal Bang.

With the pledging overhang behind, valuation at 16x PE looks appealing for the analysts who see gradual rerating in the stock. “We raise our target multiple from 20 times earlier to 23 times, to reflect improved business prospects from strategy changes. The stock, trading at an FY21 estimated 16 times PE remains attractive,” said Nitin Gupta, analyst, SBICAP Securities.

FPI snip 5

GIC Housing trades at 0.7 times FY21 price to adjusted book value as against its five-year historical average of 1.8x on a 1-year forward basis. “Risk-reward is extremely favourable because even with a small improvement in the demand environment,” said Amit N Rane, analyst, Quantum Securities.

With the benefits of the management’s cost optimisation initiatives expected to start accruing and the ramp-up in new hospitals resulting in operating leverage playing out, analyst expect adjusted EBITDA margin to expand by 140 bps over FY19-21. “At 6x FY21 EV/EBITDA, Aster continues to trade at a significant discount to peers” said Anmol Ganjoo, analyst, JM Financial.

Gulf Oil’s business model is right on all key drivers, which has resulted in consistent market share gain in the past and the trend is likely to continue. “The tie-up with OEMs, investment in the distribution chain, and product innovation will drive Gulf Oil’s performance” said Nidhi Doshi, analyst, Dolat Capital. “However, due to slowdown in auto industry and less movement of vehicles, we maintain accumulate rating with a target price of Rs 977 based on 18 times FY21 estimated earnings”.

BSE is a value play with a higher dividend at low valuations and option value from new segments such as the mutual fund platform, commodities and INX over and above the value of its core segment. “BSE stocks value includes its core operations ex-cash income of Rs 125 per share, implied value from CDSL’s market price at 20 per cent holding company discount at Rs 100 per share, owned unencumbered cash of Rs 300 per share and float income from encumbered/margin money at Rs 225 per share” said Anmol Garg, Analyst, Motilal Oswal.

“We have a positive outlook on IDFC First Bank in the long term, however, taking exposure to IDFC can provide better returns than buying IDFC First Bank, valuation-wise even after factoring-in 30 per cent holding company discount” said Amit Rane, analyst, Quantum Securities.
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