12,352.35-3.15
Stock Analysis, IPO, Mutual Funds, Bonds & More

Trying to spot the leader of next Bull Run? These names giving some cues

The bull market of 2003-2007 saw capital goods and EPC companies at the vanguard.

, ETMarkets.com|
Dec 06, 2019, 10.55 AM IST
0Comments
Getty Images
Bull-market-1---Getty
Investing in Info Edge gives exposure to India’s startup ecosystem. The company has investments in some prominent startups that include Zomato, Happily Unmarried, Policybazaar and Meritnation, among others.
Every bull run on Dalal Street in the past two decades has been led by different industries. Investors who managed to identify the general sectoral trend at the right time gained much more than those who stuck to the benchmark indices.

The bull market of 2003-2007 saw capital goods and EPC companies at the vanguard. Similarly, pharma companies outperformed post the 2008 recession and NBFCs led the great run during 2016-17.

“While equity markets have their ebbs and flows, it pays to be invested in the ‘right’ sector during bullish periods. Another truism of the market is that leaders of previous bull run seldom lead the subsequent bull run – IT sector never really regained its mojo after the Dotcom Bust; EPC companies did not participate in any rally post 2008, and the recently outperforming NBFCs have been having a rough ride in the past year and a half,” said Anil Sarin, ED & CIO for equities at Centrum Broking.

India has seen rapid digitisation in recent years. McKinsky says this has created a $435 billion opportunity for companies in this space. India is the second fastest growing digital adapter among 17 major economies, behind Indonesia. As the market veers towards another bull run, can it be the chance for internet-based companies to reap the benefits?

Some signs are visible already. Info Edge has surged 79 per cent this calendar, while Tanla Solution is up 111 per cent and Just Dial 13 per cent, against a 12 per cent rise in the Sensex.

Affle India and IRCTC, which debuted on the bourses this year, have grown 107 per cent and 174 per cent, respectively, from their issue prices. B2B marketplace IndiaMart, which debuted at Rs 973, has climbed 121 per cent since its July listing.

“They are interesting business models. Apart from Info Edge, which is very well known, respected and valued, other recently-listed companies like Affle India, IndiaMart and to some extent IRCTC look interesting. Apart from internet-based ticketing model, IRCTC also has other businesses,” Sarin pointed out.

Investing in Info Edge gives exposure to India’s startup ecosystem. The company has investments in some prominent startups that include Zomato, Happily Unmarried, Policybazaar and Meritnation, among others.

It also runs job portal naukri.com which has a market share of over 70 per cent, matrimonial website jeevansathi.com and property portal 99acres.

“I am very bullish on Info Edge. It is an extremely good story. There is a slowdown in the market, but it should be valued on its startup investments,” said Sanjiv Bhasin, EVP for markets at IIFL.

JM Financials has a ‘buy’ call on the stock with a price target of Rs 2,765, a 9 per cent potential upside from current price level.

Just Dial, which is a discovery platform, has also seen shown signs of growth, despite competition in the sector. Swiss brokerage UBS has changed its rating on the stock to ‘buy’ from ‘sell’, saying it expects the core business to continue improving and believes the B2B opportunity can surprise positively.

“We think Just Dial’s ability to indirectly monetise Google and other large digital platforms, as well as its focus on marketing and curated content, will likely aid sustainable growth. Further, the opportunity to expand in the B2B listing space could positively surprise the market. The market is underestimating its positioning and Just Dial’s earnings are likely to beat market expectations,” UBS said.

The brokerage has a price target for the stock at Rs 825, up from Rs 520, meaning a potential upside of 45 per cent.

Ad-tech company Affle India has found favour with Nomura. The Japanese brokerages expects it to ride the internet wave and has a ‘buy’ recommendation. It has set a price target at Rs 1,900 for the stock, translating into a potential upside of 23 per cent.

“We think the underlying macros are attractive in Affle’s key markets (India & Southeast Asia), where a large internet user base, rising smartphone sales, improving data connectivity and young demographics augur well for the shift to digital,” Nomura said.

Sarin does not see much hurdles for these companies as they are asset-light businesses. “Hurdles would come mainly in terms of availability and penetration of Internet. Any slower evolution of mobile networks as well as broadband penetration will be the limiting factors,” he said.

Also Read

IT stocks buck the greatest bull run

Where’s the risk? US fund managers bet on bull run in 2020

Who’s afraid of this bull run? Not these bears

This group’s stocks rallied 50% in last one year: What’s driving this bull run?

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service