With 2017 coming to an end, the markets are searching for cues to scale new highs in 2018. While the Sensex gained 26 percent or 7,064 points, Nifty rose 27.25 percent or 2,231 points on an year-to-date basis. Analysts and brokerages have set new stock price targets for the coming year. We look at some of them.
Entry Level: Around 510-490
Since last 2 years, Sun Pharma has been under tremendous pressure and has corrected by forming Lower Top Lower Bottom formation. In that pessimism, stock hit a fresh 52-weeks low of around 430 during August 14, 2017.
However, the last fall from 588 (July 20, 2017) to 430 (August 14, 2017) failed to get confirmed by the daily RSI (14) momentum indicator which signaled 'Bullish Divergence' pattern.
The impact of 'Bullish Divergence' was seen as stock witnessed decent pullback towards 572. However, once again, the stock resumed its down trend but this time it managed to found support near 50% retracement of its entire move from the bottom of 430 to 572.
On a daily chart, for the second consecutive time the RSI (14) managed to hold 40 levels and rallying higher indicates the probable shift in a range.
Looking at the weekly chart of Nifty Pharma Index, we are seeing a probable range shift and Sun Pharma holds 27.44% weight in this index.
On a daily chart, we are seeing 'Positive Reversal' post the formation of 'Bullish Divergence'.
Combining the above technical evidences, we expect this stock to outperform and advocate positional traders to buy this stock for 6-8 months perspective with an upside price target of 700 and stop loss placed below 425.
TATA MOTOR DVR
Entry Level: Around 220/200
Tata Motor DVR saw sharp rally from the bottom of around 117 (candle low of August, 2013) and hit a fresh all-time high of around 387 (candle high of September, 2014). Subsequently, the bullish momentum turned and stock witnessed profit booking which eventually pulled the stock lower. However, the fall got arrested near 200 levels which coincided with 61.8% retracement of its entire move from the bottom of 117 to 387.
Once again, the stock resumed its uptrend and rallied higher however it failed to crossed its previous all-time high which triggered fresh sell-off.
At this juncture, stock has formed a Rectangle formation on monthly chart and currently price is oscillating near the lower band of the pattern.
The September month candle formed a Long Legged Doji pattern indicating indecision, also the monthly RSI (14) came near 40 levels.
The Higher Top Higher Bottom formation on monthly chart is intact hence we expect the recent level is a good entry point to build long position with a price target of 350. Stop loss should be placed at 160 below which our bullish view will be negated.
Target Price : 1,426
InterGlobe Aviation Ltd (Indigo) is one of the most efficient low cost carriers (LCC) with a market share of 40% in Indian aviation sector. Indigo passenger traffic grew by robust 31% compounded annual growth rate (CAGR) versus industry growth of 15% CAGR, over FY14-FY17. Expanding market presence through robust fleet addition and firming up its regional connectivity plans augurs well. We factor revenue and earnings to grow at 25% and 29% CAGR over FY17-FY19E. We are positive on Indigo given increasing air travel penetration, market leadership position, and strong balance sheet.
Target Price : 283
Mammoth order book of Rs 75,000 crore (12xFY17 sales) provides strong visibility for next five years . NBCC is at sweet spot with an inflow guidance of Rs25,000cr for FY18E, limited competition and expertise in executing large projects. Execution from large redevelopment is likely to improve from H2FY18E which will add impetus for re-rating.
Target Price : 480
Tata Motors registered a 10% Y-o-Y growth in revenue for Q2FY18 with a margin expansion of 100 bps (+20.3%YoY) led by 26% volume growth from M&HCV (52% market share) and 14% YoY growth in the PV segment. We remain optimistic about the company's standalone growth prospects led by continued focus on new launches and rigorous cost cutting measures. We expect 10% standalone revenue CAGR over FY17-20E. Similarly JLR's Volume growth to stay strong at 8%YoY for the full year led by new launches (Jaguar E-Pace & I Pace and Refresh model of Range rover sports) and strong traction in China
Karur Vysa Bank
Target Price 161
Loan growth to pick up from FY18 onwards: KVB had a fairly strong loan CAGR of 14.9% over FY11-17.However, FY17 was year of consolidation and loan book grew by only 4.7%. We expect loan growth to pick up to 11% over FY17-19. Deposit growth is expected at 9% during the period. Asset quality likely to stabilize going ahead: KVB's slippages remained high during FY17 and hence Gross NPAs percentage went up to 3.58% vs 1.3%. However, large part of the troubled accounts has been classified as NPAs and hence gradually we expect the asset quality to improve. While in Q1FY18 we saw some pressure on asset quality, it still remained fairly under control. Net interest margins (NIMs) likely to see further improvement: There were 25 bps improvements in NIM during FY17, with share of CASA growing and cost of fund coming down NIM is expected to improve further going ahead.
Outlook: We expect KVB to post a strong loan book & earnings CAGR of 11% & 22% over FY2017-19E. The stock currently trades at 1.3 times FY2019E ABV. We have a BUY rating on the stock.
Target price Rs 570
AGIL's current, vitrified sales (35%) are lower as compared to its peers like Somany Ceramics (47%) and Kajaria Ceramics (61%). Recently, AGIL has launched various products in premium segment.
Going forward, we expect AGIL's profit margin to improve due to increase in focus for higher vitrified product sales, which is a high margin business. AGIL is continuously putting efforts to increase the B2C sales from the current level (35-36% in FY17).
It is expected to reach up to 50% in next 2-3 years on the back of various initiatives taken by AGIL to increase direct interaction with customers like strengthening distribution network, participation in key trade exhibition, etc.
In July FY2016, AGIL acquired Artistique Ceramic which has a better margin profile. Going forward, we expect the company to improve its operating margin from 7.5% in FY16 (excluding merger) to 13-13.5% in coming financial year.
Artisique Ceramics has a contract with RAS GAS to supply quality natural gas at a discounted rate of 50% to current market rate, which would reduce the overall power & fuel cost of the company. We expect AGIL to report a net revenue CAGR of 10% to Rs 1,286 crore and net profit CAGR of 29% to Rs 65cr over FY2017-19E. We recommend a Buy rating on the stock
Siyaram Silk Mills
Target price: 757
SSML has strong brands which cater to premium as well as popular mass segments of the market. Further, SSML entered the ladies' salwar kameez and ethnic wear segment. Going forward, we believe that the company would be able to leverage its brand equity and continue to post strong performance.
The company has a nationwide network of about 1,600 dealers and business partners. It has a retail network of 160 stores and plans to add another 300-350 stores going forward. Further, the company's brands are sold across 3,00,000 multi brand outlets in the country.
Going forward, we expect SSML to report a net sales CAGR of 12% to Rs 1,981 crore and adjusted net profit CAGR of 16% to Rs 123 crore over FY2017-19E on back of market leadership in blended fabrics, strong brand building, wide distribution channel, strong presence in tier II and tier III cities and emphasis on latest designs and affordable pricing points. At the current market price, SSML trades at an inexpensive valuation. We have an accumulate recommendation on the stock and target price of Rs 757.