Titan, ICICI Bank, Oberoi Realty, L&T, Infosys and Marico are among the top picks of domestic brokerage Motilal Oswal for 2019. Indian stock markets ended higher on Friday, helped by strong gains in banking stocks as sentiment was boosted by extended gains on Wall Street. For the week, the Sensex rose 0.94% and the Nifty 50 added 0.98%. So far this year, the NSE Nifty has gained 3.13%, while the Sensex has risen 5.93%. Both indexes are on track for a fourth yearly gain in five.
Here are the top 10 stock ideas for 2019 from Motilal Oswal:
Titan: Target price - ₹ 1,105
“Wedding season demand is scaling up well for Titan. In our view, if consumers continue flocking to its stores in the wedding season, Jewellery sales growth of 25% for the full year is achievable." The brokerage expects 25% EPS CAGR over FY18-20.
Indian Hotels: Target price -Rs 163
“Indian hospitality industry is set to enter into an upcycle, led by favourable demand-supply dynamics. Given its presence in high-demand, high-occupancy micro markets, Indian Hotels is strategically well placed to capitalize on the growth opportunities."
“Indian Hotels also has an edge in terms of operating leverage, given its high fixed-cost proportion and efforts to rationalize expenses."
Marico: Target price - ₹ 465
“There has been an evident step-up in the pace of new launches over the past 18 months with couple of notable successes. The recent pipeline and successes so far could enable a new era of growth for Marico if all goes according to plan."
“Strong performance of Parachute volumes continues in recent quarters along with healthy growth prospects in the VAHO (Value added hair oil) segment."
Oberoi Realty: Target price - ₹ 574
“Oberoi has one of the strongest balance sheets among real estate companies, with negligible net debt. With strong monetization visibility from its ongoing and upcoming projects, Oberoi is expected generate healthy free cash flow over FY18-20. We believe such financial strength offers the company with an opportunity for value-accretive land acquisitions to drive growth potential beyond the existing land bank."
ICICI Bank: Target price - ₹ 400
“ICICI is in the midst of an improvement in the operating environment (stressed asset resolution and growth pick-up) and is showing healthy signs of earnings normalization. We expect earnings momentum to accelerate from FY20 as the asset quality cycle peaks out, domestic business growth remains strong and the rising mix of retail adds more granularity to loan book."
“Further, we expect ICICI Bank to gain from the current crisis in NBFC space, due to its strong franchise in deposits along with superior customer reach across business segments"
Aurobindo Pharma: Target price - ₹ 920
“We remain positive on Aurobindo on robust ANDA filings rate, strong pace of approvals, minimal regulatory hurdles and the company outperforming the industry in the EU market."
Hindustan Unilever: Target price - ₹ 2,140
“Four key trends are helping HUL in elevating its earnings growth trajectory to ~20%: (1) rapidly improving adaptability to market requirements, (2) recognition and strong execution on Naturals, (3) strong trend toward premiumization and (4) extensive plans to employ technology and create further entry barriers."
“The acquisition of GSK Consumer healthcare business pushes HUL among the market leaders in the only key category where it did not have market leadership (Food and Refreshments)."
Crompton Greaves Consumer Electricals Ltd
“The light electricals industry is poised for robust double-digit growth over the coming few years largely driven by growth in LED. Crompton has undertaken multiple cost rationalization initiatives to combat the margin pressure in the lighting segment. We like Crompton for its strong product portfolio, established brand, market leadership, wide distribution network, and robust RoE/RoCE profile."
Infosys Ltd: Target Price – ₹ 800
“Growth for Indian IT should gradually pick-up from current 6-7% as Digital services proliferate which is still small. Infosys has built capabilities to match spend shifts in the past three years and Digital revenue now accounts for ~30% of company’s revenue."
“The acceleration in growth momentum, aided by a pick-up in verticals like Financial Services and Retail, and the visibility for its continual from recent deal wins provides confidence of improvement in the coming quarters."
Larsen and Toubro: Target price – ₹ 1,570
“Key positive triggers for L&T are 1) Pick-up in private capex cycle supported by government capex, 2) Timely execution of strong order backlog, 3) Divestment of the non-core assets and net working capital cycle improvement."
“Divestment of the non-core assets (like L&T cutting tools, EWAC alloys etc.) and net working capital cycle improvement is in line with Project Lakshya. In Q1FY19, L&T signed agreement with Schneider Electric for sale of its Electrical & Automation segment for a cash consideration of INR112b (post tax)."
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