Aditya Birla Fashion, JK Cement to Titan: Top shares to watch out for

Uncertainties in the global and domestic political and economic situation have dragged the stock market multiple-month low. Over the week, the investors lost crores of rupees. Under such a volatile market situation, making a right bet is not easy. However, information is the wealth for investors. Here are the reports of brokerages JM Financial and Edelweiss on these five stocks:

Aditya Birla Fashion and Retail (BUY):
Edelweiss said that continued revival in organised retail formats, and Aditya Birla Fashion and Retail (ABFRL)'s prudent store expansion, cost rationalisation and strategic changes in Forever21’s losses keeps us energised for ABFRL’s growth. "We retain 20x, 12m forward EV/EBITDA (ex-IND AS 116) to arrive at a target price of Rs 231. At CMP, stock is trading at FY21E EV/EBITDA of 10x (18x ex-IND AS 116). Maintain ‘BUY/SO’."

JK Cement (BUY): 
JM Financial said JK Cement (JKCE) 1QFY20 revenue/EBITDA exceeded expectations on higher realisations. Revenues grew 19 percent year-on-year (YoY), led by grey cement realisation growth of 23 percent YoY (+11% QoQ). Overall volumes remained stable as 3 percent decline in grey cement sales was offset by 21 percent growth in white cement sales. Blended earnings before interest, tax, depreciation and amortisation (EBITDA)/tonne at Rs 1,315/tonne (vs. Rs 650/tonne last year) grew as realisations improvement and lower freight expenses was partially offset by increase in power/fuel cost and other expenses. 
Net debt increased by Rs 2.18 billion to Rs 14.79 billion from Rs 12.61 billion as of March 2019 on the capex incurred during the quarter. Management expects the completion of expansion projects to drive 10-12 percent volume growth in FY20. Going forward, stability of prices will be the key for the profitability in a seasonally weak quarter. "We continue to value existing assets at 8x. Maintain BUY with a target price of Rs 1,050 (March 2020)."

Titan (BUY):
Edelweiss said that it envisaged Titan to extend its growth run led by market share gains, rising share of studded, launches and retail expansion. Margin expansion levers such as higher share of studded (jewellery), in-house frame manufacturing (eyewear), cost optimisation and operating leverage are in place. "Rolling forward, we retain 55x PE multiple and TP of INR1,260. We maintain ‘BUY/SO’. At CMP, the stock is trading at 39.5x FY21E EPS."

KEI Industries (BUY)
Edelweiss said KEI Industries (KEI)'s sustained dealer sales growth along with focus on improving the balance sheet will aid strong free-cash generation over the next two-three years. "We maintain ‘BUY/SO’ with a revised  target price of Rs 520. The stock is trading at 14/11x FY20/21E EPS."

Cochin Shipyard (BUY):
Cochin Shipyard's 1QFY20 results surprised positively as sales grew 12 percent YoY, while EBITDA was up 23 percent YoY. This was led by a strong 33 percent growth in the shipbuilding division and jump in profitability in the ship repair business, due to reversal of provisions (Rs 130 mn). Adoption of Ind AS 116 led to a 3 percent positive impact on the net profit, thus pegging net profit growth at 13 percent YoY, according to a JM Financial report. 

"Given its strong order book position of Rs 164 billion (7.2x TTM shipbuilding sales), no significant delays in its marque IAC order and increasing contribution from new ship repair facilities, we remain confident on the long-term growth prospects of the company. The stock trades at reasonable valuations of 4.6x FY20E and 4.5x FY21E EBITDA. We maintain BUY."