Share market investment tips: A leap of faith before Budget 2019 in share bazaar - Pick these stocks, and become rich

Share bazaar investment tips: It is a confusion zone currently in Indian markets, as we are back to the levels where we were six months ago. The benchmark indices Sensex has been hovering between 35,500 to a little over 36,000-mark, whereas Nifty is struggling to even see the ray of 11,000-level from the beginning of 2019. Today, the Sensex was trading at 36,122.60 down by over 90 points or 0.25% and that of Nifty 50 performing below 37 points or 0.34% at 10,818.15 at around 1354 hours. So where is market headed from here? Notably, the next big thing is Union Budget 2019 followed by General Elections where BJP Party and oppositions will collide. But did you know, now is the moment of being hungry in stocks and pick the right one! In short, buy valuable companies when they fall, if one wants to become rich from equities. 

Warren Buffett the world’s equity king once said, ‘It is better to buy a wonderful company at fair price, rather than a fair company at a wonderful price.” Simply put, cash the crash! 

Talking about the upcoming budget and its impact on markets, analysts at ShareKhan said, “Volatility may be the order of the day as oil prices, trade wars, general elections and Union Budget play out and investors will have to use patience as well as valuations to guide through the year. We expect to keep nibbling on quality stocks and use price corrections to add fundamentally strong stocks identified by our research team.”

This means that the volatility which is currently stressing investors will see relief ahead. Hence, rather than panicking, let’s have a pick in which stocks are the best bet for this year. 

Here’s a list of stocks which one can look for buy as per Sharekhan.

Hindustan Unilever! 

HUL will acquire 100% stake in GSK Consumers for a deal value of Rs. 31,700 crore. Under the share swap deal, GSK Consumers will get 4.39 shares of HUL for 1 share held (resulting in equity dilution of 8.5%).  Though the swap ratio is favourable for GSK Consumers, the deal is EPS accretive for HUL as it brings in incremental PAT of Rs. 700 crore (13% up as per FY2018 financials), while equity capital gets diluted by just 8.5% due to the deal. 

Moreover, the company would further gain from synergy benefits and consolidate its leadership position in the high-growth and high-margin health food business. 

Buy recommendation on the stock and upgrade the PT to Rs. 2,071.

Zydus Wellness! 

Fundraising through a mix of debt and equity would result in earnings dilution of 3% and 6% for FY2019E and FY2020E, respectively, which is much lesser than earlier anticipated by us. Sharekhan expects FY2021 will be operationally much better at the consolidated level.

With the receding risk of high earnings dilution and acquired brands making Zydus a commendable player in the health and wellness space. Hence, the company’s has been upgraded from Hold to Buy with a revised PT of Rs. 1,472. The stock has corrected by about 10% since the announcement of acquisition and, hence, downside risk is minimal.

देखिए रिस्क से रिवॉर्ड तक का सफर #MoneyGuru में @rainaswati और @RustagiHemant के साथ। https://t.co/exHUnrBPkZ

— Zee Business (@ZeeBusiness) January 10, 2019

Tata Consultancy Services!

TCS is a titan on stock exchanges. Sharekhan expects TCS to report best-in-class growth rates among Indian/global large-cap stocks with revenue and earnings CAGRs of 13% and 14%, respectively, over FY2018-FY2021E.

TCS is on track to achieve double-digit CC revenue growth in FY2019E and in the next two years, given improved macro environment, strong orderbook and pipeline and higher digital spending by clients. TCS is well placed among IT outsourcing companies to capture large scale digital transformation deals.

Buy rating on TCS with an unchanged PT of Rs. 2,400.

Rico Auto Industries!

RAI’s growth momentum is expected to remain strong; we expect 20% CAGR earnings over the next two years. RAI margins are expected to improve 130 BPS over the next two years led by better mix, reduction in employee costs and operational efficiencies.

Buy rating on the stock with an unchanged PT of Rs. 95.

Reliance Industries!

RIL’s stock price corrected by 11% in the past three months, attributable to weak refining margin. However, Sharekhan sees this as an opportunity to Buy as higher diesel cracks would largely offset the decline in gasoline cracks for RIL.

Ramp-up of petcoke gasification and RoGC project to help boost refining and petchem margins in FY2020E. Retail business to benefit from unique online-offline retailing strategy. Strong subscriber addition and revenue market share gain to improve financials of the telecom business.

Buy rating with unchanged PT of Rs. 1,465.

Persistent Systems!

Focus on 4-3 matrix – growth strategy is to focus on four technologies within three industries. Plans to enhance existing accounts through better account mining strategy versus expanding large number of accounts. 

Aims to on-board a new CEO and MD by mid-2019; possibilities of change in pay-out ratio/buyback of shares post Q3FY2019.

Buy rating on Persistent Systems Limited (PSL) with a revised PT of Rs. 685, given favourable risk-reward ratio.

Oil India!

Recently announced buyback plan to result in EPS accretion by 4.6% for FY2019E and FY2020E. Post the recent correction, risk-reward has turned favourable as current valuations are factoring in worst case net oil realisation of $40-45/bbl.

Steady oil realisation and higher gas prices to improve earnings visibility. Moreover, likely freeing up of domestic gas pricing could act as a key rating trigger for upstream PSUs.

Buy with an unchanged PT of Rs. 215.

INOX Leisure!

Reduction of GST would provide the flexibility to the exhibitors to take higher annual ticket price hikes. During Q3FY19E, ILL is expected to deliver strong revenue growth of 15% y-o-y, led by higher footfalls and anticipated healthy growth in advertisement revenues.

Buy rating on INOX Leisure Ltd (ILL) with an unchanged PT of Rs 270.

Petronet LNG!

Limited competition from new LNG terminals and huge gas demand-supply gap to ensure more than 100% utilisation for Dahej terminal over FY2019E-FY2020. Strong free cashflow and limited capex in the near term could result in high dividend payout in FY2019E and FY2020E.

Expect a volume CAGR of 9% over FY2018-FY2020E, led by Dahej terminal capacity addition and improvement in Kochi terminal utilisation.

Buy rating with unchanged PT of Rs. 270.

Considering the above, one can definitely take a leap of faith now ahead of Union Budget 2019, in order to reap fruits of equities. 

Sharekhan says, “The easing of crude oil prices, persistent weakness in inflationary trends and the easing of bond yields has resulted in a marked improvement in macroeconomic conditions – an important pre-requisite for a rally in Indian equity markets. And finally, earnings growth is set to revive meaningfully in FY2019-20, primarily driven by peaking out of NPA-related provisioning requirements for banks.”