Updated on 16 Sept 2016
The S&P BSE Sensex surged over 29 per cent after hitting a 52-week low of 22,494 on February 29. Hence, most traders are sitting on double-digit gains. But in recent days markets came down, Sensex came down around 1000 points. Global investment banks such as BofA-ML, Citigroup, CLSA and Morgan Stanley in separate notes to their clients this past week maintained their buy or overweight ratings on the following five stocks, which could be possible buy-on-dips candidates. Any dip in the market should be used as a very good opportunity to buy stocks, particularly anything and everything related to consumption Based on recommendations from top global brokerages, here is a list of stocks that investors could buy on dips with a minimum investment horizon of 12 months:
Apollo Hospitals: Buy | Target price Rs 1,580 BofA-ML has maintained a buy rating on Apollo Hospitals with a 12-month target price of Rs 1,580. The margins are likely to improve with the ramp-up in the occupancy of new beds, said the global investment bank. The Ebitda margins are likely to have bottomed out in Q1. The global investment bank expects a shift of focus towards profitability post capex phase. It has pruned its estimates by 8-5 per cent over FY17-18 on sluggish margins at new hospitals. Tata Motors: Buy| Target price Rs 665 Citigroup has maintained a buy rating on Tata Motors but raised its 12-month target price to Rs 665 from Rs 530 earlier. The improvement in free-cash-flows is likely to drive re-rating over the medium term. Improving model cycle at JLR as well as weak GBP should benefit JLR's margins, said the Citigroup report. The investment bank is of the view that investors will look beyond short-term pain, and focus on volume delivery improvement. After a sharp correction during 2015, the stock has gained 37 per cent on a year-to-date basis. The global investment bank believes that there is some steam left in the stock, given JLR's model momentum, and recovery in parent business.
Jain Irrigations: Overweight| Target price Rs 131 Morgan Stanley has maintained an overweight rating on Jain Irrigations but raised its 12-month target price to Rs 131 from Rs 92 earlier. The global investment bank sees strong monsoons, as well as recapitalized balance sheet, is likely to augur well for earnings progression. The global bank sees a strong possibility of the scheme being announced before the start of sugarcane planting season. Morgan Stanley raised earnings by 5-8 per cent for F17-19E given fast growth in high-margin MIS.
Oil India: Buy | Target price Rs 450 CLSA has upgraded Oil India to buy from underperform and also raised its 12-month target price to Rs 450 from Rs 350 earlier. The global investment bank has built in lower cess, and recently announced monthly kerosene price hikes in their estimates to arrive at the new target price. Higher Brent crude prices of $48/60 a barrel can drive a 24.4/23.6 per cent boost to the earnings per share (EPS). "The cess rate is effectively lower than our estimate," said the CLSA report. The global investment bank sees crude rebounding to $60 in the next 12 months. CESC: Buy | Target price Rs 790 Citigroup has maintained a buy rating on CESC, but raised its 12-month target price to Rs 790 from Rs 688 earlier. The Kolkata capex is likely to drive net profit growth of 5 per cent over the next three years. The management believes that net profit of Rs 2.3-2.5bn is sustainable from Haldia over the longer term. Dhariwal losses should progressively reduce. The global investment bank estimates 100mn of annual loss reduction over next 3 years in retail business.