BHEL, ICICI Bank, Aurobindo Pharma among top five stocks global brokerages are bullish on

NEW DELHI: Big global brokerage firms such as Credit Suisse, BofA-ML, Citigroup and CLSA in separate notes to clients have either recommended a buy or outperform ratings on top blue chip stocks like ICICI Bank, BHEL and others.

The domestic equity market is likely to remain volatile weighed down by global cues, but most market analysts say there is tremendous potential for long-term investors who are disciplined in their approach in allocating money to quality stocks.

Going by various recommendations, ETMarkets.com has collated a list of stocks on which top global brokerages have given buy-on-dips recommendations with a minimum investment horizon of 12 months.

Havells India: Outperform | Target price Rs 435
Credit Suisse has maintained an outperform rating on Havells India post Q2 results with a 12-month target price of Rs 435.

The global investment bank sees a slowdown in revenue growth in the forthcoming quarters, but September quarter earnings were largely in line with estimates thanks to a boost from other income.

The consumer durables business is likely to see robust growth, but the cable business dragged overall top line growth. A favourable mix and discontinuation of royalty are likely to keep the margins steady. Growth in the lighting segment as seen in the past has come down as LED growth normalise, the Credit Suisse report said.

ICICI Bank: Buy | Target price Rs 320
BofA-ML maintained a buy rating on ICICI Bank with a 12-month target price of Rs 320. The recent large deals are likely to help the largest private sector bank to lower stress on its books.

ICICI Bank has been one of largest lenders to Essar with an estimated exposure of 15-20 per cent of group’s debt. The global investment bank expects equity infusion by promoters in Essar Steel, which will be important for a successful S4A (scheme for sustainable structuring of stressed assets as defined by RBI).

ICICI Bank has been monetising its stakes in subsidiaries, which has helped it build up contingent provisions. BofA-ML believes the market is underestimating the benefits of ICICI Bank expanding its distribution network and technology.

The positive catalysts in the near to medium term would be an improvement in macro growth and improvement in asset quality. The global investment bank believes ICICI is provisioning a cushion to deliver +10/25 per cent EPS growth in FY17-18E.

Aurobindo Pharma: Buy | Target price Rs 1,170
Citigroup has maintained a buy rating on Aurobindo Pharma but slashed its 12-month target price to Rs 1,170 from Rs 1,200 earlier. The global investment bank believes the pharma major is well placed to leverage large backend infrastructure and product basket.

The strong revenue growth, rising capacity utilization, improving product mix would drive earnings growth. The US business momentum is likely to continue to surprise and the strong pipeline is also likely to sustain momentum over the medium term.

The global investment bank believes valuations are attractive, and leverage on the balance sheet is also coming down.

Titan Company: Buy | Target price Rs 405
Citigroup has maintained a buy rating on Titan with a 12-month target price of Rs 405. The global investment bank believes it is a good play on the long-term consumption opportunity in India. The company is well-positioned to deliver healthy revenue and earnings growth. It estimated 12-21 per cent revenue/EPS growth CAGR over FY16-18E.

Steps to increase accessibility, competitive positioning should yield positive results, the Citigroup note said. Stock valuation is at a discount to peers, which makes it more attractive.

BHEL: Buy | Target price Rs 164
CLSA has upgraded BHEL to buy from sell earlier and raised its 12-month target price to Rs 164 from Rs 155 earlier. BHEL’s client Tangedco won a case on the Ennore project. The project win improves execution visibility of the second largest order for BHEL. CLSA sees potential Rs 78 billion order from Tangedco.

It should also reduce BHEL’s share of slow-moving orders by 30 per cent. BHEL has also set sights on MoEF clearance of largest project, which the company has been awaiting environmental clearance for 15 months.

CLSA has upgraded the stock following 15 per cent decline over the past six weeks and improved EPS visibility on legal victory.

(Views and recommendations given in this section are the analysts' own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)