Supreme Industries, Kajaria & V-Guard Jefferies’ top midcaps of 2020

Midcaps in 2020 will be driven by government’s efforts to boost demand, said Jefferies.

By ET Bureau | Jan 14, 2020, 07.58 AM IST

Brokerage Jefferies said midcaps in 2020 will be driven by government’s efforts to boost demand, shift to the organised segment, premium product launches, softer raw material costs and balance sheet strength. The brokerage’s top picks among mid-cap stocks are Supreme Industries, Kajaria Ceramics and V-Guard Industries.

Supreme Industries
CMP: Rs 1,218
Jefferies’ Price Target: Rs 1,520
Expected Returns*: 24.8%

Triggers:

Further ramp-up in value added portfolio
Rising demand shift to organised players after GST and e-waybill
Government’s thrust on housing and irrigation projects

Kajaria Ceramics
CMP: Rs 541.50
Jefferies’ Price Target: Rs 795
Expected Returns*: 46.8%

Triggers:

Regaining double-digit volume growth and pricing power
Ban on coal gasifi er usage in Morbi and Wankaner in Gujarat, a key market
With fall in crude, gas prices could soften; Power and fuel key input costs

V-Guard
CMP: Rs 217.45
Jefferies’ Price Target: Rs 295
Expected Returns*: 35.7%

Triggers:

Government push to housing and rural electrification
Consolidation of position in South India, product expansion in other markets
Utilisation of cash pile for growth
5 value stocks that caught fund managers' eye
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With benchmark indices at all-time highs and valuations expensive for the top stocks, fund managers chose to deploy incremental money flows into value stocks. And with economic growth slowing down to sub-5%, there are expectations that the government will kick-start disinvestments in public sector undertakings as well as offer sops to the infrastructure segment to help revive investments. To make the best of this opportunity, fund managers bet on companies where valuations are low, a reversal in business cycle is expected, order book is strong and there is a margin of safety due to a high dividend yield. Here are five such prominent stocks that caught the eye of savvy fund managers and found a place in their portfolios:
With benchmark indices at all-time highs and valuations expensive for the top stocks, fund managers chose to deploy incremental money flows into value stocks. And with economic growth slowing down to..
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CMP: ₹1,324
Market capitalisation: ₹1,85,841 crore
Bought by: HDFC MF / Kotak MF

A Fall of 7% in mid-December presented a good buying opportunity in India’s largest construction company for value pickers. Analysts point the stock fell primarily due to slow pace of execution of its robust order book in states such as Andhra Pradesh and Maharashtra, and reports of it missing its present fiscal’s order inflow guidance due to economic slowdown. These concerns, analysts feel, will be shortlived. Given its robust order book of over ₹3 lakh crore, the company serves as a proxy to capital expenditure revival, and hence, the fund managers enhanced the exposure to the company’s stock.

CMP: ₹1,324 Market capitalisation: ₹1,85,841 crore Bought by: HDFC MF / Kotak MF A Fall of 7% in mid-December presented a good buying opportunity in India’s largest construction company for value pi..
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CMP: ₹239
Market capitalisation: ₹14,966 crore
Bought by: SBI MF

Fund managers find great value in this stock as firms in consumer electricals are expected to generate a 9% growth in revenue in the December quarter, a sharp rise after twelve quarters of low revenue growth of 6.8%. With the demand for water heaters, and other water appliances very strong in rural areas, earnings prospects will improve. The company is expected to record 14% growth in its revenue for the quarter due to improving sales in November and in early part of December. Its operating margins are expected to grow by 21 bps to 12.4% in the quarter due to improvement in the demand in December.

CMP: ₹239 Market capitalisation: ₹14,966 crore Bought by: SBI MF Fund managers find great value in this stock as firms in consumer electricals are expected to generate a 9% growth in revenue in the ..
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CMP: ₹457
Market capitalisation: ₹234,633 crore
Bought by: ICICI Pru / Axis MF

With the telecom industry consolidating into three players, Bharti, Vodafone Idea and RJio, the ability to raise tariffs has increased. Analysts point out that all the telecom operators are witnessing strong data volume growth with increasing penetration of smartphones and improved availability of 3G/4G services. The device and content ecosystem has also improved, leading to high customer awareness driving data volume growth. Fund managers believe heavy capex towards network improvement and capacity expansion to sustain heavy data usage among subscribers will bear fruits.

CMP: ₹457 Market capitalisation: ₹234,633 crore Bought by: ICICI Pru / Axis MF With the telecom industry consolidating into three players, Bharti, Vodafone Idea and RJio, the ability to raise tariff..
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CMP: ₹192
Market capitalisation: ₹100,629 crore
Bought by: HDFC MF

A dividend yield of 4.5%, strong order book and proven execution capabilities have attracted the fund managers to the counter as they find huge margin of safety. The company’s margins are set to improve, with the firm bagging seven out of 13 projects under tender-based competitive bidding. Power Grid Corporation of India plans to raise up to ₹10,000 crore through an InvIT (Infrastructure Investment Trust) by carving out its projects under competitive bidding, which will help unlock value from its operational transmission assets and free up long-term capital for further investments.

CMP: ₹192 Market capitalisation: ₹100,629 crore Bought by: HDFC MF A dividend yield of 4.5%, strong order book and proven execution capabilities have attracted the fund managers to the counter as th..
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CMP: ₹348
Market capitalization: ₹17,703 crore
Bought by: Aditya Birla SL MF

The near halving of its share price from a high of ₹700 has brought fund managers who believe this is a value buy in the private bank space back to the counter. The recent capital raise has improved the bank’s shock-absorption capacity and its strong retail franchisee in credit card and development banking (mainly micro banking) is attracting buyers. In the credit card business, RBL has increased its market share from 2.13% at the end of March 2018 to 4.26%. The bank’s strategy of focusing on high-margin retail business will help increase NIMs and profitability for the bank going forward.

CMP: ₹348 Market capitalization: ₹17,703 crore Bought by: Aditya Birla SL MF The near halving of its share price from a high of ₹700 has brought fund managers who believe this is a value buy in the ..
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