Published On: Sun, Mar 10th, 2019

Pre-election stock-specific rally likely, buy fundamentally sound stocks

After long weekend, Nifty has shown strong rally on first day of the week. At the end of the week Nifty managed to close above 11,000. Midcaps and smallcaps continued their uptrend during the week.

Foreign investors were back in action and remained net buyers in the cash and derivative segment. However, the DIIs remained net sellers and were seen booking profits at higher levels.

Last week, we had mentioned about the political scenario and after the air strike, there are bright chances of the current government coming back to power which is positive sign for sentiment.

Sentiment improves day by day and we are expecting pre-election stock specific rally in the market. So, one can try to grab this opportunity and start buying in fundamentally sound stocks.

For this week, the Nifty has strong support at 10,965-10,900 levels and resistance at 11,025-11,200 levels.

Here are three stock ideas which can be bought in staggered manner for medium to long term:

ITD Cementation India

It is a leading construction company in India operating for over eight decades with proven expertise and an excellent track record of delivering integrated services in design, engineering, procurement and construction across multiple lines of business.

Company is following calendar year as financial year and it has posted superb numbers for CY18. During Q4CY18, its sales grew 11.41 percent to Rs 640.49 crore, EBITDA grew 25 percent to Rs 90.6 crore while PAT increased 91.39 percent to Rs 33.80 crore.

For CY18, its PAT grew 62.41 percent to Rs 118.45 crore, EDITDA grew 23 percent to Rs 332.94 crore while income grew 25 percent to Rs 2,575.12 crore.

At CMP, this MNC company’s stock trades at a P/E ratio of 18x. Company has order book of Rs 9,591.7 crore as on December 31, 2018 executable over a period of 30 months. Technically stock is looking strong on weekly chart. We are recommending a buy in staggered manner for medium to long term.

PNC Infratech

PNC Infratech is an infrastructure construction, development and management company. It has reported strong operational numbers for Q3FY19. Its sales grew by 54 percent to Rs 727 crore and EBITDA grew 54 percent Rs 102 crore, while its PAT stood at Rs 47.35 crore.

During 9MFY19, its PAT grew 32.59 percent to Rs 184.98 crore on 84.13 percent higher sales of Rs 2,021.16 crore. During 9MFY19, EBITDA grew 94 percent to Rs 306 crore as against Rs 158 crore. PNC trades at PE ratio of 12.3x.

Mutual funds hold 22.34 percent and FIIs hold 6.32 percent stake in this company. Its order book as of December 2018 was Rs 7,965 crore. We are recommending a buy in staggered manner for medium to long term.

Bajaj Electricals

Bajaj Electricals has reported strong results for Q3FY19, Its sales grew by 89.05 percent to Rs 2,156.48 crore and EBITDA grew 79 percent Rs 141.31 crore, while its PAT zoomed 73.55 percent to Rs 63.92 crore.

During 9MFY19, its PAT grew 81.54 percent to Rs 138.53 crore on 57.27 percent higher sales of Rs 4,874.31 crore. EBITDA grew 68 percent to Rs 318.13 crore as against Rs 189.11 crore. BEL trades at PE ratio of 23.2x. We are recommending a buy in staggered manner for medium to long term.

(The author is Founder of Equity99.)

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