10 stocks to watch out for in 2020

PNC Infratech

Target price: Rs 240

The company has a strong order book and witnessed stellar revenue growth in the last financial year. It has an excellent track record of early execution of projects and debtor days have improved significantly. Management has revised upwards its revenue growth guidance to 50-60% for FY20. The debt to equity ratio is at a very comfortable level despite having a strong order book growth.
Technically, after breaking out from its downward sloping trend, it is continuing its upward journey where it has outperformed the midcap index. In the downside, 200-DMA of 180 has become a strong base while in the upside, it is likely to break out of the previous high of 228 where 240 would be the next target.

Reliance Industries

Their core petrochemical business is doing very well and apart from core business, their two growing segments Jio and Retail are majorly contributing to the company's overall performance. IPO of Jio and Retail business will be big value unlocking for investors, which will keep share price uplifted in the coming year. Concerns over high debt are out of the window after management announced stake sale to Saudi Aramco in its refining and petrochemical business.
Technically, the counter is in a strong bullish momentum which is likely to continue for the target of 2000 plus in the coming days. Any small dip will be a great buying opportunity in this counter. There are a series of bullish flag patterns to push bullish momentum higher and this texture is likely to continue.

(Recommended by Santosh Meena, Senior Analyst, TradingBells)

State Bank of India

Target price: Rs 425

The pace of NPA resolution through the Insolvency and Bankruptcy Code route has improved which will be a key driver for the profitability growth of the lender. It will be one of the most beneficial lenders if economic growth witnesses any uptick amid the low-interest rate environment. Other than its core performance, its subsidiaries like SBI life, SBI MF, SBI cards and SBI cap have witnessed excellent growth. The company is on the path of monetisation of subsidiaries which would lead to further unlocking of value for shareholders.      
Technically, the stock was in a trading range for the last 10 years . Now, there is a good chance that it may break out in the upside which may lead to a big rally in this counter in the coming years. The target of Rs 425 looks easily achievable in 2020.

(Recommended by Santosh Meena, Senior Analyst, TradingBells)

SBI Life Insurance

Target Price: 1,060

In Q2FY20, gross written premium rose 33.3% year-on-year, driven by new business and renewal premiums, which grew 33.8% and 32.8% YoY respectively. For H1FY20, new business margin, calculated as value of new business (VONB), which measures the profitability of new business underwritten during the period, rose 33% YoY to Rs 9,400 crore. Solvency ratio rose to 2.20 times (vs 2.17 times in Q1FY20), as against the regulatory requirement of 1.5 times while the 13M/61M persistency ratio, which indicates the stickiness of premiums, improved to 83.1%/59.6% (vs. 80.0%/55.5% in Q2FY19). In H1FY20, SBI Life's market share increased 200 bps YoY to 21.8% in terms of NBP (new business premium) among the private insurers and AUM increased 22.7% YoY to Rs 154,760 crore.

(Recommended by Geojit Financial )

Aarti Industries

Target Price: 933

Aarti Industries Ltd (ARTO) is a global leader in Benzene based derivative products. The company has a diversified product portfolio with end users in pharma, agrochemicals, specialty polymers, paints and  pigments. Aarti Industries will continue to benefit from backward integration, expansion of product portfolio and shift in volume due to Chinese shutdown in the medium term. Going ahead, management focus on value added products, execution of multiyear contracts and revival in volumes from specialty chemicals and pharma segments will drive profitability. We have an accumulate rating on the stock, given strong earning visibility of 20% CAGR over FY19-21E and RoE 21%.

(Recommended by Geojit Financial )

Bandhan Bank

It is one of the fastest-growing private banks and maintains a healthy return on equity of around 20%. Merger with Gruh finance will aid superior business growth and cost synergies in the business. Healthy growth in advances along with the low operating cost is the key strength for the bank.  After establishing itself as a microfinance player and subsequently obtaining a banking licence, it now enjoys the opportunities of CASA, fees, and leverage which is not available to most non-banks.
Technically, after a meaningful correction, it is finding strong support around 450 area and it is moving in an up sloping channel where after taking support at the lower trendline, it is preparing for a move toward the upper trendline which is placed around 700 level.

(Recommended by Santosh Meena, Senior Analyst, TradingBells)

 

Dixon Technologies

Target price: Rs 4,475

Dixon's management remains upbeat on  sustaining   volume growth   in   consumer electronics, backed by strong order book from MI for FY21 and agreement closure with large customers soon. Subsequently, it is increasing capacity from 3.6 million to 4.8 million units.
Capacity  addition  for  fully automatic  washing  machines is  on  track  and  management expects volumes to ramp up from H2FY21. The company is expecting another customer win in the semi-automatic segment, apart from the recent on-boarding of a large domestic player.  The opportunity of exports in its lighting business, which is expected to begin from FY21, can be  significant. It is believed  automation,  cost  optimisation  through indigenisation  of component procurement will drive margins further.
They have  raised  FY21/22E  revenue  of  consumer  electronics  by  20%  each  and  home appliances by 8%/13%. Subsequently, we increase FY21/22 estimates for earnings before interest, tax, depreciation and amortisation (EBITDA) by 10% each. We roll forward valuations to arrive at a revised target price of Rs 4,475. (25 times FY22 earnings per share).

HDFC Bank

Target Price: Rs 1,412

(Recommended by Geojit Financial)

L&T Infotech

Target price: Rs 2100
Technically, the overall texture of this counter is bullish where after a long period of consolidation, it is preparing to break out in the upside with a double bottom formation on a weekly time frame where we can see the level of 2,100 in 2020.

(Recommended by Santosh Meena, Senior Analyst, TradingBells)