Top stocks that are likely to offer big returns

In the one year to June 19, 2015, key benchmark indices BSE Sensex and NSE Nifty have jumped around 8 per cent and 9 per cent to 27,316 and 8,224.95, respectively. The BSE mid- and small-cap indices have outperformed the benchmark by registering gains of 16 per cent and 11 per cent, respectively.

Market experts say monsoon will continue to dictate short-term market sentiments. We spoke to them and tried to find out five stocks that can give lucrative returns in the coming quarters.

Mahindra and Mahindra: The automobile manufacturing corporation is headquartered in Mumbai.

Recommended by: Sharekhan 

Target Price: Rs 1,485

Why Buy: A strong pick-up in the monsoon rainfall in large parts of the country and a 21 per cent higher-than-normal rainfall till date have raised hopes of a boost to the rural economy reflected in the 10 per cent up move in Mahindra stock over the past ten days. The rural sentiment has been subdued over the past 15 months and an above average monsoon would be a much needed shot in the arm. Hence, the brokerage house upgraded its target price from Rs 1,380 to Rs 1,485.

Gayatri Projects: It is a construction company executing major civil works, including construction of concrete/masonry dams, earthen dams, national highways, bridges, canals, aqueducts, airports and ports.

Recommended by: Sharekhan  

Target Price: Rs 292

Why Buy: The infusion of funds by promoters and long-term foreign institutional investors at the current price is likely to raise shareholders' confidence in the company. Further, the brokerage house sees an improvement in the execution of the company's EPC business and no major hiccups for the current financial year. Gayatri Projects expects to improve order intake from the National Highway Authority of India and through the development of a new state Telangana (order uptick from both Andhra Pradesh and Telangana).

SOLAR INDUSTRIES: The company is the largest manufacturer of industrial explosives and initiating systems in India, with around 24 per cent share (in volumes).

RECOMMENDED BY: Motilal Oswal

TARGET PRICE: 4,100

WHY BUY: Domestic demand for explosives is likely to increase meaningfully, with ramp-up of coal production and pick up in infrastructure activities. As India's largest manufacturer of industrial explosives, it will be a key beneficiary. While visibility in the domestic business is improving, expansion into new geographies overseas and the fledgling defense business would drive the next phase of growth. The brokerage house expects 18 per cent CAGR in consolidated revenue till 2016-17, with improving margins.

INSECTICIDES (INDIA): The company engages in the formulation, manufacture, and sale of pesticides in India.

RECOMMENDED BY: Motilal Oswal

TARGET PRICE: Rs 800

WHY BUY: Insecticides India is among the top 10 Indian agrochemical companies and commands around 7 per cent market share. It has emerged as a strong player in the branded formulations market with a portfolio of 99 brands. The brokerage house expects strong growth, given its measures to ramp up revenues on existing branded products, launch of new molecules, potential scaling up of technicals business, and strong room to improve capacity utilisation from around 65 per cent at present. Motilal Oswal believes the company can post 18 per cent revenue CAGR and 36 per cent net profit CAGR over FY15-17 along with strong free cash flow generation (Rs 140 crore over FY15-17) and significant improvement in return ratios (RoCE and RoE to improve from 17.8 per cent and 20.3 per cent to 24.9 per cent and 24.7 per cent, respectively, over FY15-17.

L & T FINANCE HOLDINGS: The company is a well-diversified NBFC having wide presence in both retail and infrastructure segments.

RECOMMENDED BY: Prabhudas Lilladher

TARGET PRICE: Rs 80

WHY BUY: L & T Finance Holdings has been on a course correction path over the past two years as it consciously de-risked its balance sheet in both retail and infrastructure portfolio and has identified select segments to pursue profitable growth. The brokerage believes strong loan growth (25 per cent CAGR) over FY15-17E, coupled with improved efficiency and controlled credit cost, will drive around 32 per cent CAGR in earnings over FY15-17E, thus, leading to RoE expansion of 460 basis points over current levels to around 15 per cent. L & T Housing Finance stock has significantly underperformed the broader market and is offering attractive risk-reward.

RALLIS INDIA: The company mainly deals in agri-business and has emerged as one of the leaders in the Indian agro-chemical industry.

RECOMMENDED BY : Prabhudas Lilladher

TARGET PRICE: Rs 270

WHY BUY: Rallis India has de-risked its domestic pesticide portfolio over the last three years by diversifying in high growth agri-segments like seeds (33 per cent revenue CAGR over FY15-FY17E), plant growth nutrients (23.5 per cent CAGR) and exports (12.2 per cent CAGR FY15-FY17E). It is expected to deliver 21 per cent earnings CAGR over FY15-FY17E, stable margins at around 16 per cent and high RoEs in the range of 23 per cent. With the capex cycle behind, The company is expected to generate Rs 410 crore free cash over FY15-FY17E. Strong parentage, new product launches, diversification across agriculture value chain and a lean balance sheet makes Rallis a compelling "BUY" for the long term

BATA INDIA: The company manufactures footwear for men, women and children. It manufactures shoes of various quality such as leather, rubber, canvas and PVC shoes.

RECOMMENDED BY: ICICI Securities

TARGET PRICE: Rs 1,380

WHY BUY: Bata had ventured in several new product lines in the premium and accessories segment. Bata's premium brand Hush Puppies continues to gain traction in Metros, however though there is higher demand in Tier II and Tier III cities; the supply side constraint remains. Further "Power" has been able to position itself as one of the preferred sports brand. Among women specific brands, Marie Claire and accessories are catching up fast and gaining acceptance with consumers.