As Peter Lynch rightly said, "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets."
In its worst ever crash, the BSE Sensex plummetted 3,934.72 points or 13. 15 per cent to 25,981.24 on March 23 after several Indian states announced lockdown following a spurt in the number of cornavirus cases. We have seen an unprecedented upside in Indian equity markets since the slide of March 2020.
Sensex has leapt from 54k to 56k in just one month. The target for Sensex is 60,000 by December 2021, according to YES Securities. The market rally was boosted by a recovery in macroeconomic numbers, consistent buying by retail investors, good earnings and an increased pace of vaccination.
Recently, the Monthly Economic Review released by the Department of Economic Affairs stated that despite the impact of the second wave, India reasserted its V-shaped recovery. Even as the FY22 Q1 output was impacted by the severe second wave, it was large enough to post year-on-year growth of 20.1 per cent, recovering more than 90 per cent of the pre-pandemic Q1 output of FY20.
"India is poised for an even faster recovery and stronger growth, both in the short and long term on the back of stronger macroeconomic fundamentals supported by structural reforms that enable enhanced efficiency and productivity. In addition, the government's CAPEX push to crowd-in private investment and financial sector clean-up will further support growth," stated the report.
Amid the ongoing market rally, a large number of small-caps, midcap and large-caps stocks have turned into multibaggers in 2021. GNA Axles, Andhra Petrochem, KPR Mill, HG Infra and Alkyl Amines have been among the best performers of Dalal Street.
Let us take a look at some of the top performers of 2021 so far!
The multibagger stock has surged from Rs 1,553 to Rs 4,136.85 mark so far in 2021 - yielding around 166% return in this period. The stock has jumped 3,201 per cent in the last five years and surged 23,647 per cent in the last ten years.
According to a recent report by Motilal Oswal on the Indian speciality chemicals sector, the euphoria is due to a) consolidation of polluting Chemical companies in China, b) COVID-related supply chain disruptions, and c) supportive margins have led to multiples expansion for the Indian speciality chemical companies.
The brokerage house noted that the capacity expansion would facilitate the current high valuations - as even the company's RoEs would be the best among peers at 32-33% in FY24E. It added that ongoing expansions would boost the aliphatic amines capacity by 30%.
According to MarketsMojo, the company has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 0.65 times. It has strong long-term fundamental strength with an average Return on Equity (ROE) of 27.49% and has declared positive results for the last 9 consecutive quarters. However, it noted that the valuation is very expensive right now.
Along with generating a 227% return in the last 1 year, the stock has outperformed BSE 500 in each of the last 3 annual periods.
The company reported a net profit of Rs 78.54 crore for the quarter ended June 2021 compared to a profit of Rs 52.78 in the year-ago period. Revenue from operations grew 60 per cent to Rs 391.81 crore in the June-ended quarter against Rs 245.15 crore a year ago.
Experts believe that amine makers are expected to do well because of the rapid scale-up in vaccine manufacturing.
Shares of GNA Axles have delivered a 190% return in 2021 so far. The stock has been gaining for the last 3 days and has risen 9.11% in the same period.
According to MarketsMojo, the company has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 1.18 times. It has high management efficiency with a high ROCE of 16.13% and has declared positive results for the last 3 consecutive quarters.
The technical trend has improved from Mildly Bullish on June 2, 2021, and has generated 77.2% returns since then. Multiple factors for the stock are Bullish like MACD, Bollinger Band, KST and DOW.
The stock is trading at a discount compared to its average historical valuations and with a ROCE of 15, it has a Fair valuation with a 2.7 Enterprise value to Capital Employed.
"We believe domestic tractor demand is resilient and good distribution of monsoon across country will further add strength to the rural economy and fuel the growth of Farm Equipment. North American class 8 Truck market is also expected to show double digit growth in next 18 months. Further rapid recovery in Indian MHCV Truck segment will be tailwind for GNA Axle," said IDBI Capital.
The brokerage firm noted that the government's strong Infra push will create a sustainable demand for tippers and trucks for construction activity.
Andhra Petrochemicals Limited
Shares of Andhra Petrochemicals Limited have delivered 395 per cent return to its shareholders in the last 12 months and have risen 194 per cent since the beginning of this year.
The company reported a net profit of Rs 62.74 crore for the quarter ended June 2021 compared to a profit of Rs 1.93 in the year-ago period. Revenue from operations grew 318 per cent to Rs 244.07 crore in the June-ended quarter against Rs 58.39 crore a year ago.
According to MarketsMojo, the company has a low Debt to Equity ratio (avg) at 0.21 times and has high management efficiency with a high ROCE of 20.36%. The stock is technically in a Mildly Bullish range now and it is trading at a fair value compared to its average historical valuations. With a ROE of 46.5, it has a Fair valuation with a 4.2 Price to Book Value.
H.G. Infra Engineering
This multibagger stock has delivered a 180% return since the beginning of this year and has surged 210% in the last 12 months.
"We expect revenue/ Adj. PAT CAGR of 23.8%/ 22.7% over FY21-23E. Though the stock has increased 95% since the Q4FY21 result on 14 May'21, it still looks reasonably attractive at 14.0x/ 11.7x FY22E/ FY23E EPS, hence we maintain BUY with SOTP of Rs 695 (12x FY23E EPS) and 1xFY23E P/B for HAM equity investments," said Dolat Capital.
Commenting on future outlook, H.G. Infra said it is confident of over-achieving its revenue growth guidance of 25-30% for FY22E. It further added that the company will not compromise on margins as well.
According to MarketsMojo, the company has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 0.63 times. It has high management efficiency with a high ROCE of 26.22% and has declared positive results for the last 2 consecutive quarters.
The technical trend has improved from Mildly Bullish on July 2, 2021, and has generated 46.93% returns since then. The stock is in the Bullish range and multiple factors for the stock are Bullish like MACD, Bollinger Band, KST and DOW.
Also, the stock is trading at a discount compared to its average historical valuations and with a ROCE of 26.3, it has an attractive valuation with a 2.9 Enterprise value to Capital Employed.
KPR Mill Limited
The mid-cap stock has risen 160% since the beginning of this year and has delivered more than 300% return in the last 12 months.
Shares of KPR Mill Limited rose 17 per cent to hit an all-time high of Rs 2,349.60 on BSE on Thursday after the Union Cabinet approved production linked incentive (PLI) scheme for the textile sector for manmade fibre (MMF) apparel and fabrics and 10 segments of technical textiles to make the Indian textile sector globally competitive.
The scheme will help in increasing India's share in the manmade textiles and technical textiles sector, Textiles Minister Piyush Goyal said.
ICICI Direct said KPR has two major CAPEX projects in the pipeline worth Rs 750 crore towards garmenting facility (Rs 250 crore) and ethanol facility (Rs 500 crore). It noted that robust opportunities in the US market will give strong visibility for sustained growth in exports.
"We model revenue, earnings CAGR of 18%, 21%, respectively, in FY21-23E with higher RoCE of 26%. We like KPR as a structural long-term story to play the apparel export space," the brokerage house added.
It has a 'Buy' rating on the stock with a target price of Rs 2310 per share.
According to MarketsMojo, the company has a strong ability to service debt as the company has a low Debt to EBITDA ratio of 0.93 times. The technical trend has improved from Mildly Bullish on September 7, 2021, and has generated 14.54% returns since then. The stock is technically in a Bullish range now and multiple factors for the stock are Bullish like MACD, Bollinger Band, KST and DOW.
Along with generating a 300% return in the last 1 year, the stock has outperformed BSE 500 in the last 3 years, 1 year and 3 months.
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