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JM Financial Midcap Value Picks July 2017
Dated: July 9, 2017
|Script Name||Weight||CMP||Stock Rationale|
|Federal Bank (FEDERALBNK) (500469)||17.5%||Rs 116||Profits are expected to compound in excess 30% over FY17-19 on the back of strong loan growth and moderation in opex & credit costs. ROE is expected to inch towards the ~15% mark in the long run from sub 10% observed in FY16/17.|
|Manappuram Finance Limited (MANAPPURAM) (531213) (INE522D01027)||14.3%||Rs 102||Robust loan growth, improvement in NIMs and a fall in cost/income ratio should result in strong expansion and stabilization of ROE to over 20% levels from FY18 onwards. Manappuram’s profits are expected to deliver growth exceeding ~20% CAGR over FY17-19.|
|Dilip Buildcon Limited (DBL) (540047) (INE917M01012)||18.7%||Rs 477||We expect DBL’s PAT to grow at over 30% CAGR in coming years along with maintaining healthy return ratios (ROE of 18-20%)|
|Granules India Limited (GRANULES) (532482) (INE101D01020)||14.1%||Rs 141||Granules is expected to compound its profits in excess of 25% CAGR in coming years along with sustainable ROE of ~20% on the back of rising contribution from high margin segments like US OTC, prescription and Omnichem JV. Sales mix from these segments would increase from ½ of total sales in FY17 to ¾ of total sales by FY20.|
|Voltamp Transformers Limited (VOLTAMP) (532757) (INE540H01012)||16.6%||Rs 1260||Voltamp has Rs 300 crore of liquid investment and zero debt that reflects strong balance sheet of the company.|