Shares to buy on May 16: Top 5 stock market tips by the brokerage firms for Dalal Street investors

Nestle India, ITC, CCL Products, Capacite Infraprojects and Shemaroo Entertainment are the five stocks that share brokerage firms are bet high today.

Here are the top five stocks that brokerage firms bet upon and advise stock market investors to think of before making any investment decision. Photo: Reuters

Amid shedding Indian indices and topsy-turvy trend being shown by the Dalal Street in last fortnight, the stock market investors are in limbo whether to wait for some time or to take advantage of the dips and take fresh buy position in the market. However, the stock market experts are of the opinion that investors should look at stock rather the whole market and advises to check the fundamentals of the counter before making any investment decision. Here are the top five stocks that stock brokerage firms are putting their weight behind them for May 16 trade:

1] Buy CCL Products for 40 pct gains, advises Elara Securities

CCL Products consolidated sales declined by 18% YoY for 4QFY19 and 5% for FY19. During 2HFY19, the company lost one of its clients, which used to procure ~2,000 tonnes pa (sales of Rs 500mn) of low-margin spray dried coffee from CCL. This client has decided to backward integrate and start its own manufacturing unit. The client loss represents ~7% of CCL’s total volume and 5% of consolidated sales. Management says CCL has acquired 20 new clients in the past few months. These new clients will procure small packs (low volume and high margin business) with the total quantum of 500 tonnes per annum.

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On the suggestion to the stock market investors in regard to the CCL Products Akhil Parekh, Analyst at Elara Securities said, "Fundamentals of the CCL counter suggests an upside momentum for around 40 per cent gains. The CCL Products share price may jump up to Rs 365 per stock levels." CCL Products share price closed at Rs 262.7 per stock levels on Wednesday.

2] Buy Capacite Infraprojects Ltd for 35 pct gains, advises Yes Securities

Key area of the Capacite Infraprojects fundamentals include: decent performance – topline grew 31% yoy in Q4 FY19 driven by strong execution, operating margins impacted in Q4 FY19 (down 293 bps yoy to 13.5%) as some new projects started execution; margins to stabilize in coming quarters as these project ramp up, order book decent at Rs 71.8 bn (4x FY19 revenues) and attractive valuations at current levels.

On the suggestion to the stock market investors in regard to the Capacite Infraprojects Alok Deora, Vice President at Yes Securities said, "Fundamentals of the Capacite Infraprojects counter suggests an upside momentum for around 35 per cent gains. The Capacite Infraprojects share price may jump up to Rs 305 per stock levels in the 12-month period." Capacite Infraprojects share price closed at Rs 225.95 per stock levels on Wednesday.

3] Buy Nestle India Ltd for 15 pct gains in mid-term, say Narnolia Financial Advisors

Nestle India Ltd posted mixed numbers in 1QCY19, sales grew by 9% YoY to Rs 3003 cr (against expected Rs. 3141 cr) while Gross margin declined by 57 bps YoY to 58.5%. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin declined by 86 bps to 25% YoY led by a contraction in gross margin and increased employee expense. PAT grew by 9.3% to Rs 463 cr (expect. Rs. 447 cr). Going forward, the company will continue innovating and will come up with new launches in organic food space under milk products & nutrition segment while their continued focus towards expanding penetration in categories where penetration is relatively low is expected to drive revenue growth in coming quarters. Historically, the company has strong pricing power which can be used for protecting margin in the wake of rising input inflation.

On the suggestion to the stock market investors in regard to the Nestle India counter Rajeev Anand, Research Analyst at Narnolia Financial Advisors said, "From a fundamental perspective, Nestle India seems bullish in mid-term perspective for around 15 per cent upside movement. The counter can show Rs 11,778 per stock levels in two to three months." Nestle India share price was at Rs 10,310 per stock.

4] Buy Shemaroo Entertainment for 36 pct gains, advises Elara Securities

Healthy revenue growth coupled with a stable margin for Shemaroo Entertainment. It posted healthy revenue growth of 11.7% YoY to INR 1,322mn vs our estimates of Rs 1,389mn), slightly lower than our estimates, due to muted growth in the traditional media segment. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin was consistent at 31% YoY despite investments in the new OTT platform, Shemaroo Me. PAT grew 10% YoY to Rs 206mn, in line with our estimates.

Speaking about the suggestion to the stock market investors in regard to the Shemaroo Entertainment counter Karan Taurani, Analyst at Elara Securities said, "Fundamentally, the entertainment stock is quite bullish in long-term and can show Rs 500 per stock levels in around one year perspective, means around 36 per cent high from current levels." Shemaroo Entertainment stocks last traded at Rs 356 per stocks on Wednesday close.

5] Buy ITC for 35 pct gains, advises HDFC Securities

ITC’s 4Q/FY19 performance was robust against its delivery over FY15-18. Cigarette volume growth has returned owing to a stable tax regime, which validates our thesis that ITC’s performance will improve as affordability returns. We aren’t too perturbed with near term margin pressure, as cigarette biz commands the highest margins across industries (volumes matter).

Speaking about the suggestion to the share market investors in regard to the ITC counter Naveen Trivedi, Analyst, HDFC Securities said, "Fundamentals of the ITC counter suggests an upside momentum in a long-term perspective and it is poised to show Rs 398 per stock levels, means around 35 per cent higher from current levels." ITC stocks closed at Rs 296 per shares on Wednesday.

So, on the basis of brokerage firms' advise, a stock market investor can think of the given five stocks before making any investment decision on May 16.

Disclaimer: These stock tips are from the respective stock brokerage firms and their experts mentioned in the story.

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