Top 15 rate-sensitive stocks to bet on after rbi’s money policy review – the economic times

NEW DELHI: On expected lines, the Reserve Bank of India (RBI) on Tuesday slashed repo rates by 25 bps in its first bimonthly monetary policy review of the new financial year. The central bank has made provisions to boost liquidity, which will act as a booster shot for the domestic lenders.

The rate cut will make the economy more competitive and benefit banks, auto and infrastructure companies, which would derive most of the benefits from the rate cut.

ETMarkets. com collated a list of 10 rate-sensitive stocks that are likely to benefit from the rate cut on change in fundamentals and five other stocks which can gain on technical parameters.

Analyst: D K Aggarwal, Chairman and MD, SMC Investments and Advisors

ICICI Bank: Target price – Rs 286

With the bank’s current capital position, it is also a strong and diversified franchise with large distribution network which gives the ICICI the ability to leverage opportunities for profitable growth across businesses.

ICICI Bank has achieved robust loan growth in Q3FY2016 backed by a strong funding profile and maintained operating efficiency. Going forward, it would focus on sustaining momentum in these areas in the near-term, while non-performing asset additions and provisioning costs are expected to remain elevated.

IGL: Target price – Rs 660

Factors such as low global natural gas prices, favourable government policies, a surge in liquefied natural gas (LNG) regasification capacities, revival in gas demand from price-sensitive segments, better prospects for pipeline and LNG infrastructure and improving clarity on Petroleum & Natural Gas Regulatory Board’s (PNGRB) role are likely to drive growth of the company.

Torrent Power: Target price – Rs 305

The company is expected to gain from four of its gas-based power plants, which will get government subsidy on the use of re-gasified liquefied natural gas (RLNG) for six months from October to March.

Moreover, government initiatives such as ‘Make in India’ and ‘Power for All’ would give further acceleration to the financial growth of the company.

Bharat Electronics: Target price – Rs 1,546

The government’s greater emphasis on ‘Make in India’ initiative in Defence sector provides a great opportunity for the Company to enhance its indigenisation efforts and to address the opportunities in Indian Defence sector.

Healthy order book and orders in the pipeline, capacity enhancements and the creation of new test facilities will help the company in achieving the targeted growth and would also continue to drive the growth in the coming 4 to 5 years.

Ramco Cements: Target price – Rs 457

The Company expects demand for cement to rise in the near-term. The Governments’ focus on infrastructure development, housing sector, smart cities, roads etc., augurs well for the company.

The management of the company is confident of meeting the upsurge in demand and participating proactively in the next phase of growth in the country. Its performance is much better than its peers.

Further, faster recovery in the Southern market will help improve its performance.

Analyst: Tushar Pendharkar, Equity Strategist at Right Horizons Financial Services

Kumar Infraprojects: Target price – Rs 400

The company operates at a higher working capital cycle and that has further stretched due to its entry in metro projects.

Though it has manageable debt on the balance sheet (debt to equity between 0.5-0.6); however, a rate cut would still ease in case of any incremental growth in the order book and capital expenditure activity.

UltraTech Cement: Target price – Rs 4,000

It is the start of the volume pick up for the cement sector due to initiatives were taken by the government in construction and infrastructure space.

Though, the company’s balance sheet is strong; however, the cheaper credit would provide enough room for capital expenditure and inorganic expansion.

Maruti Suzuki India: Target price – Rs 6,000

Drop in rates will reduce the cost of ownership of passenger vehicle (PV), which would help the auto maker to attract the customers.

Maruti is the largest player in Indian market which makes affordable cars for Indian middle class. Thus, a decent rate cut could help the company to achieve strong double-digit YoY volume growth.

Strong volume growth coupled with operating leverage and reduced discounts could increase profitability in FY17

Capital First: Target price – Rs 550

Capital First (CAPF) is better placed due to its better asset liability management ability and superior credit quality.

CAPF is one of the fastest growing NBFC and significantly expanding its presence in consumer finance business. This could be a direct beneficiary

Larsen & Toubro: Target price – Rs 1,600

L&T has a robust order book which provides revenue visibility for the next 2-3 years. L&T is the most diversified engineering and infrastructure developer in India with a presence across all segments of infrastructure.

The company reported fairly good order inflow of near INR1 trillion during 9M-FY16 and also reported huge order backlog. Hence, revenues are expected to grow at a CAGR of 10-15% in next 3 financial years and that could be a key beneficiary of capital expenditure cycle recovery.

Stock picks based on technicals:

Analyst: Vivek Gupta, CMT, Director Research, CapitalVia Global Research

Bajaj Auto: Target price – Rs 3,200

The stock is on an upward trend and is forming a bullish continuation pattern called ‘Symmetric Triangle’. The stock is expected to continue the bull-run with the breakout from the pattern.

Once it breaks out of the pattern some more upside cannot be ruled out. The stock could well test the level of Rs 3,200 if continues to trade above the psychological and major support level of Rs 2,000 in the next 12 months.

Andhra Bank: Target price – Rs 70

Overall, the trend of the stock is weak and has given a breakout of the reversal chart pattern named, Head & Shoulder recently. It is likely to retest the level of Rs 70 if it continues to trade above the immediate support level of Rs 48.

IndusInd Bank: Target price – Rs 1,200

The primary trend of the stock is bullish and currently, it is trading below the major resistance of Rs 990 on the daily charts. The stock is sustaining above 50 and 200 DMA and is trading with the RSI of 67.17 which supports the bullish view of the stock.

Traders can take a long position in the stock with the major stop loss of 780 and target can be placed at 1200.

M&M: Target price – Rs 1,500

The stock is in a bullish trend and is trading sideways on the long term charts. With the breakout from the immediate resistance mark of Rs 1,285, it is expected to continue the major bullish trend. The major support of Rs 1,075 can be placed as stop loss in it. The next visible target for the stock is placed at Rs 1,500.

LIC Housing Finance: Target price – Rs 670

The major trend of the stock is bullish. On the weekly charts, the stock is trading in a range but with a positive bias. It is facing some major resistance mark around Rs 525.

The stock is also sustaining above its 50-DMA and has previously bounced from its major support of Rs 385. Traders can expect targets of Rs 670 and keep the support of Rs 385 as a technical stop loss for the next 12 months or so.

(Views and recommendations given in this section are the analysts’ own and do not represent those of EconomicTimes. com. Please consult your financial adviser before taking any position in the stock/s mentioned.)