Last Update: 01st October 2022
Among our many efforts under the Project S.O.A.P (Special Onboarding & Activation Program), as
promised, we are here to guide you sail clear through the stormy sea of stock markets and generate
wealth for yourself.
With the advent of technology, opening a trading account and trading/investing in stocks has become
as easy as playing games on mobile phones, but that does not mean everyone is equipped with the
skills needed for stock picking or trading. Just as making prescription medicines available free of cost
and without any monitoring or oversight or someone driving a multi-axle truck without a license or
training could destroy their health, trading/investing without proper knowledge or guidance could be
extremely dangerous to the financial health of investors.
Report Rationale:
In this special Project S.O.A.P. report, we have recommended 5 stocks that you could invest in for the long term along with 1 mini portfolio that you could invest in. Our research team has recommended these stocks and mini portfolio keeping in mind the need for long-term wealth creation and investing in quality stocks.
5 Long Term Buy Recommendations:
We have hand-picked these stocks that have the potential to give above normal returns in the next few
years. Companies with strong balance sheets, consistent earnings, and capable management are known
to create disproportionate wealth for their shareholders. Do not miss investing in these companies
1. Axis Bank
CMP as of 30/09/2022: Rs. 736
Target Return – 20%
Time Horizon – 1 year
Axis Bank has demonstrated improvement in its asset quality, NIM, and Profitability in the past few years. The bank has also changed gears in building digital infrastructure and has made investments in the same. The bank’s ongoing efforts to expand its asset portfolio in a targeted way (retail loans make up 57% of the total book) focus on the mobilization of low-cost granular deposits, declining credit costs, margin expansion, and an improved return ratios matrix are encouraging signs for future growth in earnings. The bank currently trades at a P/B of 1.9x which is below its 5-year median P/B of 2.3x making it attractively priced.
2. Greenpanel Industries
CMP as of 30/09/2022 – Rs. 423.5
Target Return – 15%
Time Horizon – 1 year
GreenPanel has market leadership in MDF industries which is expected to grow at a CAGR of 18% to 20% over the next few years. It is a market leader with a market share of 28% and is also the leading exporter of MDF panels from India. In FY22, the company increased its capacity by ~22% to 6,60,000 CBM in MDF. Further, the company’s plywood business which contributes 14% to the top line is expected to be strong going forward. The company is in a good position to take advantage of the opportunity that is emerging because of the strength of its product, which is driven by import substitution, rising domestic demand, and export opportunities for both MDF and ready-made furniture.
3. Dixon Technologies
CMP as of 30/09/2022 – INR 4,960
Target Return – 18%
Time Horizon – 1 year
Dixon Technologies (India) Limited (DIXON), a market leader in the EMS outsourcing sector, holds a 35% capacity share in the LED TV market and a 50% share in the lighting business in India. In addition to a solid manufacturing foundation, the company is enhancing its design capabilities and seeks to increase market share through capacity expansion and backward integration. The company has a loyal customer base across all of its product categories, and the addition of well-known international brands to its lineup has only strengthened that base. A healthy order book across washing machines, mobile devices, and security surveillance systems demonstrates strong revenue visibility. Long-term cost reduction, operating leverage, a drop in commodity costs, and an increase in high-margin ODM revenues are likely to lead to an improvement in operating margins. Further, Dixon is well poised to be a key beneficiary of several PLI schemes.
4. Infosys
CMP as on 30/09/2022 – Rs. 1,413
Target Return – 20%
Time Horizon – 1 year
Infosys is the second-largest IT company in India after TCS as per market capitalization. Despite such a large size, the company has been thriving with high growth. Though the company has witnessed margin pressure due to a sector-wide headwind of high attrition, the margins have not dropped significantly. Now that the attrition rates have stabilized, the margins are expected to normalize.
The company has diverse business segments and has also entered the new buzz segment; Metaverse. Over the past 5 years, Infosys has grown its revenue and profit at a CAGR of 12% & 9% respectively. The forward growth in the same is expected to be higher than average over the next 3-5 years. Further, with efficient management, Infosys is expected to be the key beneficiary of the positive tailwinds. In light of the above factors, we expect this stock to give a potential upside of 20%.
5. PSP PROJECTS
CMP as on 30/09/2022 – Rs. 642.15
Target Return – 15%
Time Horizon – 1 year
With a cash-rich balance sheet, healthy revenue visibility, and strong financial discipline, PSP Projects’ growth prospects remain positive for the future. The company has strong execution capability, thanks to its solid operational record of over a decade. Currently, the construction major has improved its eligibility for higher-ticket size projects and is witnessing significant traction for the pre-cast facility as well. The firm has a robust order book & healthy pipeline going forward. The scope of geographical diversification and continuous order wins along with a growing client base will increase the revenue visibility in the long run.
Over the past 5 years, the company has delivered impressive revenue and profit growth CAGR of 34% and 31% respectively. It has also handsomely rewarded its shareholders as it has maintained an average ROE of 26% and ROCE of 35% during the same period. The ownership of promoters has increased over the previous 4 quarters. In fact, they grew their holdings by 2.1% in June’22, thereby reaching 70.39%. The firm has a price-to-earnings (P/E) ratio of 13.9x, which is lower than its all-time median P/E ratio of 17.9x.
1 Mini Portfolio with StockBasket:
Be a part of the best corporates of India to help you make the best of equity investments. All stocks in the mini-portfolio have the following attributes and will help you grow your investments consistently
- Low debt
- Robust businesses with strong balance sheets and consistent earnings
- Strong corporate governance
- Strong cash flows
- Extremely capable and honest management team
Recommendation – Value Buy 2020 Basket
Basket Value as of 30/06/2022: Rs. 59550.35
Target Value: Rs. 119414
Target Return: +101%
Time Horizon: 5 years
Rationale:
First three months of the year 2020 have been a roller coaster ride for the markets, from making all time high of 12,430 and then falling more than 30% in just a matter of few weeks. There is widespread panic in the market because of the corona virus outbreak. What should an investor do during such times? Buy more? Sell? or just hold and stay away from markets?
The answer is simple – “BUY GREAT QUALITY STOCKS FOR LONG-TERM”
Study of similar virus outbreaks in the past and its impact on markets world-wide suggests the markets have almost always bounced back in 6 months. No one can tell where the market is going to be tomorrow or even after a month, it could be up or it could be down, but it can be said with lot of certainty that it will be up after 10 years. Ignore the short-term noise and invest for long-term.
Such times of panic are opportunities in disguise to accumulate great businesses that are now available at reasonable valuations. True wealth can only be created by buying good businesses at reasonable valuations and holding them for long-term.
Invest in this limited time basket which is created by including stocks from various sectors that offer great value and are expected to come out of this difficult time much more stronger to generate superior returns over the next 5-7 years.
Special Support for Project S.O.A.P. members:
Book a special appointment with our expert onboarding team and get exclusive support. Choose a time and date that suits you and our experts will call you back.
Steps to book a special appointment:
- Click on “Book an Appointment” and choose the service “Project S.O.A.P. – Special Onboarding”
- Choose your preferred date and time
- Fill & confirm your client details and click on “Confirm”.
In case you are facing trouble fixing an appointment, please give a missed call on 022-4503-0444 or send us a mail at support@samco.in.
Disclaimer:
The report is not for public distribution and has been furnished solely for information and must not be reproduced or redistributed to others. None can use the report as a base for any claim, demand, or cause of action, and, also none is responsible for any loss incurred based upon. The investments discussed or recommended in this report may not be suitable for all investors. The opinion expressed is the current opinion as of the date appearing on the material only. Further, the information in the document has been printed on the basis of publicly available information; internal data, and other sources believed to be true and are for general guidance only but which may have not been verified independently. While every effort is made to ensure the accuracy and completeness of the information contained, the company takes no responsibility and assumes no liability for any error/ omission or accuracy of the information. Recipients of this material should rely on their own judgments and conclusions from relevant sources before making any investment. The investment advice should not be considered to be or taken as an offer to sell or a solicitation to buy/sell any security. The price and value of the investments referred to in this material are subject to volatility. Past performance is not a guide for future performance. Certain transactions futures, options, and other derivatives as well as non-investment grade securities are subjected to substantial risks and are not suitable for all investors.
For full disclosure, visit www.samco.in
Samco Securities is registered as a Research Entity under the SEBI (Research Analysts) Regulations, 2014, SEBI Reg.No.- INH000005847.
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