Overall, especially after the run in November, the market has been rangebound and stock-specific action has continued, which is likely to be the top theme in the rest of 2019 as well.
In January, so far, Sensex has risen around half a percent. But broader markets are still lagging frontliners with the BSE Midcap index falling 1.6 percent and Smallcap index down a third of a percent.
In comparison, Sensex gained 6 percent in 2018. BSE Midcap index fell 13.5 percent and Smallcap index was down 24 percent in 2018.
Overall, especially after the run in November, the market has been rangebound and stock-specific action has continued, which is likely to be the top theme in the rest of 2019 as well.
Most experts feel the volatility will continue in the first half of 2019, so it is better to go with stock-specific action rather than looking at index return.
"We believe that the first half may be muted on account of upcoming elections. However, if a stable, reform-oriented government were to assume power, that would be a positive trigger for equities, which we believe will be the case. Thus, the first half may be a good time for investors to buy stocks," Vivek Ranjan Misra, Head of Fundamental Research at Karvy Stock Broking told Moneycontrol.
Even after the recent recovery, the market is still down 7 percent from its peak hit in August 2018 and broader markets are far away from their historic highs but that gives analyst an opportunity to pick good quality stocks at right time.
Brokerage: Ambit Capital | Stock: VIP Industries | Target: Rs 653 | Return: 27%
VIP Industries is India's leading luggage brand (around 55 percent organised share), #1 player (value terms) in backpacks and making inroads into ladies handbags (less than 2 percent share, $1 billion market).
Distribution architecture, product quality and brand segmentation across price points drove 25 percent EBITDA CAGR over FY14-18. Experienced team investing in brand and now own capacities (Bangladesh) should drive 24 percent revenue CAGR over FY18-23.
Despite currency volatility and rising procurement costs, 29 percent EPS CAGR over FY18-23 should be led by 1) 24 percent revenue CAGR from rising contribution of backpacks/handbags and 2) EBITDA margin improving to 16.9 percent (versus 13.7 percent) led by captive production, premimumisation and operating leverage.
We initiate coverage with buy call and target price of Rs 653 is built on high-teen revenue growth over the next decade as penetration and brand salience rise. Risks are management attrition and market share loss in economy segment.
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