Fundamental picks: These stocks have an upside of 25% & 37% respectively

SMC | April 23, 2015, midnight

Oil India - 25% upside


Valuation:
The Company has started diversification in non-conventional energy sector in the form of wind and solar power generation and in line with this, it proposes to install more solar and wind power plants in the coming years. Moreover, the company has also hired the services of M/s Mckinsey & Co., for preparing its long-term Perspective Plan (upto 2030) and to bring about necessary organizational restructuring to achieve the objectives laid down in the perspective plan. Thus, it is expected that the stock will see a price target of 582 in 8 to 10 months time frame on a Expected P/E of 13 x and FY18 (E) earnings of 44.78.


HSIL - 37% upside


Valuation:
The company has earmarked higher spends on marketing, warehouse and channel management pertaining to the consumer appliances segment which would give good boost to the EBITDAmargin till FY18. However, margin sustenance and expansion thereafter would further depend on higher revenue growth of consumer appliances division and mix improvement in sanitary ware and building material segments. Thus, we expect the stock to see a price target of 391 in 8 to 10 month's time frame on a one year expected P/E of 17x andFY18(E)earningsof 22.98.

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