The 10 best stocks to buy for 2020

November 17, 2019November 17, 2019 admin

The 10 best stocks/shares to buy now for 2020 or one year

The selection of the best stocks or shares to buy in the market is not an easy task. You need to study the fundamentals of the stocks, need to study technically of that particular stocks and find out the exact time to buy the stock. We have done an analysis of the 10 best stocks/shares to buy for 2020. It’s a combination of Large, Mid and Small-cap stocks. In the present market scenario, the combination of these stocks is having huge potential to grow wealth. We will also do a quarterly analysis of this model portfolio.

10 Best stocks to BUY now for 2020

Scrip Name	Sectors	Market Cap	As on 15th NOV2019	As on 16th Aug2019
ICICI Bank	PVT Banks	Large Cap	500	417
Bandhan Bank	PVT Banks	Large Cap	560	500
Indian Bank	PSU Bank	Mid-Cap	117	184
IRB Infra	Infra	Mid-Cap	72	92
Atul Ltd	Dyes & Pigment	Mid-Cap	4047	3546
Tata Steel	Steel	Large Cap	395	365
ITC	Cigarettes	Large Cap	251	253
Tata Global Beverages	Tea & Coffee	Mid-Cap	298	267
Cochin Shipyard	Misc	Small-Cap	404	349
Petronet LNG	Oil Drilling	Mid-Cap	278	238
			6922	6211

We had done three months backtested of the above “10 best stocks to buy” and it has earned around 10% in just three months. For e.g let say if you had invested Rs 6211 on the above-mentioned combination of stocks three months back. You could have earned Rs 6922 now, which is around 11% of the capital invested in just three months.

In the combination of stocks, we have taken three stocks from the banking industry. Banking sectors are known as aggressive sectors among the lot. And we feel It has huge potential for the upside movements in the coming days. The below model portfolio can be called as Aggressive Model Portfolio, where other than Banking there are Metal, Infra, Dyes & Chemical, Beverages, etc stocks are included.

The above best combinations of stocks to be invested for a minimum period of twelve months. For a one-year time frame, we can minimum expect a 20% return. Investors can also wait more than 12 months for a better return. The target and analysis of the 10 best stocks to buy are given below

The target for the 10 Best stocks to buy

Scrip Name	Sectors	Market Cap	As on 15th NOV	Target -12 months
ICICI Bank	PVT Banks	Large Cap	500	605
Bandhan Bank	PVT Banks	Large Cap	560	740
Indian Bank	PSU Bank	Mid-Cap	117	190
IRB Infra	Infra	Mid-Cap	72	94
Atul Ltd	Dyes & Pigment	Mid-Cap	4047	4700
Tata Steel	Steel	Large Cap	395	470
ITC	Cigarettes	Large Cap	251	315
Tata Global Beverages	Tea & Coffee	Mid-Cap	298	365
Cochin Shipyard	Misc	Small-Cap	404	510
Petronet LNG	Oil Drilling	Mid-Cap	278	360
			6922	8349

Analysis of the 10 best stocks to buy

ICICI Bank:

The ICICI Bank is the second-largest bank in India after HDFC Bank as per market capitalization. ICICI Bank has a market capitalization of Rs 3,22,658 crore. The current market price is Rs 500 per share and touched 52 weeks high at Rs 509 and a low of Rs 310.

We have selected this stock because of its steady improvement in the September end quarter. ICICI Bank’s Net Interest Income (NII) has increased 25.53% on YoY basis to Rs 8057 crore in Q2FY20 against Rs6418 crore in Q2FY19.

Its Asset quality has also improved, Non-Performing Assets (NPA) declined to 6.37% compared to 8.54% in the same period last year. The Bank’s Provision and contingencies declined 37.23% on YoY.

The net profit in September ends quarter after the adjustment of one time accumulated deferred tax was Rs 654.96 against Rs 908.88 in the last year the same quarter.

Further on another developmental side, the slippages have declined. Loan growth on the retail side increase, hope the bank would continue to increase the retail loan. Deposit growth also increased by 25% on a YoY basis. We suggest you BUY ICICI BANK for one-year time horizon for the target of 605

Bandhan Bank

Bandhan Bank is four and a half years bank having almost 1000 Branches spread across India and having a strong presence in East and Northeast India. The current market capitalization of Bandhan Bank is Rs 66791 crores. The Bank is trading almost near to 52 weeks high at Rs 560 per share.

Bandhan Bank had reported very strong Q2 results, we are not comparing its result because of this the first result after merged with GRUH Finance. The merger synergies are expected to cross-sale home loan products, grow deposits, particularly in the eastern region. Gruh Finance senior management personnel at Bandhan bank will provide and continuity in the operational and direction in the home finance business.

Bandhan Bank’s NPA for Q2FY20 was flat at 0.56% compared to Q1FY20 and it was 0.69 in the same period last year. The Bank’s CASA grew 39% in the Q2FY20. We suggest one should BUY Bandhan Bank at the current price for the target of Rs 740 per share in twelve months

Indian Bank:

Indian Bank is mid-cap PSU Bank has a market capitalization of Rs 5746 crore. The Bank is having a network of 2884 Branches mainly into South Indian states. The recent announcement of the merger with Allahabad Bank has corrected the share price of the Indian Bank.

The PSU merger will be completed by 31st March 2020 and post-merger Indian Bank will be the 7th largest PSU Bank in India. The Bank will have the advantage of getting a strong presence in the Eastern and Northern states of Allahabad Bank’s network.

The Q2FY20 net profit grew 139% to Rs 359 crores as compared to Rs150 crore in the same period last year. The total income increased by 18%. The Operating profit has shown a huge growth of 26% at Rs 1502 crore as compared to 1191 crore for the same period last year.

The Bank’s recovery of Bad debts improved by 31% and gross NPA increased marginally by 4 bps. Overall it was a very strong set of numbers by the PSU Bank and its performance will be improved post-merger. So we suggest to BUY Indian Bank for twelve months time horizon for the target of Rs190 per share.

These are the three best banking stocks to buy for 2020 which has got good scope for appreciation.

Cochin Shipyard

Cochin Shipyard Ltd (CSL) is one of the leading shipbuilding and repair companies in India. The company has a market capitalization of Rs 5289 crore and currently trading at Rs 404 per share. It has a solid order book, strong performance, and a healthy balance sheet.

The CSL reported a 40% increase in net profit in Q2FY20 to Rs 206.33 crore as compared to Rs 147.05 in the same period last year. The company’s consolidated total income rose by 23% to Rs 1050.8 crore compared to Rs 855.28 crore in the previous year same period.

The company has gained a huge order from the Indian Navy. It has signed the phase -111 contract for the construction of the indigenous aircraft carrier for the Indian Navy. The total value of the contract is above Rs 3000 crore. The company has also signed Kochi Water Metro Project and the contract is worth Rs 176 crore.

We expect CSL to book major revenue on the shipbuilding side, due to the execution of the current order book plus IAC Indian Navy phase III. We suggest investors accumulate Cochin Shipyard at the current level for the target of Rs 510

IRB Infra

IRB Infrastructure Developers Ltd is having a market capitalization of Rs 2508 is diversified in Road Construction, BOT Projects, and Realty. The current market price (CMP) of IRB is trading at Rs 72 per share.

The Q2FY20 results beat the street estimates, the company reported a 16% YoY in net profit for Q2 at Rs200 crore compared to 172.95 crores. Tax expenses dropped by 18% and total revenue increased by 22% compared to last year.

IRB’s two HAM projects which were facing challenges for land acquisitions got terminated recently will affect the revenue growth of the company. However, IRB remains constructive on BOT project revivals by NHAI with 3000 km likely awards this financial year.

IRB’s GIC deal will be the game-changer, As IRB has signed a binding agreement for the stake sale of its nine road assets via private InvIT structure. GIC’s investment in the InvIT will be 44bn for acquiring a 49% stake in the entity while IRB will invest Rs46bn over the next three years.

We suggest one should pick IRB Infra at the current market price for the target of Rs 94 in twelve months period.

Atul Ltd

Atul Ltd is a value-added chemical manufacturing company which are used in industries like, Agriculture, Construction, Textiles, Pharmaceuticals, and Automobiles. The market capitalization of Atul Ltd is 11,979 crores and the current market price is Rs 4042 per share.

The Q2FY20 result of Atul Ltd was reported very strong. The net profit of the company for Q2 was Rs 208.97 crores compared to Rs 147.33 in the Q1FY20. The net sales of the company stood Rs 1066.67 crores in the Q2FY20 compared to Rs1050.52 crores in the Q1 quarter.

As per the industry estimates, the Indian specialty chemical industry is expected to grow 13-15% over the next five years. Other than this increasing governmental focus on affordable housing and enhanced budget on infrastructure development will increase the demand for specialty chemicals.

With an improved outlook overall, we suggest to BUY Atul Ltd for a price between Rs 3850-3950 for the target of Rs 4700 for a period of twelve months.

ITC Ltd

ITC Ltd is an Indian multinational conglomerate having diversified in cigarettes, hotels, paperboards & specialty papers, packaging, Agri & FMCG products. It is most dependable among large-cap stocks with a market capitalization of Rs 307,960 crores. The current market price of ITC is Rs 251 per share.

The company reported an increase in revenue in Q2FY20 by 6% on YoY to Rs 11750 crores with strong growth in Agri and FMCG business. The operating profit in Q2 rose by 7.4% on YoY basis to Rs 4167 while operating margin also improved 50bps on YoY to 36%. The company’s net profit in Q2FY20 stood at Rs 4023 crores with the help of lower corporate taxes.

Despite the concern of an increase in cigarette taxes the volume growth of cigarettes has increased for the 6th consecutive quarter. We expect revenue from the cigarette will grow at a CACR of 6% for the coming financial year. Even after the economic slowdown and weakness in the economy, the ITC has managed to report steady Q2 numbers.

We suggest investors BUY ITC at CMP Rs 251and hold minimum for one year for the target of Rs 315

Tata Global Beverages:

Tata Global Beverages is an Indian multinational non-alcoholic beverage company engaged in the production and distribution of tea, coffee, and water. The company’s principal activities include processing and blending of tea, including the manufacturer of instant tea. The company has a market capitalization of Rs 18779 crores.

The consolidated sales increased by 4.2% on YoY to Rs 1834 crore. The tea business reported moderate growth of 4% whereas the coffee business down 4% in the Q2FY20. The tea business has shown a healthy volume growth of 8% in Q2, operating margin increased by 13%. The PAT declined 17% on a YoY basis to Rs 152.5 crore because of lower profit from associates and a one-time adjustment of tax.

The company reported strong double-digit growth in Tata Tea Agni and single-digit in other products like Tata Tea Premium, Tata Tea Gold. Spice Mix tea sales had delivered strong growth in Q2FY20 of about 50% compared to last year. The EBITDA margins also improved 194 bps YoY to 13.5% due to favorable commodity prices.

The international sales in the UK, Canada were seen muted volume growth in the Q2FY20.TGBL is focusing on improving its product mix in the International market in favor of health and wellness in line with industry trends. This will help to impact sales growth going forward.

We suggest investors BUY Tata Global Beverages at the current market price Rs 298 for the target of Rs 365

Tata Steel Ltd.

Tata Steel is one of the world’s largest steel companies. It manufactures ball bearings, hand tools, tubes, steel wires and also operates chrome mines. It is a well-diversified business entity with a market capitalization of Rs 44,429 crores. The company also in the business activities of steel, Ferro Alloys, and Minerals.

The net profit of Tata Steel in Q2FY20 reported 6% higher on YoY at Rs 3302.31 crore compared to Rs 3116.20 crores in the last financial year the same period. Standalone operations reported a sale volume of 3.0 (MT) whereas European operations steel sales of 2.3 MT. These are below the analyst expectations and it is because of the weak in steel demand.

Tata Steel is planning to increase India’s capacity to 30 MT by 2025 through organic & inorganic routes. This will increase the share of higher-margin domestic capacity to 71% by 2015. The post-monsoon and government economic measures may increase the demand for muted Tata Steel sales growth.

Going forward, after a subdued Q2FY20, it is expected that the performance of Tata Steel will improve in the second half of this financial year and FY21. We suggest to BUY Tata Steel at the current market price at Rs 395 for the target of Rs 470 in a period of one year.

Petronet LNG

Petronet LNG Limited is one of the best companies in the Indian energy sector. It has set up the first LNG receiving and regasification terminal in Dahej in Gujarat and other at Kochi in Kerala.

The company was formed with a joint venture by the Government of India with an intention to import LNG and set up LNG terminals in the country. Its promoters are GAIL, ONGC, IOCL, and BPCL having a market capitalization of Rs 41,700 crores.

The company posted strong Q2 results despite the revenue declined. The operating profit rose 23.6% on YoY to Rs 964 cr, operating margin improved by 304 bps to 10.3%, this is due to product mix and lower operating costs. The cost of sales declined to Rs 8023 crore as against Rs 9695 cr in the Q2FY20 quarter.EBITDA improved 31.3% YoY to Rs1160 crores

The company reported a net profit of Rs 1103 crore in September ends quarter as against Rs 563 crores in the last year the same period. The company’s profit has got a boost after a reduction in corporate tax cuts.

The project Kochi-Mangalore pipeline is getting delayed by 1-2 months and expected to be completed by March 2020. The company also plans to add two new storage tanks in Dahej which will increase the capacity by FY22.

A strong Q2 operating performance and capacity expansion will further boost earnings of Patronet LNG coming financial years. We suggest investors BUY Patronet LNG at current market price for the target of 360

Conclusions:

Above are the analysis of the best combination of stocks to buy for 2020, investors can easily gain 20% or even more than that in a year. Investors can also do SIP on their own for the above portfolio on a monthly basis.

We will analyze the above portfolio on a quarterly basis and will be updated on our website. Please note the target we have mentioned is on the conservative side. As per our analysis, the above stocks are best to buy now.

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