The stocks that delivered more than 1,000% returns in the bull market this year
Mumbai: Two stocks have delivered more than 1,000% returns as the benchmark indices scaled lifetime highs this year.
Securities broking firm Indiabulls Ventures Ltd and graphite electrode maker HEG Ltd’s year-to-date gains have been 1,345.26% and 1,068.73%, respectively. This compares with the BSE Sensex’s 26.09% gain in the same period.
These are unprecedented gains. CLSA managing director Christopher Wood added Indiabulls Ventures to its model portfolio in September. The stock was also added by MSCI to its India index in May.
Indiabulls Venture’s net profit jumped 221% to Rs55 crore in the September quarter and its revenue rose 66% to Rs180 crore.
Firstcall India is the only research house that tracks Indiabulls Ventures, and it has a overweight rating on the stock. It said that it expects net sales and net profit of the company to grow at a compound annual growth rate (CAGR) of 22% and 37% respectively over fiscal years 2016 to 2019.
In a report on 27 September, Firstcall said the consumer lending business IVL Finance is expected to significantly add to the profitability of the company in the medium to long-term
The rally in HEG’s stock picked up since 23 August, with the stock rising 1,000% since then, and street expectations are rising.
On 23 October, Jefferies India Pvt. Ltd raised its target price on the stock to Rs1,753 from Rs1,050 earlier, maintaining its buy rating.
“HEG has been able to renegotiate some of the old contracts to current spot prices. For FY19E, it plans to get into yearly contract for electrode volumes but quarterly on pricing,” Jefferies said in the note.
Jefferies analyst Rahul Murkya said that his interaction with company management revealed that shut-down of induction furnace capacity in China has led to a revival in demand of graphite electrode.
Closure of graphite electrode capacity in last 4-5 years has led to a tight demand and supply situation. The brokerage firm raised its graphite electrode price assumption to $6,000/tonne vs $5,000/tonne previously for fiscal year 2019 and $6,500/tonne vs. $5,200/tonne previously for fiscal year 2020, keeping the tight demand-supply scenario in view.
Apart from Jefferies, ICICIdirect.com and SKP Securities Ltd.also have a buy rating on the stock, data from Bloomberg showed.
E-mails sent to Indiabulls Ventures and HEG seeking comments remained unanswered.
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