Top 5 stocks that can give up to 100% returns

Graphite India
The electrode maker’s earnings are expected to reach a record $5.1 billion this year — up from $1.5 billion in 2017. This strong turnaround comes after three years of straight losses. Graphite India is the largest producer in India and is trading at just 5 times 1-year forward P/E, making it the cheapest GE producer globally. Analysts see multi-year earnings driven by a supercycle in graphite electrodes used for EAF steelmaking.

“Graphite’s valuation does not appear to have correctly priced the strength and longevity of this cycle,” said Anuj Singla, analyst, DSP Merrill Lynch. “We believe a peak cycle/trough multiple is appropriate given earnings are forecast to peak in FY20E and then modestly decline. These multiples compare to the stock’s 10-year multiples of 11x for P/E and 6.5x for EV/ EBITDA”.

Gujarat State Petronet
Tariff for GSPL’s HP pipeline has been raised 28 per cent to Rs 1.35/scm from April 2018 for 5 years. Analysts have revised up FY19 EPS estimate by 6 per cent. GSPL’s transmission unit is seen to report good volumes in the backdrop of growth in CGD & PNG sectors and higher LNG capacity in Gujarat.

“The expected upward revision of transmission tariffs by PNGRB is a positive and has led to an upgrade in earnings,” said Mayur Matani, analyst, ICICI Securities.

Himadri Chemicals
HSCL, a manufacturer of carbon materials and chemicals, continues to post top-line revenue growth. The company is on the verge of commissioning a speciality carbon black line. This is a promising upcoming segment, according to analysts. The company has gradually lowered debt and is generating healthy cash flows with CFO yield at 5 per cent.

“We expect HSCL to clock sales, profit after tax CAGR of 22.7 per cent & 28.5 per cent, respectively, in FY20,” said Chirag Shah, analyst, ICICI Securities.

Jindal Stainless
JSL went in for debottlenecking initiatives to expand capacity to 1.1MT from 0.8MT by end of FY19 at a lower capex of Rs 40-50 crore. Given higher market share and improving profitability with a change in product mix to value-added product, return ratios may remain strong and will be higher compared to European peers, said analysts.

“We value company at 6.5 times FY20 estimated EV/ EBITDA with a target price of Rs 151 ,” said Kamal Kanta Sahoo, analyst, Emkay Global.

National Aluminium
Analysts have raised Nalco’s EPS estimate for FY19 by 5.5 per cent mainly due to strong aluminium pricing and depreciating rupee. Only 10-15 per cent of its cost of production is incurred in dollar or linked to dollar pricing. Nalco has increased bauxite production by 3 per cent on opening of a new block at south of Panchpatmalli mine. It has also started work on 1mtpa expansion of alumina refinery at a capex of Rs 5540 crore.

“The stock has been trading at attractive valuations of EV/EBITDA 3.4 times FY20 and P/E of 7 times FY20,” said Sanjay Jain, analyst, Motilal Oswal Securities.