Mid-Cap Stock buy recommendations by UBS
UBS has recommended the following six stocks as their top Mid-cap picks:
Multi Commodity Exchange of India (MCX):
We believe MCX is well poised to deliver strong growth as commodity-hedging is a secular penetration-driven growth opportunity in India, with MCX being a leader (-100% market share in key commodities). We think the high growth potential in ADV and thus revenues/earnings for MCX from introduction of options is not priced in. Traded ADV (Average Daily Value) increasing despite commodity prices correction, new products pipeline makes outlook positive
We believe PVR’s strong brand and the prime location of its properties are key competitive advantages. Though revenue/EBITDA may slow, we believe EPS growth may remain robust over FY16-19E, aided by maturing screens and operating leverage. We believe PVR is at an inflection point and could start generating free cash flow from FY16E, which will likely be sustained.
Rakesh Jhunjhunwala Latest Portfolio
Leader in India OTA market and a key beneficiary of travel industry growth, expanding capacity in Indian aviation, increasing online penetration and an improving economy. We expect mix change towards higher margins Hotels & Holiday Packages and operating leverage to drive earnings.
We like Voltas for its:
1) solid balance sheet;
2) high return ratios; and
3) nearly net cash profile.
Company looks set to maintain its market leadership, aided by new product launches. Premium valuation justified, in our view.
We see market’s concerns about Info Edge’s job portal growth sustainability as providing a good buying opportunity. Our analysis suggests limited downside to Info Edge’s growth from the IT sector slowdown, as more than 65% of hiring is for attrition and thus not at risk from slowing growth and falling employee intensity.
Dish TV (Analyst: Sanjena Dadawala):
We expect Dish TV to benefit from phases III and IV of digitisation and forecast 15% CAGR in subscription revenue and EBITDA over FY16-19E. We expect sustained high EBITDA margins of c34% to help Dish to turn net-cash-positive by FY18E.
UBS has stated that these mid-cap stocks are quoting at reasonable valuations presently and are a good buy. However, the target price for the stocks is not stated.