These stocks may rally further despite over 100% gain in the year gone by

Equity investors have made humungous wealth on Dalal Street during the past one year. Sample this: as much as 95% of the stocks in the BSE 500 index have delivered a positive return to investors since June 2020. Out of which nearly one-third have more than doubled during the same period.

With a rally of 1,130%, cloud computing firm Tanla Platforms emerged as the top gainer in the index. Shares of the company have jumped to Rs 843.20 on June 24, 2021 from Rs 68.50 on June 24, 2020. On the other hand, the benchmark BSE Sensex has gained over 50% due to sustained inflows by foreign institutional investors and liquidity measures taken by RBI and the government.

157 stocks rallied over 100%

Overall, 157 stocks in the BSE500 index have gained more than 100% during the past 12 months. Adani Enterprises (up 874%), Adani Total Gas (up 681%), Intellect Design Arena (up 573%), Laurus Labs (up 483%), Balaji Amines (up 464%) and APL Apollo Tubes (up 400%) stood among other major gainers in the broader index.

Analysts are bullish on a couple of stocks despite the strong performance. For instance, Edelweiss Securities has a ‘Buy’ rating on Balaji Amines with a price target of Rs 3,197. “Demand outlook remains strong for Balaji Amines’ products. However, rich valuation can impact near-term upside,” the brokerage said.

Likewise, ICICI Securities is positive on Intellect Design Arena with a price target of Rs 875. “Improving deal wins, increased penetration in the US and Europe market, digital-ready product portfolio, healthy pipeline, huge addressable and underpenetrated market and improved annuity revenues bode well for revenue growth,” ICICI Securities said.

Sensex jumped over 50%

The 30-share Sensex has jumped to 52,699 on June 24 from 34,868 on the same day last year. Commenting on the further movement of the domestic equity market, VK Vijayakumar, chief investment strategist, Geojit Financial Services said that during normal times markets would be subject to sharp corrections when valuations are high.

“Such corrections remove excesses and make markets healthy. Therefore, periodic corrections in a bull market are desirable. But corrections need not happen when they are desirable. Market springs surprises. This resilient bullish trend has surprised even the market gurus. So, investors should remain invested, particularly in quality largecaps which are attracting investment even at high valuations,” he said.

Data shows that other players like Tata Motors, Tata Steel, Vaibhav Global, Adani Power, Redington, IndiaMART InterMESH, Affle India, Jindal Stainless, Mindtree and Tata Power Company have also gained over 100% during the year gone by.

Edelweiss Securities has ‘Buy’ on Tata Motors with a price target of Rs 432. “We believe FY22 guidance for JLR is ultra-conservative factoring near-term uncertainty (semiconductor shortage and commodity inflation). Hence, we retain our margin and free cash flow forecast,” the brokerage said.

Likewise, Sharekhan is positive on Affle India with a price target of Rs 6,580. “We have revised our earnings estimates upwards for FY2022E/FY2023E, strong management commentary on revenue growth, favourable demand environment and entry to new geographies. Given its leadership position in India, end-to-end offerings in the CPCU business model, improving share of mobile ad spends to overall ad spends and entry into newer geographies, Affle is well-positioned to capture opportunities that would arise in the markets,” Sharekhan said.