The new year started off on a strong note for the Indian stock market after a lukewarm end to an otherwise healthy 2021. The benchmark indices rose nearly 3 percent in the first week of the new year, their strongest start since 2012.
During the week, several brokerage firms came out with stock ideas for strong returns in 2022. The five stocks mentioned below are expected to deliver 16-36 percent returns to investors over the next 12 months.
Grasim Industries
Price target: Rs. 2,050 | Upside: 36%
Brokerage firm Motilal Oswal Financial Services made a surprise upgrade to its rating on Grasim Industries in the week gone by week by having a favourable outlook on the company’s core businesses and predicting that its new paints are likely to “shine”.
“Grasim’s plan to augment the capex of its paints business indicates its intent of entering the paints segment on a large scale. Brand recall of Grasim as well as its strong balance sheet, and distribution network of UltraTech’s white paints segment should help the company succeed in this segment,” Motilal Oswal Financial's analysts said in a note.
Aarti Industries
Price target: Rs. 1,345 | Upside: 36%
Brokerage firm Yes Securities initiated coverage on the chemical major with a “buy” rating. It is counting on the company to be among the chief beneficiaries of the ongoing shift in global chemical industry market share away from China. The company’s capacity enhancement is expected to magnify the revenues by 2.5-3.5 times over the next six years.
On the back of the elaborate investment plan over FY22‐25, Yes Securities expects an earnings growth of 18 percent per annum over the next 10 years.
SRF
Price target: Rs. 2,955 | Upside: 22%
The pioneer of fluorination used in the manufacturing of complex chemicals is the next big bet of Yes Securities in the specialty chemicals space.
The brokerage initiated coverage on the stock with a “buy” rating as it sees SRF’s competence in fluorination aiding growth. SRF is investing to increase the share of agrochemical and pharma in its chemicals business sales, while at the same time, its refrigerant business is benefitting from a shrinking presence of Chinese producers in the international market.
Yes Securities expects the chemical business to account for up to 60 percent of sales, up from the current 43 percent, enabling a 14 percent annualised growth in topline for SRF while maintaining its return on equity at 20 percent.
Gland Pharma
Price target: Rs. 4,556 | Upside: 16%
The injectables contract manufacturer is brokerage firm Jefferies India’s top pick in the segment, owing to its leadership positions and low-cost model that has helped the pharmaceuticals company to achieve strong growth. The brokerage initiated coverage on the stock with a “buy” rating.
Jefferies India expects Gland Pharma’s US business, which contributes nearly two-third to the business, to see volume growth. Its business in other countries is expected to benefit from its Pashamylaram facility in Telangana. In China, the company is expected to leverage promoter Fosun Pharma’s distribution network to grow its market share.
La Opala RGPrice target: Rs. 520 | Upside: 23%
The lead opalware maker in the country is the latest pick for Centrum Broking, which initiated coverage on the stock with a “buy” rating. Centrum Broking expects the company’s revenues to double in the coming years as the new 11,000-tonne opalware capacity and new borosilicate glass unit comes on stream over the next two years.
“Strengthening of demand, revamping of internal sales structure and sharpening up of e-commerce channel will drive growth in the short term,” the brokerage firm said in a recent note.
Centrum Broking’s optimism comes at a time when La Opala recorded its highest-ever sales and profitability in the September quarter and is expected to have a better December quarter.
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