On December 1, the benchmark indices rallied 1 percent each on the back of better-than-expected GDP data and good November sales data. Even though the market is turning more cautious with each rise, especially after the tremendous ally seen in November, brokerages are bullish on these 10 stocks and expect an upside of up to 29 percent:
2/11
Cholamandalam Investment and Finance Company | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 374 | Target: Rs 430 | Upside: 15 percent | At CMP, the stock is available at 3.6x / 3.0x FY2022E / FY2023E ABVPS which is reasonable given the improved growth and resumption of economic activity, and support from a resilient rural segment. Sharekhan expects disbursements to grow YoY in H2FY21 and expect an AUM growth of 25% for FY2022E & FY2023E. Asset quality outlook is improving, with October collection efficiency surging to 103% (from 95% in Q2). November number too has seen MoM improvement trend continuing. Broking house believes the buoyancy in rural markets augurs well for CV financiers and coupled with business benefits from a strong parentage, well-capitalised balance sheet and rigorous risk management practices, provide scope for improving operating leverage and Return ratios, which provides additional comfort.
3/11
Laurus Labs | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 322 | Target: Rs 400 | Upside: 24 percent | Laurus is largely a chemistry-based company and does not have expertise in biology. The current acquisition is a good fit for Laurus as it will fill the gap in the existing business profile. Further, the acquisition is reasonably valued at 6x sales with Laurus not having to invest anything beyond the stake. The growth at Richcore seems to be sustainable with the optionality of CDMO and enzymes. Though the acquisition might not add significantly to the profitability in the near term, Dolat Capital is of the view that it will be EPS accretive in the medium term.
4/11
Kalpataru Power Transmission | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 323 | Target: Rs 406 | Upside: 25 percent | Interaction with Kalpataru Power instils confidence on improving execution and order inflow outlook for the company going ahead. The company is still focused on asset monetisation and deleveraging the balance sheet. The company had also recently clarified promoter’s plan of reducing pledge of securities by 50% over one to one and a half year, with improving the velocity of sales in the real estate project, which should ease concerns related to promoter’s pledge of securities. Hence, KTPL has been addressing key issues and is witnessing improving business outlook.
IndusInd Bank | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 895 | Target: Rs 1,000 | Upside: 11 percent | IndusInd Bank currently trades at 1.5x/1.3x its FY2022E/FY2023E book value which is reasonable. The bank’s well-capitalised balance sheet and provision buffer are cushions for profitability. Sharekhan believes that the growth outlook is improving and growing collections efficiency and low expected restructuring pipeline indicate that credit cost is manageable. Easing of the lockdowns backed by a gradual improvement in the auto industry has led to a significant recovery in the stock price in the near term.
6/11
HDFC Life Insurance | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 641 | Target: Rs 770 | Upside: 20 percent | The stock is at a valuation of 4.6x/3.9x its FY2022E/FY2023E EVPS. Aided by strong fundamentals and high long-term growth potential for the Indian insurance industry in general and HLIC, in particular, broking house find HLIC an attractive long-term bet.
7/11
Infosys | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 1,137 | Target: Rs 1,350 | Upside: 18 percent | Infosys has been progressing strongly on strategic priorities that it had laid out in 2018. Scaling the digital, large deal signings and reskilling of talents are the key drivers for the accelerated growth trajectory and addition of large accounts. The qualified deal pipeline has grown materially as compared to FY2020-end. Sharekhan expects Infosys would continue to deliver industry-leading growth, led by continued large deal wins, enhanced digital capabilities aided by organic investments, acquisitions and partnerships and strong execution.
8/11
Muthoot Finance | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 1,153 | Target: Rs 1,364 | Upside: 18 percent | Prabhudas Lilladher initiated coverage on Muthoot Finance (MUTH), with a buy rating as it is a market leader (18% market share) and proxy play on gold financing market in India. The firm carries robust capital (Tier I of 24%), maintains low leverage (4x) and comes at reasonable valuations at 2.2xPBV (FY23E). It expects the company to maintain market leadership in gold lending underpinned by pricing power, improved productivity and insulation from underlying collateral price fluctuations.
Tech Mahindra | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 907 | Target: Rs 1,040 | Upside: 14 percent | The company is expected to see an acceleration in revenue growth led by large deal pipeline, digital acceleration and improving IT spend in communication. Further, in the long term, ICICIdirect believes the company will be a key beneficiary of 5G opportunities. This, coupled with an improving margin trajectory led by cost rationalisation and reasonable valuation prompt us to be positive on the stock.
10/11
Indian Hotels Company | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 120 | Target: Rs 155 | Upside: 29 percent | Sharekhan revised upwards its earnings estimates for FY2022 and FY2023 to factor in the impact of pent-up demand and improvement in profitability due to cost-optimisation initiatives. IHCL has seen a gradual recovery in occupancies and ARRs in the past few months (reach 50% in October-November). However, it expects a stark improvement in business fundamentals of IHCL in FY2022/FY2023 with strong improvement in the global tourism industry post the launch of the vaccine.
11/11
TCI Express | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 873 | Target: Rs 1,054 | Upside: 20 percent | TCI is expected to benefit from improving trade environment post easing of Covid-led restrictions. The company also has high-growth opportunities in the transportation of Covid-19 vaccines in the near term due to its strong pan-India network and limited competition in the organised express industry. Over the longer term, the company is expected to benefit from improving infrastructure, national logistics policy, and GST.
