Unabated outflows by foreign institutional investors and rising interest rates continued to weigh market sentiment in the ongoing calendar year. As a result, the benchmark BSE Sensex declined 0.80 per cent on a year-to-date basis till March 8, while the NSE Nifty index lost 1.93 per cent during the same period. However, market analysts think a stock-specific approach can help investors to accumulate quality stocks amid the ongoing weakness in the domestic equity market. Considering the present market condition, brokerage KR Choksey Shares and Securities recommended the below six stocks from sectors including auto, banks, chemicals and information technology (IT) with an upside of up to 55 per cent. Have a look:
ICICI Bank | Target price: Rs 1,175 | Market price: Rs 866 | Upside: 36%
ICICI Bank Ltd witnessed a balance sheet growth of 13.4 per cent CAGR over FY20-22 and is expected to strengthen further. The bank has been focusing on improving the strength of the balance sheet and maintaining adequate capital to manage the operating environment’s volatility. ICICI Bank will continue to focus on value addition to scale up its existing portfolio. However, KR Choksey expects the loan book to grow by 18.5 per cent CAGR while deposits to grow by 12.7 per cent CAGR over FY22-25E.
IndusInd Bank | Target price: Rs 1,550 | Market price: Rs 1,171 | Upside: 32%
IndusInd Bank reported strong NIMs at 4.3 per cent in Q3FY23, supported by the repricing of the assets and improved yields on the overall assets. IndusInd Bank is confident of stable NIMs in upcoming quarters despite increasing deposits rate with the core focus on granular and retail liability franchises. PPOP has seen a growth of 9.2 per cent CAGR over FY20-FY22. It has maintained an operating profit margin, which is amongst the best in the banking industry. Going ahead, PPOP may grow at 16.5 per cent CAGR over FY22-25, led by healthy NII and a stable cost-to-income ratio. Net profit for the bank has seen a growth of 2.2 per cent CAGR over FY20-22, which was impacted due to higher provisions owing to higher NPAs in FY20 and FY21 which started to moderate from H1FY22. PAT may increase at a CAGR of 32.7 per cent over FY22-25 on the back of healthy operating performance and lower credit costs. Asset quality is expected to remain stable with moderation in slippages.
Tata Motors | Target price: Rs 572 | Market Price: Rs 435 | Upside: 31%
After seeing net losses for 7 consecutive quarters, Tata Motors Ltd delivered a net profit in Q3FY23 on the back of improved profitability across all three businesses. Chip supply is expected to improve further leading to volume ramp-up for JLR. Stability in commodity costs along with the focus on profitable growth should aid EBIT and free cash flows.
Anupam Rasayan | Target price: Rs 839 | Market Price: Rs 745 | Upside: 13%
Unlike the other chemical companies, the company is benefitting from the European energy crisis as it has signed two new contracts worth Rs 100 crore with a European agrochemical company, which exhibits the strength of the company’s business. The company has a strong pipeline of LOI/Contracts worth Rs 2,620 crore, which provide revenue visibility for the next 5 years. Furthermore, the company is witnessing strong interest from various customers on the fluorination side and expects more conclusions of LOIs for new products and conversion of LOIs into contracts in these coming quarters.
Gujarat Fluorochemicals | Target price: Rs 5,015 | Market price: Rs 3,251 | Upside: 54%
Gujarat Fluorochem has carved out a market for itself in the fluoro-chemicals industry and is better positioned to explore markets for more value-added products, including in emerging industries like electric vehicles and advanced fluoropolymers while continuing to benefit from its backward integrated and diversified businesses. The stock is currently trading at a P/E multiple of 27.5 times and 22 times FY23 and FY24 earnings. KR Choksey maintained a ‘Buy’ rating on the stock and apply a P/E multiple of 35 times to its FY24 earnings, which yields an higher revised target price of Rs 5,015 per share.
Happiest Mind Technologies | Target price: Rs 1,159 | Market price: Rs 862 | Upside: 34%
Happiest Minds Technologies is a technology service provider to clients focused on digital transformation. It delivers services across various sectors such as retail, edutech, industrial, BFSI, hi-tech, engineering R&D, manufacturing, travel and media and entertainment. The company has been investing in new technologies like LCAP, MCAP, metaverse, IoT and blockchain, among others and seeing a strong pipeline of deals in these areas.
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