SBI Securities said Indian equity markets were resilient amid persistent geopolitical tensions. "Global investors continue to stay positive on India, led by conducive business environment. Nifty50 companies are likely to report healthy 12.5 per cent earnings CAGR during FY23A-FY26E period. Nifty50 is trading at FY24E/FY25E P/E multiple of 19.8x/16.9x which is neither expensive nor cheap," it stated.
The broking firm said investor should focus on sectors such as consumption, auto, BFSI, real estate, travel & tourism, engineering & cap goods, telecom and fast-growing sectors like Renewables, EMS etc.
For Diwali 2023, analysts at SBI Securities picked 10 stocks that may see a boost in their values. Here's what it said:
1) ICICI Bank Ltd - Target Price: Rs 1,081
SBI Sec's view: ICICI Bank is well-prepared for substantial expansion of its loan book, stability in asset quality and growth momentum. The stock currently trading at a reasonable P/BV multiple of 2.8x/2.4x of its FY24E/FY25E book value, with potential risks including increased cost of funds, elevated operating expenses, market volatility, and a potential slowdown in credit demand.
2) Maruti Suzuki India Ltd - Target Price: Rs 12,000
Brokerage view: The country's largest car manufacturer's extensive product portfolio covers a wide range of price segments with six battery electric vehicles planned for release by the end of FY23. The recent successful launches have also helped the SUV class to reach a market share of 23.3 per cent. Trading at an attractive valuation with a price-to-earnings multiple of 27.9x/24.1x for FY24-25, MSIL presents a favorable risk-reward profile.
3) Ultratech Cement Ltd - Target Price: Rs 9,800
View: The company's strategic expansion plans harmonise effectively with India's growth prospects, positioning it for medium-term advancement, fortified by a streamlined balance sheet and an impressive operating cash flow.
4) Polycab India Ltd - Target Price: Rs 5,877
View: Polycab is well-positioned for strong growth in FY23-FY25, with projected CAGR figures of 19.8 per cent in sales, 23.4 percent in EBITDA, and 23.8 per cent in PAT (Profit After Tax).
5) Kalyan Jewellers India Ltd - Target Price: Rs 364
View: KJIL targets same store sales growth of mid to high single digits. It will focus more on capital efficient franchise store strategy to accelerate RoCE from the current levels of 17 per cent. In terms of expansion, the company will increase its presence in high margin non-South India region. For international expansion, the company plans to do calibrated expansion in Middle East on the back of healthy business traction which will be largely funded from its capital-light franchise store strategy.
6) Praj Industries Ltd - Target Price: Rs 633
View: Praj Industries holds a 70 per cent market share in brewery plants in India, which aligns with the anticipated 8.1 per cent CAGR in the Indian beer market. Praj's focus on future fuels, such as 2G ethanol, enhances its potential for growth.
7) Titagarh Rail Systems Ltd - Target Price: Rs 988
View: Titagarh Rail maintains a substantial order book worth Rs 28,212 crore, with both Freight Rolling Stocks and Passenger Rolling Stocks making significant contributions. With a planned capital expenditure (capex) of Rs 600 - 700 crore over the next three years, the stock is well-positioned for growth.
8) Mrs Bectors Food Specialities Ltd - Target Price: Rs 1,358
View: Mrs Bectors Food is anticipated to demonstrate strong performance, with sales/EBITDA/PAT projected to achieve a CAGR of 17.8 per cent/28.4 per cent/36.1 per cent reaching Rs 1,891.8 crore, Rs 288.6 crore, and Rs 166.9 crore, respectively, by FY25. MBFSL presents an attractive investment opportunity due to its reasonable valuation, trading at a P/E multiple of 47.9x/39.4x for FY24E/FY25E.
9) Kolte-Patil Developers Ltd - Target Price: Rs 570
View: The management has projected pre-sales figures of Rs 2,800 crore for FY24 and Rs 3,500 crore for FY25, indicating a CAGR of 25 per cent between FY23 and FY25. Kolte-Patil's strategic expansion into Pune, Mumbai, and Bangalore helps mitigate the risks associated with geographical concentration.
10) Goodluck India Ltd - Target Price: Rs 1,072
View: Goodluck India is poised to attain mid-teens growth in revenue over the next three years, with earnings projected to escalate at a faster pace due to enhanced margins and diminished interest expenses as a result of debt repayment. The stock is trading at an attractive valuation with a good risk-reward ratio, albeit accompanied by potential risks such as the volatility of raw material prices and a moderately leveraged balance sheet.
The front-loading of government capex along with the recovery of private investment backed by an improved balance sheet, has boosted the overall investor sentiment, SBI Securities mentioned.
(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)
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