Stocks to buy: Global brokerages bullish on these 7 stocks, sees up to 40% upside

Global brokerages including Jefferies, JP Morgan, CLSA and Nomura are positive on a couple of stocks amid the ongoing weakness in the domestic equity market. Where the BSE Sensex has declined around 2 per cent in the ongoing financial year till March 20, the NSE Nifty index also lost nearly 3 per cent during the same period. Market watchers believe that factors like heavy selling by foreign institutional investors, subdued quarterly results and rising interest rates weighed market sentiment. However, overseas brokerages see up to 40 per cent upside in select stocks considering the present market scenario.

Reliance Industries

Brokerage CLSA has fixed a target price of Rs 2,970 for Reliance Industries, indicating an upside of over 30 per cent from the current market price. In a report on March 20, the global brokerage said that Reliance’s stock has fallen by about 20 per cent in less than four months, taking it to just 5 per cent above a conservative valuation based on a nearly three-year-old deal value for Jio and retail, a 15 per cent discount to the announced Aramco deal value for O2C and nil value for new energy.

“This means that a paltry $9 billion is being ascribed to 100 per cent expansion in the retail selling space plus progress in e-commerce and 5G investments at Jio plus the new energy foray, amongst others. The ramp-up of its FMCG business, the launch of Airfiber to catapult wireless broadband penetration and a new affordable 5G smartphone to monetise its pan-India standalone 5G network by the end-2023 along with an IPO of Jio and/or retail are all possible large triggers in H2FY24,” CLSA said.

Can Fin Homes

While retaining a ‘Buy’ call on Can Fin Homes, Jefferies in a report said that margins of the NBFC can surprise positively after rates stabilise due to lag between repricing of loans and liabilities. “72 per cent of its loans are yet to fully reflect the home loan rate hikes taken YTD FY23 as borrowers home loan rates are reset on an annual basis. Liabilities are mostly re-priced within the quarter. We see some moderation in loan growth, though it should still be healthy. Can Fin should deliver 16 per cent EPS CAGR and 18 per cent ROE over FY23-25. At 1.6x FY24E book value, valuations seem reasonable,” it said. The brokerage has fixed a target price of Rs 635 for Can Fin Homes. Shares of the company traded at Rs 531 in the afternoon trade on March 21.

Titan Company

Shares of Titan have declined in the ongoing financial year to date. Overseas firm JP Morgan is positive on Titan with a March 2024 target price of Rs 3,000, showing an upside of over 20 per cent against the market price of Rs 2,459 on March 20. “Titan stock has fallen on potential demand slowdown worries, though we note spending by its upper-income customer base has been fairly resilient. Even as FY24 revenue growth moderates off a high FY23, we believe it will remain among the highest of its peers,” JP Morgan said in a report on March 15.

Info Edge

Nomura sees over 40 per cent upside in Info Edge. It thinks that the company has a strong business model with distinct leadership in the cash-generating, online recruitment classified vertical. It retained a ‘Buy’ rating on Info Edge with a target price of Rs 4,940. Shares of the company traded at Rs 3472 in the afternoon trade on March 21.

“InfoEdge management noted that the trend of slowdown in tech-related sectors (which started in Q2) continues. Demand is strong in the non-tech sectors such as infrastructure, healthcare, education and offline retail. Management shared that Q4 tends to be the most important quarter, with March being the month that typically sees maximum business in the core recruitment vertical (Naukri). Hence, management considers March to be an important month in terms of demand. In tech, demand from captives continues to be better than the IT services sector. The Naukri business is directly linked to gross hiring and attrition trends in the IT services industry,” Nomura said.

UltraTech Cement, Dalmia Bharat, JK Cement

According to Jefferies, India's cement sector is likely to be a big beneficiary of declining global energy costs with benefits starting in Q4FY23 and accelerating into FY24, if trends sustain. Industry price hikes are missing amid high competitive intensity, but the higher-than-estimated cost benefits could offset the price increase requirement by the industry to meet estimates and are incrementally positive for stocks. UltraTech Cement, Dalmia Bharat and JK Cement are among the preferred picks of Jefferies in the cement pack.

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