Samvat 2078: Brokerages bullish on this stock; see up to 43% upside

According to a recent report by KR Choksey, India is set to become the 5th largest capital market in the world by 2024 with a market value exceeding $ 5 trillion by 2025. The market wealth is likely to grow by 50 per cent in the next 4 years, giving visibility of a 25 per cent average return per year.
 
Brokerage YES Securities has set a target of 72,000 for the BSE Sensex and 21,000 for the NSE Nifty by next Diwali, indicating an upside of over 15 per cent from the current levels.
 
Samvat 2077 was historical for the markets as it saw a massive bull run. Sensex touched 60,000 for the very first time and Nifty crossed 18,000-mark too.
 
Axis Securities believes Samvat 2078 will be a year of balance sheet leverage, led by significant improvement in corporate profitability. With faster economic recovery on the cards, more cyclical sectors are likely to join the rally with the expectation of higher government spending moving forward, it said.
 
Brokerages are bullish on some stocks wherein the opportunity is in favor of the bulls. According to analysts at Marwadi Financial Services, UPL Limited can give up to 43 per cent return and is one of their technical picks for Samwat 2078.
 
"The stock has fallen in a downward sloping channel and it seems to have completed its wave 4 down at 38.20 per cent retracement levels. The stock has also taken good support at its lower end of the rising channel; hence a probability of a wave 5 from here on is quite high," said analysts at Marwadi Financial Services.
 
They noted that the momentum indicator MACD has been showing positive divergence on the daily charts and it's too oversold on the daily as well as weekly charts. However, on the monthly charts the MACD is well into the buy mode i.e. in favor of the bulls.
 
"The target on the upside is Rs 1,030 i.e. above all-time highs of Rs 864 levels. So, we recommend buying UPL as the risk to reward is 1:2 which is well in the favor of the bulls," they added.
 
On the right path
 
KR Choksey noted that UPL has consistently delivered above-market growth rates with revenue and EBITDA growing at a CAGR of 24.1 and 26.9 per cent, respectively, over FY17-21.
 
The brokerage house expects UPL to profit across geographies on the back of a supportive environment and growing commodity prices, and gain market share in all its markets due to its low-cost production and robust product pipeline.
 
"UPL's strategy of positioning itself as a branded generic manufacturing company rather than a commoditised agriculture firm has enabled it to reduce dependence on high volume, low-value items and increase its concentration on branded products," it said in a report.
 
"We apply a P/E multiple of 11x to its FY24E EPS of 80.6/share, implying a target price of Rs 886/share, yielding an upside potential of 24.3 per cent from the CMP. Accordingly, we assign a 'BUY' rating on the shares of UPL," it added.
 
CLSA also increased its FY23-24 EPS estimates by 3 per cent given an improved product mix. The brokerage house said that UPL is well-placed to close FY22 at the upper-end of its revenue and EBITDA guidance.
 
At 15:03 hours, the stock was trading 1.74 per cent higher at Rs 732.60 on the Bombay Stock Exchange (BSE).