Prabhudas Lilladher sees Nifty at 27,100, adds ITC & BEML in high conviction picks

Nifty50 index can hit 27,000 mark in the coming one year, believe  the brokerage firm Prabhudas Lilladher (PL), if its bull case pans out true. Similarly, the brokerage sees Nifty50 to remain flat in its bear case. It values Nifty at 15-year average P/E 19.2 times with March 26 EPS of 1,344.

 

Nifty has given 5.5 per cent returns since its last strategy report although it went through extreme volatility around Lok Sabha elections and FII selling of Rs 45,000 crore as SIP led domestic buying of Rs 89,200 crore  more than negated the impact, said the brokerage.

 

"Elections are over and India just survived 2004 kind of upset fueled by re-emergence of caste-based politics, huge promise of freebies and impact of social media in setting the narrative. While we have an NDA government in place with support of about 300 MP’s, it is not a single party majority Government but continuity in key ministries is a positive," it added.

 

In its bull case, it values Nifty50 index 5 per cent premium to 15-year average PE 20.2 times and arrive at bull case target of 27,102 On the other hand, Nifty can trade at 10 per cent discount to LPA with a target of 23,235 in the bear case, said the brokerage firm.

 

"We expect the NDA government to sustain focus on capex led growth around PLI, Roads, Ports, Aviation, Defence, Railways and Green energy given 20 basis lower fiscal deficit in FY24, normal monsoons and Rs 2.1 lakh crore dividend from RBI. However, we expect the NDA government to increase focus on farmers, rural, urban poor and middle class to arrest the impact of new social engineering," PL said.

 

The domestic brokerage firm remains positive on auto, banks, AMC’s, capital goods, defence, hospitals, pharma, cement, aviation, and discretionary consumption. It has increased weights on capital goods, telecom and cement. "We believe progressive budget, normal monsoons and strong inflows will further re-rate markets, it said."

 

The brokerage has upgraded HUL, Marico, Eicher, Hero, TVS, Bharat Forge, Praj, Voltamp, Ambuja Cement, Vinati and Oil India, while it has downgraded Century Ply, Greenpanel, Gujarat Fluoro, SAIL, VIP and IRCTC.

 

"We are cutting weights on HUL, TTAN, Infosys, and Bajaj Finance while we are increasing weights behind HDFC Bank, L&T, Interglobe Aviation, Sun Pharma, LTI Mindtree, RIL and Bharti. We are adding Ambuja cement in the model portfolio while we are removing Delhivery from the model portfolio," it added.

 

PL has removed Safari, Navneet Education and Grindwell Norton from its high conviction picks. On the other hand, the brokerage is adding BEML as strong play on defence and railways and ITC for a steady outlook and budget expectations in conviction picks as the conclusion.