This year has been especially prosperous for Dalal Street and with Diwali and Samvat 2078 just around the corner, brokerage houses have shared their top picks. Like every other year, Muhurat Trading 2021 will be held for an hour on November 4. It is a symbolic trading session held by stock exchanges to mark the auspicious festival. The Muhurat Trading will take place from 6:15 PM to 7:15 PM to mark the beginning of Samvat 2078 on Thursday. During Samvat 2077, stock market have seen record breaking highs with the Sensex and Nifty making several records, against the backdrop of a liquidity driven rally. The 30-share Bombay Stock Exchange or BSE index has given a return of close to 40 percent during this time.
As per a report by ICICI direct, stock market surge in the past year has been driven by three fundamental factors. “First and foremost, equity as an asset class is being widely and rightly recognised as an asset generating inflation beating returns or real returns over a long period of time and is indeed very much liquid in nature; the TINA (there is no alternative) factor is at play,” said the brokerage house in a note
Secondly, with the increase in pace of digitisation, a set of efficiencies have creeped into organisations as well as the economy, indicating better corporate earnings/GDP growth. Thirdly, with new age technology platforms, the reach of equities has increased with record number of demat accounts being opened over the last 18 months, indicating enhanced retail participation,” added the note from the brokerage house.
“Given the scenario, we see value emerging across the market cap spectrum with the key filter being quality,” further said ICICI direct. With this in mind, News 18 takes a look at the top picks of brokerages during the new Samvat 2078.
ICICI Direct Recommendations for Samvat 2078
Bank of Baroda
CMP: Rs 96
Target Price (Rs): 120
Potential Upside (per cent): 25
Note: Levers for improvement in operational performance are present for the bank and also has comfortable capitalisation, CAR of 15.4 per cent.
Action Construction
CMP: Rs 227
Target Price (Rs): 300
Potential Upside (per cent): 32
Note: Despite a tough time during Covid second wave, the company has performed better on the back of some increased demand in construction equipment segment and exports. The company is confident of achieving 20 per cent revenue growth in FY22 YoY.
Bata India
CMP: Rs 1,956
Target Price (Rs): 2,389
Potential Upside (per cent): 22
Note: Bata’s focus on cost reduction, omni channel, change in product mix (higher proportion of casual footwear) and calibrated expansion of retail network through asset light franchisee route is expected to be structurally positive.
TCNS Clothing
CMP: Rs 737
Target Price (Rs): 860
Potential Upside (per cent): 17
Note: Considering the company’s strong brand franchise and healthy balance sheet (cash reserves worth Rs 140 crore), we bake in earnings CAGR of 30 per cent in FY20-24E and, given the capital efficient business model, expect TCNS to report healthy RoIC of 30 per cent in FY24E.
Gateway Distriparks
CMP: Rs 263
Target Price (Rs): 350
Potential Upside (per cent): 33
Note: The management expects to reach Rs 10000/TeU margins in the medium term and at the same time reach 1 lakh TeU/quarterly rail volume run-rate. This would translate into strong FCF generation.
Motilal Oswal Recommendations for Samvat 2078
State Bank of India
CMP: Rs 503
Target Price (Rs): 600
Potential Upside (per cent): 19
Note: Rollover has been intact at 93 per cent from the last 2 months which indicates longs are upright in the stock with more than 10 per cent price increase in the October series. One can look for Bull Call Spread opportunity here by buying 510 Call and selling 540 Call of the November series at a net premium cost of around 10 points.
Larsen & Tourbo
CMP: Rs 1,792
Target Price (Rs): 2,200
Potential Upside (per cent): 23
Note: One can initiate Bull Call Spread by buying 1820 Call and selling 2000 Call of the November series at a net premium cost of around 40 points.
Trent
CMP: Rs 1,050
Target Price (Rs): 1,250
Potential Upside (per cent): 19
Note: New entrant in the F&O world and good welcome by addition in OI by more than 36 per cent indicating addition of long positions.
Bata India
CMP: Rs 2,022
Target Price (Rs): 2,450
Potential Upside (per cent): 21
Note: Short covering is seen with increase in price by almost 18 per cent in the October series and increase in implied volatility indicating bulls to be in action.
Tech Mahindra
CMP: Rs 1,517
Target Price (Rs): 1,850
Potential Upside (per cent): 22
Note: OI shedding by almost 9 pper cent with increase in price which suggests shorts are covering their position and rollover of 97 per cent in the previous series indicating positive sentiment and strong hands in the counter.
Kotak Securities Recommendations for Samvat 2078
ACC
CMP: Rs 2208
Target Price (Rs): 2,550
Potential Upside (per cent): 15.5
Note: ACC’s expansion and cost-saving projects provide growth visibility. We expect company’s volumes to grow by 17 per cent in CY21E and by 8 per cent in CY22E.
BPCL
CMP: Rs 432
Target Price (Rs): 550
Potential Upside (per cent): 27.4
Note: We expect earning per share to increase by 18.3 per cent in FY23E to Rs. 39.9.
Hindalco Industies
CMP: Rs 473
Target Price (Rs): 565
Potential Upside (per cent): 19.4
Note: Value the Hindalco at 4.5x Sep’23E EBITDA and Novelis at 6.9x Sep’23e EBITDA and arrive at a fair value of Rs565.
Hindustan Unilever
CMP: Rs 2,456
Target Price (Rs): 2,950
Potential Upside (per cent): 20.1
Note: Value the stock on Discounted Cash flow (DCF) basis & arrive at a fair valueof Rs 2950.
ICICI Bank Ltd
CMP: Rs 841
Target Price (Rs): 900
Potential Upside (per cent): 7.0
Note: The scope of earning upgrades remain high. Valuation has room for expansion.
Disclaimer: The views and investment tips expressed by experts on News18.com are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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