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Investing in FY22: Kotak Securities suggests 7 stocks with up to 37% upside

Updated : April 10, 2021 07:46 PM IST

FY21 turned out to be an unpredictable year for investors with equity markets worldwide seeing a major rally despite the COVID-19 pandemic. Going ahead, Kotak Securities expects Nift50 to end FY22 somewhere around 15,500 levels and Sensex around 52,300. If Nifty 50 goes below 14,000 levels then it will be an ideal time to accumulate stocks from a two to three-year perspective, it added. It suggests buying economy-driven sectors in declines. Few sectors and pockets that can lead the rally in FY22 are banks, capital goods, construction, engineering, oil & gas, cement, real estate & metals, it added. It also lists 7 stocks with up to 37 percent upside for the coming year:

 Bajaj Auto:  The brokerage sees a 19.6 percent upside from the current market price and has a target of Rs 4,400. It said that the firm has strong long-term growth potential in export geographies. The brokerage expects sales volume growth of 21.1 percent and earnings to grow by 20.7 percent in FY22E. However, loss in market share and rise in base metal prices are key headwinds.
Bajaj Auto: The brokerage sees a 19.6 percent upside from the current market price and has a target of Rs 4,400. It said that the firm has strong long-term growth potential in export geographies. The brokerage expects sales volume growth of 21.1 percent and earnings to grow by 20.7 percent in FY22E. However, loss in market share and rise in base metal prices are key headwinds.
 SIS : The brokerage has a target price of Rs 460 which offers an upside of 17.95 percent from the current market price. As per the brokerage, international business will drive revenue outperformance with an ad-hoc contract win. The firm also has strong cash conversion led by strong collections, lower working capital and stable business, it said, adding that it sees business remaining resilient. It expects earnings to grow by 19.5 percent in FY23E.
SIS: The brokerage has a target price of Rs 460 which offers an upside of 17.95 percent from the current market price. As per the brokerage, international business will drive revenue outperformance with an ad-hoc contract win. The firm also has strong cash conversion led by strong collections, lower working capital and stable business, it said, adding that it sees business remaining resilient. It expects earnings to grow by 19.5 percent in FY23E.
 Narayana Hrudayalaya:  The brokerage has a price target of Rs 540 offers an upside of 31.4 percent from the current market price. As per the brokerage, Q3FY21 revenue for the company has recovered to 96 percent of pre-COVID levels. Cayman unit has also sustained its strong performance recording 30 percent YoY, it added. Cash flow generation also continues to impress, it stated, adding that net debt has declined to Rs 430 crore.
Narayana Hrudayalaya: The brokerage has a price target of Rs 540 offers an upside of 31.4 percent from the current market price. As per the brokerage, Q3FY21 revenue for the company has recovered to 96 percent of pre-COVID levels. Cayman unit has also sustained its strong performance recording 30 percent YoY, it added. Cash flow generation also continues to impress, it stated, adding that net debt has declined to Rs 430 crore.
 Indian Oil:  The brokerage has a target price of Rs 115, which offers an upside of 25 percent from the current market price. Normalized results were above estimates, reflecting robust realized margins, noted the brokerage. It added that improving margin outlook is being led by a recovery in global petroleum/petchem demand. The stock also has reasonable valuations and high dividend yield said Kotak.
Indian Oil: The brokerage has a target price of Rs 115, which offers an upside of 25 percent from the current market price. Normalized results were above estimates, reflecting robust realized margins, noted the brokerage. It added that improving margin outlook is being led by a recovery in global petroleum/petchem demand. The stock also has reasonable valuations and high dividend yield said Kotak.
 Lupin : The brokerage has a price target of Rs 1,180 which offers an upside of 15.6 percent from the current market price. FY22 is a crucial year for a complex portfolio said the brokerage and it expects progress on multiple fronts. Resolution of Goa/Indore units by 2HFY22 are additional triggers for US business, it added. The brokerage also upgraded the stock to 'buy'.
Lupin: The brokerage has a price target of Rs 1,180 which offers an upside of 15.6 percent from the current market price. FY22 is a crucial year for a complex portfolio said the brokerage and it expects progress on multiple fronts. Resolution of Goa/Indore units by 2HFY22 are additional triggers for US business, it added. The brokerage also upgraded the stock to 'buy'.
 Bharti Airtel:  The brokerage has a target price of Rs 710 that offers an upside of 37.33 percent from the current market price. The company has proposed to buy back a 20 percent stake in DTH for cumulative consideration of Rs 3,130 crore. This will help the company to achieve structural flexibility and ease of implementation, it said. It expects the firm to report a free cash flow of Rs 50,487 crore during the FY21-23E period and to report EPS of Rs 11.7 in FY22E as compared to a loss in FY21.
Bharti Airtel: The brokerage has a target price of Rs 710 that offers an upside of 37.33 percent from the current market price. The company has proposed to buy back a 20 percent stake in DTH for cumulative consideration of Rs 3,130 crore. This will help the company to achieve structural flexibility and ease of implementation, it said. It expects the firm to report a free cash flow of Rs 50,487 crore during the FY21-23E period and to report EPS of Rs 11.7 in FY22E as compared to a loss in FY21.
 KNR Constructions:  The brokerage has a target price of Rs 240 which is 12.7 percent higher than the current market price. A robust order book of Rs 8,203 crore gives revenue growth visibility for the next 2-3 years, said the brokerage. It added that KNR is positive on strong order inflows based on increased government capex. The brokerage expects EPS to grow at 44.7 percent in FY22 and 26 percent in FY23.
KNR Constructions: The brokerage has a target price of Rs 240 which is 12.7 percent higher than the current market price. A robust order book of Rs 8,203 crore gives revenue growth visibility for the next 2-3 years, said the brokerage. It added that KNR is positive on strong order inflows based on increased government capex. The brokerage expects EPS to grow at 44.7 percent in FY22 and 26 percent in FY23.
Published : April 09, 2021 03:24 PM IST
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