Investors on Dalal Street are on a roller coaster ride amid weak global cues, rising concern over inflation, foreign fund outflows and a surprise interest rate hike by the Reserve Bank of India (RBI) weighted sentiment.
The 30-share BSE Sensex tanked 2225.29 points, or 3.90 per cent, to 54835.58 during the week gone by. Likewise, the 50-share NSE Nifty index slipped 691.30 points or 4.04 per cent to 16,411.25.
However, brokerage house KRChoksey has shared its high conviction stocks bets for the month of May. The companies having consistent strong financials, high growth potential and high return on invested capital have passed the screen.
Check out the top bets!
Current market price - Rs 619
Target price - Rs 756
The brokerage firm believes that sequential improvement in ARV sales in Q3FY22 and the fact that the company expects it to improve from Q4FY22, are positive. Also, strong API sales growth and the company’s emphasis on specialty and injectable business are favorable to profitable growth over the medium – long term.
"We expect Aurobindo’s revenue and adj. PAT to grow at 4.9%/17.1% over FY21-24E, respectively. The stock is trading at 12.2x/10.2x/9.0x its FY22E/FY23E/FY24 EPS.
We apply 10.9x multiple on FY24E EPS of INR 69.11 and maintain the Target Price (TP) at INR 756 per share. We have “ACCUMULATE” rating on the shares," it added.
Current market price - Rs 1,025
Target price - Rs 1,229
KRChoksey foresees an increase in the demand for its existing as well as for the products in the pipeline with the shift towards advance technology. Also, the company is well placed to complement its long-term growth strategy due to cost efficiency and utilisation levels.
Presently it is trading at 35.49x/26.78x on FY23E/24E EPS. We are assigning a P/E multiple of 31x to its FY24 estimated EPS of INR 39.65 to arrive at a target price of Rs 1,229 per share.
It highlighted that Ami Organics extended its presence into specialty chemicals by acquiring Gujarat Organics Ltd (GOL). The acquisition is in line with the companies strategy to diversify & strengthen its existing product portfolio. Methyl Paraben and Para Anisic acid products from GOL’s side can be one of the top 5 products in total revenue of the Ami Organics in the near future, it said.
Current market price - Rs 1,574
Target price - Rs 2,094
The brokerage firm noted that Infosys is currently trading at a valuation with a P/E multiple of 27.6x/22.9x on FY23E/FY24E earnings.
It expect strong deal momentum across verticals, ease in travel restrictions and continued investments in newer technologies such as product and platform which will help maintain the growth momentum in medium term. We are assigning a P/E multiple of 29x to the FY24 estimated EPS of INR 72.2 to arrive at a target price of Rs 2,094 per share, it said.
State Bank of India
Current market price - Rs 479
Target price - Rs 617
KRChoksey noted that the bank has built a strong balance sheet in the last few quarters, and we expect to see a strong CASA mix with a focus on the retail segment, which will lead to a stable but gradual improvement in margins.
It expects the stress on the book to see further moderation, resulting in healthy earnings growth over the next two years.
"SBIN comprises subsidiaries that operate in various fields, including capital market, insurance, cards, AMC, etc. In addition, the subsidiaries allow SBIN to
leverage multiple growth opportunities," it added.
HDFC Life Insurance Company
Current market price - Rs 565
Target price - Rs 706
"The acquisition of Exide life is beneficial to HDFC Life in terms of ramping up its distribution mix and product mix in order to achieve a healthier margin expansion. It would help the company achieve its goal of providing financial protection to a wider customer base by increasing insurance penetration," KRChoksey said.
"We expect the merger with EXIDE Life to act as a positive trigger for HDFCLIFE in terms of product mix, distribution mix and geographical expansion," it added.
Godrej Consumer Products
Current market price - 619
Target price - 954
"Pressure on margins may continue with high input costs but the company can continue to see positive domestic sales growth with price hikes taken," the brokerage firm highlighted.
"They have made innovation in the household insecticides segment and also there are strong signs of growth in personal care segment due to change in
consumer behavior," it said.
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