Markets have reacted a bit to hover around the Rs 32,000 levels. Though the markets have gained heavy ground in the last few months, there are selective pockets that might still show some value. Here are a few of them being recommended by brokerage firm Motilal Oswal.
Motilal Oswal has a buy call on Lupin and has recommended a buy rating on the stock with a price target of Rs 1,125 on the stock. The current stock price of the company is Rs 995.
"We expect US business to decline 15 per cent, year-on-year in FY18 due to new competition in metformin portfolio, deferral of key launches, pricing pressure in base business due to further channel consolidation. EBITDA margin is expected to shrink to 21-23 in FY18 as it will be difficult to compensate for the loss of the high-margin US business," the broking firm has noted.
Lupin target price of Rs 1,125
Although pricing pressure in base business and new competition in Metformin portfolio will keep exerting pressure on the US business, we believe that sales will bottom by 2QFY18. Recent fall in the stock price already factors in these concerns. Resolution of Goa and Indore plant inspection in the next two months, coupled with key upcoming launches, will help drive growth from 2H. We maintain buy with target price of Rs 1,125 @ 20x FY19E PER (v/s INR1,450 @ 20x FY19E PER). We cut FY18E/19E EPS by 29%/22% as we build in the impact of competition in key products in the US," the firm has said in its report of August 8, 2017.
Motilal Oswal is also bullish on the stock of Punjab National Bank and has set a target price of Rs 184 on the stock, which is an upside of almost 20 per cent from the current market price.
"Significant stress is being recognized over the past several quarters, and now resolution (especially under IBC) in key sectors like steel, power, construction and roads remains a key for upgrades and recoveries. On an average, on the IBC cases, shortfall is 8-10 per cent. Investment in key ventures adds 30 per cent to overall market cap. We cut earnings estimates sharply (20-45 per cent) to factor in lower growth. Due to low RoAs (0.2 per cent), even 10bp change in NIM (30 per cent) and credit cost (20 per cent) to profitability is very high," the firm has noted
Earnings to remain volatile
Motilal Oswal expects earnings to remain volatile until a clear picture emerges for asset quality. The firm has set a target price of Rs 185 on the stock of Punjab National Bank. Check stock quote of PNB here
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