2 Stocks To Buy That Can Rally Up To 28%

Broking firm, Motilal Oswal is bullish on the stocks of Bharti Airtel and Emami and has recommended a buy on these stocks.

Buy Bharti Airtel

The broking firm has set a price target of Rs 910, which is almost 28% higher from the current levels.

According to the broking firm, Airtel is valued at 10 times on India Mobile and 5 times on Africa Business EV/EBITDA on FY24E factoring in 20% EBITDA CAGR over FY22-24E.

"We have built in 15% ARPU increase over FY22-24E primarily from mix benefit without factoring in any incremental tariff hikes. We see material upside potential on the stock from: a) incremental ARPU improvement opportunity through market share gains, tariff hikes and customer upgrades, b) growth in non-mobility businesses including value unlocking in multiple digital/enterprise segments and c) re-rating of valuation multiple backed by improving ROCE/FCF profile due to ARPU growth and higher share of non-mobility business, raising customer stickiness.

While 5G-led increase in capex intensity remains a red flag, our channel checks indicate lower spectrum pricing as well as moderate capex as a % of revenue over 3-5 years coupled with the Rs 160 billion uncalled Rights issue will ensure that FCF and net debt numbers would be well managed. Maintain BUY with a target price of Rs 910, implying 28% potential upside," the brokerage has said.

Buy shares of Emami

According to Motilal Oswal HMN has announced the acquisition of 'Dermicool' from Reckitt, which will make it the largest player in the Rs 7 billion Prickly-Heat Talc space.

The deal also grants HMN access to Dermicool's network of outlets, giving its other categories, where it may not already have a presence, a foot in the door. HMN has a domestic network of more than 3,500 distributors and 4,000 sub-distributors, with a direct reach across 900k retail outlets and overall reach to more than 4.5m outlets.

"The board approved a share buyback for an aggregate amount not exceeding Rs 1.6 billion, or Rs 550 per share, via the open market mechanism. The maximum buyback size represents 9.98%/9.94% of the aggregate of the total paid-up capital/free reserves of the company as of 31st Mar'21," the brokerage has said.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.