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3 Stocks That Sharekhan Has A Buy For Short To Medium Term

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Markets ended the week marginally lower as compared to the previous week. According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd in the week ahead, markets will take support from ongoing corporate earnings season, upcoming RBI's MPC meeting, auto sales numbers, and slew of macro data.

 

"On the other hand, the primary markets continues with flurry of activity as 2 IPOs close this week while several more are lined up for next week," the brokerage has said.

Here are 3 stocks that broking firm Sharekhan has a buy on.

 Welspun India

Welspun India

Welspun India is among the world's leading Home Textile solution providers. Broking firm Sharekhan has suggested buying the stock with a price target Rs 170, against the current market price of Rs 133.35

The company registered strong all-round performance on the back of strong international demand and low base of Q1FY2021. Revenue and operating profit grew by 84%/100% y-o-y, respectively, in Q1FY2022; PAT grew by 4.1 times.

Sharekhan estimates of Financials of Welspun India- Rs crores

FY 2022 (e) FY 2023 (e)
EPS 7.0 10.1
P/E 20.0 14.0
Price to book 3.4 2.8
Net profits 707 1012

Reasons why Sharekhan is betting on Welspun India
 

Reasons why Sharekhan is betting on Welspun India

The brokerage has revised upwards its earnings estimates for FY2022/FY2023 by 5.6% and 8.9%, respectively, to factor in higher-than-expected margins to incorporate the benefits of no-change in rate of RoSCTL scheme and higher sales volume from the home textile business.

"Market share gains in the home textile market in the US, higher demand from retail clients of Europe/UK coupled with strong growth in B2C business will drive the core home textile business in the near to medium term. Emerging business (including flooring) will add substantially to revenue over the next two to three years. Further, European Union removing GSP status of Pakistan can provide a level-playing field for domestic players. The stock is currently trading at 14 times its FY2023E earnings. We maintain our Buy rating on the stock with a revised target price of Rs 170," the brokerage has said.

Maruti Suzuki

Maruti Suzuki

Sharekhan also has a buy on the stock of broking Maruti Suzuki and expects expect strong volume recovery ahead, which would improve revenue and profitability. The brokerage has set a price target of Rs 8587 and has placed a buy call on the stock of Maruti Suzuki.

Sharekhan estimates of Financials of Maruti Suzuki- Rs crores

FY 2022 (e) FY 2023 (e)
EPS 189.8 275.9
P/E 37.7 25.9
Price to book 3.9 3.5
Net profits 5734 8333

Maruti Suzuki: Strong growth ahead

Maruti Suzuki: Strong growth ahead

According to Sharekhan the company is likely to benefit from buoyant passenger vehicles demand, driven by rising demand in tier-2 and tier-3 cities and rural areas. "Maruti Suzuki is expected to sustain its dominant market share, aided by strong product portfolio and position, brand appeal, and ability to frequently launch new models," the brokerage has said.

According to Sharekhan the company's strong distribution network in the passenger vehicle segment and rural penetration are likely to drive strong revenue growth going forward.

"Maruti Suzuki would benefit from operating leverage, driven by robust volume growth. We expect its earnings to post a 40.4% CAGR during FY2021-FY2023E, driven by a 21.9% revenue CAGR and a 350-bps improvement in EBITDA margin. We expect Return on Capital Employed to improve to 16.8% in FY2023E from 13.6% in FY2020. We maintain our Buy rating on the stock with an unchanged price target of Rs. 8,587," the brokerage has said.

Birlasoft Ltd

Birlasoft Ltd

Birlasoft Ltd provides digital and information technology consulting, services, solutions and products for organizations across industries, worldwide. Sharekhan has maintained a buy on the stock with a price target of Rs 500, against the current market price of Rs 408 on the stock.

Birlasoft estimates by Sharekhan in Rs

FY 2022 (e) FY 2023 (e)
EPS 16 18.8
P/E 25.4 21.7
Price to book 4.2 3.7
Net profits 456 534
Buy the Birlasoft stock, says Sharekhan

Buy the Birlasoft stock, says Sharekhan

According to Sharekhan, the management optimistic of a 15% y-o-y revenue growth in FY2022E, led by healthy deal pipeline, decent deal wins and strong growth in top accounts; EBITDA margin to sustain in Q2 despite wage revisions.

"We expect revenue and earnings to clock a 15% and 29% CAGR respectively over FY2021-FY2023E. We prefer stock given its healthy net cash balance and improving return ratios. We maintain a Buy on Birlasoft with a revised target price of Rs. 500, given its strong earnings growth potential, robust deal pipeline and strong demand environment," the brokerage has said.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.

Story first published: Saturday, July 31, 2021, 13:00 [IST]
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