Indian stock market in today's trade (August 6, 2021) ended lower weighed by RBI's August MPC outcome and a drag on heavyweight stock Reliance Industries, nonetheless on a weekly front each of the benchmark index logged gains of over 3%. Furthermore, both the benchmark indices charted a milestone during the week posting fresh record highs of 54,717 on the Sensex and 16,349 levels on the Nifty.
While, everybody may not have the courage to enter stock markets at the current juncture, ICICI Securities has recommended 'Buy' on the scrips of Cipla and Tata Communications for a significant upside potential in the short term.
So, here we have listed out why the brokerage is bullish on the 2 stocks:
Buy Cipla With Upside Potential Of 32.23% For A Target Period of 12 Months
The brokerage firm ICICI Securities holds a bullish view on the stock of global pharma major Cipla. The firm has set a price target of Rs. 1205 on the scrip, implying an upside of 32.23% from the current market price of Rs. 911.30 in a short term of 12 months.
The company reported spectacular Q1FY22 results with sales inching higher by 26.6% YoY to Rs. 5504 crore. EBITDA also registered growth during the same period and was at Rs. 1345.9 crore, up 28% YoY with margins at 24%.
The brokerage firm in its report said, "We maintain BUY as we continue to focus on its core strength of following a calibrated approach of focusing more on branded products and core therapies across the world". "We value Cipla at Rs. 1205 i.e. 28x P/E on FY23E EPS + Rs. 41 NPV for gRevlimid.
As per ICICI Securities, some of the triggers that will aid Cipla's stock price upmove include the firm's strategy of focusing on 4 verticals namely One-India, South Africa & EMs, US generics & specialty and lung leadership. Furthermore, the company is putting its focus on front end model for the US especially, and is gradually making a shift from loss-making HIV and other tenders to more profitable respiratory and other opportunities in the US and EU.
|Current market price||Rs. 911.3|
|Target price||Rs. 1205|
Alternate stock idea: Besides Cipla, in healthcare coverage ICICI Securities is bullish on Sun Pharma. "Higher contribution from specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY23".
Buy Tata Communications With Upside Potential Of 16.37% Over A 12-Month Period
The brokerage firm ICICI Securities has placed a ‘Buy' call on the stock of global digital ecosystem enabler Tata Communications with a target price of Rs. 1725, implying an upside of 16.37% from the scrip's last traded price of Rs. 1482.35.
ICICI Securities is of the view that the telecommunications company's growth shall be aided by platforms such as a) cloud, edge, security, b) next generation connectivity, c) NetFoundry d) MOVE, IoT, wherein each have robust market size growth potential of 15-25% CAGR in next four to five years. "We expect approximately 8% revenue CAGR in FY21-23E in the overall data segment, driven by likely acceleration in growth from H2FY22 onwards. Strong cash flows generation to aid deleveraging", added the brokerage.
|Current market price of Tata Communications||Rs. 1482.35|
|Target price||Rs. 1725|
Alternate Stock Idea: In the telecom vertical, apart from Tata Communications, ICICI Securities likes the scrip of Bharti Airtel and recommends buying it for a target price of Rs. 720 as against the current price of Rs. 607.9, which means an upside potential of over 18%. "A play on favourable industry structure - a good enough kicker for eventual hike in tariff as well as superior digital play in the medium to long term", said the brokerage report.
Stock market investment is risky and one should be even more careful when markets are near record high. Investments listed out in the story are taken from brokerage report and are just for informational purpose. These should not be construed as investment advice.