Brokerage firm, Emkay Global has recommended buying the stock of auto ancillary player Bharat Forge, while Geojit is upbeat on the stock of steel major, Tata Steel. Here are some facts, which had led to these brokerages having a buy on these stocks.
Buy Bharat Forge for 25% returns, says Emkay Global
Emkay Global sees the possibility of a rally in the stock of Bharat Forge from the current levels of Rs 741 to levels of Rs 920 in 1 year's time. This implies a return of nearly 25% on the stock from current levels.
The company is the world's leading forging manufacturer. "Bharat Forge's revenue is expected to grow by 51% in FY22E, led by a strong performance in Automotive and Industrial segments. Moreover, customer additions, higher content and portfolio expansion should boost growth. Nascent segments, such as Defense, Railways, Aerospace, E-mobility and Light-weighting solutions, are expected to see robust growth," Emkay Global has said.
Although the outlook for the global passenger vehicle's segment has been lowered, the segment is expected to clock double-digit growth, owing to the pending order book, better macros and low channel inventory, Emkay Global has said. The outlook has been improved for the industrial segments, such as construction equipment and tractors. The global oil & gas segment is expected to witness a multi-year upcycle.
"Our positive view on Bharat Forge is underpinned by its leadership position in automotive forgings, focus on diversification and an expected recovery in the core segments. We
have a Buy rating on the stock with a target price of Rs 920, based on 27 times P/E for the standalone business on Sep'23E EPS," the brokerage has said.
Geojit has a buy call on the stock of Tata Steel. Tata Steel is a leader in the global steel industry with operations spanning over 26 countries with key operations in India, Netherlands and United Kingdom. Tata steel primarily caters to customers in automotive, construction, engineering, energy and power sectors
The company has accelerated capital expenditure allocation for expanding Kalinganagar - already spent Rs. 2,000 crores; Expected capex for FY22 is at Rs. 10-12kcrores and the 6 MTPA pellet plant and 2.2mn CRM complex are expected to be commissioned by H1FY22.
"We expect robust domestic demand recovery post pandemic accompanied by further deleveraging efforts and efficient capital allocation ensuring liquidity. We remain positive on the stock and reiterate our BUY rating on the stock with a revised target price of Rs. 1,745 using SOTP valuation," the brokerage has said.
Investing in equities 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. The above article is for informational purposes only and is picked from the brokerage reports of Emkay Global and Geojit Securities. Be careful while investing as the Sensex has now reached the 56,000 points mark. Investors can invest small amounts and avoid putting lumpsum.