The benchmark BSE Sensex exceeded the 61,000 level for the first time, gaining more than 1,000 points from 60,000 on September 24.
The major stock index rose from 55,000 on August 13 to this level in two months, and it has more than quadrupled since its March 2020 low. HDFC Securities has come up with 2 short term picks for a maximum of 2 quarters:
The brokerage bets on the stock of beverage company for gains with Base Case Fair Value is Rs. 1619 band, Bull case fair value Rs. 1761 & suggested adding more on dips Rs. 1273-1297 band
To meet the government's ambitious aim of 20% blending by 2025, the supply of grained-based ethanol must expand by 12 times from current levels, requiring India to install an extra 482 million litres of grain-based ethanol capacity over the following four years. In the face of such a severe supply shortage, Ethanol prices may continue to rise to the benefit of distillers.
Valuation & Recommendation: Globus Spirits
"Though the stock has rallied ~4x over past 6 months, we believe there's still upside to this rally, with the caveat that the Government maintains its supportive stance on ethanol blending. We think the base case fair value of the stock is Rs 1,619 and the bull case fair value of is Rs 1,761 (18.5x Sept'23E E EPS). Investors can buy the in-stock Rs 1,454-1,482 band (15.5x Sept'23E EPS) and add more on dips to Rs 1,273-1,297 band. At LTP of Rs 1,469, it quotes at 15.4x Sept'23E EPS," the brokerage has said.
GSL to double its capacity by FY23E to ride the ethanol wave
The brokerage believes that it prepares to ride the ethanol wave, GSL is expanding its grain-based distillery capacity from 490 KLPD to 930 KLPD over the next two years. T expects to commercialise its brownfield expansion in West Bengal (for 140 KLPD capacity) in Q3FY22, with an anticipated investment of Rs 110 Cr.
The brokerage bets on the stock of finance company for gains with Base Case Fair Value is Rs. 126 band, Bull Case Fair Value Rs.135 & suggested to add more on dips of Rs.98.
In Q1FY22, the business recorded its highest-ever quarterly client increase of 1.5 lakh.
In addition, the company has begun to receive positive feedback on its recently announced Z20 plan. We believe that the sale of Land Bank and continued increases in customer acquisition, a robust Investment Banking pipeline, and increased financial product distribution revenue, particularly from mutual funds, will be major catalysts for stock re-rating.
Valuation & Recommendation: IIFL Securities
"We expect dividend yield to improve to 3.7% in FY23E from current 2.3%. The stock is trading at a steep discount to its peers which we believe, will narrow gradually as the company has started gaining lost market share.
We feel that investors can buy IIFL Securities Limited at the LTP of Rs.112.4 (12.1xFY23E EPS) and add on dips to Rs.98 (10.5xFY23E EPS) band. We expect the Base case fair value of Rs.126 (13.5xFY23E EPS) and the Bull case fair value of Rs.135.5 (14.5xFY23E EPS) over the next 2 quarters," brokerage has said.
According to the brokerage, a total of 7.1 million demat accounts have been opened as of Q1FY22. The gross industry ADTO (Average Daily Turnover) increased by 94 percent year over year. In FY21, retail participation's contribution to overall turnover increased by 300 basis points. This pattern indicates that the volatility is attracting many young people who are wanting to trade/invest. In truth, India's demographics are favourable, with low penetration, rising household savings, and expanding financial literacy, among other things.
Please note investing in stocks is subject to market risks and one needs to be cautious at this point of time as markets have gone-up sharply. The above article is only for educational purposes. Neither the author, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on a decision made.