Sharekhan is bullish on the stocks of Mahindra Lifespace and State Bank of India and sees good gains on both the stocks. Based on the current market price, the upside potential in Mahindra Lifespace is around 24% from the target and around 18% in the case of State Bank of India.
Mahindra Lifespace Developers: Buy with a price target of Rs 340
According to the Sharekhan report, there is a healthy demand in the residential segment.
"Mahindra Lifespace Developers sees healthy sales traction in Luminaire (Gurgaon) along with pricing improvement (from Rs. 10,300 per square feet to Rs. 11,500 per sq feet plus) for larger area (3500sft). It was able to achieve decent sales in Alcove (MMR) in last month. It is gearing up for one project launch each quarter with an aim to achieve Rs. 2500 crore sales per annum over next 4-5 years," the brokerage has said.
Mahindra Lifespace Developers: Reasonable on valuations
According to Sharekhan, Mahindra Lifespace Developers is poised to scale up its sales and execution over the next two to three years with a strong management team at the helm of having credible experience in their respective fields.
:Further, the company is expected to benefit from the government's relentless focus on affordable housing segments, rising affordability levels, favourable state government policies for real estate and ample inorganic growth opportunities. The company's low gearing can be utilised to raise debt to fund land acquisitions. Hence, we retain a Buy on the stock with a revised price target of Rs. 340," the brokerage has said. Shares in Mahindra Lifespace Developers was last seen trading at Rs 274.60.
Buy State Bank of India, says Sharekhan
According to Sharekhan State Bank of India has pleasantly surprised by keeping asset quality under control during the Q1FY22. Slippages (2.6-2.7% annualised) were higher sequentially, but in line with expectations and better than many private sector banks. In addition, the bank indicated strong recovery in July/August.
"SBI has a healthy provision cover of 86% (including AUCA) as of Q1FY22. The capital adequacy ratio at 13.66% (Tier-I capital at 11.3%) is comfortable and with the government's majority holding, capital and liquidity will not be an issue," the brokerage has said.
Net interest margin (NIM) at 2.92% and RoA at 0.6%, are at sub-optimal levels. Normalisation of credit cost and pick up in credit growth should boost RoA and RoE going ahead, Sharekhan has further added.
"SBI's subsidiaries are performing well. Valuations are attractive too, adjusting for subsidiary valuations of Rs. 156 per share. We retain a Buy rating on the stock with revised SOTP-based price target of Rs. 534, valuing the standalone bank at 1.3x FY23 adjusted book value," Sharekhan has said.
The above stocks are picked from the brokerage report of Sharekhan. 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. Please consult a professional advisor.