Here are a few stocks that are on the brokers radar. These could be excellent long-term growth stocks and will give gains only if they are held more for the long-term. Here are some of the great stock ideas.
Motilal Oswal has suggested buying the stock of IT firm, Tech Mahindra. According to the brokerage firm Tech Mahindra remains the most inexpensive of the top-tier IT, with valuations of 12.7x FY18 earnings and 10.8x FY19 earnings.
"However, earnings are expected to decline 4.6 per cent in FY18 after a 9 per cent fall in FY17. This decline models a pick-up in business momentum from 2QFY18,
failing which, the picture would appear worse. There is little in the form of potential triggers given the current state, and the reversal is subject to improvement in the business health from 2QFY18. We had cited our expectation of a gradual margin recovery post 1Q, and revenue to follow similar trend. Our price target of Rs 465 discounts FY19 estimated earnings by 13 times, implying 20% upside," the firm has said in its research report.
Key triggers for Tech Mahindra
According to Motilal Oswal the key triggers are large deal announcements in the enterprise segment and recovery in telecom growth. Also, one of the key triggers would be sustained margin improvement on account of measures taken. According to the brokerage firm adverse visa-related regulations as TECHM's proportion of local resources at onsite is lower than peers. The stock of Tech Mahindra last closed at Rs 382 on the NSE.
Bank of Baroda
ICICI has a buy call on the stock of Bank of Baroda with a price target of Rs 200. The firm believes that Bank of Baroda has a pan-India presence with a wide network of 5422 branches. Of these, 28% branches are in CASA rich Gujarat and Maharashtra and have higher industrial activity. The firm believes that the Net Interest Margins would improve to 2.3 per cent in the coming years or rather by FY 2018-19.
Target of Rs 200
According to ICICI Direct, return ratios are expected to remain subdued. Cleaning of books, management focus on operational efficiency and increased credit traction remain positive.
Also, resolution in a few accounts remains an upside risk. "Accordingly, we maintain our target price at Rs 200 valuing Bank of Baroda at 1.3x FY19E anticipated book value. Factoring 53% provisions on top 50 accounts and expected positive from resolutions, we upgrade the stock from hold to buy. The stock of Bank of Baroda last closed at Rs 160 on the National Stock Exchange.
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