Markets are trading at record highs, with Nifty price to earnings multiples on a 1-year forward basis over and above that 20 p/e times. This makes the markets expensive at the current juncture. However, brokers are bullish on certain stocks. Here are 3 stocks that ICICI Direct is recommending to buy with a long term perspective in mind.
Cochin Shipyard is a government of India owned entity, with the largest shipbuilding and maintenance yard. Based on its research ICICI Direct has placed a "buy" call on the stock with a price target of 500, which is a good 20% over the current market price of Rs 411.
"Cochin Shipyard continues to be one of the top-tier shipyards in the country with ample capacity, capability and the orderbook to support it. Newly embedded vision for 2030, upcoming facilities and strong order book augur well for the company. Cochin Shipyard at the current market price trades 11% earnings yield on FY21 EPS. We roll over to FY23E numbers and value Cochin Shipyard at 9 times FY23E EPS to arrive at a target price of Rs 500 per share. We maintain our BUY rating on the stock of Cochin Shipyard" ICICI Direct has said.
ICICI Direct also has a buy" rating on the stock of Zenstar Technologies. The firm has set a target price of Rs 345 on the stock in 12 months time, as against the current market price of Rs 299. The company will focus on building capabilities in digital engineering, data, artificial intelligence and machine learning.
"The new CEO is addressing past challenges and has identified key focus areas of the company. The company's focus on driving deal momentum, annuity revenues, increasing investment in sales & talent, leadership and tuck in acquisition to build capability bodes well for long term revenue growth. In addition, healthy margins prompt us to be positive on the stock. Hence, we maintain BUY rating on the stock with a revised target price of Rs 345 (15 times PE on FY23E EPS, earlier target price Rs 315)," the brokerage has said.
The brokerage firm also has a buy on the stock of Somany Ceramics, India's largest ceramic player. The firm believes that mid teen growth is possible for 2022 and the capex is in place to meet the anticipated demand.
"Somany's working capital management and net debt reduction (down from Rs 444 crore in FY20 to Rs 173 crore in FY21) has been the key positive. Given the robust demand traction, improved margins trajectory and balance sheet repair, we raise our target P/E multiple to 22x (vs. 17 times). We maintain BUY rating with a revised target price of Rs 615 per share (earlier Rs 500 per hare)
According to ICICI Direct, the management expects commissioning of all plants by FY22-end and it expects overall revenues to grow at 15% CAGR in FY21-23 to Rs 2168 crore," the brokerage has said.
Views mentioned herein are taken from the brokerage report of ICICI Direct. Neither the author, nor the brokerage nor Greynium Information Technologies would be responsible for losses incurred based on the article. Please consult a professional advisor. Investing in stock markets is risky.