Markets have rallied a fair bit from their lows seen in the month of March. Several analysts feel that markets are over priced at the current levels. It's time to be a little cautious. Here are a few stocks that broking houses are betting on.
Sharekhan has a "buy" rating on the stock of KEC International with a price target of Rs 435, as against the current market price of Rs 351. The stock of KEC has doubled since April, as it posted outperformance in Q1FY2021 (despite COVID-19 impact) and has since been showing improving trajectory in execution and order inflows. Additionally, its liquidity profile is improving with rising cash flows, better working capital management, and lowering of interest outgo.
"Currently, the stock is trading at price to earnings of 14.3x/12.1x its FY2022E/FY2023 estimated earnings, which leaves further room for upside considering a 17% CAGR in net earnings over FY2021EFY2023E and valuation below its historical (trailing 10-year) average one-year forward P/E multiple. Hence, we continue to maintain Buy on the stock with a revised target price of Rs. 435," Sharekhan has stated in latest research report on KEC.
Brokerage firm ICICI Securities has a "buy" rating on the stock of Natco Pharma. The broking firm has raised FY23 revenue/EPS estimates by 32.7/94.7% to factor in generic Revlimid sales.
"The stock currently trades at valuations of 25.0xFY22E and 11.7xFY23E earnings and EV/EBITDA multiple of 19.0xFY22E and 8.8xFY23E. We remain positive on long-term outlook driven by its strong US pipeline including opportunities like Revlimid & Imbruvica, recovery in domestic business in FY21E, potential upside in its agro business and targeted approach in RoW markets.
Considering certainty on Revlimid opportunity and 38.0% EPS CAGR over FY20-FY23E, we upgrade Natco to BUY from Add with a revised SoTP-based target price of Rs 954 per share (earlier: Rs 875 per share) including NPV of Rs302/share for Revlimid," ICICI Securities has said in its report.
Broking firm Sharekhan has a "buy" rating on the stock of Ashok Leyland with a target price of Rs 98, against the current price of Rs 79.75. "With a stronger recovery cycle in medium and heavy commercial vehicles industry from FY22, market share gains in LCV segment, better mix and price hikes, we expect the ALL topline to grow at strong 15% CAGR over FY2020-2023 period.
Margins are expected to improve sharply by 370 bps y-o-y driven by benefits of operating leverage. We expect strong 56% earnings CAGR over FY20-23 period. We have introduced FY2023 earnings in this note. At current market price, the stock is trading at 7.8x FY23 EV/EBIDTA which is lower than its long-term historical average of 12x. We increase our target price to Rs 98 as we rollover to FY23 earnings. We retain Buy rating on the stock," the broking houses has stated.
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