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3 Stocks That Motilal Oswal Is Recommending As A Buy For Gains Up To 53%

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Indices are up again in trade today and are racing for the 53,000 points mark once again. Broking firm, Motilal Oswal has a buy on some stocks, some of these companies have just reported their quarterly numbers. Here are 3 stocks the brokerage is recommending to buy.

 

Indian Oil Corporation

Indian Oil Corporation

Current market price Rs 105
Target price Rs 157

Motilal Oswal sees a whopping 53% gains on the stock of Oil Marketing Company, Indian Oil Corporation. Indian Oil reported a beat on our estimates, led by higher-than-estimated reported GRM marketing margins and marketing sales volumes, the brokerage has said.

“With the total phasing out of the COVID lockdowns and closure of refinery complexes (est 3mnbopd over the next 2–3 years), the refining margin would return to its long-term average (of USD5–6/bbl).

Consolidated debt declined further to Rs 857 billion in 1QFY22 (down 16% v/s end FY21). We maintain Buy, with combined FCF yield and dividend of 21-25% over FY22–24E. It trades at 6.1x consolidated FY23E EPS and 0.7 times FY23E price to book value the firm has said.”

According to the firm, Indian Oil has traded at a huge discount in the recent past decade owing to its capex cycle and CPSE-led liquidity. “We value it at 1.1x Sep’23 PBV, to arrive at price target of Rs 157 and maintain a Buy,” the firm has said.

Buy Sun Pharma
 

Buy Sun Pharma

Current market price Rs 775.65
Target price Rs 900

According to Motilal Oswal Sun Pharma’s earnings were well above its expectation, led by over 25% growth in all segments, except API. Steady traction in the Specialty portfolio, recovery in the core portfolio of Branded Generics, new launches in US Generics, and partial benefit of COVID-related products led to strong growth in 1QFY22 earnings. The brokerage has now decided to raise its owsn FY22E/FY23E earnings estimate by 5%/6% to factor in: a) continued ramp-up in Ilumya-led Specialty portfolio, b) addition of products in the Specialty portfolio, and c) strong COVID-related offtake, revival in core therapies, and healthy pace of launches in Domestic Formulation.

“We value Sun Pharma stock at 25x 12-months forward earnings to arrive at our price target of Rs 900,” the brokerage has said.

Buy Shriram Transport Finance

Buy Shriram Transport Finance

Current market price Rs 1385
Target price Rs 1,600

Motilal Oswal also has a buy on the stock of Shriram Trannsport Finance, with an upside of 15% on the stock.

According to the brokerage, while demand was weak over the last two years, strong signs of a demand revival was seen in 2HFY21. We expect this to continue into FY22 as well. “Over the last three years, the company has diversified into newer sources of borrowing, such as retail NCDs and ECBs. The share of ECBs in total borrowings has increased meaningfully to 21% (from 13% six quarters back). It was also able to tap the debt markets in the last four quarters. While demand was weak over the last two years, strong sign of a demand revival was seen in 2HFY21 and we expect this to continue in FY22 as well. We now model an assets under management CAGR of 12% for over Shriram Transport Finance FY21- FY24E.

Disclaimer

Disclaimer

Investing in stocks 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 before taking any decision.

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