Broking firm Sharekhan has come out with a series of research reports. In these it has a buy call on a few stocks including the likes of Persistent Systems, JSW Steel and Tata Motors. Here are some of the reasons to buy into these stocks according to India's top broking house.
Buy Tata Motors with a price target of Rs 430
Sharekhan expects the stock of Tata Motors to hit at least Rs 430 as against the current market price of Rs 291.30.
The brokerage believes that the Q1FY22 results were weak, as indicated by the management earlier this month, due to chips shortage impacting JLR business and lockdown restrictions, impacting commercial vehicles and passenger vehicles businesses.
Sharekhan sees a number of positives for Tata Motors. According to the broking firm, the JLR management maintained medium to long-term targets and continued to execute reimagine strategy. Commercial vehicles and passenger vehicles sales to recover in India, led by expected normalisation of economic activities and preference for personal mobility amid COVID-19.
"We expect all-round improvement in Tata Motors' business and expect earnings to turn positive in FY2022 and rise by 69.1% in FY2023E, driven by a 16.7% Compounded Annual Growth Rate in revenue during FY2021-FY2023E and a 130 bps rise in EBITDA margin," the brokerage has said. Sharekhan says to buy the stock with a target price of Rs 430 in the future.
Buy JSW Steel for a price target of Rs 850: Sharekhan
The broking firm has set a price target of Rs 850 on the stock of JSW Steel as against the current market price of Rs 710.
The company sees many positives on the stock, including a noticeable decline in net debt to EBITDA 1.9x in Q1FY2022 versus 2.6x in Q4FY202
The firm has also said that the sharp 22% beat in consolidated EBITDA margin at Rs. 29,608/tonne (up 42% q-o-q) were led by strong realisations. Financial performance of overseas subsidiaries improved as they clocked positive EBITDA of Rs. 282 crore (versus an EBITDA loss of Rs.322 crore in Q4FY2021).
"We believe that JSW Steel is one of best bets in the Indian steel space given strong volume/margin led earnings growth outlook and potential long-term value creation from recently acquired Bhushan Power and Steel Ltd. Hence, we maintain our Buy rating on JSW Steel with a revised price target of Rs. 850. At the current market price, the stock is trading at 8x its FY2022E EV/EBITDA and 6.9x FY2023E EV/EBITDA," the brokerage firm has said.
Sharekhan also has a buy call on the shares of Persistent Systems a mid level IT company. The brokerage has set a target of Rs 3,600 on the stock as against the current market price of Rs 3,161.
According to the broking firm, there was a strong beat in revenue growth. "Q1FY2022 witnessed higher billing rates, healthy deal TCVs, aggressive employee addition and strong client additions. EBIT margin improved 39 bps q-o-q to 13.5%," the brokerage firm has said.
According to Sharekhan strong US Dollar revenue growth of 27.3% y-o-y, robust client additions (four clients in the over $5 mn category on q-o-q) and Strong growth in healthcare & life science (up 32.5% y-o-y) vertical and India business (up 57.9% y-o-y) were the key positives.
"Given strong earnings growth potential, strong balance sheet and M&A opportunities, we retain a Buy on the stock with a revised target price of Rs. 3,600," the brokerage has said.
The stock recommendations are picked from the brokerage report of Sharekhan. However, neither the author, nor the brokerage, nor Greynium Information Technologies should be held responsible for decisions taken and losses incurred based on the above article. Investors should understand that there are inherent risks involved when investing in the markets. They should hence exercise due caution.