Market benchmarks the Sensex and the Nifty are trading with significant gains after opening in the green, with banking and financial heavyweights leading the way. It is difficult to identify opportunities in the markets, as the markets rally and stocks become more expensive based on fundamentals. ICICI Securities, on the other hand, has advised investors to buy a few equities that it believes have a reasonable upside from current levels.
Affle India: Implied upside of 34%
Affle India (Affle) is a technology platform that allows advertisers to target their ads.
According to the brokerage, Jampp is shifting from a cost per install (CPI) to a cost per conversion (CPCU) model by encouraging advertisers to contribute more data, integrating it with the cloud, connecting it to the core platform, and integrating data. This will aid Jampp in improving its sales and profit trajectory in the long run. Direct clients have increased from 61 percent in FY21 to 71 percent in FY22E, indicating that the company is doing well.
|Current Market Price||Rs 4210|
|Target Price||Rs 5635|
Why buy the shares of Affle India?
"Affle's share price has grown by ~5x since listing (from ~Rs 843 in August 2016 to ~Rs 4,210 levels in August 2021). Though we maintain a BUY rating, margin dilution prompts us to revise target price downwards from Rs 6,225 to Rs 5,635 Target Price and Valuation: We value Affle at Rs 5,635 i.e. 65x P/E on FY23E EPS.
Aside from Affle, we appreciate Just Dial in our IT coverage. Positives include a shift in promoters and a shift in advertising to the internet medium. BUY with a target price of Rs 1,250", the brokerage has said.
Key triggers for future price performance:
- Increased smart phone penetration and expanding online consumers (from 120 million to 450 million, CAGR of 24% in the next five years) are predicted to drive a 35 percent.
- CAGR in the Indian region (50 percent of revenues) and Affle forecasts organic growth of 25-30%. In FY21-23E, we estimate organic revenue to rise at a 35 percent compound annual growth rate (CAGR).
- In FY21-23E, we expect 58 percent revenue growth (organic and inorganic combined).
Mahindra & Mahindra: Implied upside of 32%
Mahindra & Mahindra (M&M) is a conglomerate with interests in a variety of industries, including automobiles, information technology, financial services, logistics, hotels, and real estate.
According to the brokerage, for the corporation and the industry, demand for automobiles is increasing. South India has performed better in terms of tractor performance thus far, although the monsoon has already advanced successfully in both north and east India. Due to the high base effect, the business maintained to forecast low to mid-single-digit tractor industry growth in FY22E.
|Current Market Price||Rs 758|
|Target Price||Rs 1000|
Why buy the shares of Mahindra & Mahindra?
"The stock price performance has been largely flattish over the past five years, in step with the wider Nifty Auto index. We retain BUY rating on pivot towards capital efficiency, EV proactiveness Target Price and Valuation: We retain SOTP-based target of Rs 1,000 for M&M (10x EV/EBITDA to standalone business; 35% holding company discount to investments)," the brokerage has said.
Key triggers for future price performance:
- Going forward, leadership in the tractor area, following Covid's return in the automotive domain, and ongoing LCV momentum will boost topline development.
- In FY21-23E, we plan to grow total volume and sales by 12.7 percent and 14.8 percent, respectively.
- New launches and differentiated products will help UV gain market share. Operating leverage benefits will result in healthy margins (13.5 percent in FY23E).
- Focus on prudent capital allocation (18 percent RoE vision) and EV thrust (six fully electric PV and LCV launches by 2026) will remain structural positives.
Bank of Baroda: Implied upside of 20%
With a global loan book of Rs 7.1 lakh crore, Bank of Baroda is a top PSU bank with stronger operating metrics than other PSBs. The structural positives (electric PV, LCV debuts by 2026) continue to exist.
According to the brokerage, Bank of Baroda has reported decent results considering the current environment. We believe with unlocking of the economy, overall operational parameters will improve.
|Current Market Price||Rs 83|
|Target Price||Rs 100|
Why buy the shares of Bank of Baroda?
"Bank of Baroda has seen its stock price rising by more than 70% in the past year. We believe improving business outlook along with containment of slippages should help overall performance to improve. We retain our BUY rating on the stock. Target Price and Valuation: We value the bank at ~0.75x FY23E ABV and maintain our target price of Rs 100 per share," the brokerage has said.
Key triggers for future price-performance:
- Shedding of low yield exposure & focus on retail segment to aid margins
- Decent asset quality amid tough situation; net slippages at ~2% in FY22E
- Shift to new tax regime to aid profitability
- Comfortable capital position, CRAR at 15.4%, to keep dilution risk away.
Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.