4 Stocks IIFL Is Betting On This Festive Season

Reliance Industries

IIFL has set a 11 per cent upside target on the stock of Reliance Industries with a price target of Rs 2054, in its latest report.

"The Retail and Jio businesses have enabled significant deleveraging and are turning in solid performance which is offsetting weakness in refining segment.

Factors like entry in post paid & enterprise segments and collaboration with Google for entry-level smart phone would drive growth for Jio. Moreover, a market move towards 2-player configuration has accelerated with likely delay in tariff hikes.

New store opening and scale up of JioMart along with inorganic opportunities are main drivers for R-Retail. We expect Reliance to register 18% pa PAT growth over FY21-23E largely driven by B2C businesses. Our SOTP value ascribes Rs 709, Rs 569 and Rs 617 per share for O2C, Jio and Retail, respectively," the brokerage firm has stated.

Infosys

IIFL has set an upside target of 32 per cent on the stock of Infosys with a price target of Rs 1,400 on the stock.

"Infosys had invested in building digital skills and increasing localization over the past two years. With the investment phase now behind, margins should start to improve. It is focused on strategic margin levers including pyramid optimization, improved onsite mix, lower subcontracting costs and automation. As a result, we expect margins to expand 200bps over FY20-23E.

We believe Infosys will outperform TCS on revenue growth by 500bps+ in FY21E, for the first time in 15 years. It trades at 21x FY22E, at 18% discount to TCS. Consistent outperformance in growth vs. TCS should lead to a convergence of the valuation gap," the brokerage firm has stated.

ICICI Bank

IIFL has set a price target of 27 per cent on the stock of ICICI Bank, with a price target of Rs 530 on the stock.

"We believe that ICICI Bank is well placed in the current scenario to gain market share across loans, deposits and revenues on the back of its funding position and product offerings. We expect loan growth of 12% CAGR over FY20-23E aided by higher growth in the retail loans. Gradual run-down of excess liquidity and increase in retail loan mix would aid NIMs going forward."

"Profitability of life insurance, general insurance, asset management and securities companies remains robust. Almost all group businesses will end up on a stronger footing versus peers in the medium term. The bank will likely deliver an RoA/RoE of 1.5/13% by FY22E. The stock is trading at 1.8x FY22E BVPS (1.3x core PB) and offers value," IIFL has said in its report.

Dr Reddy’s

IIFL has set a 19 per cent upside on Dr Reddy's Labs with a price target of Rs 5,800 on the stock.

"We expect Dr Reddy's base business EPS (excluding gRevlimid) to register 21% CAGR over FY20-23E, led by 13% revenue CAGR and 350bps margin expansion (new US launches, cost control) over the next 3 years, while gRevlimid can incrementally add annualised EPS of Rs 100 from FY23. With significant cash flows expected from gRevlimid, we expect Dr Reddy's' RoCE to improve, from 12% in FY20 to >25% by FY23E/FY24E," the brokerage firm has stated.