Brokerage firm Sharekhan has recommended a few stocks to buy at the current attractive levels. It's important to understand that stocks are trading at historical peaks, with the Sensex closing at a record high recently. However, the broking firm believes there is reasonable upside for some of the stocks that it has recommended. Some of the stocks for buying are for long term and are from banking to FMCG to mining to IT. Here are 4 stocks to buy from Sharekhan for long term.
Bank of India
Bank of India is currently traded at around Rs 80 levels and Sharekhan has a target of Rs 100 on the stock. Recently, the stock was in the news on hopes of a privatisation move by the government.
The brokerage firm notes that the performance of the bank has been steady on the other income stream, which stood at Rs. 2,053 crore for Q4FY2021, steady from Q3FY2021 but up 21.6% y-o-y. It also noted that the provision coverage ratio has been healthy at 86.24% as of Q4FY2021, which has improved from 83.75% in Q4FY2020 and provides cushion to profitability.
"We expect the bank to post RoA/RoE of 0.36%/6.6% by FY2023E, led by stable balance sheet growth along with higher provision coverage ratio and stable asset quality. However, we expect asset-quality performance to still be a key monitorable during the medium term. We have fine tuned our estimates and target multiples. We upgrade the stock to Buy rating with a revised target price of Rs. 100," the brokerage has said. The shares of Bank of India were last seen trading at Rs 80 on the NSE.
Sharekhan has also recommended buying the stock of government owned MOIL. The company has 11 mines, largely engaged in mining manganese.
The brokerage believes that MOIL has under performed the metal index in the last few quarters.
"MOIL's valuation is attractive at 4 times its FY2023E EV/EBITDA (12% discount to its historical average one-year forward EV/EBITDA multiple of 4.5 times) and its high cash & cash equivalents of Rs. 1,905 crore (Rs. 80 per share or 42% of market capitalization) provides room for share buyback (last buyback announced in November 2019 at a price of Rs. 152 per share) and high dividend payout. Hence, we maintain a Buy rating on MOIL with a revised target price of Rs. 225 (increase reflects upward revision in earnings and higher EV/EBITDA multiple)," the brokerage has said.
MOIL shares were last seen trading at Rs 190. A good pick for the long term, according to brokerage.
Birlasoft is an Enterprise Digital and IT company that is recommended by Sharekhan. The brokerage sees good CAGR in revenues for Birlasoft at 15/27% over 21-23.
"At current market price, the stock trades at 25.5x/20.8x/17.6x its FY2022E/FY2023E/FY2024E earnings. We continue to remain positive on the stock considering strong net cash of Rs. 1,119 crore (11% of market capitalisation), healthy FCF generation and improving pay-out ratio. Hence, we maintain a Buy rating on Birlasoft with a revised price target of Rs. 450," the brokerage has said.
According to it, key risks for the company would be the deterioration in demand for IT services in the wake of second wave of COVID-19 and stiff competition.
Sharekhan also has a buy call on the stock of Emami. The company owns brand such as Boro Plus, Navratna, Fair and Handsome, Zandu balm, Mentho Plus balm and Kesh King.
According to the brokerage the shares are currently trading at a 25 times its FY2023E earnings, which is at a discount to some close peers.
"We maintain a Buy recommendation on the stock with a revised price target of Rs. 635," the brokerage has said. The shares of Emami were last seen trading at Rs 542 on the National Stock Exchange and compared to some of its peers the valuation in terms of p/e is far lower.
The above stocks are picked from brokerage reports. Neither the broking firm, nor the author nor Greynium Information Technologies would be responsible for losses based on decisions taken based on the article. The above article is for informational purposes only and stock market investing is risky. Investors should consider the risk before investing. Please do not buy stock based on the information provided above do consult a registered advisor.
Max FinanciaL Services
Sharekhan also has a buy rating on Max Financial Services. The brokerage believes that the company generates healthy ROEV (18.5% in FY2021) and has sufficient capital (solvency ratio of 196%; no exigency for capital dilution in the near term) and, hence, its strong fundamentals make it a strong candidate to
benefit as the outlook improves further. We expect the stock to see further re-rating owing to deal
closure and improvement in Max Financial's operating performance. "We maintain our Buy rating on the stock," the brokerage firm has said. Max Financial Services were last seen trading at Rs 1,003 on the Bombay Stock Exchange.