4 Stocks To Buy Next Week As Markets Set For A Further Upside

Markets are expected to move higher next week, given the strong closings across the US markets. The Sensex and the Nifty might now move closer to the 60,000 levels once again. Here are 4 stocks that you can buy collated from the brokerage report of Motilal Oswal Financial Services.

Buy the stock of Bajaj Finance

Motilal Oswal has suggested buying the stock of Bajaj Finance for a price target of Rs8310. "We model in an AUM/PAT CAGR of ~27%/40% and expect BAF to deliver a RoA/RoE of 4.6%/24% in FY24. We remain watchful of the various developments in BAF's payment offerings, improvement in velocity from digital transformation, and foray into the Credit Card business, subject to approval from the RBI. We reiterate our Buy rating with a target price of Rs 8310 (premised on 7.7x FY24E BVPS)," the brokerage has said.

ITC

ITC is another stock that the brokerage has suggested to buy at the current levels. "As highlighted in our upgrade to Buy note as well as our FY22 annual report note, strong earnings momentum (18% EPS CAGR over FY22-FY24 v/s ~5% in the preceding five years) is being driven by healthy performance from Cigarettes in a stable tax environment, strong recovery in Hotels business profitability, and continued good performance of FMCG-Others. Allied with better capital allocation and continued healthy dividend payouts, the path towards high 20's/early 30's RoE is visible. We assign a 22x EPS multiple and roll forward to Sep'24E earnings. Maintain BUY with a price target of Rs 400," the brokerage has said.

Tata Consumer Products

This Tata Group stock is also on the buy radar of Motilal Oswal. "Tata Consumer Products (TCP) reported revenue of INR33.6b (v/s est. of INR33.2b), up 11% YoY in 2QFY23. EBITDA margin contracted 70bp YoY to 12.9% (v/s est. of 13.2%) due to lower gross margin at 41.7% in 2QFY23 v/s 42.8% in 2QFY22. EBITDA was up 5% YoY to INR4.34b (v/s est. of INR4.38." the brokerage has said.

Canara Bank

The brokerage sees the possibility of a huge upsurge in the stock price of Canara Bank. "We increase our net profit estimates by 17%/19% for FY23/24 to account for higher NII, other income, loan growth and lower tax rate. We expect CBK to deliver FY24E RoA/RoE of 1.0%/16.2%, respectively. Maintain BUY with a revised target price of Rs 340 (premised on 0.8x FY24E ABV).

Good operating performance

Canara Bank posted a net profit of Rs 25.3b (+90% YoY; significant beat) led by strong other income and beat in NII, which grew 19% YoY (3% beat) due to healthy loan growth and 8bp QoQ expansion in margin to 2.86%. For 1HFY22, NII/PPoP/PAT grew 14%/22%/81% YoY to INR142.2b/INR135.1b/ INR45.5b, respectively.
According to Motilal Oswal, other income rose 13% YoY due to healthy performance in treasury, continued traction in fee income and higher recoveries from written-off accounts. Total revenue thus increased 16% YoY (5% beat). Fresh slippages were stable at Rs 39.5 bilion while higher recoveries, upgrades and write-offs aided 61bp/29bp decline in the GNPA/NNPA ratios to 6.37%/2.19%, respectively. PCR improved to 67% in 2QFY23.