Motilal Oswal has recommended several large cap stocks that are preferred by it in its latest India Strategy Report. Here are 5 stocks from the largecap space that feature in its report.
5 stocks that you can buy
|Company Name||FY 2022 (E) EPS||Current market price|
|SAIL||Rs 37.7||Rs 122|
|SBI Cards||Rs 17.7||Rs 1,103|
|Godrej Consumer||Rs 18.9||Rs 1,106|
|Divis Labs||Rs 103.5||Rs 5,055|
|State Bank of India||Rs 39||Rs 432|
SBI has strong potential to jump 40% from current levels
Among all of these stocks, SBI may have the potential to jump at least 40% from the current levels, making it the most attractive stock to buy. Motilal Oswal has set a price target of nearly Rs 600 on the stock as against its current market price of Rs 432.
"State Bank of India has demonstrated a strong improvement in asset quality, with gross non performing assets declining 43% over the past three years. PCR, on the other hand, has increased to 68% currently from 40% four years ago.
"State Bank of India appears well-positioned to report a strong uptick in earnings, led by moderation in credit costs from FY22. During FY19-21, SBIN has shown remarkable improvement in asset quality; NPLs have reduced to 1.8% currently from 5.7% in FY18," Motilal Oswal Financials has stated in its report.
Markets turn overvalued
Though the brokerage has recommended some largecap stocks, we wish to emphasize the fact that it maybe time to turn cautious with the index now at record highs with the Sensex around that 58,000 points levels. According to the Motilal Oswal report the Nifty 12-month forward P/E of 21.8x is at a premium of 21% v/s its long term averages of 18.0 times. This means the markets are at least 18% over and above its long term averages.
On the other hand at 3.3 times, 12-month forward P/B for the Nifty is at a 15% premium to its historical average of 2.6 times.
"As top 100 firms gain from cost efficiency and pricing power to enhance EBITDA margins and profits, big corporations are getting bigger. The first quarter of FY22 earnings season has broadly met expectations, with cyclicals leading the way," the brokerage has said.
Markets may consolidate at these levels
According to Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services going ahead global cues would be actively tracked as fear of economic slowdown looms while delta variant cases continue to surge. "The market might consolidate for some time on account of weak global cues. Even valuations are also moving beyond comfort zones and hence could lead to bouts of profit booking and increase in volatility. But the overall sentiment in the domestic market remains positive, supported by improving economic data and positive earnings expectation. Good 1QFY22 earnings delivery has boosted hopes for a solid FY22 with 30%+ projected Nifty earnings growth, on the back of a strong 15% earnings growth in FY21," he says.
The article is informational in nature, which is taken from the brokerage report of Motilal Oswal. Please do consult a professional advisor before you invest in equities. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.