Indian indices started the October series on Friday (September 25, 2020) on a positive note, but for the week settled lower after a volatile week. Nifty suffered losses to the extent of 3.95% while Bank Nifty ended lower by 4.76%.
1. JBM Auto:
Brokerage firm Dolat Capital has a 'Buy' recommendation on the counter and as against its closing price on September 24 of Rs. 207 has set a target price of Rs. 373, which is an 80 percent upside. As for lockdown and negative operating leverage, operating profit at the firm came to be - Rs. 79 million as against estimated loss of Rs. 72 million.
Owing to recovery in PV volume as well as robust order book in bus segment, the management expects sharp recovery in earnings from Q2FY21.
2. Tech Mahindra:
Sharekhan has set a target price of Rs. 910, i.e. an upside of 21 percent considering the LTP of Rs. 748. The brokerage firm has upgraded its earnings estimates for FY2021E on expectations of better margin expansion in Q2 FY2020 owing to continuing lower admin and travel related expenses, while at the same time largely maintained estimates for FY2022E and FY2023E. The company is well placed to benefit from the expansion of 5G value chain across networks and IT services when pick up in investments by CSPs and higher 5G adoption by enterprise would happen, the brokerage adds.
3. Aurobindo Pharma:
Sharekhan for the pharma company has set a target price of Rs. 975, which is a 31% upside considering the last traded price of Rs. 743. As per the broking house Aurobindo has a high exposure of nearly 80% to the US and European markets. And robust momentum in the US together with gradual pickup in demand in other countries will add to the company's topline growth and constant improvement in margin would help the company in realizing double-digit earnings growth. In a little over a month's time, the stock has corrected closely by 16%, providing a good entry-point for investors.
Over a period of FY2020-23, the company's sales and PAT are expected to report 9.2% and 11.5% CAGR, respectively.
4. Britannia Industries:
Emkay Securities has set a target price of Rs. 4500 for the food and beverage company. This is a 24% upside in the stock considering the last traded price of Rs. 3613. Given the latest correction, the stock trades at 40x FY22E EPS that seems attractive on the back of strong volume as well as margin gains. Over the FY2020-23, brokerage estimates 20% earnings for Britannia. The FMCG major is the brokerage's preferred choice offering excellent earnings and growth outlook.
5. Muthoot Finance:
Motillal Oswal has a 'Buy' recommendation on the gold financing company and sees the stock price of the company moving to Rs. 1300, a 28% upside considering the last trade price of Rs. 1017. Companies in the segment have outperformed their NBFC counterparts on the back of their strong show over the last 1-2 years. And the momentum is likely to persist in the short to medium term on account of low asset-quality risk and elevated return ratios.The brokerage foresees Muthoot Finance to generate 6.8%/5.4% RoA and 25%/24% RoE over the medium term.