Motilal Oswal has come out with its latest BULLS & BEARS (November 2021): India Valuations Handbook. Here are some of the stocks to buy as picked from the India Valuations handbook.
SBI and Canara Bank
Among the PSU banks, Motilal Oswal is bullish on the stocks of State Bank of India and Canara Bank.
According to the Bulls & Bears (November 2021): India Valuations Handbook, PSU Banks are trading at P/B of 0.9x, near the historical average of 0.8 times.
"Overall, we believe the earnings of PSU banks are set to rebound strongly. Along with improving asset quality trends, this would enable healthy CAGRs in ABVs over FY21-24E - compared with muted growth, or even decline, witnessed in many of them in prior years. We estimate PSU banks to deliver early double-digit RoE by FY23, while valuations remain undemanding (except for State Bank of India).
SBI remains top pick in the sector. We resume coverage on Canara Bank with a BUY rating," the report says.
Stocks to buy from the technology sector
From the technology sector, Motilal Oswal likes the stocks of HCL Tech and Infosys, Zenstar Technologies, L&T Technology and Cyient.
"We believe largecap companies are better placed to absorb the supply pressure given their capabilities in training employees in newer skills. Among the Tier I players, we like INFO and HCL Technology on the expectation of industry-leading growth. From the Tier II pack, we prefer LTTS, CYL, and ZENT given their attractive and industry-relevant portfolios," the brokerage has said.
Earning season broadly in line
According to Bulls & Bears (November 2021): India Valuations Handbook, the 2QFY22 earnings season has thus far been above estimates, benefitting from a) strong growth in the Technology sector, b) steady recovery in loan growth as well as recovery and an upgrade in the asset quality of most private sector banks, c) higher commodity prices and volume growth in the Energy and Metals sectors, and d) the economic unlock driving growth in Consumer and Retail.
"Nifty profits for the 34 companies that have posted their results have grown 22% YoY (v/s exp. of 13% growth). On the other hand, for the 127 companies in our Motilal Oswal Financial Services Universe, profit growth stands at 26% YoY (v/s exp. of 19% growth)," the report said.
The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.