Buy 2 Quality Stocks After Strong Business Growth, Good Q3: Sharekhan Recommends

1. Buy Kotak Mahindra Bank

Sharekhan has assigned buy call to Kotak Mahindra Bank with a target price of Rs 2250 apiece. The last trading price of the stock is Rs 1759.90 apiece with intraday decline of 1.31%. If you buy Kotak Mahindra Bank at this price, you will likely receive 28% return.

The stock declined 7% in last 3-months and 3% in last 1-year. In last 5-years, it gave a return of 63%.

According to Sharekhan, "We believe margins have not yet peaked out. Further, we expect its subsidiaries to contribute to consolidated earnings, as they gain scale and market share gradually going forward. The stock is currently trading at 2.8x/2.4x/2.1x its FY2023E/FY2024E/FY2025E Core BV. Near-term focus would be on the succession plans of Mr. Uday Kotak (MD and CEO), who would retire by December 2023, and a smooth transition. We maintain our Buy rating on the stock with an unchanged price target (PT) of Rs. 2,250."

Key Risks: Economic slowdown can lead to slower loan growth, higher-than-anticipated credit cost, and slower growth in retail liabilities.

2. Buy Coforge Ltd

The brokerage has recommended investors to buy IT Software sector stock, Coforge Ltd with a target price of Rs 4900 apiece. The last trading price of the stock is Rs 4321 apiece with an intraday fall of 0.84%. if you buy Coforge Ltd now, you will potentially get 13% return. The stock's 52-week high is Rs 5190.00 apiece and 52-week low is Rs 3210.00 apiece, respectively.

The company has a market capitalisation of Rs 26,394.47 crore. The stock rallied 10% in last 1-week, 16% in last 1-month, 11% in last 3-months, and 16% in last 6-months. The stock declined 10% in last 1-month.

In last 3-years, the mid cap stock rallied 123% and in last 5-years, the stock's value surged by 401%. It came into existence in 1992.

Coforge's reported revenues at $251.7 million, up 3.7% q-o-q in cc, in-line with street estimates but missed our estimates by ~70bps. Adjusted EBITDA margin in Q3FY23 improved 10 bps to 18.5%. The margins for the quarter saw an impact of forex loss of 70 bps, which almost nullified tailwinds from INR depreciation for the quarter.

According to Coforge, "We expect the outlook for FY24 to be uncertain on account of global headwinds and any recovery is most likely to be gradual. Coforge on the back of consistent deal wins and healthy order backlog provides decent revenue visibility (FY23 guidance raised in Q3FY23). Hence we maintain a Buy on Coforge with revised PT of Rs. 4900. (to reflect the rollover of target multiple to FY25E EPS). At CMP, the stock trades at 25.8x/21.9x its FY24E/FY25E EPS respectively."

Disclaimer

The stocks have been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.