Buy 3 Oil & Gas, Metal Sector Stocks Including Maharatna Stock For Gains Up To 48%: ICICI Securities

Leading brokerage firm ICICI Securities initiates coverage on 3 high-quality stocks from Oil & Gas, and Metal sectors. Among these 3 stocks. Two are PSU Maharatna stocks namely GAIL (India) Ltd. and Indian Oil Corporation Ltd. Whereas, one stock, which is Jindal Steel & Power Ltd. is from the metal sector. Jindal Steel & Power and GAIL (India) are midcap stocks, and Indian Oil Corporation is a Large cap stock. Here are the key takeaways from the stocks:

1. GAIL (India) Ltd.

ICICI Securities has assigned a target price of Rs 116 apiece to the stock of GAIL (India) with a "Buy". If you buy the stock at the current market price it could fetch a return of 21%.

The stock last traded at Rs 96.05 apiece on NSE., up 0.95% from its previous close. Its 52-week low is Rs 83 apiece and 52 week high is Rs 115.67 apiece, respectively.

The stock has fallen 4.81% in the past 1 week and gained 5.09% in the past 3 months. In the past 1 year, it declined 2.32%. In the past 3 years, it gained 22.41%. However, it fell 20.99% in the past 5 years.

According to the brokerage, Structurally, resilient gas demand, growing pipeline connectivity (the Eastern Gas Grid alone should add volumes of ~10-12mmscmd over FY23E-FY25E) and additional delta from petrochemicals (JBF acquisition should also add capacity) imply GAIL can manage the stress of higher input costs for petrochemical and LPG segments over FY24-25E. "We do factor in lower margins for the two segments for FY23/24E vs our earlier estimates, leading to earnings and target price downgrades. Valuations remain attractive, underpinning our positive stance despite the weak quarter. Reiterate BUY," the brokerage has said.

2. Indian Oil Corporation Limited

The brokerage initiates a "Buy" on the stock of Indian Oil Corporation with a target price of Rs 118 apiece, which implies a potential 48% upside.

The stock's current market price is Rs 79.80 apiece on NSE, down 2.39% from the previous close. Its 52-week low is Rs 65.20 apiece and 52-week high is Rs 90.70 apiece, respectively.

The stock has fallen 3.27% in the past 1 week. It gained 4.31% in 1 month and 16.5% in 3 months, respectively. In the past 1 year, it declined 1.68% and in the past 5 years, it declined by 42.71%, respectively. It gained 9.92% in the past 3 years.

ICICI Securities said, "We cut our estimates of 'other products' marketing margin for FY23E to Rs1,000/t from Rs2,500/t earlier and also tweak our retail margin estimates sharply down for Q4, given the lack of any price changes in petrol and diesel. This reduces FY23E and FY24E recurring consolidated EPS to Rs4/sh and Rs17/sh, respectively, down 53/6%. Valuations of 5.3x FY25E P/E, 4.7 EV/EBITDA and 0.7 P/BV are attractive. We believe dividend yield of ~10% (average estimated for FY24/25E) and the support from CPCL earnings make risk-reward favourable for IOCL. Our FY24E EV/EBITDA-based valuation of Rs118/sh implies 44% upside. Maintain BUY."

2. Jindal Steel & Power

The brokerage has placed a "Buy" on the stock of Jindal Steel & Power with a target price of Rs 750 apiece. The stock is likely to surge 24% from its current level considering the given target price and current market price.

The stock last traded at Rs 608.25 apiece on NSE, up 4.23% from its previous close. The stock's 52 week low is Rs 304.20 apiece and 52 week high is Rs 622.75 apiece, respectively.

The stock has gained 2.17% in a week. It gave 4.76% in 1 month and 30.81% in 3 months, respectively. It gained 47.94% in the past 1 year. It gave the highest 263.89% positive return in 3 years. It gave 128.71% positive return in 5 years.

ICICI Securities said, "Positive on cost efficiencies and value-accretive capex. We perceive JSPL to be on the right track with lower debt and upcoming cost efficiencies helping it in a tough macro environment of subdued steel prices. The balance sheet has enough headroom for the company to complete the ongoing capex at Angul, which would usher in further economies of scale. We value JSPL at 6x FY24E EBITDA resulting in a target price of Rs750/share. We maintain BUY rating on the stock and recommend it as our top pick in the ferrous space."

Disclaimer

The stocks have been picked from the brokerage reports of ICICI Securities. 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 consult with certified experts before making any investment decision.