Two of India's top institutional and researched based broking houses, Emkay Global Financials and Motilal Oswal have recommended buying the stocks of NTPC and HDFC respectively in their latest research report. The firms see good value in the stocks they have recommended and see significant upside from the current levels.
Buy NTPC with a 50% upside
Emkay Global has a buy on the stock of NTPC, with a solid price target of 50% from the current level. NTPC reported nearly flat earnings due to higher deferred tax, although generation was up 19% yoy. NTPC has commissioned 1.4GW/2.6GW capacity over the last one year at standalone and group level, respectively.
|Current market price||Rs 117.50|
|Target price||Rs 180|
"While the high concentration of coal-thermal projects had raised ESG concerns on the company, we see incremental efforts toward RE expansion. This, along with an improvement in the RoE profile, should lead to a re-rating in the stock.
In the past 5 years, the company has traded at an average PB of 1.1x and RoE of sub-11%. With RoEs moving to 12.5%, a re-rating should happen, in our view. Maintain Buy with a Sept'23E target price of Rs 180, at an implied price to book multiple of 1.21 times, Emkay global has said
Motilal Oswal has set a solid price target of 34% on the stock of HDFC. The firm believes the stock can rally as much as Rs 3,290, from the current market price of Rs 2,462.
|Current market price||Rs 2462|
|Target price||Rs 3290|
According to the brokerage firm, HDFC’s core profit before tax grew 12% year-on-year to Rs 32.2 billion, beating estimates by 5%. Net Interest Income (ex-assignment income) at Rs 41.3 billion was 2% above our estimate. “On the other hand, provisions at Rs 6.9 billion were lower than our estimates of Rs 8 billion. Better-than-expected marked to market gains on investment led to an 11% beat on reported net profits (down 6% QoQ / 2% YoY),” the brokerage has said.
Buy HDFC with an SOTP based target price of Rs 3,290
According to Motilal Oswal Institutional Equities, HDFC continues to maintain elevated provisions and the total buffer stands at 2.64% of loans.
During the quarter, HDFC restructured loans worth Rs 7.78 billion (15 basis points of assets under management). Sixty two per cent of the restructured advances is from the Non-individual segment and largely pertains to just one account, which forms 50 basis points of assets under management.
"We increase our FY22E/FY23E estimates by 7-8%, factoring in higher net interest income and non-core income. We expect HDFC to report core RoA/RoE of 2%/13% over FY22-23E. Reiterate Buy, with SOTP-based target price of Rs 3,290 (FY23E SOTP based), Motilal Oswal has said in its report.
Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.