With the Sensex at 52,800 points, there is always an elements of risk to buy shares, if things go wrong. It is better to pick stocks that are fundamentally sound and have the potential to generate good returns. Here are 3 stocks that brokerage houses have a "buy" on.
Lumax Auto Technologies
Sharekhan has maintained a "buy" rating on the stock of Lumax Auto Technologies. He company is an auto ancillay player, with manufacturing facilities in 13 locations.
"Lumax Auto is expected to benefit from strong underline demand from its clients in 2W, passenger vehicles, and commercial vehicles space, driven by expected recovery in the automotive segment and expansion of product portfolio.
Management has guided for a positive outlook, expecting bounce back from Q2FY2022, with revenue growth of 22-25% y-o-y in FY2022E, driven by recovery in the automotive industry, widening of product portfolio, and increasing wallet share from existing clients. Operating profit margin (OPM) is expected to remain firm, led by operating leverage and cost-control measures.
The company expects EBITDA margin profile to improve gradually to 12-13% over the next 3-5 years. The stock is trading below its historical average at a P/E multiple of 11.8x and EV/EBITDA multiple of 5.9x its FY2023 estimates. We retain Buy rating on the stock with an unchanged target price of Rs 207," the broking firm has said.
The shares of Lumax Auto were last changing hand at Rs 161.20.
ICICI Direct has a "buy" call on the stock of Tata Motors with a target price of Rs 375, against the current market price of Rs 307.
The brokerage expects Tata Motors FY21P-23E sales CAGR of 18.4% with FY23E EPS of 37.6.
"The chip shortage-led production warning comes as a negative surprise and is likely to impact CFO generation in FY22E. However, we retain our positive stance on Tata Motors for the medium to long term given its intent to reduce automotive net debt to near zero levels (from Rs 41,000 crore as of FY21), alertness to global automotive mega change of electrification Jaguar to be all-electric by 2025, Land Rover to introduce 6 BEVs in the next five years; EV leader in India 4-W currently via Nexon) and focus on sustainable FCF generation, going forward.
Accordingly, we maintain BUY with a revised SOTP based target price of Rs 375 (12x, 3.3x FY23E EV/EBITDA to India, JLR businesses respectively; earlier target price of Rs 400)," the broking firm has said.
Motilal Oswal has maintained a buy rating on the stock of Equitas Holdings. Equitas reported muted loan growth, impacted by subdued disbursements, on account of regional lockdowns.
"However, deposit growth remains robust, led by healthy traction in the Current and Savings Account (CASA) deposits, with the CASA ratio surging to 40%. On the asset quality front, collection efficiency declined sharply in May'21 across segments, but showed recovery in vehicle / small business loan segments in Jun'21. However, collection efficiency in the MFI portfolio declined sharply. Overall, collection trends would be a key monitorable in the near term. We maintain a BUY rating, with target price of Rs 110 (1x FY23E ABV)," the brokerage firm has said.
Past stock performance is not a guarantee of future success. Market investments are susceptible to market risk. Any losses caused as a result of a choice based on the preceding content are not the responsibility of the author or Greynium Information Technologies. As a result, investors should proceed with care, as markets have risen dramatically. Please seek the advice of a professional expert.