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December Top Stock Idea Picks: Kotak Securities Picks 7 Stocks To Buy & Add For Robust Gains

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Leading brokerage firm Kotak Securities picks 7 quality stocks from across the sectors with Buy & Add call for December 2022 in its recent top pick report. These 7 stocks are HDFC Bank, HCL Technologies, Indraprastha Gas, ITC, Krishna Institute of Medical Sciences, Mahindra & Mahindra, and NMDC. Among these stock 5 are large cap stocks and 2 are mid cap stocks.

 
StocksRecommendationTarget Price (Rs)Potential Upside (%)
HDFC BankBuy17509
HCL TechnologiesBuy125012
Indraprastha GasBuy51015
ITCAdd38022
Krishna Institute of Medical SciencesBuy107014
Mahindra & MahindraBuy150019
NMDCBuy1308

1. HDFC Bank (HDFCB)

1. HDFC Bank (HDFCB)

HDFCB is among India's top 2 private-sector banks. It has a market cap of Rs 8,94,921 crore. The brokerage has placed a buy call on the stock of the bank with an unchanged target price of Rs 1,750/share. The brokerage claims a potential upside of 9% from its current level, considering the given target price.

The stock on NSE last traded at Rs 1,611.15/share. It has given 7.14% positive returns in 1 year, 29.3% in 3 years and 78.69% in 5 years, respectively.

According to the brokerage - Rationale:

  • 20% yoy earnings growth, 10% yoy operating profit growth.
  • Solid loan growth of 23% yoy and healthy return ratios of 2% RoA and 17% RoE.
  • Asset quality metrics were stable.
  • While we remain positive, the near-term issue of merger would a key overhang.
  • Maintain BUY, fair value at Rs. 1,750 (unchanged), 2.5x September 23E book
2. HCL Technologies Limited (HCLT)
 

2. HCL Technologies Limited (HCLT)

HCLT is a large-cap company from the IT Sector. It has a market cap of Rs 3,04,188 crore. The brokerage placed a buy with a target price of Rs.1,250/share which implies an upside of 12% from the current market price.

The stock on NSE last traded at Rs 1,120.95/share. It has given 1.37% negative returns in 1 year. Whereas, in 3 & 5 years, it gave 100.06% and 161.11% multibagger returns, respectively.

According to the brokerage - Rationale:

  • Strong all-round performance; service up 5.3% in c/c, EBIT margin up 100bps qoq.
  • Raises FY23E revenue growth guidance; EBIT band tightened.
  • We expect earnings to grow by 7% in FY23E and 11.6% in FY24E.
  • We raise FY23-25 c/c revenue estimates by 30-80 bps, EPS by 2-3% and SoTP-based fair value to Rs1,250.
3. Indraprastha Gas Limited (IGL)

3. Indraprastha Gas Limited (IGL)

IGL is a mid-cap company from the Gas Distribution Sector having a market cap of Rs 30,782.54 crore. Kotak Securities has assigned a buy to the stock with a target price of Rs.510/share for gains of up to 15% if it is purchased at the current market price.

The stock of IGL last traded at Rs 439.75/share on NSE. It has given 10.58% negative returns in 1 year. Whereas, in 3 & 5 years, the stock surged by 9.19 and 35.6%, respectively.

According to the brokerage - Rationale:

  • In-line Q2; per unit margins decline due to lower price hikes; Q3 likely weaker.
  • Focus is on the Dr Kirit Parikh-led committee's recommendation on gas pricing.
  • A price reduction and ceiling on APM would be a positive for CGDs.
  • We expect earnings to grow by 16.2% in FY24E and 11% in FY25E.
  • We value IGL stock at Rs510 using DCF methodology.
4. ITC Limited

4. ITC Limited

ITC is a large-cap company with a diversified product portfolio. It has a market cap of Rs 4,18,224 crore. The expert Research team of Kotak Securities has assigned an "Add" rating to the ITC stock with a revised target price of Rs.380/share. The stock is likely to give gains of up to 22% if it is purchased at the current market price.

The stock of ITC last traded at Rs 337.30/share on NSE. In a year, the stock moved up by 54.8%, in 3 years it moved up by 38.61% and in 5 years, it moved up by 34.06%, respectively.

According to the brokerage - Rationale:

  • ITC reported another well-rounded quarter.
  • We expect earnings to grow by 16.2% in FY24E & by 17.6% in FY25E.
  • Stock is currently trading at valuation of 19.3x P/E FY25E earnings.
  • We value ITC using Sum of the Parts (SoTP) methodology.
  • We upgrade FY23-24 EPS by 5-6%, roll over & revise FV to Rs380 (from Rs337)
5. Krishna Institute of Medical Sciences Limited (KIMS)

5. Krishna Institute of Medical Sciences Limited (KIMS)

KIMS is a Midcap Hospital & Allied Services sector company having a market cap of Rs 12,127.41 crore. Kotak Securities has recommended buy the stock of KIMS with a revised target price of Rs. 1,725/share. If you buy the stock at the current market price, you would likely get a return of 14%.

The stock of KIMS last traded at Rs 1515.40/share on NSE. Since its listing i.e. 28 June 2021, it has given 52% positive returns. In 3 months ut gave 18.41% positive returns and in a year, it gave 14.24% positive returns, respectively.

According to the brokerage - Rationale:

  • Strong acute season; Nagpur acquisition drive 14% QoQ sales growth in Q2FY23 • Growth drivers: Bolstering core presence with opportune new entries.
  • On a solid footing; Solid execution at reasonable valuations.
  • KIMS will generate a cumulative FCF of Rs560 cr over FY23-26E.
  • Roll forward to Sep24E; Revise FV to Rs1,725 (Rs1,590 earlier). Maintain BUY. (EBIDTA - Earnings Before Interest, Depreciation, Tax & Amortization; IndAS - Indian Accounting Standard)
6. Mahindra & Mahindra Limited (M&M)

6. Mahindra & Mahindra Limited (M&M)

M&M is a large-cap homegrown auto sector company having a market cap of Rs 1,57,021 crore. Kotak Securities has initiated a "buy" call on the M&M stock with a revised target price of Rs. 1,500/share. According to the given target price, the stock is likely to give a positive return of up to 19%.

M&M's stock on NSE last traded at Rs 1263.05/share. It has given 53.63% positive returns in 1 year, 147.56% multibagger returns in 3 years, and 84.73% positive returns in 5 years, respectively.

According to the brokerage - Rationale:

  • Order book remains strong in PV segment; M&M would be expanding its capacity.
  • Domestic tractor volumes to grow mid-single digits yoy in FY23E.
  • Consolidated RoEs have crossed 20% in H1FY23, which is encouraging.
  • We expect earnings per share (EPS) to grow by 21.7% in FY24E and 11.2% in FY25E.
  • We value stock on SoTP (Sum-of-The-Parts) methodology.
7. NMDC Limited

7. NMDC Limited

NMDC is a PSU-Navratna company under the ownership of the Ministry of Steel, Govt. Of India. It is a mid-cap metal sector stock having a market cap of Rs 35,431.02 crore. Kotak Securities recommends "buy" the stock of the company with a target price of Rs. 130/share. The brokerage claims a potential upside of 8% from its current level.

The shares of NMDC last traded at Rs 120.90/share on NSE. It has given 15.43% negative returns in 1 year, 9.46% positive returns in 3 years, and 5.73% positive returns in 5 years, respectively.

According to the brokerage - Rationale:

  • Announced 9% price cut for iron ore in its attempt to revive volumes in 2HFY23.
  • Both domestic and seaborne iron ore prices have bottomed, in our view.
  • Strong case for re-rating with improved capital allocation.
  • Value NMDC at 5.5x Sep'24E EV/EBITDA (Enterprise Value/ Earnings Before Interest, Tax, Depreciation and Amortization). Upgrade to BUY.
Disclaimer

Disclaimer

The stocks have been picked from the brokerage report of Kotak 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 check with certified experts before making any investment decision.

 

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