Even as the markets have hit a historic high, broking firm, Motilal Oswal has a "buy" call on the stocks of Eicher Motors and Coal India, with gains of as much as 28%. On our front we would like to caution our readers of over exuberance, as the markets keep hitting a record high every day.
|Current market price||Rs 2,546|
|Target price||Rs 3,250|
Motilal Oswal has said to buy the stock of Eicher Motors, with a price target of Rs 3,250 on the stock, which is at least 26% higher than the current market price
The first quarter of FY22 saw the best ever exports (+28% QoQ, 83% growth over 1QFY20). According to the Motilal Oswal report, international network expansion continues with the addition of eight exclusive stores (to 140) and 19 new multi-brand outlets (to 650) in the first quarter of FY22. Eicher Motors targets to take the exclusive store count to 175 by FY22-end.
Eicher Motors performance beat was driven by VECV, while Royal Enfield was in line with Motilal Oswal's estimates. Delayed product launches (first due to the second COVID wave and now due to the semiconductor shortage) have shifted the recovery timelines to 2HFY22.
"Near term uncertainties due to supply-chain issues notwithstanding, the recently launched Meteor and upcoming products would help expand the addressable markets and drive the next phase of growth for Royal Enfield. The stock trades at 33.5x/21.6x FY22E/FY23E consolidated EPS. We maintain our Buy rating," the brokerage has said.
|Current market price||Rs 143|
|Target price||Rs 185|
Motilal Oswal Institutional Research is also betting on the stock of Coal India and has a set target price that is almost 26% higher than the current market price. The dividend yield according to Motilal Oswal is a solid 12%, which is double of what banks are offering in terms of interest rates.
The management highlighted that while dispatches and production targets were set at 740 metric tonnes and 670 metric tonnes, respectively, for FY22, it is realistically looking at dispatches of 700mt and production of 630-640 metric tonnes for FY22.
Coal India's 1QFY22 result highlights the benefit of a recovery in Power demand, leading to improved off-take and profits.
"Adjusted EBITDA (excluding OBR) jumped 64% YoY to Rs 46 billion We expect profitability to recover in FY22E (+24% YoY). Capital expenditure run-rate is likely to increase in the near term, but higher dispatches and some normalization in receivables should aid cash generation and maintain dividends (dividend yield:12%). We reiterate our Buy rating with a target price of Rs 185 per share, based on 4 times FY22E EV/EBITDA," the brokerage has said.
Investing in equities 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. The above article is for informational purposes only and is picked from the brokerage report of Motilal Oswal. Be careful while investing as the Sensex has now crossed 55,000 points.