ICICI Direct Picks 6 Quality Stocks From Auto Sector: Hold, Buy Rating For Higher Return

ICICI Direct has picked 6 stocks from auto sector to invest for higher returns. These stocks are Eicher Motors, Hero MotoCorp, Uno Minda, Tata Motors, Escorts Kubota, and Mahindra & Mahindra. If you buy these stocks now, you will get maximum potential return of 33%. Check key details below:

1. Buy Eicher Motors

The analyst has recommended investors to buy Eichers Motors with a target price of Rs 4310 apiece. The current market price of the stock is Rs 3251 apiece.

If you buy Eichers Motors now, you will get 33% return." It has a market capitalisation of Rs 88,909.07 crore. The large cap stock gave 56% return in last 3-years, and 15% return in last 1-year.

According to ICICI Direct, "EML is expected to report a healthy performance in Q3FY23. Royal Enfield (RE) volumes for the quarter came in at 2.2 lakh units, up 6.6% QoQ with product mix inclined more towards portfolio. Share of >350 cc motorcycles in total sales volume for Q3FY23 was at 9% vs.12% in Q2FY23."

2. Hold Hero MotoCorp

ICICI Direct has suggested investors to hold Hero MotoCorp (HMCL) with a target price of Rs 2910 apiece. The current market price of the stock is Rs 2742 apiece.

The large cap auto stock has a market capitalisation of Rs 54,845 crore. The shares have soared 15% in last 3-years and 10% in last 1-year. The large cap stock declined 27% in last 5-years.

According to ICIC Direct, "EBITDA for Q3FY23 is expected at Rs 936 crore with EBITDA margins at 12%, up 60 bps QoQ (gross margin benefits limited by negative operating leverage at play). Consequent PAT in Q3FY23 is expected at Rs 644 crore, down 10% QoQ.

3. Buy Uno Minda

The brokerage firm has assigned buy rating to Uno Minda (MIL) with a target price of Rs 650 apiece. The current market price is Rs 539 apiece. If you buy Uno Minda shares now, you will get 21% return.

It has a market capitalisation of Rs 30,918 crore. The mid cap stock has given 195% return in last 3-years and 154% in last 5-years. It declined 7% in last 1-year.

According to ICICI Direct, "Net sales on a consolidated basis are expected at Rs 2,633 crore, down 8.5% QoQ. EBITDA for the quarter is expected at Rs 296 crore with corresponding EBITDA margins at 11.3%, up 20 bps QoQ with RM benefits negated by negative operating leverage. PAT for Q3FY23 is expected at Rs 144 crore, down 15.6% QoQ."

4. Buy Mahindra & Mahindra

ICICI Direct has given buy call to Mahindra & Mahindra with a target price of Rs 1590 apiece. The current market price of the stock is Rs 1264 apiece. If you buy Mahindra & Mahindra shares now, you will get 26% return.

The stock has given 50% return in last 1-year, 141% in last 3-years, and 67% return in last 5-years. The large cap stock came into existence in 1945.

According to ICICI Direct, "Standalone EBITDA for Q3FY23 is expected at Rs 2,901 crore with EBITDA margins at 13.5%, up 150 bps QoQ. Standalone PAT for Q3FY22 is seen at Rs 1,792 crore, down 14.2% QoQ,(Q2FY23 PAT included higher other income i.e. dividend from Tech Mahindra)"

5. Buy Escorts Kubota

The brokerage firm has assigned buy rating to Escorts Kubota with a target price of Rs 2365 apiece. The current market price of the stock is Rs 2163. If you buy Escorts Kubota now, you will get 9% upside.

The mid cap company has a market capitalisation of Rs 28,549 crore. The stock has given 256% return in last 3-years and 172% return in last 5-years. In last 1-year, it has soared 15%.

According to ICICI Direct, "EBITDA in Q3FY23 is expected at Rs 235 operating leverage and RM benefits. Consequent PAT is expected at Rs 204 crore vs. Rs 88 crore in Q2FY23 (one time exceptional loss booked in Q2FY23)."

6. Hold Tata Motors

The analyst has assigned hold rating to the stock with a target price of Rs 465. The current market price of the stock is Rs 382 apiece. The company has a market capitalisation of Rs 1,26,923.11 crore.

The large cap stock has given 122% return in last 3-years. 

According to ICICI Direct, "TML is expected to report a muted performance in Q3FY23 primarily tracking muted sales at JLR. Total sales volume at Indian operations were at 2.3 lakh units, down 6.3% QoQ with JLR sales volume anticipated at 88,101 lakh units, down 2% QoQ. On a consolidated basis for Q3FY23, we expect TML to report net sales of Rs 80,862 crore, up 1.6% QoQ. EBITDA in Q3FY23 is expected at Rs 8,931 crore with corresponding EBITDA margins at 11%, flat QoQ. JLR's EBITDA margins are expected at 11.5%."

 

Disclaimer

The stocks have been picked from the brokerage report of ICICI Direct. 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 taking any investment decision.