ICICI Securities Is Betting On These 3 Stocks For Impressive Gains

Buy Elgi Equipments, Says ICICI Securities

The brokerage is optimistic on the stock of air compressor major Elgi Equipments. The firm has set a price target of Rs 260 on the stock, as against the current market price of Rs 203.

According to ICICI Securities, long-term incremental growth will be driven by rapid growth in international markets, new products such as innovative AB series compressors, and traction in the India business. Double-digit return ratios, net debt-free b/s, and excellent cash generation.

Elgi's share price has grown by ~2.2x over the past five years (from Rs65 in March 2016 to Rs 205 levels in March 2021).  Considering strong growth outlook, better margins, we maintain BUY rating Target Price and Valuation: We value Elgi at Rs 260 i.e. 42x P/E on FY23E EPS.

We also like Grindwell Norton in our coverage. Margin expansion (from ~16.7% in FY20 to 20.6% in FY23E) .BUY with a target price of Rs 151," the brokerage has said.

Buy Gabriel India for an upside of Rs 160

According to the brokerage firm, Gabriel India (GIL) is a top-10 global shock absorber producer that caters to the 2-W, 3-W, PV, CV, railway, and aftermarket markets.

"The stock price has grown at modest ~3% CAGR from Rs 115 levels (August 2016), having done slightly better than Nifty Auto index. We retain BUY rating on mix & margin gains and large EV opportunity Target Price and Valuation: We value GIL at 20x P/E on FY23E basis for a revised target price of Rs 160 per share (earlier target price Rs150).

Margin improvement to 8.5 percent by FY23E will be aided by lower breakeven levels, cost focus, and a bigger percentage of aftermarket and exports from present levels. Net cash b/s (Rs 250 crore in cash and liquid investments); 14% of market capitalization," the brokergae has said.

Apart from GIL, we favor JK Tyre for auto auxiliary coverage. When it comes to b/s deleveraging, asset sweating, and capital efficiency, BUY with a target price of Rs 180, the brokerage added.

Buy Indian Oil Corporation, Says ICICI Securities

According to ICICI Securities, higher costs were passed on to customers, the marketing segment's performance improved QoQ. GRMs were recorded at US$6.6/bbl, down from US$10.6/bbl QoQ due to larger inventory gains in Q4FY21. EBITDA was Rs 11,126.1 crore, down 17.6 percent from the previous quarter.

"IOC's refining margins are expected to improve gradually with an improvement in product cracks. Steady marketing margins and better sales with relaxations in lockdown are expected to lead to better profitability. We upgrade our rating from HOLD to BUY on the stock. Target Price and Valuation: We value IOC at Rs 120 i.e. average of P/E multiple: Rs 115 /share and P/BV multiple: Rs 125/share.

Apart from IOC, we prefer MGL in our oil and gas coverage because it benefits from India's growing gas demand and will continue to rise due to consistent volume growth, stronger pricing power, and a favourable regulatory environment. BUY with a target price of Rs 1,340, the brokerage has said.

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house 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.