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Kotak Securities Picks 3 Stocks To Invest, Assigns Buy & Add Call With Attractive Valuation

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Kotak Securities has picked 3 stocks from Banking, Capital Goods and NBFC sector with "Buy" and "Add" ratings last week. The stocks are Equitas Small Finance Bank, ABB India Limited, and Five Star Business Finance Limited. The brokerage claims the stock would give robust returns in 2023 with an attractive valuation. Here are the key highlights of the stocks:

 

1. Equitas Small Finance Bank
 

1. Equitas Small Finance Bank

The brokerage has assigned an "Add" on the stock of Equitas Small Finance Bank with Rs 65 apiece for a potential upside of up to 11% from its current market price. The stock last traded at Rs 58.70 apiece on NSE, 0.76% down as compared to its previous close.

The stock got listed on NSE in November 2020, and since then it has given 78.96% positive returns to shareholders. However, the stock in the fallen 0.68% in the past 1 month, and surged 0.6% in the past 1 week, respectively. It has given maximum 17.4% in the last 3 months, whereas, in the last 1 year it has fallen 0.93%.

Equitas Small Finance Bank is a Small Finance Bank, headquartered in Chennai, India. It is a subsidiary of Equitas Holdings Limited. With a market capitalisation of Rs 7,356.45 crore, it is small cap banking stock. 

The Brokerage said, "We retain ADD rating and increase Fair Value to Rs65 (Rs60 earlier). At our FV, we value the bank at 1.3X BVPS (adjusted) and 9X December 2024E EPS for mid-teen RoEs in the medium term. We continue to build a steady recovery in return ratios driven primarily by lower credit cost in the medium term. With asset quality pain largely behind, the discussion is now moving towards operating profit performance."

2. ABB India Limited

2. ABB India Limited

Kotak Securities recommended investors buy the stock of ABB India Limited for a target price of Rs 3,100 apiece. The brokerage with the given target price claims 10% potential return. The share price of the stock on Friday ended at Rs 2,843.60 apiece after gaining 1.34%.

The stock surged 5,99% in the last 5 days. However, it has fallen 3.41% in the last 1 month and 10.83% in the last 3 months, respectively. In the last 1 year, it gave 27.79% positive returns. The stock has given 120.95% multibagger return in the last 3 years and 98.15% positive return in the last 5 years.

ABB India is an integrated power equipment manufacturer supplying a complete range of engineering, products, solutions & services in areas of Automation & Power technology. It is a large-cap company that operates in the capital goods industry having a market capitalisation of Rs 60,258.27 crore.

According to Kotak Securities, The case for ABB exporting motors to the large Europe market is strong given (1) profitability mandate here for ABB Global, (2) shift towards common product platforms by ABB Global, (3) ABB's 100% localized offering, and (4) higher utilization of India component supplier base versus Europe. This would help counter headwinds in the domestic motors and process automation business. "We retain FV, upgrade to BUY (from REDUCE) with unchanged FV of Rs 3,100. We note comparable valuations to SIEMENS post the price correction," the brokerage has said.

3. Five Star Business Finance Limited

3. Five Star Business Finance Limited

The brokerage has assigned an "Add" call to the stock with a target price of Rs 700 apiece. According to the given target price, the stock is likely to be given 10% returns on investments if purchased at the current market price. The current market price of the stock is Rs 637.25 apiece on NSE, down 1.92% from its previous close.

It is a 21 November 2022 listed NBFC stock. Since its listing, the has surged 30.05%. It surged 3.67% in the last 1 week, and 2.03% in the last 1 month, respectively. The company is an NBFC-ND-SI providing secured business loans to micro-entrepreneurs and self-employed individuals across South India. 

According to the brokerage, Five Star Business Finance's (Five Star) high-growth niche market position and strong profitability drive its premium valuations (3.6X book at our RGM-based FV of Rs700), although the income vagaries of its below-prime customers make the business more volatile than affordable HFCs.

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 consult with certified experts before making any investment decision.

 

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