MO Is Betting On These 2 Stocks For Robust Returns

Top broking and equity research house, Motilal Oswal is betting on the stocks of Equitas Small Finance Bank and Eicher Motors for solid gains.

Eicher Motors: Buy the stock for a target price of Rs 3625

Motilal Oswal has set a price target of Rs 3625 on the stock of Equitas Small Finance Bank. "We believe improving supplies, new product launches and the ramp-up in exports will drive the next phase of growth for RE. Besides, stable commodity prices will also support margins and drive earnings growth. The stock trades at 21.7x/17.2x FY24E/FY25E consolidated EPS. We have a BUY rating on the stock with a target price of Rs 3,625 (Mar'25E SoTP)," the brokerage has said.
According to Motilal Oswal, demand remains healthy for RE in the domestic market, with no impact of macro headwinds or IT sector weakness (given relatively high salience). "RE continues to gain market share in the 150cc and above motorcycle segment (FY23YTD at 31.8% v/s FY22 at 28.7% vs FY19 at 25%). If the interest rate stabilizes, it could support demand for RE," the brokerage has said.

Equitas Small Finance Bank: 19% upside likely on the stock

Equitas Small Finance Bank has been focusing on building a diversified loan book with small business loans (SBL), vehicle finance, MFI and housing finance being the key business segments. "Loan growth has witnessed a gradual recovery at 27% vs 15% last year and we estimate 26% CAGR in loan book over FY23-25E," the brokerage has said.

"The bank has demonstrated a strong improvement in asset quality with X bucket collection efficiency improving to Pre-Covid levels and GNPA/NNPA moderating to 3.6%/1.8% as on 3QFY23. The bank expects slippages to moderate and has guided to improve its PCR to 60% by FY25 vs 51% at present. We thus estimate credit cost to moderate to 1.3% by FY25 vs management guidance of 1%. We estimate Equitas Small Finance Bank to deliver FY25E RoA/RoE of 2.2%/16.9% and value it at INR77 (1.4x Sep'24E ABV). We thus transition our coverage with Buy rating," the brokerage has said.

Disclaimer:

The stock has been picked from the brokerage report of Motilal Oswal. 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.