Motilal Oswal Bullish On 5 Stocks With Strong Financials, Sees Maximum 45% Return

Leading brokerage house Motilal Oswal has recommended 5 stocks for investment. These stocks are Brigade Enterprises, Bharat Forge, Mahanagar Gas, Manappuram Finance, and Lemon Tree Hotels. If you buy these stocks today, you will get maximum return of 40%. Check key takeaways below:

Name Of Company	Return
Brigade Enterprises	45%
Lemon Tree Hotels	21%
Manappuram Finance	21%
Bharat Forge	15%
Mahanagar Gas	14%

1. Brigade Enterprises

The current market price of the mid-cap stock is Rs 495 apiece. It has a market capitalisation at Rs 11,415 crore. The stock, operating in Real Estate sector, has given maximum return of 178% in last 5-years.

Motilal Oswal has assigned buy call to the stock with a target price of Rs 720 apiece. Buy Brigade Enterprises at the current market price of Rs 495 to get potential return of 45%.

According to Motilal Oswal, "We reiterate our BUY rating on the stock with an unchanged TP of INR720, implying an upside potential of 39%. Management reiterated its intent to fully lease out its commercial assets by FY23, leading to 19% YoY increase in rental income in FY24E. Further, BEL is expected to generate INR44b of cash flows over FY23-25, which will be utilized to strengthen future project pipeline leading to growth visibility."

2. Bharat Forge

The current market price of the stock is Rs 853 apiece with market capitalisation of Rs 39,732 crore. The stock has given maximum return of 93% in last 3-years. Motilal Oswal has assigned buy rating to the stock with a target price of Rs 985 apiece. Buy Bharat Forge to get potential return of 15%.

According to the analyst, "We estimate a consolidated revenue/EBITDA/PAT CAGR of 14%/20%/24% over FY22-25. The stock trades at 40.5x/25.6x FY23E/FY24E consolidated EPS. We maintain our Buy rating, with a TP of INR985 (at 25x Dec'24E EPS)."

All the core businesses are seeing a good cyclical recovery, whereas new businesses are in various stages of ramp-up. This, coupled with its focus on creating new revenue pools in Aerospace, Defense, and e-Mobility, can lead to the de-risking of the business, added Oswal.

3. Mahanagar Gas

The current market price of Mahanagar Gas is Rs 898 apiece with market capitalisation of Rs 8,872 crore. The stock has given maximum return of 11% in last 1-month. Motilal Oswal has given buy call to Mahanagar Gas with a target price of Rs 1025 apiece. Buy Mahanagar Gas today to gain potential return of 14%.

According to Motilal Oswal, "The stock trades at 12x FY24E EPS of INR73, and valuing it at 14x FY24E EPS we arrive at our TP of INR1,025. Maintain BUY owing to its relatively cheaper valuations."

We expect a volume growth of 8% during FY22-24 with the management guiding for a volume CAGR of 6% over the next 3-5 years (volume growth of FY23 being higher), added Oswal.

4. Manappuram Finance

The current market price of the mid cap stock is Rs 116 apiece with market capitalisation of Rs 9856 crore. The stock has given maximum return of 23% in last 5-years. Motilal Oswal has assigned buy call to the stock with a target price of Rs 140 apiece. Buy Manappuram Finance now to get maximum potential return of 21%.

According to Motilal Oswal, "We believe the risk-reward for MGFL, at 0.9x FY24 P/BV, is still favorable for a consolidated RoA/RoE of 4.1%/17% over FY23-24. We maintain our Buy rating with a TP of INR140 (based on 1.1x FY24E consolidated BVPS)."

While the management has highlighted that demand in small-ticket and rural Gold loans have recovered, we continue to monitor the sustainability of this demand at Gold loan yields of 21-22% offered by MGFL. The management has clearly articulated that it does not wish to pursue growth at the cost of a compression in spreads, which is a big positive for profitability, added the analyst.

5. Lemon Tree Hotels

The current market price of the mid cap stock is Rs 91 apiece. It has a market capitaliasation of Rs 7233 crore. The mid cap company came into existence in 1992. The stock has given maximum return in last 1 year at 59%. Motilal Oswal has given buy rating to Lemon Tree with a target price of Rs 110. Buy Lemon Tree Hotels today to get maximum potential return of 21%.

According to the brokerage, "We expect LEMONTRE to deliver a revenue/EBITDA CAGR of 59%/97% over FY22-24 and RoE to improve to 13% by FY24. We retain our FY23/FY24 EBITDA estimate and maintain our Buy rating on the stock, with a FY24E SoTP-based TP of INR110."

LEMONTRE is expected to witness strong growth, led by; 1) buoyant demand during the wedding season, 2) improving traction in corporate travel, 3) increase in inbound travel, and 4) India assuming the G20 presidency (meetings across India).

Disclaimer

The stocks have 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 check with certified experts before taking any investment decision.