Though buying stocks today poses some concerns, there could still be upside left, given valuations of some stocks. Investors have to dig deep into share research reports and could also invest selectively on declines. However, on some stocks like SBI, analysts are unanimously bullish that these hold great long term potential.
SBI Shares: Great investment for the long term
Brokerage firms are bullish on the share price of SBI following the quarterly numbers which were largely on expected lines. Lower gross non performing assets going forward and value in subsidiaries like SBI life Insurance and SBI Cards have led to renewed optimism on the stock.
Broking firms like Motilal Oswal, Kotak Securities and Emkay Global have recently upgraded the stock to a "buy". Emkay has the most bullish stance on the stock of SBI, with a price target of Rs 600, which is almost a 40% upside from the current levels.
SBI: Solid on most parameters
While FY 2021, was a year of covid-19 pandemic, SBI did not seem to be impacted too much. Retail credit growth grew at 16%, while current and savings account grew at a solid 16.3%. The Bank's net profit grew by a robust 40%, when compared to the previous year at Rs 20,488 crores.
While net NPA for FY 2021 was down to 1.50% from 2.22% in FY 2020. On most parameters SBI scored in terms of its numbers. Even going forward most analysts remain bullish on the shares of SBI.
"Its earnings in Financial Year 2120-21 have been more than the sum of what it did in the last five years (FY16-20). Overall, the bank is making strong progress on earnings normalization (FY21 Return On Equity of 9.3%). We expect it to deliver FY22E/FY23E RoE of 13.9%/15%. We maintain our BUY rating with a revised target price of Rs 530 per share(1.1 times FY23 estimated ABV+ Rs 187 per share from subsidiaries). State Bank of India continues to remain among our top Buys in the sector," Motilal Oswal has stated.
The SBI stock was last quoting at Rs 429.55 on the Bombay Stock Exchange and broker suggestions look like there maybe long term gains on the stock.
Gas Authority of India (GAIL) is a government owned enterprise, which is into a host of businesses including natural gas, liquid hydrocarbons, LPG transmission, city gas distribution and exploration and production. The company commands a 50% share in gas transmission and 50% in gas trading.
Recently, brokerage firm Emkay Global had a buy rating on the stock of GAIL for long term investment. The brokerage firm has set a price target of Rs 190 on the shares. The firm believes that higher oil prices, strong marketing and petchem performance, will help in the future.
"We raise FY22/23E Earnings per Share by 19%/23%, building in higher gas marketing-petchem margins and Other Income. We increase target price to Rs 190 from Rs 160 earlier, valuing GAIL at a blended core FY23E EV/EBITDA multiple of 5.8 times. Retain Buy with an overweight stance," the brokerage has stated."
The shares of GAIL were last seen trading at Rs 163.70 on the National Stock Exchange.
Broking firm Motilal Oswal on the other hand believes that transmission volumes in Apr-May'21 were 10-15% lower, though they recovered to 110mmscmd in Jun'21.
"Around 80%/50% of US contracts are tied up for FY22/FY23. Valuing the core business at 10x FY23E adjusted EPS of Rs 16.5 and adding investments, we arrive at our target price of Rs 210 per share. We reiterate GAIL shares as our top pick in the largecap and oil and gas space," Motilal Oswal has said.
The above stocks are picked from brokerage reports. Neither the broking firm, nor the author nor Greynium Information Technologies would be responsible for losses based on decisions taken based on the article.
The above article is for informational purposes only and stock market investing is risky. Investors should consider the risk before investing. Please do not buy stock based on the information provided above only do consult a registered advisor.