Even as the markets have seen three successive days of losses, it opens a small window of opportunity for those looking to buy stocks on declines. According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, technically Nifty formed a Bearish candle on daily scale and continued its lower highs - lower lows formation of the last two sessions. Key support now stands at around 15,500 zones while on the upside the index may face resistance around 15,800 levels. Here are 3 stocks that the brokerage firm Sharekhan is recommending to buy for strong returns.
Buy Tata Elxi Stock for price target of Rs 5,000
Sharekhan has a buy on the stock of Tata Elxi with a price target of Rs 5,000, as against the current market price of Rs 4,100.
Sharekhan believes that growth is likely to remain strong for Tata Elxi in the coming years, as it focuses on high growth sectors (media and healthcare) and emerging technology areas (connected, autonomous, OTT, digital health, and medical devices, etc.), where the client allocates a higher budget.
The firm also believes that revenue for Tata Elxi is set to grow at twice the industry average, margin profile is superior and company has differentiated technological capabilities
"At the current market price, the stock is trading at 53x/44x/37x its FY2022E/FY2023E/FY2024E earnings, which though expensive is justified against anticipated 2x revenue growth as compared to industry's average growth rate, superior margin, and solid execution. We maintain our Buy rating on Tata Elxi Ltd with a revised a target price of Rs. 5,000, given a strong balance sheet, consistent dividend payout, improving cash generation and its status as a preferred partner for clients," the brokerage has said.
Shares in Tata Elxi last closed at Rs 4,100 on the NSE.
Buy HDFC Bank
HDFC Bank did not report a great set of quarterly numbers and the stock has been falling ever since the bank reported its numbers. The stock has seen sharp fall on Monday and Tuesday. Nonetheless, broking firm Sharekhan has set a price target of Rs 1800 on the stock as against the current market price of Rs 1,433,
According to the brokerage, the bank's consistency is buoyed by its robust underwriting capability, risk measurement standards and focused on high quality corporates, which support the valuations.
"We find the management's focus for stable NIMs, and a structurally improving cost-income ratio encouraging, while the high provisioning buffer should support asset quality and profitability. We have fine-tuned our estimates and the target multiple for the bank considering the dynamic environment. We retain a Buy rating on the stock with a unchanged price target of Rs. 1,810," Sharekhan has said in its report.
The broking firm has also recommended the stock of L&T Infotech after its latest results. Sharekhan believes that there would be strong hiring, timely wage revisions, investments in sales and capabilities and strategies around on cloud & data would aid sustainable growth in coming years.
"We expect revenue to clock 17% CAGR over FY2021-24 "We expect L&T Infotech to deliver USD revenue/earnings CAGR of 16.7%/17.4% over FY2021-FY2023E. At the current market price, the stock is trading at 34x/29x/25x its FY2022E/FY2023E/FY2024E earnings, which, although expensive, is justified given possibilities of its strong revenue growth momentum with stable margins and a robust business model. Hence, we maintain our Buy rating on the stock of L&T Infotech with an unchanged price target of Rs. 4,800," the broking firm has said.
The above three stocks are picked from the brokerage report of Sharekhan. Neither the author, nor Greynium Information nor the brokerage would be responsible for any losses incurred based on a decision after reading the article. We at goodreturns.in have been constantly emphasizing the need to reduce over exuberance in stocks and invest with caution. So, please do be careful.