Broking firm Sharekhan has recommended buying the stock of Titan, while Emkay Global is bullish on the stock of Oil India. Let's take a look as to why these brokerages are bullish on these stocks.
Buy Oil India for a price target of Rs 255, says Emkay Global
Emkay Global is bullish on the stock of Oil India and has recommended buying the stock with a price target of Rs 255, as against the current market price of Rs 210.
"We consolidate Numaligarh Refinery into Oil India with a revised Sep'22E SOTP target price of Rs 255, (previously Rs165 for Mar'22E). Oil India's core outlook is positive with crude at USD70+ and gas prices on an uptick. We do not build in any output growth despite management's optimism," the brokerage has said.
Emkay Global believes that Numaligarh Refinery acquisition should have been 100% with the Assam govt allotted Oil India ‘sshare instead, the effective 69.6% stake is also material. Oil India stands to benefit from massive Numaligarh Refinery excise duty-driven earnings and its ongoing 3x capacity expansion, the brokerage believes.
"We bake in USD65 Brent/4.5 APM for the long term and value S/A using DCF now. Oil India should receive Rs 13-15 billion in annual dividends from Numaligarh Refinery and India Oil Corporation in the next 5 years; these, if up-streamed, could result in a 45%+ payout and a 7% yield at current market price. We Upgrade the stock to Buy from Hold," the brokerage has said.
Buy Titan, says Sharekhan
According to Sharekhan, correction in gold prices, upcoming festive/wedding season and a shift to trusted brands will boost Titan's jewellery sales in Q2/Q3FY2022 that would also boost margins sequentially.
"Titan will be one of the key beneficiaries of a structural shift by consumers towards trusted brands. Government's announcement for compulsory hallmarking will reduce pricing premium between regional/small players versus large players such as Titan, which bodes well. The festive season has begun on good note with Onam seeing good jewellery sales in South India, also supported by recent fall in gold prices. Jewellers believe that the ongoing festive season and upcoming wedding season will boost sales in the coming quarters and drive up profitability and cash flows in the medium term," the brokerage has said.
Price target of Rs 2,305 on the stock
Sharekhan has maintained a buy on the stock with a revised price target of Rs. 2,305. The stock is currently trading at 72.0x and 61.5x its FY2023E and FY2024E earnings.
"Any disruption in the jewellery business' recovery due to a spike in COVID-19 cases followed by frequent lockdowns would act as a key risk to earnings estimates," the brokerage has said highlighting the key risks to the targets. The shares of Titan Company were last trading at Rs 2,103 on the NSE.
The above stocks are picked from the brokerage reports of Sharekhan and Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor.