Markets are rallying higher and higher with the Sensex and the Nifty hitting news peaks. However, there are many stocks that still have some upside. Post quarterly numbers broking firm Emkay Global has suggested buying the stock of NTPC with an upside potential of 51%. The broking firm also has a buy call on the stock of IndusInd Bank with an upside target of 36%. Let's take a look at why Emkay Global has suggested to buy these shares for the long term.
Emkay Global sees a 36% upside in the stock of IndusInd Bank and has recommended buying the stock with a target of Rs 1,375 in one-years time. The stock of IndusInd Bank as last seen trading at Rs 1014 on the NSE.
"IndusInd Bank scripted a major turnaround 1.0 since 2009/10, but faltered lately with higher corporate NPAs/deposit scare. The bank has largely rectified its past mistakes, built prudent capital/provisioning buffers and is preparing to build sustainable & digitally agile retail bank, delivering yesteryear's superior RoA trajectory of 1.7-1.9% over FY23/24E.
Amid the ongoing pandemic, the bank intends to shore up contingent buffer (1% of loans) including counter-cyclical buffers given cyclical retail book to bring stability to earnings in long run. We believe that retailization of assets (55% vs. 52%)/liabilities (50% vs. 37%) should structurally improve NIMs/core-PPoP, while moderating LLP should drive-up RoAs," the brokerage firm has said.
Indusind Bank: Reasonable on valuations
According to Emkay Global, IndusInd Bank assured that risk/governance standards have been strengthened while promoter interference has been virtually NIL, and its recent capital subscription at a premium should provide investor comfort.
"IndusInd Bank is waiting for holding company norms to enter into broking/AMC/non-life insurance business, and is open to strategic stake in fintech to strengthen digital offering. We believe a resurgent IndusInd with higher retail orientation/risk guards in place should be deliver sustainably higher return ratios, providing a good turnaround story to play on. Retain Buy with a target price of Rs 1,375 (vs. 1,175), now based on 2x Jun'23E ABV (1.7x earlier)," Emkay Global has said.
Emkay Global sees a 51% upside on the stock of power generation company NTPC. The stock of NTPC was currently trading at Rs 118 and the broking firm has set a target of Rs 179 on the shares.
"NTPC is set to add 14GW of thermal and 14GW of RE capacity over the next 3-4 years. NTPC has raised its RE target to 60GW by 2032 from 30GW, and we believe given the huge opportunity in the country and low cost of funding for NTPC, the company is set to achieve it," the broking firm has said.
According to it, low penetration of durables, various PLI schemes, focus on localization in defense and rising per capita income will all boost demand growth in the medium term.
NTPC: Upside potential of 51%
"We assume coverage on NTPC with a Buy rating and a target price of Rs 179, based on SoTP. We estimate RoE in FY21-FY24 to be 12.5% - 200bps higher than the last 5-year average. We believe that improving RoE profile is one of the most important factors for re-rating in Utilities. We also note that EPS CAGR in FY21-FY24E stands at 8%," the broking firm has said.
The stock of NTPC was trading at Rs 118 on the NSE.
The stocks mentioned above are based on the report of Emkay Global Financials. Investing in stocks are risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly. Please consult a professional advisor.