Motilal Oswal Institutional Equities has recommended buying the stocks of Ashok Leyland and Sun TV Network for good pretty decent gains.
Broking firm, Motilal Oswal has placed a buy call on the stock of Sun TV with a target price of Rs 625, which is about 22% higher from the current levels of Rs 505.
According to Motilal Oswal, Sun TV is planning a series of non-fiction content across all channels, along with a revamp of fictional content.
"It gained 4-5% market share and touched 45% viewership in the Prime Time segment. It plans to invest Rs 12 billion in movie production over the next 1.5-2 years. Five big ticket movies (contributing 50%) are to be completed by Oct'21. One big ticket movie starring Rajnikant is lined up for release this Diwali (4th Nov'21)," the broking firm has said after speaking to the management.
Sun Next OTT has 23.3m subscribers largely from B2B telcos. Its target is to have 11 million subscribers (20% of South Indian homes) and will intensify its original content once its existing movie production is complete.
According to Motilal Oswal, Sun TV has a healthy liquidity, with a net cash of over Rs 39 billion at present.
"This offers it room to intensify investments in the linear as well as OTT space. This, along with a higher dividend payout potential (45-85%) and low valuation, offers support. SUN TV trades at a FY22E/FY23E P/E of 11.7 times and 11.1 times. We value it at a FY23E P/E of 13 times to arrive at our target price of Rs 620 per share. We maintain our Buy rating on the stock," the brokerage has said.
Buy Ashok Leyland stock
The brokerage is also bullish on the shares of auto major, Ashok Leyland and sees returns of around 22% for a target price of Rs 155, from the current price of Rs 125.
"While there are headwinds from higher diesel prices and supply-chain issues, commercial vehicles volumes should bounce back, driven by Infra and an economic recovery. LCVs have seen a strong demand recovery on the back of e-commerce and FMCG activity. The intensity of the third COVID wave is an unknown, but higher diesel prices and financing issues will get addressed through a demand recovery," the brokerage has said.
Valuations at 24.3x/10.9x FY22E/FY23E EV/EBITDA are at an early recovery cycle, Motilal Oswal has said.
"This does not fully reflect Ashok Leyland's focus on adding new revenue streams and profit pools. We maintain our Buy rating with a target price of Rs 155 per share (12x FY23E EV/EBITDA)," Motilal Oswal has said.
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