Stocks To Buy: Top Brokerage Bets On Three Quality Stocks For Investment, Sees Gains Up To 16%

HDFC Bank

HDFC Bank is one of the largest and leading private sector banks in India having a market cap of Rs 8,37,376 crore. It is a large-cap bank. The brokerage initiated a buy call with a target price of Rs 1750 per share. With the given target price, the stock is likely to give a 16% return.

On NSE, the stock last traded at Rs 1,507.55 per share. It recorded its 52 week high in April 2022 at Rs 1,722.10 and 52 week low in June 2022 at Rs 1,271.60, respectively.

The stock has given decent returns over the past 5 years. In the past 1 week, the stock gave 3.65% positive returns. In the past 1 and 3 months, it has given 6.68% and 5.16% positive returns on investments. However, over a year, the stock fell by 4.67%. In the past 3 years, the stock has given 21.57% positive returns and 64.7% in the past 5 years.

Brokerage's Views & Comments

HDFC Bank, India's leading private sector bank continues to deliver consistent growth and operational performance across cycles. As of FY22, HDFC Bank's market share stood at 11.2%/9.5%/23% in Advances/Deposits/credit cards in force (volume) respectively. After a challenging FY20, the credit growth for the industry has picked up and being the dominant private sector bank, it is bound to gain market share. All three segments-Retail/ CRB/Corporate loans are witnessing strong momentum and with higher share of retail loans in mix ahead, margins are expected to improve. Despite increasing competition and attractive rates offered by mid and small peer banks, HDFC Bank has been able to maintain its market share. Besides, more than 50% of loan book is floating rate and as it gets repriced, with a lag in reset in liability book, margins will stay strong. Merger with HDFC Ltd is expected to further strengthen the bank's leadership position as growth run way remains fairly large. The bank expects to complete the merger ahead of time by Q1FY24 instead of the original target of Q3. Post merger, there could be faster deposit accretion while unsecured loans' share in the merged entity might remain at 11%. "NIMs are expected to expand as share of retail would rise amid lower PSL requirements. Thus, we have positive view on HDFC Bank Ltd and recommend to BUY the scrip with target of Rs 1,750 from 12 months investment perspective. The scrip is currently valued at P/B multiple of 2.64x on FY24E book value," the brokerage has said.

Titan Company Limited

Titan Company Limited is a large-cap Tata Group company having a market cap of Rs 2,45,353 crore. Ashika Research suggests "buy" stock with a target price of Rs 3,120 per share. It sees a potential upside of up to 13% from its current level.

The stock's last traded share price on NSE is Rs Rs 2,763.65 per share. The stock is trading near 52 week high, only Rs 37.9 below the high. Its 52 week high is Rs 2,791 and the 52 week low is Rs 1,825.05, respectively.

The stock has performed well over the past 5 years. It has given 7.36% in the past 1 month, 14.37% in 3 months, 14.3% positive returns in 1 year, respectively. In the past 3 years, the stock has given 112.28% positive returns and 318.89% multibagger returns.

Brokerage's Views & Comments

Despite Covid-induced challenges in the last two years, Titan has delivered a robust performance over FY17-22 and the company expects the growth narrative to remain strong over FY22- 27E. As per management, the tailwind in demand has been led by product differentiation and premiumisation which led to higher volume along with growth in average selling price, new product launched, and net store addition. Its FY27E target is a sum of a consistent strong CAGR in Jewelry (~20%) and Caratlane, an incremental contribution from international operations, Taneira and Handbags (~3% CAGR contribution), and a growth pick-up in Watches/Eyewear vs. a 3-5% CAGR over FY17-22. Hallmarking regulations that mandate the selling of certified high-purity jewellery would reduce the pricing differential between organized and unorganized players, leading to market share gains for organized players like Titan. The management remains optimistic on the outlook for the upcoming festive seasons and it is visible in the positive consumer sentiments across business categories.

"Titan is focusing on market share gains by entering newer markets. The company is introducing products as per localized tastes and preferences. It has witnessed considerable success in newer markets in the South as well as parts of eastern India. Thus, we remain positive on Titan as the company is expected to glitter in Q2FY23 on continued market share gains and premiumisation theme. Further, we believe that the continued sales momentum across business divisions would have positive impact on the organized jewelry retail benefiting players like Titan. We recommend our investors to BUY Titan with target of Rs 3,120 from 12 months investment perspective. The scrip is currently valued at P/E multiple of 62.1x on FY24E Bloomberg Consensus EPS of Rs 44.4," the brokerage has said.

Reliance Industries Limited (RIL)

RIL is an Indian conglomerate that operates various businesses. It is a large cap Bluechip stock having a market cap of Rs 17,28,813 crore. The brokerage has placed a buy call and sees a potential upside of up to 12% from its current level. It has given a target price of Rs 2,850 per share.

The stock on NSE last traded at Rs 2,555.15 per share. Its 52 week high on NSE is Rs 2,856.15 and the 52 week low is Rs 2,180, respectively.

The stock  has delivered decent returns over the past 5 years. In the past 1 week, it gave 4.24% positive, and in 1 month it gave 7.84% positive returns. However, in 3 months it gave a 1.96% negative return. In the past 1 year it gave 2.88%, in 3 years 75.38% and in 5 years 170.3% positive returns, respectively.

Brokerage's View & Comments

Reliance Industries is a diversified conglomerate which is transforming itself to digital service provider from commodity business. Its recent strategic initiatives and acquisition warranted the fact that company is transforming into digital company. Reliance Industries energy business is one of the best in class, with the highest complexity globally and the lowest cost structure thus enabling the company to have stable and higher margin profile as against peers. Though, company's 2QFY23 consolidated numbers were not much satisfactory mainly on EBITDA and PAT level, the digital and retail division reported robust growth numbers. O2C division reported weak numbers during 2QFY23 which impacted the overall performance. The operating profit during 2QFY23 was impacted by the special additional excise duty imposed by the government in July.

"The government's special additional excise duty on export of refined products cost the company Rs 4,039 crore in the September quarter. However, Reliance Jio, Retail and Oil & Gas exploration business witnessed strong momentum and the momentum is expected to continue in coming quarters also. Hence, we have positive view on Reliance Industries given its strong balance sheet, management pedigree and global tie ups. We recommend BUY on Reliance Industries with target price of Rs 2,850 from 12 months investment perspective," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage report of Ashika Research. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.