Markets have been on a roller-coaster ride, moving between losses and gains. Increasingly, volatility has become the name of the game. A lot of retail investors are piling into stocks, and hence some caution is desirable.
"Globally, markets witnessed a second day of uptick on the back of robust corporate earnings and renewed optimism about the economic recovery. US Dow climbed up 850 points (2.5%) in the last two trading sessions, almost recovering its losses (of nearly 1000 points) in the previous few days," Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd says.
Investors with a long-term perspective only need to take a call on the markets, as the short term remains volatile. Here are two stocks that you could buy as recommended by brokerage firm, Emkay Global.
Buy ICICI Prudential Life Insurance for a 24% upside target
Emkay Global has set a price target that is 24% higher on the stock of life insurance company ICICI Prudential Life Insurance. That too the firm believes that the target price could be achieved in a period of 1-year.
According to the brokerage firm, the VNB margins are witnessing an increment. It also believes that the increasing traction in single-premium products supports strong APE growth.
"APE grew 48% yoy to Rs 12.2 billion, with ICICI Bank continuing to distribute single-premium and annuity plans heavily. Management is focused on improving the growth profile in the coming years by entering into more bancassurance tie-ups and rolling out new products consistently. By FY23, the company intends to achieve VNB which is two times that of its FY19 VNB. We are assuming 25.6% VNB CAGR in FY21-24E, with steady margins of 26.3%, Emkay global has said in its report.
We roll forward to Sep'22E, and accordingly revise our target to Rs750, corresponding to 2.7 times P/Sep'23E enterprise value. Upgrade to Buy with an overweight stance in Insurance EAP," the brokerage has said.
ICICI Prudential Life Insurance shares were last seen trading at Rs 635 on the NSE.
Buy the stock of Jubilant FoodWorks, says Emkay Global
This company is the largest food service Company. Jubilant FoodWorks has master franchise rights for three international brands, Domino's Pizza, Dunkin' Donuts and Popeyes addressing three different food market segments.
According to the brokerage firm, the stock of Jubilant FoodWorks has a price target of Rs 3,400, as against the current market price of Rs 3,100. Emkay Global believes that the first quarter performance for 2021-22 was steady and the reopening would only accelerate recovery.
The brokerage has said that margins were steady due to efficient cost structure and one can expect some more gains ahead.
"Despite 15% lower revenues QoQ, EBITDA margins at 24.1% largely remained flat, helped by a variable employee cost structure (down 18% qoq) and likely benefits of some rental concessions. Gross margins remained stable at 77.2% in Q1. Jubilant Foodworks has taken a modest hike in product prices and delivery charges at Q1-end to wade off the impact of raw material/fuel inflation. Going ahead, it expects to sustain EBITDA margins with plans to invest into digital capabilities," the brokerage has said.
In addition to the strong cost control in Q1, the management commentary on aggressive store additions and thrust on digital & tech initiatives were key positives, the firm has noted. "In our view, Jubilant FoodWorks strong growth outlook, led by SSG recovery on reopening, and a solid expansion plan provide more upsides. Maintain Buy with a target price of Rs 3,400 (55x Sep'23E EPS)," the brokerage has said.
The 2 stocks picked are from the research report of Emkay Global Financial Services. Investors need to do their own analysis and research before buying the stock. The author, Greynium Information Technologies Pvt Ltd and the brokerage should not be held responsible for any losses incurred based on a decision from the article.