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ICICI Securities Lists Out 3 Stocks To Buy With Strong Potential

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We have arrived at a point when an upbeat equities outlook and numerous rounds of liquidity influx have pushed equity markets to new highs, implying a considerably more hopeful economic rebound than actual macroeconomic evidence suggests. The spotlight will stay on profits in the coming week, and this aspect may determine market direction. ICICI Securities, one of the country's top brokerage houses for research-backed stock advice, has advised investors to buy Wipro, 5 Paisa, and Sandhar Technologies stocks.

 

5 Paisa Capital

5 Paisa Capital

5 Paisa is a well-known discount stock broker backed by the IIFL company, which is run by Nirmal Jain. The company has cash market share of 4.43% as of June 2021. Paisa Capital Ltd. is a company that was founded in 2007. Its share price presently is 552.45. It currently has a market capitalization of Rs 1624.25 crore. The share price of 5 Paisa on Friday ended the day at Rs 552.20, up4.99% on NSE.

"5 Paisa share price has grown by ~2.3x over the past four years (from Rs 220 in November 2017 to Rs 525 levels in July 2021). Being a new age fintech broker, we retain our BUY rating on the stock. Target Price and Valuation: We value 5 Paisa at ~29x P/E on FY23E EPS to arrive at revised TP of |600 per share," the brokerage report said.

5 Paisa: Key triggers for future price performance
 

5 Paisa: Key triggers for future price performance

Key triggers for future price-performance:

  • Focus on aggressive client accretion to aid ADTO and thereby topline
  • Revamp existing product suite and new product launch Improvement in technology & branding to support incremental accretion
  • Operating leverage with revenue growth outpacing cost of acquisition
  • Operating leverage & tight cost control seen aiding profitability
  • MTF surge, clients surge to aid earnings growth and return ratios.

Alternative Stock Idea:

In addition to 5 Paisa, we prefer MCX in our coverage.

MCX is India's leading commodity derivatives exchange, having a market share of over 96 percent in the commodities futures area as of FY21. BUY with target price of Rs 2,000, it added.

Sandhar Technologies

Sandhar Technologies

Sandhar Technologies (STL) is a significant auto accessory company that primarily serves the Indian vehicle OEM market with a variety of products including locking systems, aluminium die-casting, and interiors (together form 57 percent of sales). On Friday, stock ended the trade at Rs 292, up 0.74% on NSE.

Founded in 1987, with a lengthy history of client partnerships in a variety of industries. Combined, the 2-W and PV accounted for 80% of FY21 sales.

Over the years, the blended EBITDA margin profile has improved steadily, accompanied by continuous CFO creation and good capital efficiency.

"STL got listed on the bourses in March 2018. Over the past three years, the stock has not generated any meaningful returns for its shareholders. However, we believe STL offers significant margin of safety at the current market price (CMP) with attractive risk-reward at play  We initiate coverage under I-Direct Instinct format with a BUY rating Target Price and Valuation: We value STL at Rs 365 i.e. 15x FY23E EPS of Rs 24.2, the ICICI Direct said.

Sandhar tech: Key triggers for future price performance

Sandhar tech: Key triggers for future price performance

Key triggers for future price-performance:

  • High double digit Sales, PAT growth lies ahead with lean balance sheet and robust capital efficiency. Expect sales to grow at 20% CAGR over FY21-23E
  • Growth will be led by (i) increase in wallet share with existing clients, (ii) new client additions & order wins, (iii) infra-revival related growth in cabin space
  • Margins to grow to 11.5% by FY23E; PAT to post ~59% FY21-23E CAGR
  • Consequent RoCE expansion on the horizon to ~17% by FY23E
  • Unaffected by EV transition in the 2-W space. STL has already on-boarded Ampere, Ather Energy, Revolt, Mahindra Electric among others in the emobility domain with talks progressively on with Ola- Electric as well
  • Trades at inexpensive valuation of ~12x P/E & ~6x EV/EBITDA (FY23E).

Coupled with expected reduction in gross debt levels, consolidated RoCE is seen improving to 16.8% in FY23E vs. 8.1% in FY21. At the CMP, we believe the company offers significant margin of safety. We ascribe BUY rating and value STL at | 365 by assigning 15x P/E multiple on FY23E EPS of |Rs 24.2, it added.

Wipro

Wipro

Wipro is a BFSI, health, consumer, energy & utility, technology, and communication IT, consulting, and BPO firm. It employs 190000 people who serve clients on six continents. Payout consistency (70%) and a healthy OCF to EBITDA ratio of 89 percent.

The stock got a buy rating from ICICI Securities, a brokerage firm. The brokerage company believes the stock has a 14 percent upside potential and has set a price target of Rs 670.

"Wipro's share price has grown by ~3x over the past five years (from Rs 210 in Jul 2016 to Rs 586 levels in July 2021). However, recent run up in price prompts us to maintain HOLD Target Price and Valuation: We value Wipro at Rs 670 i.e. 26x P/E on FY23E EPS, the brokerage said in its report.

Wipro: Key triggers for future price performance

Wipro: Key triggers for future price performance

Key triggers for future price-performance:

  • The strategy of new CEO to drive turnaround in the company
  • Restructuring of organisation, client mining, aspiration to win one large deal every quarter to drive growth
  • Higher penetration in Europe, client mining, acquisition of new logos and traction in digital revenues to further boost revenue growth.

Alternative Stock Suggestion: We favour Infosys in our IT coverage. Increased investment in digital technology has resulted in industry-leading revenue growth. BUY with a target price of Rs 1,825, it said

Disclaimer

Disclaimer

Stock investing is risky, and investors must exercise 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. Investors should take care because the markets have closed at an all-time high.

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