Stock Recommendations: Domestic equity market is reeling under severe pressure, leading to a steep meltdown in benchmarks. BSE Sensex and Nifty50 hit their new 52-week lows last week. The last week is said to be the worst one for the benchmark indices where Sensex dropped close to 3,000 points and Nifty50 tumbled about 1,000 points. Both the indices are just inches away from the bear grip.
The looming fears of global recessions and stagflation are among the major nightmares for the markets as the inflationary worries due to geopolitical worries are now spooking the world and central banks are aggressively looking to tame it.
As market experts predict more volatility ahead, they suggest that investors should look for a pool of good stocks, which can do well in the next two-three years, particularly in the bear market.
“The next two-three months would be a transitional phase for the economy and we need to brace for higher volatility, need to stick to quality stocks, and not to panic and exit,” says Siddhartha Khemka, Head of Retail Research, Motilal Oswal Financial Services
So, here are a few stocks whose valuations are significantly down from their respective 52-week high, and hence, Amarjeet Maurya, AVP – Mid Caps, Angel One Ltd, recommend buying these stocks.
CMP |Target Price |Upside
Ashok Leyland Ltd (ALL) is one of the leading players in the Indian CV industry with a 32 per cent market share in the MHCV segment. The company also has a strong presence in the fast-growing LCV segment. We believe that the company is ideally placed to capture the growth revival in the CV segment and will be the biggest beneficiary of the Government’s voluntary scrappage policy and hence rate the stock a BUY.
HDFC bank is India’s largest private sector bank with an asset book of Rs. 11.3 lakh crore in FY21 and deposit base of Rs. 13.4 lakh crore. The Bank has a very well spread out book with wholesale constituting ~54 per cent of the asset book while retail accounted for the remaining 46 per cent of the loan book. Given best-in-class asset quality and expected rebound in growth from Q2FY22 we are positive on the bank given reasonable valuations at 3.0xFY23 adjusted book which is at a discount to historical averages. We value the stock at3.7xFY23 adjusted book and arrive at a target price of Rs. 1,859.
CMP |Target Price |Upside
PI Industries is a leading player in providing Custom synthesis and manufacturing solutions (CSM) to global agrochemical players. The CSM business accounted for over 70 per cent of the company’s revenues in FY22 and is expected to be the key growth driver for the company in future. The company has been increasing its share of high-margin CSM business driven by strong relationships with global agrochemical players.
HCL Tech (HCLT) is amongst the top four IT services companies based out of India and provides a vast gamut of services like ADM, Enterprise solutions, Infrastructure management services, etc. At CMP the stock is trading at a P/E multiple of 21.5xFY23 EPS estimate which is at a significant discount to the other large-cap IT companies like Infosys and TCS and offers tremendous value at current levels given market leader status in Infrastructure management.
Marico is one of the major FMCG companies present in the hair oil, edible oil, foods & personal care segment. Marico’s products have strong brand recall coupled with an extensive distribution reach of more than 5mn outlets and a direct reach of ~1 million outlets. Marico has a strong balance sheet along with free cash flow and higher profitability. We expect Marico to report a healthy bottom-line CAGR of ~11 per cent over FY2022-24E due to better volume growth on the back of a strong brand, and wide distribution network.
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