Stocks That Sharekhan Is Betting On For Long Term Returns

Markets have rallied a great deal and investing in stocks at this juncture would require enough and more research to be done. Buying stocks in large quantities would not be advisable, given how the markets have rallied. Here are some stocks being recommended as buy from brokerage house Sharekhan. However, we at goodreturns would advocate caution and suggest a buy on declines strategy.

Tata Motors

The brokerage has a "buy" call on the stock with a price target of Rs 430. Sharekhan sees all-round improvement in Tata Motors' business and expect earnings to turn positive in FY2022 and rise by 69.1% in FY2023E, driven by a 16.7% CAGR in revenue during FY2021-FY2023E and a 130 basis points improvement in EBITDA margin.

"Retail sales and orders remain robust, which is likely to keep wholesales strong, as the issue of semiconductor chip shortage is set to improve from Q3FY22 onwards. The management stays positive on product delivery, launches and capex programs as planned earlier. With respect to the global chip shortage, chip-making facilities in Japan and Texas will take time to resume," the brokerage has said.

 

Tata Motors: Growth drivers intact

According to Sharekhan the key growth drivers at the firm are intact. With respect to the global chip shortage, chip-making facilities in Japan and Texas will take time to resume. "With the electrification to be the next motivation for the company over the next decade, JLR targets net zero carbon emissions by 2039.The management has maintained its positive guidance for its JLR business, expecting positive cashflow by FY23, net debt to be zero by FY24and EBIT margins greater than 10% by FY26," the brokerage has said.

Tata Motors: Attractive on valuations

"We expect Tata Motors earnings to become positive in FY2022E and 69.1% in FY2023E, driven by a 16.7% revenue CAGR during FY2021-FY2023E and a 130 bps improvement in EBITDA margin. Our SOTP-based valuation provides a target of Rs. 430 for Tata Motors. The stock trades at an attractive valuations at P/E multiple of 9.6x and EV/EBITDA multiple of 2.9x its FY2023E estimates. We maintain a Buy on the stock with an unchanged target price of Rs 430," the brokerage has said.

Shares of Tata Motors were last seen trading at Rs 306 on the NSE.

 

Tata Consultancy Services (TCS)

Sharekhan has also given a buy call on the stock of TCS. The company recently declared its quarterly numbers. The brokerage has maintained a buy call on the stock with an unchanged target of Rs. 3,750, given a strong revenue growth potential, resilient margin performance and strong competencies across technologies and domains.

 

"Management remains confident on reporting sustainable margins in FY2022E, aided by strong revenue growth and operational efficiencies, despite a rise in discretionary expenses. It is well-placed to capture growth and transformation opportunities. USD revenue and earnings to clock a 13%/16% CAGR over FY2021-23E; we continue to prefer TCS on account of its full-service business model, best-in class execution, consistent mega-deal wins and higher payouts," the brokerage has said.

Shares of TCS were last seen trading at Rs 3,208 on the NSE.

 

Indian Hotels

Sharekhan is also betting on the stock of India Hotels, India's largest hotel chain.

"A strong focus on building an asset-light model and recovery in the business environment will help Indian hotels recover to 80% of pre-COVID levels in FY2023 and clock strong profitability. In FY2022, the company is focusing on keeping its balance sheet lean with no major capital investments.

Stock is currently trading at 25x its FY2023E EV/EBIDTA. Any sustained improvement in the business fundamentals and reduction in debt as planned would further re-rate the stock. We maintain a Buy recommendation on the stock with a revised price target of Rs 182. Among hotels, Indian Hotels is one of the better plays in the unlock theme due to a relatively stable balance sheet, strong room inventory and brand
recognition," Sharekhan has said in its latest report. 

Disclaimer

All of the above stocks are picked from brokerage reports. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.