2 Large Cap Stocks From Auto Sector Rallies 5-7% In A Day, Should You Buy?

On Friday, domestic indices fell more than 2% intraday as market jitters about the Budget persisted. The Nifty 50 fell 287.60 points to 17,604.35, and the BSE Sensex fell 874.16 points to settle at 59,330.90. Major stocks witnesses the fall. However, two stocks from the auto sector, namely Tata Motors Ltd. (TML) and Bajaj Auto Ltd., were the top gainers, gaining 5-7%. The leading brokerage firm ICICI Direct has picked these two stocks. Check below to know more.

Tata Motors Ltd. (TML)

ICICI Direct has a buy on stock of TML with a target price of Rs 530 apiece. According to the given target price, stock purchased at the current market price is likely to give return up to 19% from its current level in 12 months. TML is Tata Group's large-cap Auto Sector stock having a market capitalisation of Rs 1,39,178 crore.

On NSE, the share price of TML surged 6.34% and closed at Rs 445.60 apiece. The stock recorded its 52 week high on 31st January 2022 at Rs 520 apiece and 52 week low on 12th May 2022 at Rs 366.20 apiece on NSE, respectively.

It moved up 6.99% in a week, however, it fell 0.05% in 1 month. It moved up 4.39% in 3 months, whereas, it fell 18.39% in the past 1 year. In the past 3 years, it gave the highest 110.82% return. In the past 5 years, it fell 5.3%.

Brokerage Comments

According to the brokerage, TML's stock price has grown 1.7% over the past five years (~Rs 383 levels in January 2020), in line with the broader Nifty Auto index. "We upgrade the stock from HOLD to BUY due to JLR's progressive volume recovery, healthy positive EBIT margin profile and FCF visibility for FY24E, with fundamental drivers for healthy growth in domestic operations. Introducing FY25E but continuing to value it on FY24E we arrive at Rs 530 as the target price for TML on an SOTP basis (10x, 2.5x FY24E EV/EBITDA on India, JLR; Rs 158 value to Indian EV business; earlier TP Rs 465)," the brokerage has said.

Bajaj Auto Ltd.

ICICI Direct has placed a "Hold" tag on the stock of Bajaj Auto with a target price of Rs 4,100 apiece. According to the brokerage, in 12 months, the stock is likely to be given up to 5% return if purchased at the current market. Baja Auto is a flagship company of Bajaj Group engaged in two-wheeler and three-wheeler manufacturing. It is a large-cap stock having a market capitalisation of Rs 1,05,186 crore. 

On NSE, the shares of Bajaj Auto gained 5.90% and closed at Rs 3,936.75 apiece. The stock recorded its 52 week high on 1 September 2022 at Rs 4,131.75 apiece and 52 week low on 7 March 2022 at Rs 3,125 apiece, respectively.

The stock in a week gained 10.19%. It gave 9.63% in 1 month and 8.68% in the 3 months, respectively. In 1 year it gave 12.44% positive returns. In 3 years it gave 27.71% positive return. In the past 5 years, it gave 18.87% positive returns.

Brokerage Comments

According to the brokerage, BAL's stock price has grown ~2.8% CAGR (from Rs 3,240 in January 2018) over five years in line with the broader Nifty Auto index. "We maintain HOLD rating on BAL following slower pace of volume recovery in export markets and gradual inching up the play in EV domain by the company with captive electric-3-W launch expected in March 2023 Target Price and Valuation: Introducing FY25E, we now value BAL at Rs 4,100 on SOTP basis (15x PE on FY24-25E average EPS, stake in PMAG; earlier TP: Rs 3,910)," the brokerage has said.

Disclaimer

The stocks have been picked from the brokerage reports of ICICI Direct. 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 consult with certified experts before making any investment decision.