3 Stocks To Buy According To Motilal Oswal for Long-term Investors

Broking firm, Motilal Oswal has a buy call on the stock of ICICI Bank, HDFC Life and Reliance Industries.

Buy ICICI Bank, says Motilal Oswal

The brokerage is bullish on the stock of ICICI Bank and has set a target price of Rs 1,000 on the stock, post quarterly numbers of the bank, as against the current market price of Rs 847.

"ICICI Bank reported a strong 2QFY22, led by healthy NII growth (11 basis points NIM expansion), strong fee income trends, and controlled provisions. The bank reported a 5%/9% beat to our PPOP/net earnings estimate and is progressing swiftly towards earnings normalization," the brokerage has said.

"The additional COVID-19 provision buffer (0.8% of loans) provides a comfort on credit cost. Restructured loans increased to 1.3% of loans. The bank carries 20% provisions on this portfolio. We increase our estimates for FY22/FY23 by 5%/2.5% and expect RoA/RoE to improve to 2%/16.6% by FY24E. We maintain our Buy rating with a revised SoTP-based target price of Rs 1,000 per share (2.8x Sep'23E ABV for the bank). ICICI Bank remains our top pick in the sector," Motilal Oswal Institutional Equities has said in its report.

Buy Reliance Industries

The broking firm also has a buy call on the stock of Reliance Industries with a price target of Rs 2,900, as against the current market price of Rs 2,597.

"Using SoTP, we value the Refining and Petrochemical segment at 7.5x FY24E EV/EBITDA to arrive at a valuation of INR775/share for the standalone entity. We ascribe an equity valuation of Rs 880 per share to RJio and Rs 1,200 per share to Reliance Retail, factoring in the recent stake sale. Our higher EV/EBITDA multiple of 33x/19x for Retail/Digital Services underscores new growth opportunities in the Digital space, along with the rationalization of tariffs in RJio. We reiterate our Buy rating with a target price of Rs 2,900 per share," the brokerage has said.

Buy HDFC Life Insurance

Motilal Oswal Institutional Equities also has a buy call on the stock of HDFC Life Insurance. According to the brokerage, the management remains focused on maintaining a balanced product mix across the business, with an emphasis on product innovation and superior customer service.

"In the near term, Non-PAR/Annuity/Credit Life is likely to witness healthy growth. Demand for ULIP has bounced back strongly, but growth depends upon the performance of the capital market. Persistency trends remain steady across cohorts and will continue to aid robust renewal trends. We estimate VNB margin to reflect stable trends, driving 22% VNB CAGR over FY21-24E, with margin to sustain 27% over FY24E. We estimate FY24E operating RoEV 19%. We maintain our Neutral rating with an unchanged target price of Rs 750 per share, corresponding to 3.8 times Sep'23E EV," the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal Institutional Equities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.