Indian share markets were trading between gains and losses in Tuesday’s volatile session. In the afternoon deals, BSE Sensex made a fresh record high of 48,369.17, while the broader Nifty 50 index crossed the crucial 14,150 levels. In the last month of the calendar year 2020, Nifty 50 index gained over 8 per cent. Domestic research and brokerage firm Emkay Global Financial Services has come up with five large-cap high conviction stocks. Despite volatility in the Indian share market, the brokerage firm believes, these stocks may rally going ahead.
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State Bank of India: The brokerage firm likes SBI as it has one of the lowest GNPA ratios among PSBs at 5.3 per cent. SBI remains reasonably capitalized by PSB standards, with CET 1 at 10.5 per cent and additional Tier I of 1.4 per cent. Enkay Global believes that the bank could be a significant beneficiary of any reacceleration in corporate resolutions.
ICICI Bank: With a ‘buy’ rating to the stock, Emkay Global Financial Services expects overall asset quality experience for ICICI Bank in the current cycle to be far better than market expectations, given its better-quality retail portfolio built largely around captive customers. “After a long, ICICI has credible and stable top management with an unwavering focus on sustainable profitability vs. growth, which we believe deserves due recognition amid the spate of management rejig in large peers,” it said.
BPCL: The brokerage firm sees an upside of 21.42 per cent from the previous close in Bharat Petroleum Corporation Ltd, with a target price of Rs 480 apiece. The domestic brokerage firm sees marketing margins to remain healthy. “We value BPCL’s core business at 6.5x blended EV/EBITDA, BORL-NRL at 5-6x EV/EBITDA and investments at a 30-50% discount,” it said.
Hero MotoCorp: The brokerage firm noted that Hero MotoCorp has been able to defend the market share with its strong brand equity, solid product portfolio and extensive distribution network. Valuations are reasonable (16x/15x FY22/23E EPS) compared with a historical multiple of 18x. Emkay Global has reaffirmed its ‘buy’ rating. It will take hero MotoCorp to jump over 26 per cent from the previous close to reach the target price of Rs 3,839 pegged by the brokerage firm.
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United Breweries: According to the brokerage firm, United Breweries offers a strong long-term growth opportunity in beer. Softening input prices, recovery in volumes, cost-reduction measures and low competition can offer sharp improvement in margins, it added. “We forecast a full volume recovery by FY23 and 400bps margin improvement. Valuations at 44x FY23 EPA appear reasonable,” the brokerage firm added.
(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)