All eyes on corporate earnings: 3 stocks that look attractive

All eyes on corporate earnings: 3 stocks that look attractive

Market


The Indian benchmark indices – Nifty, Sensex – have been reeling under selling pressure for last 3 days dragged by weak global cues. The US Fed minutes confirmed the central bank’s focus on curbing inflation.

Given the economic and geopolitical uncertainty around the world, Indian market has been trading sideways since the start of the year as investors wait on the fence.

Amid all the global tensions, the focus in domestic market is now on corporate earnings and Budget 2023-24. We collate 3 stock picks from different brokerages amid such an environment.   

Sensing the profitability of Private sector banks, pumped-up demand in the automobile industry, and expanding capital goods market, brokerage firms have picked Schaeffler India, Finolex Cables Ltd, and CSB bank as their top stocks recommendation for next quarter.

CSB Bank

Brokerage: LKP Securities Limited

Recommendation: CMP: 248| Target Price: 313

The stock brokerage firm has suggested the private sector’s CSB Bank by looking at its healthy credit growth trajectory driven by Gold loans, high yields, strong asset quality, lower credit cost to drive return ratios, etc.

“The bank is well equipped to report superlative return ratios (FY24E ROA/ROE of 2.1%/18.7%) driven by better operating performance, balance sheet growth, and improving asset quality. The stock trades at 1.2xFY24E Adj. BVPS of Rs209. We value the bank at 1.5xFY23E Adj. BVPS and arrive at a price target of Rs313; a potential upside of 25%.” says the brokerage firm.

Finolex Cables

Brokerage: Sharekhan

Recommendation: CMP: 536 | Target Price: Rs. 660

Based on the long-term growth of the company due to rising demand in such as auto, construction, and industrials, the brokerage firm believes that Finolex Cables can perform well by matching its peers, given its improving product mix and strong long-term growth prospects.

“ With strong growth visibility, we retain our Buy rating on the stock with a revised SOTP-based PT of Rs. 660 (14x its P/E on December FY2024E standalone Core EPS and 30% holding company discount for its stake in Finolex Industries). We believe that the dispute between promoters regarding control of the company is an overhang on the stock and resolution of the same would be a key upside catalyst,” says Sharekhan

Schaeffler India

Brokerage: Sharekhan

Recommendation: CMP: 2673.35 | Target Price: Rs. 3,328

The brokerage firm has upgraded the rating on Schaeffler India Limited (SIL) to buy for an unchanged 12-month target price of 3,328, based on the robust demand outlook for its automotive and industrial businesses, and comfortable valuations, post 18% correction in stock prices. With strong backing from the parent company, SIL can seek to take advantage of the electrification and hybridisation trend. Sharekhan expects the company’s earnings to post a 35.2% CAGR during CY2021-CY2023E, driven by a 29.4% revenue CAGR and a 110-bps improvement in EBITDA margin from 17.5% in CY2021 to 18.6% in CY2023E.

“The premium valuations are justified, given the pedigree of its parent company and its capability to outperform industry and peers. We upgrade SIL to a Buy rating with a 12-month PT of Rs. 3,328.” states the stock brokerage firm.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.


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