From SBI to Sun Pharma: Kotak Securities lists top stock picks for March 2022

Pranati Deva
Updated: 04 Mar 2022, 11:02 AM IST
TL;DR.

Equity markets globally turned volatile towards the latter part of February 2022 amid the Russia-Ukraine conflict. Further rise in oil prices and globally elevated inflation levels continue to be a challenge for the equity markets. Global and domestic markets over the next few weeks will remain volatile, influenced by the current geopolitical tension. Focus should be towards long term investment in quality large-cap and mid-cap stocks with strong earnings growth and valuation comfort. Keeping that in mind, Kotak Securities has come out with top picks for the month of March.

Bata India: The brokerage has a 'buy' call on the stock and has a target of ₹2,380 per share, indicating an upside of 31 percent. Bata has reported better than expected numbers for Q3FY22 and the management has also mentioned that they observed improvement in sentiment in Q3. Kotak expecta earnings to grow by 35.3 percent in FY23E and by 29.3 percent in FY24E.

Cummins India: The brokerage has a 'buy' call on the stock with a target at ₹1,160 per share, implying an 21 percent upside. The company is the top performer in capital goods coverage in COVID times after 7 years of no growth. Stiffer emission norms will enhance competitive positioning & export potential, noted Kotak and added that the management has reiterated the firm being a beneficiary of energy transition. It expects earnings per share (EPS) to grow at 27.2 percent in FY23 and 16 percent in FY24.

M&M: The brokerage is bullish on the stock with a target at ₹1,180 per share, indicating a massive upside of 49 percent. Order book of the auto major remains strong in the passenger vehicle segment. Kotak expects strong recovery in auto volumes once chip shortage situation resolves. MM has been successful in turning around international farm and auto subsidiaries, it added. It expect earnings per share (EPS) to grow by 26.9 percent in FY23E and 12.2 percent in FY24E.

SBI: The brokerage is positive on the stock with a target at ₹700 per share, which implied an upside of 44.8 percent. SBI reported 60 percent YoY earning growth on 33 percent YoY decline in provisions. All asset quality trends are improving and RoE is exceeding 12 percent, noted Kotak. It added that valuation remain undemanding given medium trends expected on RoE.

Sun Pharma: The brokerage has an 'add' call on the stock with a target at ₹975 per share, an upside of 15.5 percent. The firm withnesses a healthy all-round show in Q3FY22, delivering on multiple fronts. Strong YoY and QoQ uptick in global specialty sales was also seen. Domestic revival is on track with renewed focus. Further, continued execution in specialty provides further re-rerating potential, stated Kotak.

Tata Steel: The brokerage is bullish on the stock with a target at ₹1,221 per share, indicating an upside of 33 percent. Q3FY22 moderated on expected lines on higher coal costs, both in India and Europe. Higher coking coal prices and lower prices should further reduce margins in India, said Kotak. It added that Europe margins are likely to benefit from contract revisions.

Tech Mahindra: The brokerage has a 'buy' call on the stock with a target at ₹1,800 per share, implying a 27.7 percent upside. The company witnessed a steady quarter, muted margin and weak free cash generation. Multiple growth engines are likely to drive solid revenue growth, noted Kotak. It broadly retains estimates and target price as aggressive acquisitions are worrisome. It expects earnings to grow by 16.4 percent in FY23E and 13.1 percent in FY24E.

First Published: 04 Mar 2022, 11:02 AM IST