Diwali Muhurat Trading: From CAMS to Metro Brands, JM Financial lists its 6 top stock picks

Pranati Deva
Updated: 24 Oct 2022, 05:28 PM IST
TL;DR.

After a brief outperformance in the last few months, midcaps have again turned underperformers in the month of October so far. The Nifty Midcap index is down over 1.5 percent in the current month as against a flat Nifty. Midcaps have also lost most gains for 2022 YTD and is up just half a percent as against a 1.5 percent rise in Nifty. However, is the recent correction in the midcap space, an opportunity to accumulate midcaps at Diwali? Brokerage house JM Financial has come out with a list of 6 midcaps you can buy this Diwali. Among largecaps, it likes Titan, ICICI Bank, ITC, Sun Pharma, Maruti and Siemens. Let's take a look at its midcap picks:

KPIT Tech: The brokerage has a target price of ₹830 for the stock, indicating an upside of nearly 26 percent. As per the brokerage, KPIT’s software integration capabilities with top global automobile manufacturers will provide significant value creation compared to its peers. KPIT’s further expansion in the field of middleware and cloud base connected service will also provide significant visibility to the earnings growth visibility of the company, it added. In the last 1 year, the stock has given a massive 95 percent return to its investors.

CAMS: The brokerage has a target price of ₹3,300 for the stock, indicating an upside potential of 27 percent. It is a mutual funds transfer agency commanding a 70 percent market share while the rest lies with KFin Technologies (KFin), noted the brokerage. JM believes CAMS would continue to maintain its leadership position in RTA (Registrar or transfer agents) industry and would continue to grow both AUM-based revenue as well as non-AUM-based revenues. The stock, however, fell 16 percent in the last 1 year.

Schaeffler India: The brokerage has a target price of ₹4,045 for the stock, indicating an upside of 27 percent. As per JM Financial, the company is likely to be a key beneficiary of the electrification and hybridization trend for the domestic business, as India is expected to witness faster growth in electric and hybrid vehicles going forward. With access to a robust product portfolio from the parent’s basket, new order wins in the automotive segment and ramp-up in exports will continue to drive strong growth for the company, it added. JM expects new business wins in the automotive segment and a rising share of exports to drive outperformance, delivering 18%/25% CAGR in sales/earnings over CY21-24E. The stock doubled investor wealth in the last 1 year, up 100 percent.

Metro Brands: The brokerage has a target price of ₹1,070 for the stock, indicating an upside of 15 percent. Metro Brands is India’s second-largest footwear retailer in India. Metro Brands operated 598 Stores across 136 cities spread across 30 states and union territories in India. The brokerage is bullish on the stock on the back of aggressive store expansion, expansion in gross and EBITDA margins arising from operating efficiencies, normalized operations, and successful scale-up of new and existing brands. The recent shift of consumer behavior towards footwear now being considered as a fashion statement rather than a value purchase a few years ago has led to increased premiumisation of products, leading to a re-rating of the sector, said the brokerage and Metro is best placed within the footwear retail plays.

Praj Industries: The brokerage has a target price of ₹550 for the stock, indicating a potential upside of 25 percent. Praj Industries has grown to become one of the most reputed biotechnologies and engineering companies in the world, said the brokerage. With an order book of nearly ₹3,241 cr, Praj is one of the best plays of the global bioeconomic revolution in our view. Praj commands about 10 percent market share measured by production by ethanol plants globally installed by the Company, noted JM. The company’s strong ability and vast experience in technology, manufacturing, project management & operations are key moats for the business, it added. The stock has risen 30 percent in the last 1 year.

Cholamandalam Investment: The brokerage has a target price of ₹950 for the stock, indicating an upside of 27 percent. Cholamandalam Investment and Finance (CFIC) leading mid-cap vehicle financier expanding its presence into housing finance. It has a proven player with a strong ability to deliver industry-led growth with its strong diversified product portfolio basket with a strong presence, said the brokerage. The firm's ability to deliver industry-leading growth in the loan book, coupled with its strong asset quality and consequently healthy RoE of 19%, CIFC would continue to command premium valuations relative to its listed peers in Vehicle Finance, noted the brokerage. JM also estimates its AUM growth to remain on a healthy trajectory, driven by an acceleration in new products, and expansion in new markets. It forecasts earnings CAGR of 19% over FY22-24E driven by healthy AUM growth trends, better margins, product portfolio expansions, and improvement in asset quality. The stock jumped 25 percent in the last 1 year.

First Published: 22 Oct 2022, 09:54 AM IST