Top picks: Angel One picks 6 stocks with a potential upside of 30-68%

AU Small Finance Bank: The brokerage has a target price of ₹848 for the stock, indicating a potential upside of 30 percent. AU Small Finance Bank is one of the leading small finance banks with a Total Loan AUM of ₹47,831 crore. at the end of Q4FY22, noted the brokerage. It has a well-diversified geographical presence across India and a very high exposure to high-margin retail business, which accounted for 80 percent of AUM at the end of FY22, said the brokerage. Angel One believes that the worst is over for the bank and expects continued improvement in asset quality in FY2023, which should lead to a rerating. Reducing the cost of funds will also help NIM expansion going forward, it added.

Sona BLW Precision: The brokerage has a target price of ₹843 for the stock, indicating a potential upside of 61 percent. Sona BLW, one of India's leading automotive technology companies, derives 50 percent of its revenues from Battery Electric Vehicles (BEV) and Hybrid Vehicles and stands to benefit from the global electrification trend, said the brokerage. As per the brokerage, it has a strong positioning in the Indian Differential Gears market across PV, CV, and tractor OEMs and it continues to gain market share globally aided by its combined motor and driveline capabilities. Focus on R&D is yielding results in new product development which is likely to aid further growth, it added.

Suprajit Engineering: The brokerage has a target price of ₹485 for the stock, indicating a potential upside of 42 percent. As per the broekrage, the firm is the largest supplier of automotive cables to the domestic OEMs with a presence across both 2Ws and PVs. SEL overall has outperformed the Indian Auto industry in recent years aided by market share gains as well as commercialization of new products, noted Angel One. The company believes that consolidation of vendors and new client additions would help in maintaining the trend of market/wallet share gains, it added. SEL has grown profitably over the years and as a result, it boasts a strong balance sheet and the brokerage believes SEL is a prime beneficiary of a ramp-up in production by OEMs and its newly developed products for EVs would support revenues due to higher kit value. Its premium valuations are justified in our opinion owing to its strong outlook and top-grade quality of earnings, said the brokerage.

Jubilant Ingrevia: The brokerage has a target price of ₹700 for the stck, indicating an upside of 50 percent. As per the brokerage, the company derives 56 percent of its revenues from the life science chemicals division while the specialty chemicals and nutrition & health solution business account for 28 percent and 15 percent of revenues respectively. At current levels the stock is trading at P/E multiple of ~13.5xFY24 EPS which is at a significant discount to other chemical companies, therefore, the brokerage believes that there is value in the stock at current levels and hence rate it a BUY.

Amber Enterprises: The brokerage has a target price of ₹3,850 for the stock, indicating a potential upside of 68 percent for the stock. Amber Enterprises is the market leader in the room air conditioners (RAC) outsourced manufacturing space in India. As per the brokerage, Amber would outperform the industry due to its dominant position in Room AC contract manufacturer, increase in the share of business in existing customers and new client additions. Going forward, Angel One expects healthy profitability on the back of its foray into the Commercial AC segment, entry into export markets, and participation in the PLI scheme.

Devyani International: The brokerage has a target price of ₹255 for the stock indicating an upside of 37 percent. Devyani is Yum Brands’ largest franchisee in India, with more than 800 stores including KFC, Pizza Hut and Costa Coffee. As per the brokerage, the Quick service restaurants industry is expected to grow 23% CAGR over FY20-25 which would benefit player like DIL. Going ahead, it expects DIL would add 200 stores per annum (at least 3-4 years) which would drive strong revenue growth. Lower capex and improving store-level economics would boost the operating margin going ahead. Angel One sees DIL reporting strong top-line growth and improvement in operating on the back of aggressive store addition, improving store unit economics and strong brand.