In a recent report, market daily Business Standard applied a bottom-up screener approach to finding out stocks that offer maximum upside potential vis-à-vis their consensus target price (TP).
They collated the TP of stocks in the BSE 200 universe with analyst coverage from at least 15 brokerages and then compared the current market price to TP to identify stocks that offer the highest upside and downside.
The result of this screener shows Bandhan Bank, UPL, Macrotech Developers (formerly known as Lodha Developers), and FSN E-Commerce Ventures (Nykaa) currently trading at a maximum discount to their TP, noted the report.
Private sector lender Bandhan Bank, which is tracked by 29 analysts, has 24 ‘buy’ ratings, one ‘sell’ rating, and four ‘holding’ ratings. The consensus TP for the stock is ₹333 — 46 percent higher than its last close of ₹228, it informed.
Similarly, agrochemical firm UPL (formerly United Phosphorus), realty major Macrotech Developers, and beauty retailer Nykaa also offer over 35 percent potential upside if their consensus TP is anything to go by, stated the report.
“Nykaa’s stock has corrected partly due to the global tech sell-off on rising yields and more recently due to the imminent lock-in expiry. We believe valuation is now even more appealing and under-appreciates the structural growth opportunity in beauty and personal care,” said a note by HSBC. The brokerage has a TP of ₹2,170 for the stock. Shares of Nykaa have nearly halved this year.
On the flip side, state-owned engineering firm Bharat Heavy Electricals (BHEL) and debt-laden telecommunications player Vodafone Idea (Vi) is currently trading at a maximum premium to their TP, BS pointed out.
BHEL has only two ‘buy’ ratings and 16 ‘sell’ ratings. Its stock trades at ₹70 — 35 percent above its TP of ₹50.
Meanwhile, Vi has zero ‘buy’ calls and 16 ‘sell’ calls with a TP of ₹6 — 28 percent below its last close of ₹8.41.