Indian markets declined around 2 percent in the month of April 2022 amid volatility on the back of weak global cues, hawkish US Federal comments on aggressive rate hike concerns, and surging inflation.
Amid the volatility, ICICI Direct has come out with 2 gladiator stock picks - Coromandel International and Bandhan Bank
For Coromandel International, the brokerage has a target price of ₹1,030, indicating an upside of 13 percent. Stop loss at ₹840.
As per ICICI Direct, agri-input-related stocks are in a strong uptrend and have been relatively outperforming the broader market in the last two quarters.
"Within the space, we remain constructive on Coromandel International as it is on the cusp of generating a breakout above the last 10 month’s consolidation on the back of strong volume signaling conclusion of secondary correction and resumption of the structural uptrend. Hence, it offers a fresh entry opportunity," it explained.
The brokerage expects the stock to extend the current up move and head towards ₹1,030 in the coming months as it is the 138.2 percent external retracement of the entire previous decline.
For Bandhan Bank, the brokerage has a target price of ₹390, indicating an upside of 15 percent. Stop loss at ₹310.
The brokerage noted that the Bank Nifty has relatively outperformed the Nifty during the recent corrective phase within which Bandhan Bank has been resilient and has been outperforming the Bank Nifty since the beginning of 2022.
The stock has generated a breakout above the last 15-month falling channel and is seen sustaining above the same signaling resumption of up move and offers a fresh entry opportunity.
ICICI expects buying demand to emerge around ₹320-310 in case of any corrective decline being the confluence of the 52-week EMA and upper band of the recent falling channel breakout area.
Incorporated in 2015 as RBI granted a universal banking license, Bandhan Bank has a strong presence in eastern and northeastern India with MFI loans being its forte.
A total of 65 percent of loans are from emerging enterprise businesses (EEB), noted the brokerage. The bank has 1176 branches in 34 states, UTs and a total customer base of 2.5 crores.
"Bandhan Bank has underperformed in the past year as challenges pertaining to asset quality have emerged with the microloan segment being most impacted by the pandemic. The recent quarter’s performance was mixed as provisions fell sharply QoQ. Asset quality (in percentage terms) stayed largely steady," ICICI Direct added.
Earnings recovery was led by lower credit cost and the brokerage believes materialisation of estimated recoveries of ₹5,000 crore in coming quarters could bolster profitability. It expects RoA of 3.1 percent and RoE of 23.1 percent by FY24E while earnings are projected to grow at CAGR of 32 percent in FY21-24E.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies and not of MintGenie.