The outlook for the domestic market remains hazy despite occasional spells of gains as concerns over inflation, slowing economies, geopolitical tensions and rate hikes linger.
The upcoming India GDP data, US FOMC meeting and RBI MPC meet in June and updates on the Ukraine war will dictate the trends of the market.
Some analysts feel that since most negatives are on the table for the market, investors should pick quality stocks at cheaper valuations at this point.
Analysts also point out that buying on dips should be the preferred strategy in the short term as fear of missing out (FOMO) is ruling traders’ mindset.
MintGenie talked to analysts to find their preferred picks at this juncture. Based on their recommendations, here are 10 stocks to buy for the medium term. Take a look:
Analyst: Mitul Shah- Head of Research at Reliance Securities
The management continues to expect a strong demand environment and deal pipeline and guided for a 13-15 percent revenue growth in CC terms and a 21-23% EBIT margin range for FY23E.
During Q4FY22, the company added a record high quarterly net workforce of nearly 21.9k employees. It targets to hire more than 50,000 freshers in FY23.
Stable management keeps Infosys in a better position to make bolder decisions and pursue aggressive market share gain.
"We are positive on Infosys considering the industry-leading double-digit revenue growth, rising share of digital business, decent EBIT margin levels and a consistent capital allocation policy. We expect Infosys to continue to gain market share in the current technology upcycle. We have a buy rating with a target price of ₹1,980, valuing the stock at 28.5 times FY24E earnings," said the analyst.
The analyst believes that the rural recovery would support tractor sales in the coming quarters. While likely ease on semiconductor and strong response on its new XUV700 coupled with transformation in its SUV product portfolio Would aid revenues and profitability.
The analyst expects strong demand for SUVs to continue over the next two-three years and premiumization trend would further pick up.
MM plans to launch 15 new products each in tractor and farm machinery space and 17 new products in LCVs with few CNG options by 2026. It plans to launch 13 new products with 8 new EVs in SUV segment by 2027 comprising 20 percent of EV volume.
"We are positive on M&M given strong products pipeline, sizable presence in promising tractor segment, healthy return ratios and attractive valuation post price correction," said the analyst.
Being a strong rural player in India with a range of rural-focused products, TVS Motor (TVSL) would continue to get benefited from the expected revival in rural markets, going forward, said the analyst.
The extensive product portfolio, vast dealers’ network in the rural area and improving brand equity in the last five years will continue to aid the company.
As exports contribute nearly 28 percent to TVSL’s volume, a sharp rebound in exports to the African countries would have a major positive impact on its performance. TVSL’s outperformance may continue on the volume front on the back of new products and improve brand equity.
"In view of the healthy rural sales, strong products basket, improving brand equity, healthy export potential, better margin trajectory, healthy volumes and better return ratio, we remain positive on TVSL," said the analyst.
Under its Lakshya’26 plan, the company aims to pursue profitable growth and expand the scale of its IT&TS portfolio.
PLI scheme and “Atmanirbhar Bharat” will give a further boost to infrastructure development and domestic manufacturing. However, in the short-to-medium term, crude and commodity prices are likely to stay volatile owing to the geopolitical scenario.
For FY23, the management has guided for 12-15 percent growth in order inflow and revenue. Margins for the Projects and Manufacturing business are expected to remain at nearly 9.5 percent. However, given the volatility in the EPC segment, the NWC-sales ratio is expected at 20-22 percent.
The management is optimistic about healthy order inflows in the next couple of years. With strong order prospects, L&T scouts for opportunities of ₹8.5 lakh crore during FY23.
Cash burns in Hyderabad metro project and higher input costs are seen as the key near-term overhangs. However, an expected healthy pick-up in ordering activities and a sharp improvement in order inflow may drive the stock’s performance in the medium-to-long term.
The valuation of 18 times FY24E earnings still looks comfortable, as L&T continues to enjoy decent value accretion from its subsidiaries.
"We expect the growth momentum to continue with a revenue and EBITDA CAGR of 11 percent and 25 percent respectively, during FY22-FY24E," said the analyst.
The company saw a very successful diversification in the last 20 years because of an agile management’s thought process, network effect-collaboration strategies with global and local players, execution capabilities etc. These qualities allow KEC to enter bigger businesses and geographies and double its revenue every five years.
The relapse of Covid and the ongoing Russia-Ukraine conflict have led to a further surge in the already elevated level of commodity prices, which has impacted profitability.
Analyst: Siddharth Sedani, Vice President - Equity Advisory, Anand Rathi Shares and Stock Brokers
Tata Motors- Jaguar Range Rover, China Announces tax cuts and removing curbs to buy certain PVs and cars. China will also relax the purchase restrictions on automobiles and reduce some passenger car purchase taxes by 60 bn yuan. JLR gets nearly 30 percent of sales from China.
The company continued EV alertness in India through concepts and real launches (PV market leader with Nexon; plans to introduce 10 models by 2025) and JLR (Jaguar all-electric by 2025; 6 BEVs in Land Rover in next five years).
CRISIL’s profits are mainly contributed from the research and rating segment, Profits from the overall research segment grew by 55.1 percent in FY21.
"CRISIL’s revenue grew by nearly 10 percent CAGR in the last three years. With the recovery in economic activity, client additions, new product offerings and solutions - we estimate the momentum will continue and the revenue will grow at nearly 12 percent CAGR over the next two years," said the analyst.
"We believe the company will maintain its business growth momentum, driven by its investments in talent and technology, recovery in economic activities, new product offerings and solutions," the analyst added.
Jubilant Ingrevia Limited provides life science products and solutions in India and internationally. It operates in three segments: Specialty Chemicals, Nutrition & Health Solutions, and Life Science Chemicals.
Going ahead, the company continues to expect strong demand for its products in the near term. The company’s Diketene plant is under commissioning now, and it expects to start commercial production during the current quarter. On the product launch side, the company maintains a strong pipeline of 34 new products which it expects to launch in the next three years.
Tata Steel Group is among the top global steel companies with an annual steel production capacity of nearly 34 million tonnes per annum (MTPA).
Tata Steel (TSL) is one of the world’s most geographically diversified steel producers, with operations and commercial presence across the world. It operates in 26 countries with key operations in India, Netherlands and United Kingdom. TSL has been a part of the DJSI emerging markets Index since 2012 and has been consistently ranked among thetop five steel companies in the DJSI Corporate Sustainability Assessment since 2016.
Tata Steel is aiming to double Indian operations steel production capacity to 40 million tonnes (MT) by 2030. Chinese steel curbs are likely to keep steel prices and a return to profitability at the European operations.
"After a strong performance in the first half of FY22, we expect the rest of the year to be stronger for Tata Steel standalone operations. Domestic steel prices are at a discount to import parity prices allowing companies to push through price hikes," said the analyst.
"Iron ore integration in domestic operations enables the company to capture the increase in steel prices in profits. European operations are also expected to remain profitable with an improvement in spreads which lead to a further fall in net debt over FY22-FY24 even though Tata Steel will continue to pursue growth capex in India," the analyst added.
The company has given a guidance of 12 to 14 percent growth in revenues for FY23 and expects to achieve the EBIT margins of 18 to 20 percent.
"With continuity of robust growth across Mode-2 and Mode-3 business (40.5 percent of revenue combined), we expect the growth momentum to continue supported by strong products, deal pipeline and ramp up of large deals," said the analyst.
Disclaimer: The views and recommendations made above are those of individual analysts or broking firms and not of MintGenie.
