scorecardresearchThese top picks by Angel One for April can give up to 57% upside

These top picks by Angel One for April can give up to 57% upside

Updated: 11 Apr 2022, 02:30 PM IST
TL;DR.

With inflationary pressures expected to persist, and lack of resolution from the conflict, domestic brokerage house Angel One expects the market to be range bound over the next 1-2 quarters. Within sectors, it expects IT and Consumer Staples to outperform given the lower impact of higher energy prices on margins. It is also positive on the banking sector from a longer-term perspective but expect margin pressures to persist in the manufacturing space. Let's take a look at its top picks for the month of April:

Federal Bank: The brokerage has a target price of  <span class='webrupee'>₹</span>135 for the lender, indicating an upside of 37 percent. At the end of Q3 FY22, the bank had advances of  <span class='webrupee'>₹</span>1.41 lakh crore and deposits of  <span class='webrupee'>₹</span>1.75 lakh crore. Overall asset quality for the quarter improved in Q3 FY22 and was in line with Street expectations. The brokerage expects the asset quality of the lender to improve further in FY23 given the normalization of the economy. It also sees the bank posting a PAT CAGR of 23.2 percent between FY20-23 and remains positive on the bank.

Federal Bank: The brokerage has a target price of 135 for the lender, indicating an upside of 37 percent. At the end of Q3 FY22, the bank had advances of 1.41 lakh crore and deposits of 1.75 lakh crore. Overall asset quality for the quarter improved in Q3 FY22 and was in line with Street expectations. The brokerage expects the asset quality of the lender to improve further in FY23 given the normalization of the economy. It also sees the bank posting a PAT CAGR of 23.2 percent between FY20-23 and remains positive on the bank.

HDFC Bank: The brokerage has a target price of  <span class='webrupee'>₹</span>1,859 for the lender, indicating an upside of 16 percent. HDFC Bank is India's largest private sector bank with a loan book of  <span class='webrupee'>₹</span>12 lakh crore in H2FY22 and a deposit base of  <span class='webrupee'>₹</span>14 lakh crore. As per the brokerage, the management has maintained that there will be a maximum impact of 10-20 bps on asset quality from the restructured pool. Given best-in-class asset quality and expected rebound in growth from FY23 Angel One is positive on the private sector lender.

HDFC Bank: The brokerage has a target price of 1,859 for the lender, indicating an upside of 16 percent. HDFC Bank is India's largest private sector bank with a loan book of 12 lakh crore in H2FY22 and a deposit base of 14 lakh crore. As per the brokerage, the management has maintained that there will be a maximum impact of 10-20 bps on asset quality from the restructured pool. Given best-in-class asset quality and expected rebound in growth from FY23 Angel One is positive on the private sector lender.

Ashok Leyland: The brokerage has a target price of  <span class='webrupee'>₹</span>164 for the lender, indicating a 33 percent upside in the stock. As per the brokerage, FY21 medium and heavy commercial vehicle industry production volumes have been at the lowest levels seen in 12 years and the brokerage believes that the company is ideally placed to capture the growth revival in the CV segment. It added that the firm will be the biggest beneficiary of the Government's voluntary scrappage policy and hence rate the stock a 'buy'.

Ashok Leyland: The brokerage has a target price of 164 for the lender, indicating a 33 percent upside in the stock. As per the brokerage, FY21 medium and heavy commercial vehicle industry production volumes have been at the lowest levels seen in 12 years and the brokerage believes that the company is ideally placed to capture the growth revival in the CV segment. It added that the firm will be the biggest beneficiary of the Government's voluntary scrappage policy and hence rate the stock a 'buy'.

Ramakrishna Forgings: The brokerage has a target of  <span class='webrupee'>₹</span>256 for the stock, indicating an upside of 42 percent. Ramkrishna Forgings (RKFL), a leading forging player in India and among a select few having the heavy press, stands to benefit from a favorable demand outlook for the Medium &amp; Heavy Commercial Vehicle (M&amp;HCV) industry. The company has phased out its CAPEX over the past few years during which it was impacted by industry slowdown in certain periods. With the end to the CAPEX cycle, the favorable outlook in the medium term, and sufficient capacity in place, the brokerage believes it would be able to post a volume CAGR of 29 percent over FY21-23E.

Ramakrishna Forgings: The brokerage has a target of 256 for the stock, indicating an upside of 42 percent. Ramkrishna Forgings (RKFL), a leading forging player in India and among a select few having the heavy press, stands to benefit from a favorable demand outlook for the Medium & Heavy Commercial Vehicle (M&HCV) industry. The company has phased out its CAPEX over the past few years during which it was impacted by industry slowdown in certain periods. With the end to the CAPEX cycle, the favorable outlook in the medium term, and sufficient capacity in place, the brokerage believes it would be able to post a volume CAGR of 29 percent over FY21-23E.

PI Industries: The brokerage has a target price of  <span class='webrupee'>₹</span>3,440 for the stock, indicating an upside of 18 percent. The brokerage expects PI Industries to post a revenue/PAT CAGR of 20 percent/22.5 percent between FY21-FY24 driven by 20 percent growth in the Custom synthesis and manufacturing (CSM) business over the next 2-3 years. Moreover, foray into new segments like electronic chemicals and APIs will also help drive growth over the next 3-4 years for the company, it added.

PI Industries: The brokerage has a target price of 3,440 for the stock, indicating an upside of 18 percent. The brokerage expects PI Industries to post a revenue/PAT CAGR of 20 percent/22.5 percent between FY21-FY24 driven by 20 percent growth in the Custom synthesis and manufacturing (CSM) business over the next 2-3 years. Moreover, foray into new segments like electronic chemicals and APIs will also help drive growth over the next 3-4 years for the company, it added.

Jubilant Ingrevia: The brokerage has a target price of  <span class='webrupee'>₹</span>700 for the stock, indicating an upside of 34 percent. Jubilant Ingrevia was formed by spinning off the chemical and life science ingredients of Jubilant Life Sciences Ltd. At current levels the stock is trading at P/E multiple of ~13xFY23 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.

Jubilant Ingrevia: The brokerage has a target price of 700 for the stock, indicating an upside of 34 percent. Jubilant Ingrevia was formed by spinning off the chemical and life science ingredients of Jubilant Life Sciences Ltd. At current levels the stock is trading at P/E multiple of ~13xFY23 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.

HCL Technologies: The brokerage has a target price of  <span class='webrupee'>₹</span>1,466 per share for the stock, implying an upside of 23 percent. HCL Tech is amongst the top four IT services companies based out of India. As per the brokerage, At CMP the stock is trading at a significant discount to the other large-cap IT companies like Infosys and TCS and offers tremendous value at current levels given market leader status in Infrastructure management. It added that strong deal wins will help drive growth in the services business, which should make up for any shortfall in the product business.

HCL Technologies: The brokerage has a target price of 1,466 per share for the stock, implying an upside of 23 percent. HCL Tech is amongst the top four IT services companies based out of India. As per the brokerage, At CMP the stock is trading at a significant discount to the other large-cap IT companies like Infosys and TCS and offers tremendous value at current levels given market leader status in Infrastructure management. It added that strong deal wins will help drive growth in the services business, which should make up for any shortfall in the product business.

Stove Kraft: The brokerage has a target price of  <span class='webrupee'>₹</span>1,050 per share for the stock, indicating an upside of 57 percent. Stove Kraft is engaged in the business of manufacturing &amp; selling Kitchen &amp; Home appliances products like pressure cookers, LPG stoves, nonstick cookware etc. under the brand name of 'Pigeon' and 'Gilma'. In the Pressure Cookers and Cookware segment, over the last two years, the company has outperformed Industry and its peers, noted the brokerage. Going forward, it expects the firm to report healthy top-line &amp; bottom-line growth on the back of new product launches, strong brand name and wide distribution network.

Stove Kraft: The brokerage has a target price of 1,050 per share for the stock, indicating an upside of 57 percent. Stove Kraft is engaged in the business of manufacturing & selling Kitchen & Home appliances products like pressure cookers, LPG stoves, nonstick cookware etc. under the brand name of 'Pigeon' and 'Gilma'. In the Pressure Cookers and Cookware segment, over the last two years, the company has outperformed Industry and its peers, noted the brokerage. Going forward, it expects the firm to report healthy top-line & bottom-line growth on the back of new product launches, strong brand name and wide distribution network.

Sobha: The brokerage has a target price of  <span class='webrupee'>₹</span>1,050 per share for the stock, indicating an upside of 46 percent. The company operates in Residential &amp; Commercial real estate along with the Contractual business. As per the brokerage, the firm's 70 percent of residential pre-sales come from the Bangalore market which is one of the IT hubs in India, and it expects new hiring by the IT industry will increase residential demand in the South India market.

Sobha: The brokerage has a target price of 1,050 per share for the stock, indicating an upside of 46 percent. The company operates in Residential & Commercial real estate along with the Contractual business. As per the brokerage, the firm's 70 percent of residential pre-sales come from the Bangalore market which is one of the IT hubs in India, and it expects new hiring by the IT industry will increase residential demand in the South India market.

Devyani International: The brokerage has a target price of  <span class='webrupee'>₹</span>219 per share for the stock, indicating an upside of 26 percent. Devyani International is Yum Brands’ largest franchisee in India, with more than 800 stores including KFC, Pizza Hut, and Costa Coffee. It expects the company to add 200 stores per annum which would drive strong revenue growth. Lower capex and improving store-level economics would boost the operating margin going ahead, added Angel. Going forward, it sees the firm reporting strong top-line growth and improvement in operating on the back of aggressive store addition, improving store unit economics and strong brand.

Devyani International: The brokerage has a target price of 219 per share for the stock, indicating an upside of 26 percent. Devyani International is Yum Brands’ largest franchisee in India, with more than 800 stores including KFC, Pizza Hut, and Costa Coffee. It expects the company to add 200 stores per annum which would drive strong revenue growth. Lower capex and improving store-level economics would boost the operating margin going ahead, added Angel. Going forward, it sees the firm reporting strong top-line growth and improvement in operating on the back of aggressive store addition, improving store unit economics and strong brand.

First Published: 11 Apr 2022, 02:30 PM IST