These value stocks can offer Nifty returns as business picks up

With the Sensex jumping 130% in the past 18 months to 60,000, the hunt is on for stocks which have not participated in the recent rally and companies that could benefit from the revival of business activity. Analysts at top brokerages think shares of select housing finance, auto, sugar companies, and multiplex operators fit this criteria. These stocks could offer up to 116% upside, they say. ET takes a look at these value picks of leading brokerages.

Motilal Oswal


LIC HOUSING
CMP: Rs 434.9 Target Price: Rs 525

Change Since Jan 1: 20.4%

Siddhartha Khemka, head- retail research, at Motilal Oswal sees another 20.7% upside in LIC Housing Fin. He expects the capitalisation or leverage concerns for LIC Housing to be ironed out once they are able to resolve the stalemate on the equity capital raise with the exchanges. “We draw comfort from LIC Housing’s ability to source low-cost liabilities, favorable housing finance cycle and the 11-12% return on equity,” says Khemka.

MAHINDRA & MAHINDRA
CMP: Rs 811.45 Target Price: Rs 950

Change Since Jan 1: 12.6%

Estimating a 17% upside in M&M, Khemka says valuations are still at a substantial discount to its 5-year average, capturing both the pain points of deterioration in utility vehicle market share and the performance of the subsidiaries. “M&M has reoriented its focus on growth after tightening its capital allocation policies. The auto segment is expected to see strong momentum in CVs and sports utility vehicles.”

Kotak Securities


PVR
CMP: Rs 1,596.8 Target Price: Rs 1,700

Change Since Jan 1: 21%

Shrikant Chouhan, head of research (retail), Kotak Securities, expects PVR’s business to recover over the second-half of FY22 as Covid restrictions ease. “Pent-up demand can potentially drive a surprise. PVR is trading at 14% discount to its pre-Covid valuations while several consumption stocks have re-rated. So there is room for some re-rating as operating metrics recover,” says Chouhan. The target price of Rs 1,700 implies a 6.5% upside.

LIC HOUSING
CMP: Rs 434.9 Target Price: Rs 600

Change Since Jan 1: 20.4%

The target price means that the stock has another 38% upside potential. An improving real estate cycle driving higher disbursements and possible gradual improvement in collections are in favour of LIC Housing Finance, says Chouhan. The recent capital issuance is also a comforting factor, he adds. The brokerage has recently upgraded the stock to ‘buy’ from ‘add’.

ICICIdirect

TRIVENI ENGINEERING
CMP: Rs 171.85 Target Price: Rs 270

Change Since Jan 1: 140.7%

The sugar sector has seen a steep rally but Pankaj Pandey, head of research at ICICIdirect, still sees value in the sector, estimating that Triveni Engineering can go up another 57%. “Sugar is one sector which we like because the ethanol story looks quite strong. Sugar stocks have rallied, but they are not pricey or expensive compared to the rest of the market. Triveni Engineering is what we like the most,” says Pandey.

BALRAMPUR CHINI
CMP: Rs 354.8 Target Price: Rs 515

Change Since Jan 1: 106.1%

Balrampur Chini is one of the most efficient sugar companies in India with the secondlargest crushing capacity. “In the next three years, Balrampur Chini would be able to increase distillery capacity to 2.2 times from current 16 crore litre to 35 crore litre, which would result in significant improvement in earnings,” says Pandey. With a Rs 515 target price, the stock could go up another 45.15%.

IIFL

BOSCH
CMP: Rs 15,785 Target Price: Rs 23,000

Change Since Jan 1: 23.4%

Sanjiv Bhasin, director at IIFL Securities, says Bosch is the largest original equipment manufacturer and it has invested $1.5 billion in a semiconductor facility. “I expect the stock to go up to Rs 23,000,” says Bhasin. As per the target price, the stock could go up by another 45.7%.

IRB INFRA
CMP: Rs 174.6 Target Price: Rs 375

Change Since Jan 1: 45.9%

“IRB Infra is a pure play infra company with strong presence in TOT, BOT and HAM models. Fastag has become a necessity now, so the stock will benefit from there,” says Bhasin. “The market-cap of less than Rs 6,000 crore is unjustified. I expect the stock to touch Rs 250 in the next four months.” Bhasin expects the stock to touch Rs 375 in a year, which means it could go up by nearly 116% more.

Centrum Broking


BAJAJ CONSUMER
CMP: Rs 256.95 Target Price: Rs 380

Change Since Jan 1: 20%

At 13 times FY23 numbers, the stock is attractive compared to 30-50 times valuations that FMCG stocks trade at, says Nischal Maheshwari, CEO, CentrumInstitutional Equities. He has a ‘buy’ rating with a target price of Rs 380. This means there’s over 48% upside potential.

UTI AMC
CMP: Rs 1,096.4 Target Price: Rs 1,500

Chg Since Jan 1: 97.3%

The stock has rallied but it is still cheap compared to HDFC AMC and Nippon AMC, says Maheshwari. “There is no reason for the stock to trade at a cheaper multiple to its peers. The numbers are also improving. We expect the stock to touch Rs 1,500 and have a ‘buy’ rating,” he said. The target implies a 36.8% upside potential.