Markets this week were once again very volatile, as news of new infections of Covid swept the globe. According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, technically, Nifty formed a Bullish candle on daily scale and now looks poised for a move towards 16,000 point levels while on the downside support exists at 15,580 point levels. Investors need to adopt some caution as markets have gone-up substantially. Here are 3 stocks that broking firm Motilal Oswal has suggested to buy for long term returns.
Mahindra CIE
Motilal Oswal is also betting on the stock of Mahindra CIE and believes it has had a strong all round performance, led by management initiatives. The company is a multi-technology automotive components supplier. It is a subsidiary of the CIE Automotive group of Spain; an industrial group specialised in supplying components and subassemblies for the automotive market, which has presence across the globe and is listed on the stock exchanges in Madrid and Bilbao.
The management recently highlighted it is optimistic about a recovery in India and Europe during 2HCY21, with the semiconductor shortage expected to ease from Sep'21. It has approved a new wholly-owned subsidiary - CIE Hosur - to set up a greenfield plant at Hosur to support its Bill Forge unit and lower corporate tax.
'Mahindra CIE growth story is on track, driven by its organic initiatives (new products/customers). This, coupled with cost-cutting initiatives in both India and the EU, would drive margin expansion. The stock trades at valuations of 15.5x/13.7x CY21E/CY22E consolidated EPS. We maintain our Buy rating with a target price of Rs 295 per share (15x Sep'23E consolidated EPS),' the brokerage has said.
Shares of Mahindra CIE last closed at Rs 244 on the NSE.
HUL: Buy with a 19% upside
Motilal Oswal sees an upside of 19% on the stock of FMCG major Hindustan Unilever. The brokerage says that rural demand has remained resilient, despite a higher incidence of COVID19 cases v/s last year.
'With mobility improving, demand for FMCG products will improve, especially for those which are discretionary in nature, leading to higher operating margin going forward. Rural demand has remained resilient, despite a higher incidence of COVID19 cases v/s last year.
The expectation of a good monsoon also augurs well for demand going forward, with no material downtrading being witnessed. We maintain our buy rating on the stock of Hindustan Unilever, with a price target of Rs 2,840 per share,' the brokerage has said. The shares of HUL were last trading at Rs 2,359 on the NSE.
Buy Ultratech Cement shares for gains of 18%
Motilal Oswal has suggested to buy the shares of Ultratech Cement with a higher price target of 18% from the current market price. According to the broking firm, better realization and lower cost inflation have driven 9% beat on EBITDA margins this quarter.
'For key infrastructure projects, Ultratech Cement is well-suited to tap into expected growth in both retail and institutional (non-trade) cement demand in India. While it is ramping up its underutilized acquired capacities, it also has a strong pipeline of expansion projects that offers strong growth visibility
Market share gains should continue, aided by the ongoing 20mtpa expansion program, which should drive a 13% volume CAGR over FY21/24E. We raise our EPS for FY22E/FY23E by 6%/6%, factoring in a better realization outlook. We estimate a 26% EPS CAGR over FY21-23E,' the broking firm has said.
Disclaimer
Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies Pvt Ltd nor the author, nor the brokerage would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets are now at a record high. Please consult a professional advisor and avoid investing lumpsum amounts.