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    Nifty can hit 20,900 by March 2024, says Ambit and adds 5 new stocks

    Synopsis

    Ambit Capital predicts that Nifty's fair value will be 20,900 by March 2024 by estimating its EPS at Rs 940 and 10-year G-Sec yield at 7.1%. Ambit has included five new stocks- SBI Cards, Indigo, Affle (India), Max Healthcare, and IndiaMart Intermesh to its portfolio. The brokerage house has reduced weight in IT, whereas it is marginally overweight in banks. The preference remains in favor of large caps over small and mid-caps. Ambit G&C portfolio has mid and small-cap allocations at 12% and 5%, and cash at 5.2%, but it has removed two stocks - LIC Housing Finance and GCPL - besides Bank Nifty.

    Nifty can hit 20,900 by March 2024, says Ambit and adds 5 new stocksAgencies
    By estimating Nifty's EPS at Rs 940 and 10-year G-Sec yield at 7.1%, domestic brokerage house Ambit Capital has calculated that Nifty's fair value should be at 20,900 by March 2024. It has also added 5 new stocks SBI Cards, Indigo, Affle (India), Max Healthcare, and IndiaMart Intermesh to its portfolio.

    "We reduce our 10-year yield assumption from 7.3% as an OIS curve, real rate, and repo G-sec spread indicate yields will stay benign. But we see risk to earnings as the growth engine of Nifty BFSI will slow down in FY24 with the contribution to incremental EPS growth tapering (43%) & risks to earnings of IT, O&G (Reliance) & Metals remain," Ambit said.

    Stating that the preference remains in the favour of largecaps over small and midcaps, it has reduced weight in IT but is marginally overweight banks.

    "Earnings trajectory will likely change from FY24, with BFSI contribution to incremental EPS growth tapering to 43%. Our house view suggests IT, Metals & O&G (Reliance) contribute ~20% of incr. EPS growth & are at risk. While banks' EPS trajectory remains robust, risks to “Tech earnings” remain with the expectation of revenue growth normalization to the pre-Covid period. Delay in China recovery can hit Reliance & Metal earnings," Ambit said.

    In its G&C portfolio, the brokerage has mid and smallcap allocations at 12% and 5%, while cash is at 5.2%. It has removed two stocks - LIC Housing Finance and GCPL - besides Bank Nifty.

    HCL Tech's weightage has been reduced from 7% to 4.5%.

    Ambit on 5 new stock picks:
    Indiamart - We remain convinced of INMART’s strong network effects and execution that will enable it to monetise B2B SMBs and accelerate revenue growth. 47x FY25E target P/E is for 20%+ revenue CAGR and operating leverage that we believe will drive 38% FY23-25E EPS CAGR.

    Affle - Its differentiated outcome-based pricing aligns well with advertiser RoI, marquee clientele, and cross-channel inventory access, and should drive 24% revenue CAGR over FY23-25E (8x over FY23-33E). EBITDA margin could expand 230 bps over FY23-25E to 22.4% (26% by FY33E) on acquisition turnarounds and non-linearity of employee/other expenses. Our TP of ₹ 1,250 implies 41x FY25 P/E.

    SBI Cards
    - We expect momentum in card addition and card spends to continue given the state of the economy and the lower penetration of credit cards in India. Thus, we believe credit card is a high-growth and high-RoE industry for a long period.

    Indigo - Despite the increasing competitive intensity, we prefer Indigo given its established leadership, strong balance sheet, efficient fleet, and cost structure. Longer term, we continue to believe Indigo’s strategy to focus away from metro routes and expand into Tier-2/Tier3 domestic routes and international routes would ultimately bear fruit (higher yielding compared to metro routes).

    Max Healthcare - Consensus expects 16%/16% revenue/EBITDA CAGR over FY23-25E. Max Healthcare is currently trading at 24x FY25 EV/EBITDA.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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