Surya Roshni, Ceat Ltd, Manappuram Finance: 10 stocks that are expected to give solid returns in 1 year

The Indian equity market is in a sweet spot these days. The benchmark indices are now just a kissing distance away from their all-time highs and the Nifty Bank is also hovering around its record high of 44,144.15. The market momentum is primarily driven by relentless FPI buying. The global market construct is also favourable with resilience in the mother market US. The only joker in the pack now is the uncertainty regarding the US debt ceiling impasse, says Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

That said, here is a list of ten stocks that brokerages are bullish on post-March 2023 quarter earnings -

Maruti Suzuki | BUY | Target Price: Rs 11,500 | Brokerage: JM Financial Research | CMP: Rs 9,203.25

After two consecutive years of market share loss, the brokerage believes that Maruti Suzuki is at the cusp of market share recovery led by new launches. A healthy order book, favourable mix and operating leverage tailwinds will further support strong performance going ahead. We ascribe 25x PE to arrive at Mar’24 fair value of Rs 11,500. Re-iterate BUY.

Aptus Value Housing Finance | BUY | Target Price: Rs 320 | Brokerage: Axis Securities | CMP: Rs 265.75

The company’s asset quality improvement is likely to continue with collections remaining healthy and the management eyeing to maintain GNPA at ~1% on a steady state basis, thereby keeping credit costs muted. Thus, healthy growth along with benign credit costs should aid superior RoA delivery despite pressure on margins and gradual inch-up in Opex as the company looks to
increase its footprint. We expect Aptus to deliver RoA/RoE of ~7.5-7.8%/15-16% over FY24-25E. 

APL Apollo Tubes | BUY | Target Price: Rs 1,653 | Brokerage: Centrum Broking | CMP: Rs 1,150.95

We expect strong operating cash flow (OCF) will fund capex and turn into a net cash company by FY25 end. We decrease the FY24 volume estimate by 10 per cent to 2.7mt due to slow commissioning and ramp-up of Raipur plant. Rolling over to FY25, we revise our target price to Rs 1,653/sh (Earlier: Rs1,285) valuing at 30x FY25x EPS. 

Surya Roshni Ltd | BUY | Target Price: Rs 941 | Brokerage: Anand Rathi | CMP: Rs 809.15

Surya Roshni has shown tremendous growth in FY23 by improving its profitability and balancing the product mix despite adverse market conditions. Its strong order backlog, favourable revenue mix and lean balance sheet provide a cushion for any uncertain macro headwinds. Being the second largest player in GI pipes and the third largest player in the lighting and consumer segment, the company gets an advantage for bagging orders over its unorganized player. Surya is currently trading at an attractive valuation of 13x of FY23 EPS (average PE of the last 5 years). Therefore, we assign a BUY rating on the stock with a target price of Rs 941 using a target multiple of 10x FY25 EPS (18% upside) led by healthy growth prospects and operational efficiency.

Larsen & Toubro | BUY | Target Price: Rs 2,724 | Brokerage: HDFC Securiities | CMP: Rs 2,229.90

Given: (1) the record-high order book of Rs 4 trillion and order inflows of Rs 2.3 trillion; (2) bottoming out of infra margins; (3) improvement in subsidiary performance; (4) improvement in net working capital levels; and (5) pick-up in private and public capex in coming years, we have increased the standalone multiple to 24x, from 23x. We maintain a BUY on the stock with an increased TP of Rs 2,724/sh (24x core Mar-25 EPS).

Manappuram Finance | BUY | Target Price: Rs149 | Brokerage: Nirmal Bang Securities | CMP: Rs 110.20

The management has clarified in past about the recent ED raid that it pertains to a decade-old case and has been settled in conformity with relevant guidelines. Moreover, the management stated that it has received a stay order towards the raid and a final order is awaited. We believe this would be key monitorable in the near term towards any adverse impact on the business. We remain positive about the company’s growth prospects as a diversified lender. We maintain BUY on Manappuram with a target price (TP) of Rs 149, valuing it at 1.2x FY25E consolidated ABVPS.

Tata Motors | BUY | Target Price: Rs 650 | Brokerage: ICICI Securities | CMP: Rs 530.80

We maintain a BUY rating amid healthy profitability across all business segments, JLR's volume recovery on the anvil, and reiterated focus towards EV space at JLR coupled with healthy FCF generation targets for FY24E.

CEAT Ltd | BUY | Target Price: Rs 2,091 | Brokerage: LKP Securities: | CMP: Rs 1,775.55

We believe the company is in the right direction to improve the market share in PCR/TBR tyres and expect CEAT to outperform the industry. With the outlook of reduced capex, dipping financial leverage, improving return ratios and positive FCF, we remain sanguine on the stock. At CMP, the stock is trading at 11.5x FY25E. We assign a target multiple of 14x to value the stock with a target price of Rs 2,091. Maintain BUY.

Indian Hotels Co | BUY | Target Price: Rs 430 | Brokerage: IDBI Capital | CMP: Rs 353.20

Strong industry dynamics on occupancy and average daily rate (ADR), IHCL’s presence across the key markets through diversified brands, the superior growth momentum of new business segments viz Qmin, Ama and Chambers, changing landscape of Ginger on scale and profitability and healthy balance sheet would pave the way for IHCL next leg of the growth story. Maintain BUY with a revised TP of Rs 430, assigning 24x EV/EBITDA to FY25E.

Exide Industries | BUY | Target Price: Rs 225  | Brokerage: Motilal Oswal Securities | CMP: Rs 190.80

The company would see a lower impact of the lead price inflation due to its captive smelter. We prefer Exide Industries as it offers superior risk-reward considering its market leadership, technological alliances, backward integration, better mix, and strong balance sheet – post the sale of the Insurance business to support its new li-ion cell plant. Further, it has shown reasonable progress on new technology with an efficient partner in the form of SVolt. The stock trades at 14.2x/11.7x FY24E/FY25E standalone EPS. Valuing it at ~12x standalone Mar’25E EPS + Rs 34/sh for a stake in HDFC Life Insurance (@ 40% Holdco discount), we maintain our BUY rating with a TP of nearly Rs 225.

(Disclaimer: The views/suggestions/recommendations given in this article are solely by investment experts. Zee Business suggests its readers to consult their investment advisers before making any financial decision.)