NSE Nifty 50 could scale 17,745 in the next one year — an upside of 6% from existing highs — according to domestic brokerage and investigation firm Prabhudas Lilladher. “Equities remain an attractive asset class given ample liquidity, low-interest rates and recovery hopes, the brokerage firm said in a report. However, rising volatility and inflow of significant retail money remains a key monitorable, the report added. Benchmark indices have remained resilient since April 2020, recovering from the covid-19 induced sell-off smartly. Now Sensex and Nifty are sitting well above pre-covid levels, near all-time highs of 56,198 and 16,712.
Domestic equity markets have risen on the back of global liquidity infusion and rising hopes of demand recovery amid rising vaccination coverage. “NIFTY EEPS has seen an increase of 3.5% for FY22 and 4.4% for FY23 at 690.5 and 787 a growth of 32.2% and 13.7%,” the brokerage firm mentioned. Estimates pegged by Prabhudas Lilladher are greater than consensus by 4.2% for FY22, and 3.5%/-.2% for FY23/24. NIFTY is at the moment trading at 22.6x 1-year forward EPS which shows 12% premium to 10 year typical of 20.1x.
In the base case situation, analysts worth Nifty at September 2023 EPS of Rs 840 a 5% premium to 10-year typical PE (21x) and arrive at the September 2022 target of 17,745. On the other hand in a bull case situation, the brokerage firm has upped its target for Nifty to 21,020 from the earlier 18,850. “Third Covid wave, lower bond-buying by FED, Repo rate increase by RBI, global capital flows and geopolitical instability are key risks to bull case scenario,” they added.
Large-cap stock picks
HDFC Bank – Buy
Target value: Rs 1,870
The brokerage firm has a obtain rating on the stock and is overweight HDFC Bank in its model portfolio. Analysts think HDFC Bank will see income development of 12.1% in 2022 and 15.8% in 2023, though earnings will develop 17.5% and 19.9%. HDFC Bank’s management mentioned that collections have been choosing up in June and have been quickly enhancing in July. The targe value for HDFC bank implies a 20% upside from existing levels.
Mahindra & Mahindra – Buy
Target value: Rs 961
The stock is a new addition to Prabhuas Lilladher’s model portfolio, with an overweight of .4%. The management of Mahindra & Mahindra believes tractor sales will develop in single digits in the economic year 2022. For individual cars, the trend remains sturdy for Thar with a 10-month waiting period and a sturdy pipeline for Bolero neo. So far this month, the stock has surged more than 6% to now trades at Rs 776, which nevertheless leaves an upside prospective of 23.8%.
Indraprastha Gas – Buy
Target value: Rs 662
Analysts think Indraprastha Gas to report income development of 25.8% next year and 19.1% in the year right after that. Although IGL reported reduced than anticipated volume development owing to the pandemic, it nevertheless remains a preferred stock for analysts. The stock has gained just 3.6% so far this year. To attain the set target value the stock will will need to rally 25.8%.
Hindustan Petroleum Corporation – Buy
Target value: Rs 404
HPCL stock value has jumped more than 16% so far this year and there could be more upside for the stock. Prabhudhas Lilladher expects the business to report earnings development of 6.1% in 2022 and 12.2% in 2023. The target value of Rs 404 implies a 57% upside from the existing levels of Rs 257.