6 Top Stock Picks To Buy For The Month Of July From Kotak Securities

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oi-Sneha Kulkarni

| Updated: Tuesday, July 6, 2021, 8:59 [IST]

Long-term investors should consider buying the companies listed below, according to brokerage firm Kotak Securities. Here are a few stocks that have been upgraded, along with their target price and the reason for the stock’s buy recommendation. Given the strong economic recovery and a gradual increase in global and domestic bond yields, Kotak Securities predicts modest gains from the Indian market from now till the end of FY22. It will be an excellent market to ‘buy on dips,’ according to the report.

HCL Technologies

The stock gets a ‘add’ rating from the brokerage. It feels that the stock’s solid pipeline provides growth comfort and forecasts profits growth of 6.6 percent in FY22E and 11 percent in FY23E.

The firm has given a Target of Rs 1,080 with an upside of 9.8%.

The recent deal trend for HCL Technologies has been positive, reflecting growth in the Retail and CPG, Manufacturing, and BFSI industries. Fiskars will be able to standardise and harmonise their IT and business processes, promote operating model change, and improve overall digital maturity with the help of HCL.

HCL Tech. has a Return on Assets ROA of 20.65%, which is a positive indicator of future performance. (It’s always preferable to have higher values). HCL Tech’s current year dividend is Rs 8, with a yield of 1.23 percent.

ICICI Bank

The stock has a ‘buy’ call from the brokerage. The lender has been checking all the right boxes and producing solid growth in a hard environment, according to the brokerage. The lender is expected to recover from the COVID-19 incident faster than its peers, according to the report. The firm has set a target price of Rs. 710 for the stock, representing a 12.5 percent gain.

In the most recent financial year, ICICI Bank generated Rs 74,798.32 crore in revenue. In the last three years, it has grown its income by 11.36 percent.

Non-interest income, often known as other income, is critical for banks since it provides a consistent source of revenue with no added risk. ICICI Bank’s other income has increased to Rs 16,448.62 crore. Since the last three years, the corporation has continuously maintained a NIM of 3.08 percent.

LIC Housing Finance

On the stock, the brokerage has a ‘add’ call. During FY22-24E, it anticipates the company to generate a 15% EPC CAGR and a RoE of 13-14 percent. The firm has set a target price of Rs. 600 for the stock, upside of a 27.7 percent gain. The company’s advances growth ratio is 15.37 percent, which is well-maintained. The company’s net profit is Rs 2,401.84 crore, with a compounded profit growth rate of 7.54 percent over the last three years. LIC Housing Finance has a PAT margin of 12.19 percent. The stock now has a P/E ratio of 4.94, with an average historical P/E of 12.10 over the last five years.

Sun Pharma

The brokerage has an ‘add’ recommendation on the company and has raised its FY22-23E estimates by 4-5 percent due to lower marketing spend. The company achieved solid domestic business growth of 13% year over year, with Ilumya ramp-up on track, it said. According to the brokerage, continued specialist execution affords the possibility for additional re-rating and will create high profits growth. The firm has set a target price of Rs. 740 for the stock, upside of a 10 percent gain.

For the past three years, the company has showed a good profit growth of 422.44%. The firm has a high level of operating leverage, with an average operating leverage of 9.35. The debt-to-equity ratio of Sun Pharma Inds. is 0.26, which is a good sign for the company.

NCC

The stock has a ‘buy’ call from the brokerage. A high order backlog, it continued, provides good revenue growth visibility for the next 2-3 years. Based on a positive view for infra capex, it is bullish about future order inflows. The firm has set a target price of Rs. 105 for the stock, upside of a 20.7 percent gain. For the past three years, the company has showed a solid profit growth of 19.21%. NCC has a PE ratio of 21.19, which is excessive and expensive in comparison. The D/E ratio of NCC is 0.37, indicating that the company has a low debt-to-capital ratio. NCC’s current year dividend is Rs 0.20, with a yield of 0.89 percent.

SAIL

The stock has a ‘buy’ call from the brokerage. SAIL is well-positioned to benefit from a strong steel up-cycle, according to the report, with expansion projects driving volume growth and operating leverage. The brokerage also claimed that the balance sheet has greatly improved and that deleveraging should continue. For the past three years, the company has showed a good profit growth of 39.48 percent. The company has a high operating leverage, with an average operating leverage of 6.40. SAIL has a PE ratio of 13.48, which is low and undervalued in comparison.

6 Top Stock Picks To Buy For The Month Of July From Kotak Securities

Company LTP Market cap Target Upside
HCL Technologies 979.50 2.66LCr Rs 1,080 9.8%.
ICICI Bank 647.05 4.48LCr 710 12.5%
LIC Housing Finance 471.50 23.78TCr 600 27.7%
NCC 90.90 5.53TCr 105 20.7%
SAIL 125.85 51.86TCr 170 29.8%
Sun Pharmaceuticals 681 1.63LCr 740 10.0%

Disclaimer

All of the stocks mentioned here were chosen from a Kotak Securities report. Stock investing is risky, and investors should conduct their own research. Any losses experienced as a result of a choice based on the above article are not the responsibility of the author, the brokerage business, or Greynium Information Technologies Pvt Ltd. As a result, investors should proceed with care, a markets have risen dramatically.

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