Domestic stock markets enter the month of June after having witnessed a volatile May. “Fear in the market is at an extreme level of 2008-09 and 2020. Hence, the present decline is an excellent opportunity for the investors to accumulate the best outperforming stocks,” said analysts at Ashika Stock Broking. On the technical side, Ashika Stock Broking said that if a meaningful pull-back is to materialise, the NSE Nifty 50 index needs to decisively close above 16,500-16,650. “In all likelihood, the market is expected to honour the support zone of 15,400-15,600 in the short-term, as it happens to be the 61.8% retracement of CY21 rally,” they added. The brokerage firm has also picked three stocks to buy for the month that they believe can deliver as much as 15% returns.
ICICI Lombard General Insurance: BUY
Target price: Rs 1,460 per share
ICICI Lombard General Insurance Company (ICICI Lombard) is the second-largest non-life insurance player in the country and one of the largest within the private sector with an overall market share of 8.1% and 12.9% market share among the private general insurance space. Analysts believe there is a massive opportunity in the non-life insurance space. The segment stood at Rs 2,207.7 billion on the basis of gross direct premium income (GDPI) and has been clocking 16% CAGR over the last 10 years. Further, ICICI Lombard is the largest motor insurer in the private space with an 11.8% market share at the end of the previous financial year. Analysts noted that growing auto sales would benefit the company.
“At the current market price, the scrip is valued at P/E of 26.9x FY24E EPS and investors are advised to ‘BUY’ the scrip based on strong positioning and growth ahead,” the note said. The target price suggests an upside of 16% from today’s price.
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PI Industries: BUY
Target price: Rs 3,203 per share
The Pesticides and Agrochemicals manufacturer has a strong export-oriented business with healthy domestic exposure as well. Ashika Stock Broking is bullish on the stock seeing its strong order book in CSM space that offers long-term growth visibility, a portfolio of specialized products, and a strong financial position. Analysts noted that PI Industries has a strong CSM order book of more than $1.4 billion, which provides long-term revenue growth visibility. Further, the company has seen healthy enquiries for the export of its products which could strengthen its position.
At the current market price, Ashika Stock Broking values the stock at P/E multiple of 33.3x on FY24E. The continued rise in the prices of key inputs and the inability to pass the same could bring the margin under pressure and Below normal monsoon are some of the risks aligned with the stock.
Abbott India: BUY
Target price: Rs 20,500
A subsidiary of USA-based Abbott Laboratories, Abbott India is a multinational pharma company. In the bygone January-March quarter, the company reported a strong performance with the revenue and net profit witnessing strong double-digit growth, making analysts bullish on the stock. “In order to expand its Indian market share, the company has been continuously launching new products,” Ashika Stock Broking said. “Presence in high-margin vaccine segment, efforts to improve penetration, price revision of non-NLEM products and product portfolio expansion would drive the company’s growth,” they added.
Analysts added that Abbott India has outperformed the industry on a consistent basis in Women’s Health, GI, Metabolic, Pain Management and CNS among others. Further, the company has a healthy cash flow and a debt-free balance sheet.