Diwali 2023 Picks - Ashok Leyland, Tata Motors, Bajaj Finance Among Top Nine Investment Ideas By KRChoksey
We present our top nine Diwali investment ideas, indicating enduring charm and light for long-term success amid uncertain times.
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KRChoksey Research Report
This Diwali, it's crucial to choose stocks that can ride India's growth with resilience, ensuring sustainable gains while mitigating downside risks. In these uncertain times, India emerges as a shining star amidst the cloudy global economic environment.
We present our top nine Diwali investment ideas, indicating enduring charm and light for long-term success without compromising on risk management and resilience amid uncertain times.
Ashok Leyland - Strong margin performance and market share gains on the cards
(Current market price: Rs 169 / Target price: Rs 221 / upside potential: 30.8%)
We expect a Ashok Leyland Ltd.'s revenue/ Ebitda/ adjusted profit after tax compound annual growth rate of 13.5%/ 38.2%/ 66.7% respectively over FY23 to FY25E.
We have assigned a price/earning multiple of 18 times on FY25E earnings per share of Rs 12.3 to arrive at a target price of Rs 221/share, with a potential upside of 30.8% from the current market price.
Accordingly, we maintain our 'Buy' rating on the shares of Ashok Leyland.
Bajaj Finance - Consistently delivering robust business growth
(Current market price: Rs 7,562 / Target price: Rs 9,475/ upside potential: 25.3%)
Bajaj Finance Ltd. is currently trading at 6.0 times/4.9 times price/adjusted book value multiple for FY24E/FY25E ABV.
We assign a P/ABV multiple of 6.2 times on FY25E adjusted book value of Rs 1,528.2 to arrive at a target price of Rs 9,475 per share, an upside of 25.3% over CMP. Accordingly, we maintain our 'Buy' rating on Bajaj Finance shares.
ITC - Traction continues in cigarettes, fmcg-others and hotels
(Current market price: Rs 435 / Target price: Rs 540/ upside potential: 23.9%)
We value ITC shares using the Sum of the parts approach applying 15.8 times enterprise value/Ebitda on the FY25E Ebitda of the cigarette business; 19.3 times EV/Ebitda on the FY25E Ebitda of the hotels business; 7.4 times EV/Ebitda on FY25E Ebitda of agri-business; 6.5 times EV/Ebitda on FY25E Ebitda of paper business and 9.0 times EV/revenue on FY25E revenue of fmcg business – we arrive at the target price to Rs 540 per share (unchanged); an upside of 23.9% over the CMP.
Accordingly, we maintain our 'Buy' rating on ITC shares.
Tata Motors - Expect a stronger H2 FY24E
(Current market price: Rs 646 / Target price: Rs 743/ upside potential: 15.0%)
We expect Tata Motors Ltd. will grow at a compound annual growth rate of 17.5%/ 40.1% in revenues/Ebitda over FY23-25E. We value the JLR and Chery-JLR joint venture businesses at 2.4 times EV/Ebitda, Tata Motors-commercial vehicle at 13.0 times EV/Ebitda, and Tata Motors-commercial vehicle business at 14.5 times EV/Ebitda, and a value of Rs 40 per share for stake in Tata Technologies and arrive at a target price of Rs 743 per share, implying an upside of 15.0%. Accordingly, we maintain our 'Buy' rating on the shares of Tata Motors.
Click on the attachment to read the full list of KRChoksey's Diwali stock picks:
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