Stocks to buy: IndiGo, Adani Ports, Jindal Steel among 5 stocks that can rise 12-53% in next 1 year, say brokerages

“Robust economic outlook, anticipated political stability and massive entry of new investors augur well for the markets in the medium to long term,” said G. Chokkalingam, founder and head of research at Equinomics Research Private Limited.

Experts suggest buying quality stocks at the current juncture. Based on the recommendations of brokerage firms Nuvama Wealth Management and JM Financial, here are five stocks that can give healthy double-digit returns in the next one year. Take a look:

Brokerage firm: Nuvama Wealth Management

InterGlobe Aviation (IndiGo) | Last traded price (LTP): ₹3,492.05 | Target price: ₹3,953 | Upside potential: 13%

Nuvama raised FY25E and FY26E EBITDAR (earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs) by 1 per cent and 3 per cent, respectively, and increased the target price by 5 per cent to ₹3,953 from ₹3,774 earlier.

According to the brokerage firm, a likely duopolistic industry structure dominated by IndiGo and Air India bodes well for the company. This is expected to spur pricing discipline which in turn may drive yields up over the long term.

“Aggressive capacity addition and robust demand should drive PAX (the number of passengers carried by an airline) growth,” Nuvama said.

Also Read: Nifty 50, other indices rejig tomorrow: Shriram Finance, HDFC Bank, Jio Finance, Adani Power to see highest inflows

Jindal Steel & Power (JSPL) | LTP: ₹837.20 | Target price: ₹1,030 | Upside potential: 23%

Nuvama pointed out that during FY10–14, JSPL recorded an average EBITDA/t of ₹14,900, courtesy of captive thermal coal. Post-de-allocation of coal mines, its earnings got hit and it posted an average EBITDA/t of nearly ₹11,000 over FY15–21.

The brokerage firm expects with the resumption of captive coal mines and other cost-saving and value-additive facilities, JSPL may sustain EBITDA/t of ₹15,000-plus FY25 onwards despite no improvement in steel prices.

“The 19 per cent steel volume CAGR, improvement in product mix with the commissioning of HSM (hot strip mills), and benefits of captive coal and pellets along with a slurry pipeline/conveyor belt would aid EBITDA CAGR of 31 per cent over FY24–26E,” said Nuvama.

Also Read: Stocks to buy: Mahanagar Gas, Va Tech Wabag, Aditya Birla Sun Life, among six fundamental stock picks by HDFC Securities

Brokerage firm: JM Financial

PG Electroplast | LTP: ₹1,584 | Target price: ₹2,430 | Upside potential: 53%

The brokerage firm has initiated coverage on PG Electroplast with a buy recommendation.

“Our target PE (price-to-earnings ratio) multiple is 27 on FY26E (Amber currently trades at PE of 31 times on FY26E). Over the next two to three years, we expect PG Electroplast to gain market share in ACs (air conditioning) and WMs (washing machines). Also, with entry into new categories (like LED TVs + laptops + computers + electronic manufacturing service), PG Electroplast is seeing higher earnings growth with improved balance sheet and return ratios,” said JM Financial.

The brokerage firm expects earnings CAGR of 41 per cent, with an improved asset turnover-return ratio (RoE), to improve to nearly 16.3 per cent in FY26E from 12 per cent in FY22.

“With strong profitable growth, we expect a re-rating of the stock,” said JM Financial.

Also Read: Multibagger Stock: Skipper stock generates 290% return in a year, soars nearly 1800% in 4 years

Adani Ports and SEZ | LTP: ₹1,304.20 | Target price: ₹1,460 | Upside potential: 12%

JM Financial underscored that Adani Ports and SEZ announced the acquisition of a 95 per cent stake in Gopalpur Port (GPL) at an EV (enterprise value) of ₹30.8 billion -13 times FY24 EV/EBITDA; 10 times FY25 EV/EBITDA.

“GPL is a bulk port, located on the East coast of India with 20mntpa handling capacity, 30-year concession (extendable up to 2056) and over 500 acres of leased land parcel. Given Adani Ports’ expertise in ramping up volume and improving EBITDA margins through cost/operational efficiencies and de-bottlenecking, we believe GPL will be a value-accretive acquisition for the company,” said JM Financial.

“GPL acquisition, though a small one (less than 3 per cent of Adani Ports consolidated volumes), will be the sixth port on the east coast (Dhamra, Gangavaram, Krishnapatnam, Kattupalli and Ennore) and will further deepen its reach in the long term. We bake in GPL acquisition in estimate with revised March 2025 target price of ₹1,460 from ₹1,430 earlier,” said the brokerage firm.

Also Read: Stocks to Buy -Maruti Suzuki , JSW Energy among 4 weekly technical stock picks by Axis Securities

KPIT Technologies | LTP: ₹1,428.50 | Target price: ₹1,860 | Upside potential: 30%

JM Financial highlighted that KPIT Tech has corrected nearly 10 per cent over the past one month. Investors seem concerned about the impact of the global EV (electric vehicle) slowdown on downstream services that KPIT offers. The pessimism is misplaced.

“The ‘softwarization’ of vehicles – where KPIT is focussed – is a parallel shift to electrification and hence investment cycles of the two need not be coupled. In fact, the same software could be used across different propulsion engines,” said the brokerage firm.

“We estimate that e-Powertrain related work – which is correlated with EV demand – constitutes less than a third of KPIT’s revenues today. Besides, the volume shift from BEV (battery-electrified vehicles) to PHEV (plug-in hybrid electric vehicles) should just supplant the work of one powertrain for another,” said the brokerage firm.

JM Financial pointed out that KPIT is relatively insulated from a slowdown in tier-1 software spend, unlike some of its peers, given a higher share of OEMs in its revenue mix.

The brokerage firm believes a strong FY24 exit will position KPIT well to guide for 18-20 per cent FY25 constant currency revenue growth, the highest among peers. That should help valuation as well.

“The stock now trades at 1.7 times PEG (on a two-year rolling consensus EPS estimates), in line with its three-year mean PEG (post relisting), reasonable in our view,” said JM Financial.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 27 Mar 2024, 11:49 AM IST