Infosys, Reliance Industries & ONGC attractive buys despite market highs

Sep 04 2014, 04:29 IST
Comments 0
Summary16 Nifty stocks at discount to LTA valuations

Even as markets are at all-time highs, blue-chips such as Dr Reddy’s, Axis Bank, Bank of Baroda, Lupin, ONGC, RIL, BPCL and Infosys seem attractively priced as they trade below their long-term average valuations.

Experts feel while these stocks may see some headwinds in the near-term, current valuations make them an attractive buy. “With the oil subsidy burden reducing on ONGC, the stock could see further upside. Infosys could see an uptick with the sector seeing a pick up in demand. In addition, the IT major could benefit from the product-based approach of the new CEO. However, in the near-term, the stock could face some headwinds due to appreciation in the Rupee,” said Vinay Khattar, head (research),

Edelweiss Capital Markets.

Click here for graph

Certain Nifty stocks are trading at more than 70% discount to their long-term average valuations. The oil & gas exploration and production company Cairn India is currently trading at one-year trailing p/e of 5.18, which is 72.69% below its long-term average p/e of 18.95. The Gurgaon-based company saw its earnings grow 3% for the year-ended March 31, 2014.

Dr Reddy’s Laboratory, which saw the net profit grow 28.20% for the year-ended March 31, 2014, is currently trading at 56.15% discount to its long-term average valuations.

Among banking stocks, Bank of Baroda and Axis Bank are trading at 15.41% and 17.16% discounts, respectively, to their long-term average price to book valuations. While Axis Bank saw it net profit for the year-ended March 31, 2014, grow 20.50%, Bank of Baroda saw its earnings grow 4.10% during the same period.

Experts expect earnings per share (EPS) growth for Nifty in FY15 to be at 16%. “Bloomberg consensus forecasts for the Nifty suggest EPS growth of c16% in FY15 and c17% in FY16 post an insipid c9% in FY14 and have exhibited positive momentum in past three months,” Barclays said in a report. According to Khattar, with markets hitting new highs every other day, large-caps are expected to drive the market rally.

Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...