Motilal Oswal picked three stocks from three different sectors to bet on after tracking global as well as domestic factors. These stocks can provide a return of up to 14% as per Motilal Oswal. Here’s the list of stocks-
Tata Communications
Tata Communications’ valuations are reasonable, said the domestic broker Motilal Oswal in a research note. The broker maintained its ‘Neutral’ call on the stock. However, it sees further downside in the stock of 4% at a target price of Rs 1,660. Motilal Oswal awaits acceleration in revenue growth, along with margin improvement in the digital portfolio, before turning more constructive. “We believe ramping up digital margins to double digits would remain a tall ask, given inherent low margins and a significant share of resale business in TCOM’s digital portfolio,” said Motilal Oswal.
Tata Communications’ management aims to increase the share of its digital portfolio to 65%, as against 47% currently, which implies acceleration in digital revenue CAGR to 26% over FY21-25. This includes large acquisitions as well.
Indraprastha Gas
Motilal Oswal has turned positive on the city gas distribution sector as it sees scope for margin expansion, steady volume growth, and reasonable valuation. It has upgraded Indraprastha Gas to a Buy rating. The broker sees an upside of 14% with a target price of Rs 435 on the stock. However, concerns related to cannibalisation from electric vehicles (EVs) persist in the sector. Globally, EV penetration growth is under stress as the policy support wanes in both developed (such as the US/Europe) and emerging economies, which could turn positive for the CGD sector.
Adding to that, China dominates EV sales globally, accounting for 40% of the total exports, but countries such as the US, Europe, and Mexico are now resisting the low-cost exports from China by raising tariffs or promoting local manufacturing, which could be beneficial for Indian companies.
AngelOne
Motilal Oswal picked Angel One as its top pick in the Capital Market despite a decline in F&O activity. However, the broker expects a stable growth trajectory for volumes, and rising retail participation should support the performance of market intermediaries. Plus, the strong SIP activity and recovery in flows, backed by industry efforts to spread awareness and enhance financial literacy, will promote a long-term investment perspective that bodes well for AMCs, said Motilal Oswal.
The capital market ecosystem witnessed a mixed performance, with some parameters such as option premium turnover, cash volumes and MF AUM, and maintaining growth momentum. However, other segments like F&O volumes, commodity volumes, and net MF inflows declined.