The domestic brokerage firm Motilal Oswal is seeing as much as 17% upside in one of the three stocks, which it has picked recently. The brokerage house is betting on strong fundamental plays. According to the, green shoots in new business, and other recent developments around them are the key triggers.
Check a detailed analysis of the investment rationale for Reliance Industries, Larsen & Toubro, and Happy Forgings.
Motilal Oswal on Reliance Industries: New Energy business to scale up
The brokerage firm kept the rating unchanged on oil-to-chemicals behemoth, Reliance Industries, at ‘Buy’. The brokerage sees an upside of 16% at a target price of Rs 1,765. On a sum of the parts (SoTP) basis, the brokerage has an equity valuation of Rs 585 per share to RJio and Rs 625 per share to Reliance Retail (factoring in the stake sale), as well as Rs 174 per share to the New Energy business. As per Motilal Oswal, Reliance Industries’ new energy business is all set to scale up in FY27.
The actual India demand for Battery Energy Storage System (BESS) can far exceed the Central Electricity Authority’s (CEA) initial India FY32 BESS target of 236 GWh as battery costs decline and new use cases emerge (e.g. Green hydrogen, integration with thermal capacity).
Motilal Oswal on L&T: Middle East seen as key market
Motilal Oswal has maintained its ‘Buy’ on L&T with a target price of Rs 4,500, implying an upside of 12% from the current market price. The management remains focused on its capital allocation strategy and expects to hive off non-core assets soon and keep investing in new-age areas over the next five years. “The company has learnt from its past mistakes and now has diversified its country base in the Middle East, such as Saudi Arabia, Kuwait, and Qatar,” said Motilal Oswal.
L&T’s management remains focused on its capital allocation strategy and expects to cut off non-core assets soon and keep investing in new-age areas over the next five years. L&T expects to invest a total of Rs 1 lakh crore over the next five years.
Motilal Oswal on Happy Forgings: Steady performance across parameters
The brokerage has retained its ‘Buy’ rating on Happy Forgings, with a target price of Rs 1,200. The price target indicates an upside of up to 17% over the next 12 months. Motilal Oswal said that given the company’s healthy new order wins, it is likely to post a 17% standalone revenue CAGR over FY25-28.
Further, Happy Forgings is estimated to record a 230 basis points margin expansion to 31.2% over FY25-28, led by an improved mix in the coming years.
“We, thus, expect HFL to post a 22% earnings CAGR over FY25-28. Happy Forgings’ superior financial track record compared to its peers serves as a testament to its inherent operational efficiencies and is likely to be a key competitive advantage going forward,” said Motilal Oswal.