Sensex and Nifty corrected by more than 8% each in June 2022, recording their worst monthly performance since March 2020. Still, the weakness might not be over. “On the short-term chart, the index has broken down from bearish cup and handle pattern at 15,700 and hit the low of 15,183. The short bullish blips retested the breakdown and again regained the negative momentum indicating the bears are in control of short-term trend,” analysts at Ashika Group said in a report. Analysts at the brokerage and research firm have picked 3 stocks for the month of July, projecting strong upside potential.
Ashok Leyland: BUY
Target price: Rs 170 per share
Shares of Ashok Leyland have outperformed the benchmark indices so far this year, gaining 14.5% while Sensex and Nifty are deep in the red. Analysts believe the company could gain from an upturn in the CV industry. “The company is suitably positioned with M&HCV market share of 32% and aims to improve market share further with the launch of new products,” analysts wrote. Further, it is believed that Ashok Leyland will benefit from the full opening of the economy, which will drive the bus segment. Ashok Leyland’s subsidiary, Switch Mobility focuses on EVs. “The management has made it clear that it will be looking to raise funds in this subsidiary. This could lead to re-rating of AL if future deal/collaboration happens at decent valuations,” said analysts.
The target price implies an upside of 17% from Friday’s price of Rs 146 per share.
Target price: Rs 2,750 per share
Siemens Ltd. is a 75% subsidiary of Siemens AG, Germany. “Order inflow in Q2SY22 rose by 61.4% YoY to Rs. 5,339 crore, driven by high-value order booked in the mobility segment. Strong order inflow was witnessed across all business verticals during the quarter,” analysts said. Further, digitalization is seen as a long-term growth driver for the company. “There is huge potential of digitalization adoption in the Indian context given the government’s focus on increasing the share of manufacturing from the current 17% to 25%. This would mean an incremental annual manufacturing output of $500-600 trillion requiring a capex of $1.3-1.5 trillion to compete globally,” the note said.
The stock is up marginally year-to-date, trading at Rs 2,392 per share. This implies an upside of 15%.
United Spirits: BUY
Target price: Rs 875 per share
United Spirits Ltd. (USL) is India’s leading alcoholic beverage company and a subsidiary of global leader Diageo. With its strong brand presence in the country, United Spirits continues to focus on refurbishing blends and packaging despite the pandemic. “The company aims to bank on operational efficiency and data analytics for long-term business growth. USL continues to divest its non-core assets to reduce balance sheet leverage and to improve working capital management,” said analysts. The focus on premiumization through a strategic review of popular brands by United Spirits is also seen as a positive for the company and its stock.
The stock is down 13% so far this year and now trades at around Rs 780 per share. For the stock to reach the target price it will have to rally by 12%.