BSE Sensex and NSE Nifty 50 have started the month of August strongly, with both the benchmark indices gaining more than 2% each in six trading sessions so far. S&P BSE Sensex is now placed at 58,853 points while the NSE Nifty 50 index is at 17,525. Indices have trimmed nearly all year-to-date losses with the help of a rally that started in the middle of June. However, now as Foreign Portfolio Investors (FPI) come back in and the rate hike cycle being factored in, analysts are advising some caution with valuations soaring higher. Analysts at Yes Securities have picked 4 stocks that they believe are well placed for helping investors pocket strong returns.
Bharti Airtel: BUY
Target price: Rs 901
The telecom giant is not just a major force in India but with over 490 million customers it operates in 17 countries across South Asia and Africa. “We believe despite the 5G investment payouts, Bharti is witnessing a shift in its FCF generation capability that could translate into healthy deleveraging,” Yes Securities said. 4G mix improvement, coupled with market share gains from Vodafone Idea, and continued tariff hikes are seen as triggers for the stock. Analysts noted that the consolidation in the sector with only two major players in Reliance Jio and Bharti Airtel, while Vodafone Idea struggles, has led to multiple rounds of tariff hikes, translating into an increase in ARPU.
The Bharti Airtel stock has gained just around 2% so far this year to now trade at 704 per share. This translates to an upside of nearly 28%.
Axis Bank: BUY
Target price: Rs 918
Yes Securities believes Axis bank is churning its book towards high-yielding segments now. “Axis Bank’s market share in net credit cards added has improved dramatically after a lean CY20. Axis bank’s thrust on high yielding segments has started playing out in FY22,” analysts noted. Additionally, the private sector lender is well capitalised with its CAR of 17.83% and CET1 ratio of 15.16%, including profit. Analysts also see the acquisition of Citibank India’s retail business as an opportunistic bet which may prove to be beneficial for Axis Bank.
The stock is up 7% so far in 2022 to trade at Rs 746 per share. This suggests 23% upside for the bank stock.
PSP Projects: BUY
Target price: Rs 725
Shares of PSP Projects have risen sharply this year, zooming 29% so far this year to now trade at Rs 639 per share. Now, Yes Securities predicts another 13% up-move in the stock. PSP Projects is an integrated EPC company across the construction value chain from Design, Construction, Mechanical, Electrical, Plumbing (MEP), Interior, O&M Services. “It had a total order inflow of Rs 1,802 crore in FY22 whereas for FY23 until now it has a total order inflow of Rs 1,097 crore. The company has guided for steady growth of 20-25% in the order book every year,” analysts said.
With a strong order book and reliable project execution, Yes Securities believes the company can grow its topline as well as the bottom line.
The Ramco Cements: BUY
Target price: Rs 931
Ramco Cements’ shares have been in the firm grip of bears this year, tanking 26% to now trade at Rs 755 per share. Analysts at Yes Securities like the stock for its strong retail presence in the south, low-cost cement producer characteristic and steadily increasing capacity share. “We believe TRCL will generate healthy operating cash flows of Rs 26.8 billion and fund its ongoing capex and plans to deleverage its balance sheet over FY23-24E,” Yes Securities said. The target price suggests 23% upside for the cement stock.