Indians are investing in the stock market like never before. A report by Jefferies in March this year suggests that the share of stocks in total savings by Indians was at an all-time high of 4.8%, up from 4.3% in March 2021. Before 2021, the highest share of stocks in savings was recorded at 4.2% in 2008. Some of the key reasons for this development include higher returns on investments, multiple investment options, and seamless availability of expert counsel.
However, choosing the right share or the right portfolio of stocks is always tricky, especially if you are a new or first-time investor.
Let’s try and help you with five stocks that can help you become rich in the current market scenario:
Diversified conglomerate ITC Limited has performed exceptionally well on Dalal Street since March this year. The company’s share price has soared by 60%. In the last financial year, ITC’s Gross Revenue increased by 22.7% to over Rs 59,000 crores, while EBITDA rose to nearly Rs 19,000 crores with an increase of 22%. The company has superb fundamentals with an ROE of 33.6% and an ROCE of 24.8%. Its stock value is likely to reach the target price of Rs 385 with a SL of 300.
Under its Chairman Sanjiv Puri, ITC has made strategic investments in ‘digital’ and ‘sustainability’, the two ‘future megatrends’. The company has also successfully devised a new strategy for all round growth in the future. The ITC Next strategy, said to be a brainchild of Puri, aims to turn the conglomerate into a highly competitive, FutureTech, climate positive, and inclusive enterprise. In recent times, ITC has exhibited great agility and innovation by introducing 100+ new FMCG products last year and launching its super app called ITC MAARS. The company has also devised an asset right strategy for its hotels and set new sustainability benchmarks in its Paperboards and Agri Businesses.
Astra Micro Products
The company is engaged in the business of design, development, and manufacture of sub-systems for Radio Frequency and microwave systems used in defense, space, meteorology, and telecommunication. The company has an ROCE (Return On Capital Employed) of 11% and an ROE (Return On Equity) of 6.94%. It has reduced its debt and has very favorable DE ratio of just 0.10x. Further, the company has reported 94% CAGR growth in PAT over the last three years. It reported a superb cash flow from operating activity of Rs 101 cr. As of Q1FY23, the company booked orders worth Rs 253 crore and has order books of 2x its revenue for FY22. This is a highly undervalued counter and can reach the target price of Rs 450 with SL of Rs 310.
Adani Ports & Special Economic Zone is in the business of development, operations, and maintenance of port infrastructure (port services and related infrastructure development) and has linked multi product Special Economic Zone (SEZ) and related infrastructure contiguous to the port at Mundra. APSEZ through its subsidiary operates five logistics parks in Haryana, Punjab, Rajasthan, and Karnataka with 4,00,000 sq. ft of warehousing space. It is the only Adani Group company which is yet to show a big move. Also, the company has strong fundamentals and this counter expected to reach the target price of Rs 1100 with SL of Rs 920.
Poonawalla Fincorp Ltd (erstwhile Magma Fincorp Ltd) is a non-deposit taking NBFC registered with RBI. It is engaged in providing consumer and MSME financing, as well as general insurance services. With a change in the company’s management, it aims to be amongst the top three NBFCs in consumer and MSME segments with risk-calibrated accelerated growth of ~3x of FY21 AUM for which company has already achieved AUM of 1.24x of FY21. Also, the company’s borrowings cost has reduced by 264bps between Q1FY22 and Q1FY23. In the long run, it is expected to flourish under the new management. We expect this counter to reach the target price of Rs 450 with SL of Rs 300.
IL&FS Investment Managers Limited
IL&FS Investment Managers Limited is a domestic private equity fund management company which deals in investment banking, asset management and infrastructure financing. The company has invested across various sectors, such as Telecom, City Gas Distribution, Shipyards, Retail, and Media. Funds managed by IIML span General Purpose Private Equity, Real Estate, and Infrastructure. The company has a history of consistently paying dividends and has been maintaining a healthy dividend payout of 48.4%, with a dividend yield of 4.89%. IL&FS Investment Managers Limited is a debt-free company with good growth potential. We expect this counter to reach the target price of Rs 16 and SL of Rs 7.
A company’s market reputation, track record, current performance and prospects determine its long-term share value. For large entities like ITC, which has been around for over a century and is backed by a solid leadership, investors are always of great significance. That’s why putting your money in such companies, while a tad tricky in the short term, is certainly profitable in the long run.
(By Rahul Sharma, Head of Research at Equity 99)
Disclaimer: This are the author’s personal views. Readers are advised to consult their financial planner before making any investment.