The brokerage firm expects Indian markets to continue to outperform throughout 2024, supported by strong macro and micro fundamentals. Here are the top options to look out for.
Motilal Oswal identifies State Bank of India (SBI), Hero MotoCorp, Dalmia Bharat, Coal India, Kajaria Ceramics and several other stocks as their top picks for 2024.
The brokerage firm expects Indian markets to continue to outperform throughout 2024, supported by strong macro and micro fundamentals. Motilal Oswal highlighted that despite the recent market recovery, valuations remain reasonable and below the average over the past 10 years. Loan growth remains healthy and the bank expects moderate growth over the medium term. SBI remains one of our favorite sector picks. SBI exceeds previous RoA target by 1%; currently aims to achieve a RoA of 1.2% and a RoE of 20% sustainably.
We like ONGC due to its cheap valuation and improving volume growth outlook. It aims to increase production to 50 mmtoe by FY28 (40 mmtoe FY23), driven by
ongoing projects (9 infrastructure projects and 14 development projects). Management. OPAL is expected to be profitable by FY25 if the government is elected. Approve the use of gas from new wells.
Domestic electricity demand is expected to grow 1.1 times GDP and reach 1,750 bu of power generation by 2024. Coal India is our top pick as it is well-positioned to capitalize on the increase Head of the electricity industry. Coal aims to produce 780 million tonnes in FY24E (up 12% year-on-year). It offers an attractive dividend yield of 5.6%.
SIEMENS (Siemens SA)
BUY | CMP: 3960 | TARGET: 4,600 | Increase: 16%
Siemens is targeting domestic market opportunities within the government. and private investment. PLI-led spend of ₹4t over 4-5 years could expand the addressable market. The possible merger and listing of Siemens India Energy business is expected to pave the way for value creation over the next 2-3 years. We expect Siemens to record an EBITDA/PAT CAGR of 18%/19% over FY23-26.
HEROMOTCO (Hero MotoCorp Ltd)
BUY | CMP: 4138 | TARGET: 4480 | Increase: 8%
Domestic demand for 2W saw a strong recovery during the festive period, extending into December due to record numbers of weddings, especially in the Central and Northern regions. The recovery of its core product portfolio, coupled with a well-planned expansion strategy in the electric and premium vehicle space, has helped Hero better position itself in the 2W OEM space. We forecast volume CAGR of 7% over FY23-25, leading to NPAT CAGR of 21%. DALBHARAT (Dalmia Bharat Ltd)
BUY | CMP: 2274 | TARGET: 2,800 | Increase: 23%
As part of the Dalmia 2.0 initiative, management has prioritized four key areas: growth, financial performance, maintaining trust and organizational development. The company aims to increase its cement grinding capacity to 75 mtpa/110-130 mtpa by FY27/2031. We expect volume CAGR of ~11% in FY23-26 and estimate EBITDA/tonne of ₹1,150 in FY25.
KAJARIACER (Kajaria Céramique Ltd)
BUY | WPC: 1303 | TARGET: 1,580 | Increase: 21%
Expectations of demand recovery, supported by real estate growth and the company’s expansion plans into smaller towns, could drive volume growth. Additionally, India is likely to become the largest brick exporter by 2025. We believe NPAT CAGR of 26% over 23-26E, high margins (RoCE of 27% in 2026) and a healthy balance sheet should help Kajaria maintain premium multiples. PNBHOUSING (Pnb Housing Fin Ltd)
BUY | WPC: 781 | TARGET: 950 | Increase: 22%
PNBHF has converted its business model to retail and aims to increase quarterly disbursements for affordable housing to about 10 billion yen in the near future. We forecast AGR of 13%/28� in AUM/PAT in FY23 to FY26E and RoA/RoE of around 2.4%/12.4% in FY26. Capital raise through rights issue has provided much-needed credit capital, which could lead to an improvement in the ratings.
LEMONTREE (Lemon Tree Hotel Company Limited)
BUY | CMP: 120 | OBJECTIVES: 135 | Increase: 13%
We expect Lemon Tree to continue its strong growth momentum thanks to improved occupancy and ARR as well as the addition of hotels under management contracts. Mgt expects a very favorable period for the hotel industry in the next 4-5 years. We expect Adj.
NPAT CAGR of 46% in FY23-25 and RoE improves to 21.5% in FY25
(14% in FY23).
SUNTECK (Sunteck Real Estate Company Limited)
BUY | WPC: 445 | TARGET: 640 | Increase: 44%
Sunteck’s multi-micromarket presence, luxury offerings and proven track record of execution have made it one of the biggest beneficiaries of strong demand. The management aims to add at least INR 150-200 billion worth of projects to amplify its active project portfolio to INR 500 billion in the next 2-3 years. We forecast a pre-sales CAGR of 25% in FY23-26, driven by accelerated product launches.
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