3 Stocks To Buy As Recommended By The Morning India Report

Buy the stock of Indian Oil, says the Morning India report

Motilal Oswal sees an upside of nearly 22% on the stock of Indian Oil for a target price of Rs 160. “The company reported a beat on our estimates owing to better than expected reported GRM (USD6.6/bbl) and marketing margin (Rs 7/liter), although refining throughput and marketing sales volumes were lower than our estimate. Petchem margin for Indian Oil fell by 23% QoQ, in line with the softening of PE/PP cracks in 2QFY22 (averaging 15-19% lower QoQ),” the brokerage has said.

“Indian Oil is likely to benefit the most from an uptick in refining margin, further aided by robust petchem margin in the near term (as mentioned above). We maintain our Buy rating on the stock,” the Morning India report has said.

Buy HDFC Stock

The Morning India report has recommended buying the stock of HDFC for a 17% upside. The company reported 2QFY22 PAT (in-line) of INR37.8b, up 32% YoY / 26% QoQ. According to Motilal Oswal, the increase was primarily driven by lower credit costs of 31 basis points (which stood at Rs 4.5 billion, against the expectation of Rs 6 billion).

Individual disbursements in Oct’21 were the highest ever in a non-quarter-end month. Growth in home loans was seen in affordable housing as well as high-end properties. The increasing sales momentum and new project launches are positive developments for the Housing Finance sector

“We have largely maintained our estimates. We now model assets under management growth of 13% (v/s 11% earlier) in FY22E. We estimate HDFC to deliver core RoA/RoE of 2%/13% in FY23E. We reiterate our Buy rating, with SOTP-based target price of Rs 3,370 (Sep’23 SOTP-based),” the brokerage has said.

Buy Tata Motors

Motilal Oswal has set a target price of Rs 565 on the stock of Tata Motors. The company’s 2QFY22 performance was heavily impacted by the semiconductor shortage in JLR and India.

“Demand remains strong in JLR, with a record order book of 127k units. The semiconductor shortage situation remains dynamic. However, JLR expects a gradual recovery starting 2HFY22, with higher production (by 50k units) in 3Q from 2QFY22 levels,” the brokerage has said.

“Operating performance beat in JLR was driven by a favorable mix and lower fixed cost. India CV business missed our estimates due to commodity cost pressures. We expect a strong recovery/traction in JLR/India businesses from 3QFY22E onwards,” the brokerage has said.

Nifty company results better than expectations

According to the Morning India report, the 2QFY22 earnings are marginally ahead of expectations as the companies benefitted from a) strong revenue growth in the technology sector b) steady recovery in loan growth, as well recovery and upgrade in the asset quality of most private sector banks (except Bandhan), c) higher commodity prices and volume growth in the energy and metal sectors, and d) opening up of the economy which boosted consumer and retail growth. Nifty profit for the 34 companies that have announced their results grew 22% YoY (v/s estimate of 13% YoY). On the other hand, for the 127 companies in the Motilal Oswal Universe, profit grew 26% YoY (v/s estimate of 19% YoY).

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.