7 Stocks To Buy From Broking Firm Motilal Oswal For Long Term Investors

Buy State Bank of India stock

According to Motilal Oswal among PSU Banks, State Bank of India remains the best play on a gradual recovery in the Indian economy, with a healthy PCR, Tier I of 11.3%, strong liability franchise and improved core operating profit. It appears well positioned to report strong uptick in earnings, led by normalization in credit cost.

“We estimate PPOP at 14% CAGR over FY21-23E v/s 6% CAGR (FY18-21), enabling State Bank of India to achieve 15% RoE (decadal high) by FY23E,” the brokerage has said.

VIP Industries

According to Motilal Oswal VIP industries is the largest luggage manufacturing company and would immensely benefit from opening up of the economy and pick up in domestic leisure travel.

Buy Tata Motors stock

The brokerage also has a buy call on the stock of Tata Motors. “Recovery is underway in all of the three businesses of Tata Motors.

While India CV business would see cyclical recovery, JLR is witnessing both cyclical and structural, supported by a favorable product mix. This could drive recovery in JLR’s EBIT margins and leave scope for a surprise on profitability.

The India PV business (34% CAGR) would witness structural recovery aided by refreshed product portfolio and market share gains which will bring it on track to achieve FCF breakeven by FY23,” the brokerage has said.

United Spirits

According to Motilal Oswal Financial services, recovery post the second COVID wave has been faster than that in FY21 and continues to improve.

“The outlook appears promising with: a) on-trade channel returning to normalcy; b) increased occasions for home indulgence; c) the ongoing strategic review of half of the Popular portfolio to be concluded by Dec’21, which would offer further primacy to the Prestige & Above (P&A) segment; d) potential success in the P&A segment in terms of both growth and ; e) the new CEO taking over recently; and e) faster-than-expected deleveraging,” the brokerage has said.

Indian Hotels

Motilal Oswal Financial Services expects gradual recovery in FY22E and sharp recovery in FY23E on (a) a low base, (b) improvement in ARR once normalization is achieved, (c) improved occupancies, (d) positivity in cost rationalization efforts in FY21, (e) an increase in F&B income as banqueting and conferences resume, and (f) higher income from management contracts.

“The company is on the right track to grow its EBITDA as new revenue-generating avenues are seeing higher EBITDA margins,” it has stated.

Buy Ultratech Cement stock

Ultratech Cement enjoys leadership position across regions, which helps it maintain its premium pricing in most markets. Ultratech Cement is setting up Cement capacities of 19.5mtpa, which would drive sales volume CAGR of 10% over FY21-24E.

“We expect Ultatech Cement to turn cash positive in FY24E and expect RoE to improve further to 15% by FY24E on higher asset turnover, led by an enhancement in capacity utilization, continued debt reduction, and improvement in EBIT margin,” Motilal Oswal Financial Services has said.

Macrotech Developers

Lodha is one of the largest real estate developers in India, benefitting from the recent demand pick-up and the optimism behind the expected upcycle. Prices have hit rock bottomed and are expected to pick-up gradually in the near term as the supply crunch is likely to see demand exceeding launches.