Stocks to Buy: Motilal Oswal Recommends 3 Stocks To Buy For Positive Returns

Buy Cholamandalam Inv & Fin, Says Motilal Oswal

Broking firm Motilal Oswal has said to buy the stock of Cholamandalam Inv & Fin in its latest report. According to the broking firm, the organization announced 1QFY22 PAT of INR3.3b (11% beat), up 34% QoQ/down 24% YoY. This was by virtue of solid authority over opex, regardless of raised credit costs.

Current Market Price	Rs 525.25
Target Price	Rs 650

Expectations of financials in years to come by Motilal Oswal

	2021	2022E
Earning Per Share	18.5	21.5
Price to Earnings	28.5	24.4
Price to Book value	4.5	3.9

Target price of Rs 650 on Cholamandalam Inv & Fin

According to Brokerage, it expects a strong recovery in disbursements from 2QFY22. Also, they expect asset quality to show gradual recovery – given the pickup in business activity and improvement in collections in the second half of Jun’21 as well as in Jul’21.

” Our higher credit cost estimate in FY22E was mitigated by an expected improvement in NII and other fee income, leading to only a minor change to our estimates. We expect the company to deliver healthy RoE of 17-20% over the next two years. The stock trades at 3.0x FY23E P/BV. We maintain our Buy rating on the stock, with TP of INR650/share (4x FY23E BVPS),” the brokerage has said.

Buy Emami stock, says Motilal Oswal

Another stock that Motilal Oswal has a buy on is the stock of Emami. The brokerage sees a decent upside in the stock.

Current Market Price	Rs 574.85
Target Price	Rs 660

Expectations of financials of Emami stock

	2021	2022E
Earnings Per Share	16.3	17.1
Price to Earnings	35.1	33.2
Price to Book Value	14.4	12.6

Price target of Rs 660 on the stock

According to Motilal Oswal, it is too soon to get down on an underlying recuperation in deals, before the COVIDled blip on optional utilization in 1QFY22, the organization had announced three progressive quarters of two-year normal deals of 7.5-10% – a level we trust HMN can return to 2QFY22 onwards.

“We maintain our Buy rating, encouraged by the following factors: a) inexpensive valuations at 30.3x FY23E EPS, b) a sharp reduction in pledged shares (now at 30% levels), and c) potential tailwinds for HMN over the next few quarters (~50% of HMN’s domestic sales comes from rural India) – just like other peers with higher rural salience. We arrive at our TP of Rs 660/share (valuing the company at 32x Sep’23E EPS, a 40% discount to peers),” the brokerage has said.

Buy Vinati Organics, Motilal Oswal

According to Motilal Oswal, Vinati Organics (VO) reported mixed results, with revenue above our estimate (+20%), while EBITDA came in below our estimate (-8%). Higher efficiencies, as a result of a ramp-up, would reduce operating costs and help EBITDA margins.

Expectations of financials in years to come by Motilal Oswal

	2021	2022
Earnings Per Share	26.2	33.6
Price to Earnings	73.5	57.3
Price to Book Value	12.8	10.9

Current Market Price	Rs 1,942.75
Target Price	Rs R2,220

Price target of Rs 2,220 on the stock

According to the brokerage, the company is in the process of merging VAL and VO, which would result in the production of AOs from Butyl Phenol and further forward integration. VO would become the world’s largest and only doubly integrated AO producer.

“Gradual ramp-up in expanded capacity over the next three years would drive huge growth for VO, with further development on the product molecules currently under R&D. With new products such as AO and Butyl Phenol resulting in higher import substitution, we forecast a revenue CAGR of ~38% over FY21-24E (unchanged), translating to an EBITDA and EPS CAGR of 31-32% over this period. Valuing the stock at 43x Sep’23E EPS, we arrive at TP of INR2,220. Maintain Buy,” the brokerage has said.

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.