Kotak Securities lists top stock picks for March: Cipla, ITC, L&T and more

SUMMARY

Rising hopes of a global economic recovery on the back of increasing vaccination fuelled a rally in equities in February. However, a sharp rise in bond yields led to some correction in market performance across the globe recently. With rising bond yields and rich valuations, where should one invest in March? According to Kotak Securities, the market could see a consolidation phase in the next few months. It added that since near-term valuations are still very much on the higher side it is not wise to expect healthy returns in less than one year. It also noted that few sectors that can make money for investors given their past underperformance and potential recovery are banks, capital goods, construction, engineering, oil & gas, cement, real estate & metals. Here's a list of the domestic brokerage’s top stock picks for March:

By Pranati Deva Mar 9, 2021 3:01:34 PM IST (Published)

Bajaj Consumer: The brokerage has an 'add' rating on the stock with a target at Rs 300 per share, indicating a 23.5 percent upside. It stated that the new CEO’s single-minded focus and initiatives on reviving growth are yielding results. It expects earnings to grow by 6.7 percent in FY22E and 7.8 percent in FY23E.

Cipla: The brokerage has a 'buy' call on the stock with a target at Rs 950 per share, indicating a 20.7 percent upside. It added that the domestic segment leads to sales growth for the firm and the strong cost controls drive margin outperformance. Strong execution in respiratory franchise positions Cipla well over the medium term, the brokerage further noted. It raised the FY22/23 earnings estimate by 2-3 percent.

DCB Bank: The brokerage has a 'buy' call on the stock with a target at Rs 150 per share, indicating a 29.3 percent upside. The lender reported flat earnings on the back of building provisions for Covid-related NPLs noted the brokerage. It added that a recovery in macro would be a factor for re-rating and revised earnings upward for FY21.

Escorts: The brokerage has a 'buy' call on the stock with a target at Rs 1,700 per share, indicating a 29.7 percent upside. It believes that the tractor industry to show strong growth over the next two years and estimates Escorts' tractor volumes to grow at 14.5 percent YoY in FY21E & 10.7 percent in FY22E. It also expects earnings per share (EPS) to grow by 14.8 percent in FY22E and 12.3 percent in FY23E.

ITC: The brokerage has a 'buy' call on the stock with a target at Rs 265 per share, indicating a 29.9 percent upside. As per Kotak, ITC offers a combination of decent growth and inexpensive valuation. There is a promise of solid long-term growth in FMCG, it added. It also expects earnings to grow by 18.7 percent in FY22E and 8.1 percent in FY23E.

L&T: The brokerage has a 'buy' call on the stock with a target at Rs 1,720 per share, indicating a 19.2 percent upside. The government’s impetus on infrastructure spending bodes well for the firm, noted the brokerage, adding that this should lead to quick order realization and eventual scale-up in execution. It sees an EPS growth of 60.4 percent and 23.5 percent in FY22E and FY23E, respectively.

Petronet LNG: The brokerage has a 'buy' call on the stock with a target at Rs 300 per share, indicating a 17.7 percent upside. The firm reported robust Q3 results despite lower volumes. Lower-than-anticipated volume at Dahej terminal was offset by higher margins, stated Kotak. It expects earnings to grow by 3.9 percent in FY22E and 9.4 percent in FY23E.