NSE Nifty 50 surged 24 per cent in CY21, significantly better than the returns it posted in the previous three years, said analysts at Axis Securities. The domestic brokerage firm also maintained its Nifty 50 target for December 2022 at 20,200, valuing it at 22x FY24E earnings. The target implies about 15% upside from current levels. Last year’s bull run was led by outperformance in the broader market.
Indian share markets were volatile in the last month of the calendar year 2021 marked by a weakness in the global market due to rising concerns over inflation and faster tapering. Nifty Midcap 100 and Nifty Smallcap 250 delivered 46 per cent and 62 per cent returns respectively in 2021, which stood superior to the previous years’ return as well. Analysts say that large cap stocks are likely to catch up in the near term.
Analysts say that any further increase in the Covid-19 caseload will be a short-term negative for the market. The near-term focus will be on the third quarter earnings of FY22 and Union Budget 2022. “The Union Budget 2022 is expected to be growth-oriented given the state election lined up in over five states in 2022. The consequent higher government spending will help the economy to gain further growth momentum,” analysts said.
Large, mid, small cap stocks to buy in CY2022
ICICI Bank: This large cap stock has a target price of Rs 975 apiece, an upside of 26 per cent from last close. Analysts said that higher loan growth, improving operating profits, and a strong provision buffer coupled with a strong deposit franchise will help the bank achieve ROAE/ROAA expansion over FY22-23E.
State Bank of India: SBI stock will have to jump 33.5 per cent from the last close to achieve the target of Rs 645 apiece pegged by the brokerage firm. It said that SBI continues to be the best play among PSU banks on the gradual recovery in the Indian economy given its healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook.
Maruti Suzuki India: This consumer discretionary large cap stock has a target of Rs 8,500 apiece, implying a rally of 11.4 per cent from the previous close. The brokerage firm said that Maruti Suzuki India could emerge as the biggest beneficiary of demand recovery in the post-COVID period, considering its stronghold in the entry-level segment and a favorable product lifecycle.
Bajaj Auto: It will require an upside of 37 per cent, to hit the target of Rs 4,500 apiece pegged by the brokerage firm. “Bajaj Auto is well-placed to capitalize on demand normalisation and premiumisation trends in the 2W industry which should support profitability and operational performance going forward,” the brokerage firm said.
Federal Bank: The brokerage firm believes that the key positives for this midcap financial stock are increasing retail focus, strong fee income, adequate capitalization, and prudent provisioning. It has a target price of Rs 125, a rally of 41.32 per cent from last close.
Bata India: Axis Securities has given a target price of Rs 2,300 apiece, which implies a rally of 25 per cent from the previous day’s close. It believes that over the years, Bata India has consistently worked on building a cash efficient business driven by healthy operating cash flows, asset turns (8x), strong cash on the balance sheet (Rs 900 crore) and superior EBITDA margins than its peers.
Equitas Small Finance Bank: Equitas Small Finance Bank has a price target of Rs 78 apiece, an up move of 31.42 per cent. The brokerage believes that this smallcap stock is eligible for re-rating given its improving profitability, asset quality, and return ratios
Amber Enterprises India: Amber Enterprises India, a smallcap consumer discretionary stock, will rally 12 per cent to Rs 3,690 apiece. The brokerage firm expects Amber to register a revenue CAGR of 31% over FY21-24. “The company’s long-term outlook remains intact with demand recovery and encouraging growth in the underpenetrated domestic market,” it said.
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