The tremendous break in the rally in the stock market for the last few days has increased the concern of investors. The situation of overvaluation is visible in the market, hence the Sensex and Nifty have fallen significantly. In such a situation, the importance of stocks giving strong fundamentals and stable returns has increased for investors. Well-known brokerage firm Kotak Institutional Equity and HSBC have recommended two such stocks, which can give good profits even in this period of volatility.
Tech Mahindra
Target Price – Rs 1800 Rating – BUY
Brokerage Firm – Kotak Institutional Equity
Tech Mahindra’s margins have been stable and achieved a revenue growth of 7.2 per cent in the September quarter as compared to the previous quarter. The company’s communication vertical is in a good position due to the company’s 5G contribution and good deals being achieved. BPO is also performing well and can maintain this momentum for the next two-three years.
From the financial year 2022 to 2024, the company’s revenue is showing an increase of 1 to 2 percent. At the same time, there is an increase of one percent in the EPS. The revenue growth in the communication vertical is going to be good for the next three years. Therefore, its target price is being increased from 1580 to 1800 rupees. This stock is trading on 21X FY2023E. Still, it has full potential for growth. That’s why it is being given a BUY rating.
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ICICI BANK
Target Price – Rs 950 Rating – BUY
Agency – HSBC
ICICI Bank has achieved a net profit of Rs 55.1 billion. This is more than 19 per cent as compared to the June quarter. This profit is much higher than HSBC’s estimate. The margin of the bank has also been better than expected. The bank’s net interest margin stands at 4 per cent, which is 11 basis points higher than the previous quarter. The bank’s cost of funds has also been cut.
Business banking, SME and retail loan business grew by 17 per cent in the second quarter of FY 2021-22. Whereas in the second quarter of the last financial year i.e. 2020-21, there was an increase of four percent. The bank’s fee income has increased by 21 per cent as compared to the second quarter of the previous financial year, leading to a 23 per cent increase in core operating profit. The all round operating performance of the bank is quite good. Therefore, its target pricing has been increased to Rs 950. It is being given a BUY rating.
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