Reliance, Infosys among stocks to buy; may rally up to 32% on Q1 results, global market to set direction

S&P BSE Sensex and NSE Nifty 50 soared more than 8 per cent each in July, after three months of downturns. Kotak Securities believes that the market has largely digested the US Fed rate hike, economic contraction and has discounted the street’s expectation of 35-50bps rate hike by RBI in August policy meet. The brokerage firm also expects the Indian market to follow global markets in the near to medium term. The research firm has listed eight stocks such as Reliance Industries, Axis Bank, Infosys, ICICI Bank, M&M and others as top stocks to buy and sees more than 32 per cent upside potential after April-June quarter earnings.

The brokerage firm noted that the key risk in its view would be any surprise from the global market as crude oil continues to trade above USD100 per barrel amidst ongoing Ukraine-Russia war. The rally in the month of July was aided by flattening of inflation, softening of commodity prices and pickup in monsoon improved investors sentiments. In addition, reduced aggression in selling by FIIs also gave cheers to the investors, said analysts at Kotak Securities. 

Axis Bank: BUY | Target price: Rs 960 | Upside: 32.5%

Analysts see 32.5% upside in the stock at their fair value of Rs 960. They added that the bank is well positioned for a re-rating from current levels.

ICICI Bank: BUY | Target price: Rs 975 | Upside: 19.1%

Analysts see 19.1% upside in the stock at a fair value of Rs 975, as the bank is well placed to justify its premium valuation. They added that the adjusted credit cost was at zero but the bank chose to build a contingency buffer. Kotak Securities said in uncertain times, as we are in today, we believe it is the best idea in large caps.

Infosys: BUY | Target price: Rs 1,690 | Upside: 9.1%

Analysts see fair value of Rs1,690 implies upside of 9% from current market price. They noted that strong revenue growth; weak margin; sharp increase in unbilled revenues.

M&M: BUY | Target price: Rs 1,400 | Upside: 20.2%

Analysts see a fair value of Rs 1400 offers 20.2% upside from the current market price. “We increase our FY23-25 EPS estimates by 9-12% on higher volume assumptions. We expect earnings per share (EPS) to grow by 33.0% in FY23E and 19.0% in FY24E,” they said.

Reliance Industries: BUY | Target price: 2,980 | Upside: 18.8%

Analysts say that fair value of Rs 2,980 implies upside of 19% from current market price. “Jio — ahead of us, driven by higher net adds and higher realized tariffs. We expect earnings (EPS) to grow by 24.4% in FY23E and 19.1% in FY24E,” they added.

Sapphire Foods: BUY | Target price: Rs 1,425 | Upside: 24.2%

Analysts say fair value of Rs 1,425 offers upside of 24.1% from current market price. Kotak Securities has initiated coverage on the stock with a buy rating to it. “We expect Sapphire Foods to be one of the fastest growing QSR chains in India. We expect EPS of 17.4 in FY23E & EPS of 25.3 in FY24E. The stock is currently trading at a valuation of 57.1x P/E FY24E EPS,” it added.

SRF: BUY | Target price: Rs 2,660 | Upside: 9.5%

Analysts say fair value of Rs2660 offers 9.5% upside from the current market price. Kotak Securities said that SRF’s cautious outlook for packaging films(PFB) is offset by bullish outlook for the chemicals segment. “We expect earnings to grow 26.9% in FY23 and 16.5% in FY24. We value the stock on SOTP (Sum of The Parts) & arrive at a fair value of Rs 2,660,” the research firm added.

Supreme Industries: BUY | Target Price: Rs 2,210 | Upside: 16.5%

The price target of Rs.2,210 offers upside of 16.5% from current market price. Management expects 15% volume growth in FY23 with 15% EBITDA margin. “We cut earnings estimates for FY23/FY24 in the range of 2.8-9.5%. We value the stock at 29x FY24E earnings; and maintain a buy rating,” Kotak Securities said.

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