ITC, Titan and SBI among top 24 stocks to watch out for in FY24

With the global macro situation throwing the bulls out of gear in FY23, traders are taking a cautious approach while investors are seeing the downturn as an opportunity to accumulate their favourite stocks.

“In this volatile market environment, it is judicious to carefully add positions in a gradual manner in quality stocks, where there is visibility in earnings and comfort on valuation. Also given the near-term volatility in the market it is important for investors to keep an investment horizon of at least 1-3 years, to generate better returns,” Sharekhan said.

To find out which stocks should be on the top of your watchlist, we reached out to various brokerages to curate a list of 24 stocks for FY24.

Sanjeev Hota, Vice President and Head of Research at Sharekhan BNP Paribas 1) L&T
We maintain a Buy on L&T with a revised PT of Rs 2,600 (upgrading our target P/E for the core business), given strong execution and margin tailwinds and improving return ratios in the capex upcycle.

2) ITC
The stock trades at 22.6x and 20.4x its FY24E and FY25E EPS, a stark discount to some large consumer goods stocks. Consistent earnings growth, a strong dividend payout and sustained ESG rating along with potential value-unlocking in the hotel/IT business will reduce valuation gap going ahead.

3) HAL
HAL has strong government support, proven execution capabilities, capacity expansion, improving working capital cycle and healthy cash balance. It trades at ~17x FY24E EPS and ~15xFY25E EPS, lower than listed peers.4) SBI
We believe there is an investment case for gradual improvement in the core ROA trajectory in the near term.

At the CMP, SBI trades at 0.8x/0.7x its FY2024E/FY2025 core ABV. It is our top pick among PSU banks and is available at a bargain valuation.

5) SRF Ltd
Investment in right areas of specialty chemical business would improve earnings quality and safeguard from cyclical packaging film margins. Vinit Bolinjkar, Head of Research, Ventura Securities

6) Tata Motors
Transformation of the JLR and domestic PV business through new models and EV launches, along with a cyclical recovery in CV segment and vehicle scrapping should drive a turnaround in the business performance. Deleveraging and lower capex requirements to drive positive FCF. 7) Varun Beverages
VBL’s efforts on expanding its distribution network and increasing capacity to capitalize on new opportunities by coming out with new products (recently acquired Sting energy drink) will result in increased penetration and improved market share.

8) NTPC
NTPC’s total power generation capacity is at 71.6 GW, out of which 3.2 GW is solar & wind. The company is targeting 32GW of solar+wind capacity by 2032. NTPC’s profitability is backed by long-term PPAs based on cost-plus tariff structure, thereby ensuring adequate recovery of RoE.

9) National Aluminum Co Ltd
The company is the lowest-cost producer of metallurgical grade alumina in the world and lowest-cost producer of bauxite in the world as per Wood McKenzie report. The 1mtpa capacity expansion of the alumina refinery is targeted to be commissioned by Jan’24. 10) Indraprastha Gas
IGL has been awarded 5 GAs to develop 400+ CNG stations, 1.5 Mn+ new connections, and 9,500 Km+ steel pipeline in the next few years, which will likely drive future growth.

11) Bharat Dynamics
BDL is the sole manufacturer of rockets & missiles in India. Increasing demand for rockets and missiles from all the 3 wings of defence – Army, Air Force and Navy has significantly improved the order book, which is likely to sustain for the next 8-10 years. Nirvi Ashar – Fundamental Analyst, Religare Broking

12) Dalmia Bharat
We estimate its revenue/EBITDA/PAT to grow at 23%/25%/31% CAGR over FY22-25E and remain optimistic on the long term growth prospects of the company. We have a Buy rating with a target price of Rs 2,291. 13) Maruti Suzuki
We have estimated its revenue/EBITDA/PAT to grow at 18.8%/41.0%/45.4% CAGR over FY22-25E and have recommended a Buy rating with a target price of Rs 11,501.

14) Britannia Industries
Financially, we have estimated its revenue/EBITDA/PAT to grow at 15%/19%/21.7% CAGR between FY22-25E and have recommended an Accumulate rating with a target price of Rs 5,117. 15) HCL Technologies
We estimate its revenue/EBIT growth in INR terms to grow at 15.3%/17.2% CAGR over FY22-25E and have recommended a Buy rating with a target price of Rs 1,333. 16) ICICI Bank
We remain positive on the bank on the back of credit growth, improvement in asset quality, improving margins and various digital initiatives.

We expect total income/PAT to grow at CAGR of 19%/28% and advances/deposits to grow at a CAGR 19%/13% for the period FY22-FY25E. Target price: Rs 1,157. Varun Saboo, Head – Equities, Anand Rathi Shares and Stock Brokers

17) Bandhan Bank
Worst is in the price. The performance will keep improving from current levels (as highlighted in management commentary). Valuations at 1.2x FY24E book are extremely attractive.

18) Mahindra Finance
It’s already in an upcycle, performance should continue to remain strong. With RBI’s norms over the years strengthening and company’s own internal processes also becoming more stringent, downcycle impact should be lesser. This stock clearly warrants a material valuation rerate.

19) Sagar Cement
This company has consistently been adding capacity moving from about 3mnt to about 11.5 mnt now. They recently closed a successful transaction acquiring Andhra Cement. There should definitely be a valuation rerating here.

20) Astral
The company has been witnessing a strong demand environment. Expect their performance to remain very strong going forward. CMP around Rs 1300, expect to move to Rs

1800 odd levels. 21) HG infra
The company has been showing strong growth and good accumulation in order booking. We expect a minimum 25%+ revenue CAGR over the next 2-3 years.

The stock is trading around 7x and can easily move to 10x in the base case. Amnish Aggarwal – Head of Research, Prabhudas Lilladher 22) ABB
ABB India remains a structural play in the long run.

Considering robust enquiry pipeline, penetration in Tier 3 & 4 markets driving volume growth across businesses and focus on operational efficiencies, we expect ABB to report revenue and PAT CAGR of 17.5% and 17.6% between CY22-CY24. We have an accumulate rating on the stock with a target of Rs 3371 valuing it at PE of 67x CY24E. 23) Havells
It is India’s leading diversified FMEG player with 21 product verticals covering 70% of household electric sockets.

We have a BUY on Havells with a DCF-based TP of Rs 1447 (implied 47x FY24 earning). 24) Titan
Titan is well-placed to capitalize on long-term growth opportunities. We expect 24.9% EPS CAGR over FY22-25.

We have a BUY rating with DCF based stock price target of Rs 2905.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.

These do not represent the views of Economic Times)

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