Three stocks Aurobindo Phama, Bandhan Bank and ZEE Entertainment are 35-36 per cent off their 52-week highs. Adani Green Energy, Lupin,
, Hero MotoCorp and are down 25-33 per cent from their recent peaks. , IndusTower, , Vedanta, , and MRF are other stocks that are down over 20 per cent from their 52-week high levels.
For these 14 stocks to reclaim their 52-week highs, they need to rally up to 56 per cent from the prevailing levels.
Analysts are quite positive about some of these stocks.
For example, HPCL has 29 ‘buy’ and ‘strong buy’ recommendations against six ‘hold’ calls and no ‘sell’ rating. Adani Ports has 21 ‘strong buy’ and ‘buy’ calls against just two ‘sell’ calls. Motherson Sumi has 18 ‘buy’ and ‘strong buy’ calls against two ‘strong sell’ and five ‘hold’ calls.
Analysts recommending ‘buy’ and ‘strong buy’ on Aurobindo Pharma stands at 22 today against two ‘hold’ and two ‘sell’ calls. Bandhan Bank also has 18 ‘buy’ and ‘strong buy’ calls against four ‘sell’ and ‘strong sell’ calls.
Analysts are mixed on a few others. They include Lupin that has 19 ‘buy’ or ‘strong buy’ calls against 12 ‘sell’ or ‘strong sell’ calls. While the majority of analysts have a ‘buy’ rating on Hero MotoCorp, as many as 14 others have a ‘hold’ rating on the stock. ZEE Entertainment, Biocon and Indus Towers also are ‘hold’ calls.
Prabhudas Lilladher sees HPCL at Rs 404 against its Friday’s price of Rs 247.
“We believe increased crude oil supplies from OPEC and Iran post lifting of sanctions will likely keep crude oil prices rangebound to support marketing margins in the medium term. Also, GRMs are expected to recover with pickup in economic activity,” it said.
BofA Securities values Adani Ports using the sum-of-the-parts (SoTP) methodology to arrive at a price target of Rs 874 per share. The scrip closed at Rs 687.25 on Friday. “We value its stake in Adani Logistics at 20 times FY23E earnings and its stake in other businesses at 5 times the invested equity as of March 2021,” it said.
In the case of Motherson Sumi, Edelweiss expects the company to see improvement in both topline growth and profitability as supply constraints stabilise. It sees a robust demand scenario in Europe and North America markets, healthy order book from emerging EV sector and is positive on the company’s focus on cost optimisation initiatives.
“Focus on higher content per vehicle may gain further traction. Margins for Motheson Sumi may rise to 10.8 per cent by FY23 on the back of higher capacity utilisation at greenfield plants and general operating leverage benefits,” said ICICI Direct.
For Aurobindo Pharma, YES Securities said the foray into the animal healthcare business is a negative development even though the absolute amount deployed at Rs 420 crore may not be large enough to constrain the balance sheet.
“While catalysts for injectables growth remain intact at Vizag plant for Europe and emerging markets, new US facility for high value/low volume products and ramp-up at Unit IV, reckon the diversification into an unrelated area would keep PE multiple under check,” it said, while lowering its target on the stock to Rs 980 from Rs 1,200. The scrip closed at Rs 681.45 on Friday.
In the case of Bandhan Bank, its struggle on the asset quality front and high credit cost has been an outcome of external circumstances. Analysts admitted that investors may not have the appetite for sharp earnings volatility, but believe a substantially low share of the micro-banking portfolio, as guided by the management, would help ease the MFI-related concerns.
“An important question to ponder upon is: how much worse can it get? The company management has highlighted that the majority of the stressed customers are expected to regularize, as their economic situation improves. A positive outcome on this front will mean improvement in asset quality metrics in the ensuing quarters, which should support the stock valuation,” it said. The brokerage has upgraded Bandhan Bank to ‘buy’ with a revised price target of Rs 336, based on 2.5 times FY23 adjusted book value per share.
