3 mid-cap stocks to buy for 33-38% returns over the next year

Bank of Baroda: improving credit growth

Bank of Baroda saw overall credit growth improve to 10% yoy/6% yoy, driven by growth in retail and agriculture. According to Emkay Global, SME growth has been moderate, given the bank’s conscious risk aversion.

“Business growth was also below average. In retail, growth improved across all segments, with housing growing 11% year-on-year after a weak performance in the third quarter. gold also rose 25% year-on-year The CASA ratio fell slightly, but remained high and healthy at 42% The bank reported healthy NIMs of 3.1% It believes the higher share of the floating rate portfolio, the healthy CASA ratio and lower NPA interest reversals will lead to a robust margin trajectory,” Emkay noted. New slippages were higher at Rs 58 billion (3.2% of loans), including Future Retail. However, higher recoveries/woffs resulted in a 64 bps reduction in the GNPA ratio to 6.6%. The standard restructured net portfolio declined to 2.4% of loans in the fourth quarter, from 2.8% in the third quarter, with a lower relapse rate from now on.

Buy Bank of Baroda stock with a target price of Rs 130

Buy Bank of Baroda stock with a target price of Rs 130

“Taking into account better growth/NIM and lower LLP, we expect the bank’s RoE to gradually improve to 11-13% in FY23-25E from 9% in FY23-25E. in FY22 and 1% in FY21. BOB is better positioned to accelerate growth while maintaining Retain Buy with an overweight position in the revised EAP target price of Rs 130 (prior target price on the stock of Rs 145), based on 0.7x FY24E ABV (0.9x Dec’23E ABV earlier) due to higher CoE. Key risks,” Emkay Global said. Companies view higher NPA formation, primarily in the corporate/SME portfolio and a slower-than-expected growth trajectory, as key risks to the stock. Bank of Baroda shares were last seen at Rs 100.25, implying upside potential of almost 30% on the stock if investors buy the stock at the current market price. The time frame to reach the target price is a short-term period of one year.

Buy Tech Mahindra Shares 33% Rise

Buy Tech Mahindra Shares 33% Rise

Emkay Global has an advantage over IT Stock Tech Mahindra midcap of 33% from current levels. The company believes it is a good stock to buy now as trading was healthy. Tech Mahindra’s Q4FY22 revenue was in line with Emkay’s expectations, but EBITM fell short of its estimates. Revenue increased 4.9% quarter-on-quarter to $1,608 million (5.4% CC), driven by Enterprise (5.8%) and CME (4.8%). EBITM fell 160 basis points quarter-on-quarter to 13.2%.

Net new deals won were robust with a TCV of $1,011 million, split between CME ($645 million) and Enterprise ($366 million). The number of deals for FY22 increased 48% year-on-year to $3.3 billion. The deal pipeline remains healthy and he expects the healthy deal-making momentum to continue.

Tech Mahindra: Buy the stock with a target price of Rs 1600 over the next 1 year

Tech Mahindra: Buy the stock with a target price of Rs 1600 over the next 1 year

Emkay Global says management remains confident that revenue growth momentum will continue thanks to widespread demand, strong traction in the CME sector (rising demand for digital transformation driven by 5G spending), inflow and healthy deal pipeline and robust demand for digital engineering, cloud, data analytics and cybersecurity services. “We have reduced our FY23/24 EPS estimates by 7.5%/6.8%, taking into account fourth quarter performance, recent acquisitions and lower margin assumptions. Strong momentum of revenue growth and a dividend yield of around 4% will support valuations, even if the stock misses forward-triggers after a big loss in margins. We keep buying with a target price of Rs 1,600 (Rs 1,730 earlier) to 22x Mar’24E EPS,” the brokerage said.

Escorts: buy mid-sized shares with a price target of Rs 2140

Escorts: buy mid-sized shares with a price target of Rs 2140

Emkay has set a target price nearly 38% higher from current levels on the Escorts stock. Emkay has a price target of Rs 2,140 on June 24 estimates. Emkay expects revenue CAGR of 13% in FY22-24E, helped by 21%/13%/11% growth in the CE/Railways/Agri segments. Growth in the agricultural segment should be driven by a recovery in domestic volumes and robust exports. “We value core at 22x P/E and cash at Rs 390 per share (0.80x pound); core P/E is at a 10% premium to fair P/E (supported by DCF) and captures the upside potential for agricultural implements in India and higher exports. To arrive at a fair value, we have assumed an EPS dilution of 5%, due to the merger of Kubota Agricultural Machinery India and Escorts Kubota India,” said the brokerage firm.

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