Motilal Oswal identifies State Bank Of India (SBI), Hero MotoCorp, Dalmia Bharat, Coal India, Kajaria Ceramics, and several other stocks as their top choices for the year 2024.
The brokerage firm foresees continued outperformance in the Indian market throughout 2024, propelled by strong macro and micro fundamentals. Motilal Oswal emphasizes that, despite the recent upswing in the market, valuations remain reasonable and are situated below the 10-year average.
Here are the top stocks by Motilal Oswal for 2024
SBIN (State Bank Of India)
BUY | CMP: 642 | TARGET: 800 | Upside: 25%
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Loan growth remains healthy and the bank has guided for mid-teen growth over the medium term. SBI remains one of our preferred picks in sector. SBI has surpassed its previous RoA target of 1%; now aims to deliver 1.2% RoA and 20% RoE on a sustainable basis.
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ONGC ( Oil and Natural Gas Corporation)
BUY | CMP: 205 | TARGET: 235 | Upside: 15%
We like ONGC given its inexpensive valuations & improving volume growth outlook. It targets to increase its production to 50mmtoe by FY28 (40mmtoe FY23), driven by 23
ongoing projects (9 infrastructure & 14 development projects). Mgt. expects OPAL to turn profitable by FY25 if govt. approves to utilize gas from new wells.
COALINDIA (Coal India Ltd)
BUY | CMP: 376 | TARGET: 430 | Upside: 14%
Domestic power demand is expected to grow at 1.1x GDP & reach 1,750bu of power generation in FY24. Coal India is our top pick as it is well-placed to capitalize on growth in power sector. Coal is targeting production of 780mt in FY24E (up 12% YoY). It offers attractive dividend yield of 5.6%.
SIEMENS (Siemens Ltd)
BUY | CMP: 3960 | TARGET: 4600 | Upside: 16%
Siemens is targeting opportunities in the domestic market across govt. & private capex. ₹4t PLI-led spending over 4-5 years could expand the addressable market. A potential demerger & listing of Siemens’s India Energy segment should open avenues for value-unlocking over the next 2-3 years. We expect Siemens to clock EBITDA/PAT CAGRs of 18%/19% over FY23-26.
HEROMOTCO (Hero MotoCorp Ltd)
BUY | CMP: 4138 | TARGET: 4480 | Upside: 8%
Domestic 2W demand saw strong rebound in festival period which continued in Dec due to record marriages especially in central/northern regions. Recovery in its core product portfolio, coupled with well-planned strategy to expand in both premium & EVs make Hero better placed in 2W OEM space. We expect 7% volume CAGR over FY23-25 leading to 21% PAT CAGR.
DALBHARAT (Dalmia Bharat Ltd)
BUY | CMP: 2274 | TARGET: 2800 | Upside: 23%
Under the Dalmia 2.0 initiative, management has prioritized four key areas: Growth, financial performance, sustaining trust, & organizational development. It aims to increase its cement grinding capacity to 75mtpa/110-130mtpa by FY27/FY31. We expect volume CAGR of ~11% over FY23-26 & estimate EBITDA/t of ₹1,150 in FY25.
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KAJARIACER (Kajaria Ceramics Ltd)
BUY | CMP: 1303 | TARGET: 1580 | Upside: 21%
Expectation of pick up in demand aided by growth in real estate and company’s expansion plan to penetrate in smaller cities could drive volume growth. Further, India is likely to become the largest tile exporter by FY25. We believe 26% PAT CAGR over FY23-26E, strong return ratios (RoCE of 27% in FY26), & healthy balance sheet will help Kajaria maintain premium multiples.
PNBHOUSING (Pnb Housing Fin Ltd)
BUY | CMP: 781 | TARGET: 950 | Upside: 22%
PNBHF has transformed its business model toward Retail & targets to scale up affordable housing quarterly disbursements to ~₹10b in the short term. We expect 13%/28% a CAGR in AUM/PAT over FY23-FY26E & RoA/RoE of ~2.4%/12.4% in FY26. The equity capital raise through rights issue has brought in much-needed confidence capital, which could result in a rating upgrade.
LEMONTREE (Lemon Tree Hotels Ltd)
BUY | CMP: 120 | TARGET: 135 | Upside: 13%
We expect Lemon tree to continue its strong momentum led by improvements in occupancy & ARR and additions of hotels under management contracts. Mgt expects highly favorable period for the hotel industry over next 4-5 years. We expect Adj. PAT CAGR of 46% over FY23-25 and improvement in RoE to 21.5% by FY25
(14% in FY23).
SUNTECK (Sunteck Realty Ltd)
BUY | CMP: 445 | TARGET: 640 | Upside: 44%
Sunteck’s multi-micro-market presence, luxury offerings, and proven execution track record have made it one of the biggest beneficiaries of the strong demand. The management aims to add at least projects worth INR150-200b to amplify its active project pipeline to INR500b over the next 2-3 years. We expect 25% pre-sales CAGR over FY23-26, fueled by ramp-up in launches
