Can Fin Homes, Castrol India Top 2 Stocks Which Can Give Up To 19% Return

Domestic equity markets stood firm amidst the event risk in the form of two key big events like the US Fed Meeting, Interim Budget, etc, and managed to close in green last week. Nifty was up by 2.3% registering a fresh all-time high of 22126. Broader markets outperformed with Nifty Smallcap & Midcap indexes were up by 5.6% and 2.7 respectively.

FOMC maintained the status quo and rate cut expectations were pushed back to Jun’24. Post this event, the US 10-year bond yield has cooled off and is trading at 1 month low of 3.9%. This augurs well for risk assets like EMs and commodities.

Going ahead the market will now focus on the earning season and global cues. RBI’s MPC meets on February 8 will be in focus this week. One can expect stock-specific action to continue based on the outcome of quarterly results, though any flare-up in geopolitical tension can act as a party spoiler.

Here are the top 2 stocks which can fetch up to 18% return

Can Fin Homes| CMP: Rs 828.3 | Target: Rs 960 | Upside: 15.9%

Can Fin Homes’s Q3 FY24 operational performance was broadly in line with consensus estimates. Higher provisions during the quarter were offset by lower Opex. NII reported a healthy growth of 31% YoY / 4% QoQ led by marginal expansion in NIMs (5bps QoQ) though the AUM growth was moderate at 13.1% YoY (2.1% QoQ). The decline in new loan approvals and sluggish disbursement growth was primarily on account of the centralization of the process.

Asset quality witnessed slight deterioration, with GNPA / NNPA up by 15bps / 6bps at 0.91%/0.49% respectively. Of the total Rs 308.8 crore GNPA, Rs 98.0 crore was due to slippages from the restructured books. The provision coverage (excluding management overlay provisions) stood at 45.8% (44% in Q2FY24). The total provisions held on the restructured book stood at Rs 58.0 crore, with an additional management overlay of Rs 34.0 crore.

Castrol India| CMP: Rs 199.55 | Target: Rs 236 | Upside: 18.3%

Castrol India’s various initiatives should help in enhancing its market position significantly. The new auto care segment is gaining traction for Castrol India and the management holds a positive outlook for this business segment. The company plans to expand the segment’s product portfolio and is also exploring opportunities to widen its service networks. The company’s primary focus will be on the Ki mobility partnership as this strategy is anticipated to be beneficial for the automotive market.

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The company has continued its expansion strategy by expanding its footprint to 1.2K multi-brand passenger car workshops, over 5.5K bike points, and 47 Castrol Express oil change outlets at Jio-bp sites. Further, management is actively working towards thermal solutions for EV batteries with existing fluids designed for EVs already in its portfolio.

Though the rising EV penetration is a threat, management believes that the Indian lubricant market to be strong till late 2030 and 2040.

Research Analyst: Mr. Krishna Kumar Agarwal
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