Mishra Dhatu Nigam, Karur Vysya Bank Top 2 Stocks Which Can Fetch Up to 17% Return
by Sandip Das on 29 January 2024, 5 min read
The domestic equity benchmarks encountered notable downward pressure last week as key sectors, including banks, FMCG, and metal, contributed to the market decline. Steep selling in index heavyweights HDFC Bank, Reliance Industries, and Hindustan Unilever had a significant impact on the benchmarks. The market breadth favored laggards, and the broader market, particularly small and midcap indices, struggled.
Traders, however, interpreted this decline as part of an anticipated consolidation phase following recent market upswings. The week was in the hold of volatility due to varied reasons. The first was a holiday-shortened week, the second being the expiry of the January month derivative contract expiry followed by the ongoing result season. FII selling amid heightened economic uncertainty in major global economies and the latest results by Reliance Industries revealing a slight dip in Q3 consolidated revenue also hurt investor sentiment.
Meanwhile, rising oil prices on concerns about possible supply disruptions due to rising tensions in the Middle East, and the extreme cold weather in North America raised concerns about inflation and the interest-rate outlook. Going ahead, the market is expected to remain range-bound and consolidate in the range of 21,850-21,250 zone. The penetration, with strength on either side, would open gates for a trending move. Till it happens, we would suggest market participants, especially traders, play safe and become aggressive only after the markets find direction and momentum.
The hope of favourable Union Budget, 4-month high domestic Service PMI data, record high closing in US S&P 500 Index, and stable US 10-year bond yield, may lead domestic equity bourses to remain positive.
Here are the top 2 stocks which can fetch up to 17% return:
Mishra Dhatu Nigam is involved in the manufacturing of special steels, superalloys, and titanium alloys (sole manufacturer) in India catering to strategic customers in industries such as space, defense, and energy along with supplying special alloys and products to the commercial sector. The company had reported a muted topline CAGR growth of about 7% and 6% over 3-year and 5-year periods, respectively.
In H1FY24, the Value of Production (VoP) stood at Rs 586.5 crore. This is in comparison to (VoP) of Rs 484.0 crore in the corresponding period of the previous year. As of October 1, 2023, the company had a robust order book of Rs 1,501.2 crores which is slated to get executed within the next 1-1.5 years, with ~50% mix of short cycle projects having healthy near-term revenue visibility.
The company is also receiving orders from big players like Rolls Royce, and GE Aerospace. Through favourable government schemes on enhancing domestic infrastructure, the Aerospace and Defence (A&D) market in India is estimated to be worth about USD 70 billion by 2030. Hence there is immense scope for a growth opportunity for Mishra Dhatu Nigam going ahead.
Karur Vysya Bank delivered another quarter of an all-time high PAT in 3QFY24. It was led by healthy loan growth and 25bps QoQ margin reflation at 4.32%. It benefits from interest recovery from one NPA account and the shedding of low-yielding corporate loans. Loan growth was steady across segments, driven by MSME, LAP, housing, and Personal loan. Deposit growth was healthy but at the cost of CASA contracting by 75bps QoQ to 31.5%. It poses a challenge to the management of mobilising retail deposits while maintaining a steady-state growth strategy.
The bank has maintained its NIM guidance for 4QFY24 at 3.8%. Thereafter it is expected to remain at its historic long-term range of 3.75-3.8%. Its RoA guidance for FY24 is 1.6% after considering double-digit loan growth, healthy margins, and benign credit costs. In the future, the bank expects to add ~25 branches per year.
Research Analyst: Mr. Krishna Kumar Agarwal For more insight into the report, kindly click here Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.
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