Top 5 Stocks on Brokerages' Radar with 10-60% Upside Potential

5 min read
Top 5 Stocks on Brokerages' Radar with 10-60% Upside Potential

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Current Bull Market in India seems “unique” and can’t be studied with traditional technical analysis parameters. Indian equities have doubled from their lows in March 2020 during the pandemic, with the S&P BSE Sensex and NSE Nifty 50 delivering returns of over 100% since then led by reopening of the economy, high inflows from foreign investors and corporate earnings growth.

In the series of Brokerage Radar I mentioned 20 stocks and almost all of them met the expected targets. At the time when Indian bourses are touching all time highs, big brokerages like Morgan Stanley, Citi, emkay global are bullish on below 5 stocks which still holds 30-60% upside potential from current levels. Let's talk about them in detail.

Also Read: RailTel IPO | 10 Things You Must Know

1) JPMorgan On Hindalco Industries maintained Buy rating with price target of Rs 500. (Current Price: Rs. 307, Upside Potential: 65%)

Brief about the company: Hindalco Industries Limited an Indian aluminium and copper manufacturing company, is a subsidiary of the Aditya Birla Group. Its headquarters are at Mumbai, Maharashtra, India. It is the Flagship company in the metals business. The company has annual sales of US$15 billion and employs around 20,000 people. (wiki)

Major Reasons given by JPM:

  1. Global growth story remains intact: Sustained global demand growth for aluminum would support elevated LME aluminum prices. Steady aluminum demand growth across the key product segments such as autos, cans and packaging should support elevated margin for Hindalco’s downstream subsidiary, Novelis Corp., and drive volume growth. For that steady downstream demand growth is necessary as that is what would drive Novelis’ Ebitda higher.
  2. Investment in high growth projects, combined with share buyback to lift its decade-low return-on-equity: Hindalco’s Novelis acquisition and subsequent capex increase has not lifted RoEs materially. The Indian aluminium maker delivered more than 10% RoE only twice in the last 10 years (FY12 and FY18) and it was driven by high prices in LME.

  3. Increase of exposure in cyclicals: Since the global financial crisis, and disappointment on sustained global growth, investors have broadly shunned cyclicals, especially commodity cyclicals. Hindalco’s stock price up-move since April has broadly tracked earnings upgrades. Investors continue to worry on how sustainable the current global growth uptrend is going to be, and hence if the stock price for Hindalco (and other commodity cyclicals) has peaked out.

Technical Analysis: 17 out of 28 major indicators show that this stock is Bullish on daily charts.

Jefferies reiterates its buy rating with revised price target of Rs 350

Also Read : Top 10 Potential Wealth Creators of 2021

2) Morgan Stanley On State Bank of India maintains overweight rating with Price target raised to Rs 600 from Rs 525 (Current Price: Rs. 418, Upside Potential: 43%)

Brief about the company: State Bank of India is an India-based banking and financial services company. The Company's segments include Treasury, Corporate Wholesale Banking, Retail Banking and Other Banking Business. As per Reserve Bank of India's latest statement State Bank of India (SBI) along with ICICI Bank and HDFC Bank will continue to be 'too-big-to-fail'.

Major Reasons given by Morgan Stanley:

  1. Macro backdrop for banks is looking increasingly like the early 2000s.
  2. SBI looks best placed in the current cycle.
  3. Has built a strong retail franchise and sustained deposit market share.
  4. Expect earnings estimate upgrades and significant re-rating as the corporate cycle turns.
  5. Assume >1% RoA in FY22/23 and 1.6x FY23e price-to-book value.
  6. Bull case price target of Rs 765 implies potential upside of nearly 90%

Technical Analysis: 16 out of 28 major indicators show that this stock is Bullish on daily charts.

JP Morgan raised SBI price target to Rs 440

Also read: Top 5 PSU Stocks with 30-50% Upside Potential in 2021

3) Emkay Global on PI Industries maintains buy rating with the price target raised to Rs 2,500 from Rs 2,450 (Current Price: Rs. 2271, Upside Potential: 10%)

Brief about the company: PI Industries is engaged in the manufacturing and distribution of agro chemicals. Its geographical segments include Sales within India and Sales outside India. The Company manufactures agrochemicals, plant nutrients and plant protection, specialty fertilizers and hybrid seeds.

Major Reasons given by Emkay Global:

  1. Remain constructive due to new order wins,
  2. Visibility on new molecule commercialisation pipeline & improved utilisation and synergies from Isagro integration.
  3. Raise FY21-23 PAT Estimates by 2-7% factoring in the Q3 beat.
  4. Organic revenue growth target of 20% for FY22

Technical Analysis: 17 out of 28 major indicators show that this stock is Bullish on daily charts.

Motilal Oswal raised PI Industries price target to Rs 2611

Explore: Get one 'Fundamentally strong stock, Everyday!' here

4) Emkay Global On ITC maintains buy rating with Price target raised to Rs 265 from Rs 250 (Current Price: Rs. 218, Upside Potential: 22%)

Brief about the company: Established in 1910, ITC is the largest cigarette manufacturer and seller in the country. ITC operates in five business segments at present — FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri Business.

Major Reasons given by Emkay Global:

  1. Expect full recovery in Cigarette business by Q4.
  2. FMCG comparable growth at 11%; performance of other divisions mixed.
  3. Keep estimates unchanged but further recovery in cigarettes / other divisions can lead to an upgrade in FY22/23 forecasts.
  4. Increased aggression on innovations and cost efficiencies are encouraging.
  5. Valuations provide attractive upsides.

Technical Analysis: 11 out of 28 major indicators show that this stock is Bullish on daily charts.

5) HSBC On Nestle India Maintains buy rating with Price target of Rs 20,000 (Current Price: Rs. 16,364, Upside Potential: 22%)

Brief about the company: Nestle India Limited is the Indian subsidiary of Nestlé which is a Swiss multinational company. The company is headquartered in Gurgaon, Haryana. The company's products include food, beverages, chocolate, and confectioneries.(wiki)

Major Reasons given by HSBC:

  1. Domestic sales growth of 10.1% was impressive.
  2. Growth is now consistently broad-based, pointing to clear acceleration in categories like milk and nutrition.
  3. Innovation-led health and wellness focus is the key long-term appeal.
  4. Current price builds in long-term earnings growth of 12.6%, which we see as undemanding.

Technical Analysis: 01 out of 28 major indicators show that this stock is Bullish on daily charts. Stock is only bullish on monthly charts as on Feb 18, 2021.

Note: All above mentioned stocks are fundamentally strong. One can even buy them for the long term horizon (5-10 years) for better returns.

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Akshay Seth
Research Analyst (SEBI Regd.)
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