After opening at a record high of 63,601.71 points on Thursday, the BSE Sensex cooled off, an hour into trade. The NSE Nifty 50 on the other hand continued to trade flat. Financial and Auto shares buoyed the indices, while IT and power stocks were under pressure.
Meanwhile, foreign brokerage houses have raised the target of these two large-cap stocks:
HDFC Bank Ltd:
HDFC Bank is a publicly held banking company that provides a range of banking and financial services including retail banking, wholesale banking and treasury operations.
Goldman Sachs has a buy rating on the company’s shares with a price target of ₹ 2050. This translates to an upside of 24.41 percent as compared to its share price of ₹ 1,647.75 at 12:07 PM on Thursday.
The global investment bank said that HDFC Bank is likely to emerge stronger after the merger. Strong balance sheet growth and superior profitability are positive for it. Goldman Sachs sees earnings growth of 18 percent over FY 23-26.
HDFC Bank is a large-cap company with a market capitalization of ₹ 9,14,593 crores. It has an ideal return on equity of 17.14 percent The bank’s shares were trading at a price-to-earnings ratio (P/E) of 19.88, which is significantly higher than the industry P/E of 9.11, indicating that the stock might be overvalued as compared to its peers. It has a dividend yield of 1.16 percent.
Larsen and Toubro Ltd:
Larsen & Toubro (L&T) is a multinational conglomerate which is primarily engaged in providing engineering, procurement and construction (EPC) solutions in key sectors such as infrastructure, hydrocarbon, power, process industries and defence, information technology and financial services in domestic and international markets.
Morgan Stanley has an overweight rating on Larsen & Toubro with a price target of ₹ 2,647.00. This implies an upside of 10.55 percent as compared to its share price of ₹ 2,394.35 apiece at 12:10 PM on Thursday.
It said that capex thrust continues and there is a good outlook on other fronts too. Diversified EPC companies, such as L&T, are strongly positioned and L&T is a natural monopoly in its business, given its scale. “Margins are likely to improve in H2. The company has a return on equity (RoE) target of 18 percent over the next 3-4 years,” it added.
L&T is a large-cap company with a market capitalization of ₹ 3,36,557 crores. It has a low return on equity of 12.19 percent. The company’s shares were trading at a price-to-earnings ratio (P/E) of 32.16, which is significantly higher than the industry P/E of 8.01, indicating that the stock might be overvalued as compared to its peers. It has a dividend yield of 1.00 percent.
Written by Simran Bafna
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