2 Bluechip Stocks Motilal Oswal Recommends To Buy: 1 Auto and 1 FMCG

Post the Covid crisis, situation has improved for all the Indian companies and most of the bluechip companies have posted healthy growth, to indicate they have surpassed the crisis. A leading stock broking firm, Motilal Oswal shares insights about two bluechip companies and asks investors to invest in them for it believes both of them show potential growth. The companies are Mahindra & Mahindra Limited and ITC Limited. Below are the details.

Buy shares of Mahindra & Mahindra Limited, with a target price of Rs 1,525 per share (18% upside)
Motilal Oswal mentions that demand for Mahindra & Mahindra Limited's both the divisions (Automotive and tractors) remains healthy, but due to multiple industry-wide challenges emerging in foreseeable future, the volume growth will be lower.

So the brokerage has cut down the estimates, "We cut our standalone FY24E EPS by 8%. Despite this, we expect MM's revenue/ EBITDA/PAT to post 15%/20%/20% CAGR over FY23-25. This coupled with a healthy improvement in RoCE (+200bp over FY23- 25E to 18.2%) and cheap valuations (at 14.3x/12.6x FY24E/FY25E) preserves attractiveness of the stock. Hence, we maintain our BUY rating with a target price of Rs 1,525 (premised on Mar'25E SoTP or implied core P/E at targetprice, which stands at 15.7x FY25E EPS)"

The latest closing price of Mahindra & Mahindra Limited stock is Rs 1226.70 per share, it is down by 1.67% on intraday basis. Its 52-week high is Rs 1,396 per share and 52-week low is at Rs 725.45 per share. In one year the stock price has grown by 66.74% and over tree years it has grown whoppingly by 171.06%.

Buy shares of ITC Limited, with a target price of Rs 1,525 per share (16% upside)
According to Motilal Oswal , ITC has demonstrated a healthy 23% EPS growth in FY23E and expect a likely EPS CAGR of ~15% over the next two years as well. ITC's earnings outlook is better than other large cap staples players both on a two-year CAGR ending FY23E as well as FY24 earnings growth expectations.

Plus the brokerage noticed that the stock has done well since it upgrade in Jun'22 with ~45% stock price appreciation at a time when consumer peers both staples, and recently, discretionaries have struggled."

ITC has a track record of giving good dividends in last five years. It's recent dividend yield is healthy at 3.5-4% despite the stock price appreciations and valuations remain inexpensive at 22.2xFY24 EPS and less than 20xFY25 EPS.

Besides the challenges for ITC are receding as per Motilal Oswal "The challenger were; an extremely punitive tax regime of the past, covid related disruptions and commodity cost inflation now seems to be receding. We maintain BUY rating and our target price of Rs 450 per share."

The latest closing price of ITC Limited stock is Rs 388.05 per share, it was up by 0.64% oover previous day's closing price. Its 52-week high is Rs 394 per share and 52-week low is at Rs 227.90 per share. In one year the stock price has grown by 64.29% and over tree years it has grown exponentially by 120.86%.

Disclaimer:
The stocks have been picked from the brokerage report of Motilal Oswal, Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.