2 Stocks To Buy Where Motilal Oswal Sees Solid Gains: 1 NBFC Stock & 1 Logistic Stock

Motilal Oswal suggests investors to buy stocks of Mahindra & Mahindra Financial Services Limited and TCI Express. The brokerage firm in its brokerage report explains that it sees solid gains from stocks of two companies. Given below are the details of each.

Buy shares of Mahindra & Mahindra Financial Services, with a price target of Rs 285 per share, potential upside (23%)

Mahindra & Mahindra Financial Services is a large cap, non banking finance company, founded in 1991 as Maxi Motors Financial Services Limited and later it changed its name to the present one. The company diversified its financing option from financing in house utility vehicles to financial solutions tailored to the under-served customer in under-penetrated rural markets.

According to Motilal Oswal, Mahindra & Mahindra Financial Services' last few months initiatives will be helpful for the growth of the company and the stock price would rally by nearly 23%. "Mahindra Finance (MMFS) has over the last 18 months embarked on multiple strategic initiatives, which we believe will lead to lower operating cost ratios through improved productivity aided by higher efficiencies, sustainable improvement in asset quality resulting in lower credit costs, much better risk management by leveraging analytics/business intelligence, and improvement in business volumes by targeting the affluent rural and semi-urban (RUSU) customer segment with relevant lifecycle products. We model an AUM/PAT CAGR of 18%/17% over FY23-FY25E with an RoA/RoE of 2.0%/13% in FY25E. We retain our BUY rating on the stock with a target price of Rs 285 per share (premised on 1.8x FY25E P/BV)."

The current market price of Mahindra & Mahindra Financial Services stock is Rs 235.55 per share, which is up by 1.57% over previous day. Its 52-week low is at Rs 158.25 per share and 52-week high is 272 per share.

Buy shares of TCI Express, with a price target of Rs 1,750 per share, potential upside (17%)

TCI Express is amid cap company, established in 1996 as one of the foremost divisions of Transport Corporation of India (TCI), is a leading logistics supply chain management company. It is the only express cargo company in India having its own set up across India reinforced with a team of over 3500+ professionals and more than 40,000 pickup and delivery locations.

According to Motilal Oswal, TCI Express, the company has good presence network across the country and it has added new centers with new services to reduce turnaround time. "Our thesis on TCI express is premised on presence in the high margin B2B Express segment, expanding branch network in key markets, targeting the SME segment (the company added 73 branches between April'21 and Dec'22), incremental revenues from new services such as air express, rail express, cold chain express, C2C (~18% of revenues in 3QFY23), and d) addition of new automation sortingcenters, which will potentially reduce turnaround time."

In terms of valuation the company show strong earnings resulting in strong return ratios. "With strong earnings growth and no major capex, the company is expected to maintain strong return ratios (~24% RoE through FY23-25). We expect the company to clock a 9% volume CAGR over FY23-25, resulting in 11% revenue CAGR over the same period. We reiterate our BUY rating with a target price of Rs 1,750 per share based on 40x FY24 EPS."

The current market price of TCI Express Ltd stock is Rs 1,538 per share, whihc is up by 2.99% on intraday basis. The 52-week high is Rs 2,009.95 per share and 52-week low is 1,383.75 per share.

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.