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Business News/ Markets / Stock Markets/  Stocks to buy: L&T Finance and Astra Microwave Products - two top picks by analysts
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Stocks to buy: L&T Finance and Astra Microwave Products - two top picks by analysts

Indian stock market continues to witness stock specific reactions amid the ongoing corporate earnings seasons for the December quarter of FY24. Investors will now watch for key triggers including the Reserve Bank of India’s (RBI) monetary policy this week.

Analysts have recommended two stocks to buy, L&T Finance Holdings and Astra Microwave Products, that they believe can give decent returns in a 6-12 months period.Premium
Analysts have recommended two stocks to buy, L&T Finance Holdings and Astra Microwave Products, that they believe can give decent returns in a 6-12 months period.

Stocks to buy: The Indian stock market indices, Sensex and Nifty 50, traded over half a percent higher on Tuesday led by gains in IT, pharma, energy and auto stocks amid mixed global market cues.

Broader markets also supported the upmove as the Nifty Smallcap 100 and Nifty Midcap 100 indices gained over 0.6% each.

Markets continue to witness stock specific reactions amid the ongoing corporate earnings seasons for the December quarter of FY24. Investors will now watch for key triggers including the Reserve Bank of India’s (RBI) monetary policy this week.

Analysts have recommended two stocks to buy, L&T Finance Holdings and Astra Microwave Products, that they believe can give decent returns in a 6-12 months period. Here are the key factors behind recommendations:

L&T Finance Holdings | Buy | TP: 190

L&T Finance Holdings (LTFH) is now focusing on growing its retail business (88% of portfolio) and run-down or sell off the wholesale lending business. Increased share of retail loans is driving higher net interest margins (NIMs) for the company and return ratios are also improving, noted brokerage firm HDFC Securities.

The company’s management sees minimal impact of the RBI’s revised norms of increasing 25 bps weight for unsecured retail products due to healthy capital position, low proportion of the unsecured book, and strong earnings trajectory.

Also Read: Buy or sell: Ruchit Jain of 5paisa recommends these two stocks for the week

LTFH has witnessed improving trends across its business in the past few months and with pick up in disbursements, return ratios are likely to improve, said the brokerage firm.

“The stock is available at reasonable valuations for a reason of possible asset quality hiccups in wholesale lending though the focus on this business has been falling. We feel investors can buy the stock in the band of 173-177 and add on dips in the 155-159 band for base case fair value of 190 and bull case fair value of 206 in 2 quarters," HDFC Securities said.

Astra Microwave Products | Buy | TP: 740

Astra Microwave Products is strongly placed to capture a bigger pie of the growing Indian defence sector with deep domain expertise and high focus on R&D, ICICI Direct said.

With strong domain expertise in microwave and radio frequency applications, the company has moved up the value chain from manufacturing sub-systems or components to development & production of a wide range of high-end, high-value critical microwave and radio frequency application-based equipment, it added.

Moreover, the company’s healthy order-book position with buoyant prospects & pipeline presents strong growth visibility. Its order book position stood healthy at 1,867 crore as of September 2023-end (2.3x TTM revenue).

Also Read: Buy or sell: Dharmesh Shah of ICICI Securities recommends these 2 stocks to buy this week

“We believe Astra Microwave Products is well placed to witness healthy growth led by strong sector tailwinds. Govt’s focus on indigenisation, increasing usage of electronics in defence & space, strong order backlog, healthy orders pipeline and execution of high-margin domestic orders would drive earnings in the coming period," ICICI Direct said in a report.

It estimates the company’s revenue, EBITDA and PAT to grow at ~17%, ~25% and ~36% CAGR respectively over FY23-26E. Valuation at 33.1x P/E on FY26E basis looks attractive given strong growth ahead led by multiple sectoral tailwinds, it said.

The brokerage recommends a ‘Buy’ on Astra Microwave Products with target price of 740 per share for a period of 6-12 months.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 06 Feb 2024, 12:02 PM IST
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