Nifty at 16.4x forward earnings as SMIFS sees up to 116% upside in six stocks
India's valuation premium over emerging markets has narrowed from 97% to 35%, and the Nifty now trades at 16.4 times one-year forward earnings against a long-term average of 18.4 times, according to Token Times. Domestic brokerage SMIFS has responded with BUY recommendations on six stocks it expects to gain from the improved balance between valuations and earnings prospects.
The largest implied upside sits with TVS Supply Chain Solutions, which SMIFS rates BUY with a target price of Rs 240 against a current market price of Rs 111, an upside of 116%. Swiggy follows with a target of Rs 375 against Rs 184, implying 104% upside, and Mazagon Dock Shipbuilders carries a BUY call with a target of Rs 2,905 against Rs 1,731, or 68%.
Olectra Greentech is rated BUY with a target of Rs 1,500 against Rs 985, a 52% upside. ITC has a target of Rs 360 against Rs 259, implying 39%, while Larsen & Toubro rounds out the list with a target of Rs 4,550 against Rs 3,801, an upside of 20%.
The Nifty's decline, which the brokerage attributes to geopolitical tensions, elevated energy prices, persistent foreign selling and higher global borrowing costs, has pulled valuations closer to their long-run average. SMIFS's calls rest on the view that earnings prospects now look better matched to prices.
The recommendations are those of SMIFS, a SEBI-registered research analyst, and were reported with attribution. They are not investment advice, and readers should consult the original research report and make their own assessment.
