Motilal Oswal sees 17% upside potential for top-100 stocks by market-cap

Adani Ports, Hindalco among stocks with 100 per cent 'Buy' rating by analysts.

Top-100 stocks by market capitalisation (market-cap) could see an upside of 17 per cent from the current levels in a year, suggest findings of a recent study from Motilal Oswal Securities (MOSL). The top-100 pack, the research and broking house said, constitutes 68 per cent of India's market-cap.

“Based on the consensus target prices for the available top-100 companies, the potential upside stands at 17 per cent. Private Banks (+30 per cent), Oil & Gas (+11), Consumer (+8), NBFCs (+7), Technology (+7), Automobiles (+6) and public sector banks (+5) are likely to contribute the most to the potential target upsides of the top-100 stocks,” the MOSL study said.

The basic criterion of MOSL's study was that a minimum of 10 analysts should cover each stock and aims to find Dalal Street’s most and least favoured sectors and stocks.

As per their findings, the top-15 stocks by market-cap are projected to contribute 68 per cent to the potential target price upsides of this top-100 set. ICICI Bank (+11 per cent), Reliance Industries (+10), HDFC Bank (+9), Infosys (+6), HDFC (+5) are the top stocks that are likely to contribute the most with respect to potential target upsides.

UPL (+42 per cent), Zomato (+39), SBI Life Insurance (+38), Life Insurance Corporation (+36), ICICI Pru Life (+35), and FSN E-Commerce (+35) are the counters where MOSL sees the highest target price upsides over the next one year.

Analyst sentiment

Meanwhile, at the macro level, analyst sentiment – as measured by the proportion of BUY/Hold/Sell ratings – has not changed much over the past year with the percentage of BUY ratings moderating to 71 per cent from 73 per cent a year ago, their findings suggest. Further, the percentage of Hold and Sell ratings stood at 17 per cent/12 per cent versus 16 per cent/ 11 per cent, a year ago, MOSL said.

“Sentiment on Capital Goods, Private Banks, Healthcare, Real Estate, and PSU Banks has been positive with their coverages improving 11 per cent, 8 per cent, 6 per cent, 5 per cent and 4 per cent year-on-year, respectively. Metals, Utilities, non-bank finance companies (due to a drop in coverage of HDFC), Telecom, and Automobiles have taken a hit, with their coverages dropping 10 per cent, 10 per cent, 7 per cent, 5 per cent & 4 per cent YoY, respectively in the past year,” the MOSL note said.

Among individual stocks, Hindalco, which is covered by 24 analysts, enjoys 100 per cent ‘Buy’ rating along with Adani Ports and Max Healthcare (100 per cent each), followed by SBI and L&T (98 per cent each). On the other hand, YES Bank (7 per cent), JSW Energy (9), JSW Steel (19), Divi’s Labs (20), and Hindustan Zinc (20) have the lowest percentage of ‘Buy’ ratings, the MOSL study found.

Earnings watch

 

Earnings for the top-100 stocks, the MOSL study said, are likely to jump 18 per cent over FY23-25 based on consensus estimates. Private Banks (+15 per cent), Oil & Gas (+12), PSU Banks (+10), Auto (+10), and Technology (+9) are likely to contribute the most to top-100’s earnings growth.

Telecom (+58 per cent), Automobiles (+44), NBFCs (+34), Real Estate (+28), and Cement (+25) are the sectors that could lead earnings growth.

The top-15 stocks, according to MOSL, are forecasted to contribute 61 per cent to the earnings growth of the top-100 set. Among individual stocks / companies, Reliance Industries (+7 per cent), HDFC Bank (+6), HDFC (+6), State Bank of India (+6), Tata Motors (+5) are the top stocks that are likely to contribute the most with respect to earnings.

Tata Motors (loss to profit), Indigo (loss to profit), FSN E-Commerce (+179 per cent), BPCL (+151 per cent), and IOCL (+100 per cent) are stocks / companies with the possibility of the highest earnings growth, the MOSL study said.