Stocks to buy in January: Bajaj Auto, TCS, UPL among 6 trading ideas that can give up to 40% return

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Amid volatility due to mixed global cues and burgeoning Omicron cases, the Indian markets have been exhibiting bullish trends for the past one week as of the last six trading sessions, Indian equity markets have opened on positive note on 5 occasions, including Monday. Despite weak global cues this morning, the headline indices opened firm as Nifty50 and the S&P BSE Sensex opened at 17,913.30 and 60,070.39 respectively.  

Anticipating good earnings and FIIs returning to buying zone, the Indian markets are largely expected to do better in January. Brokerage firm KR Choksey has identified 6 stocks that an investor can keep in focus in January for up to 40 per cent return.  

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1 Bajaj Auto Ltd | CMP Rs 3,359 | Target: Rs 4,710 

The research sees a potential upside of 40.2% in this stock and recommends a buy. Bajaj Auto has positioned itself strongly in export markets with a focus on Nigeria, Bangladesh, Philippines, and Colombia, which account for ~50% of its two-wheeler export revenue. Since our last recommendation, the stock price of “Bajaj Auto has significantly corrected by 12.5% from Rs 3,840 to Rs 3,359 per share. We assign a P/E multiple of 23x on FY24E EPS of Rs 205 to arrive at a target price of INR 4,710/share; implying an upside potential of 40.2% from the CMP,” says the research.  

2. SBI Life Insurance Ltd | CMP: Rs 1,220 Target: Rs 1,435 

Recommending a buy, KR Choksey says SBI Life has been showing strong recovery after impact of the pandemic. SBI Life has a diversified product mix with Saving contributing 51%, protection at 12%, annuity at 15% and group savings at 17%. 

“We believe the risk-reward trade-off is positive. We apply a 2.6x P/EV on FY24E EVPS of Rs 559 to arrive at a weighted average Target Price of Rs 1,435 per share for SBI Life, implying a potential upside of 17.6% from the CMP,” it said.  

3 UPL Ltd | CMP: Rs 764 |Target: Rs 886 

UPL has transformed itself from a local to global player, with over 30+ acquisitions across the globe in the last two decades. It is transforming itself from a generic agrochemical player to a one-stop solution for farmers in all key geographies. The company has recently invested Rs13 mn in compulsorily convertible preference shares of Allfresh Supply Management Pvt. Ltd. UPL has focused on differentiated offerings by consistently investing in innovation and brand building. “We continue to have a positive outlook on the stock. We apply a P/E multiple of 11x to the FY24E EPS of Rs 80.6/share, implying a target price of Rs 886 per share, yielding an upside potential of 15.9% from the CMP. We assign a ‘BUY’ rating on the shares of UPL Ltd,” said the report.  

4. Tata Consultancy Services Ltd. |CMP: Rs 3,861 |Target: Rs 4,256 

The research sees a potential upside of 10.2% for the IT conglomerate shares. TCS key services include application development, product co-development and system implementation/system engineering. TCS has specialized expertise in insurance, banking, Retail & CPG, and manufacturing sectors. “We are assigning a P/E multiple of 29x to the FY24 estimated EPS of Rs 145 to arrive at a target price of INR 4,256 per share, an upside of 10.2% over the CMP, with an “ACCUMULATE” rating on the stock,” it said.  

5 CIpla Ltd| CMP: Rs 929 | Target: Rs 998 

Cipla Limited, is the 3rd largest Pharmaceutical company from India and South Africa (SA) and is one of the most dispensed generics companies in the US. The company manufactures over 1,500 products in over 50 dosage forms and in over 65 therapeutic areas. “We apply a P/E multiple of 24.5x on FY23E EPS of Rs 40.8 and arrive at a target price of Rs 998 per share, giving an upside potential of 7.4% from its CMP of Rs 929. We recommend an “ACCUMULATE” rating on the shares of Cipla,” KR Choksey report recommended.  

6 Godrej Consumer Products Ltd.| CMP: Rs 955| Target: Rs 1,025 

The company’s strategic and disciplined approach to building brands, driving innovation & relentless focus on winning on the ground continues to deliver growth. The company is aiming for 150–200 bps EBITDA margin expansion over the next few years. This will be fueled by improving gross margins and reducing overheads and non-media ATL.   

“We apply a P/E multiple of 43x to the FY24E EPS of Rs 23.8 to arrive at a target price of Rs 1,025 per share; an upside of 7.3% over the CMP,” it said.  

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