Industrial Stocks: The stock market continues to decline. But do you know that many veteran shares of the industrial sector have fallen by 50% from their record high in this decline? Has now these shares have a chance to shop after such a decline? Global brokerage firm Jefferies believes that investors should focus on some select stocks at this time. Jefferies himself has selected 4 top stocks that can later give tremendous returns to investors!
Jeffers has included 4 industrial sector companies in their top pics in a recent report. These are stocks, Siemens Limited, Thermax Limited, Larsen & Toubro (L&T) and Hindustan Aeronautics Limited (HAL).
According to the report of Jefferies, the shares of these companies have lost about 15% to 45% from their alltime high levels. L&T shares are trading below 17% from their record high. At the same time, shares of Siemens, Thermax and HAL have fallen from 39% to 45%. Jefferies says that this decline can be a big opportunity for long -term investors, as the fundamental of these companies is strong and Capex Cycle can further support their growth.
Jeffers reminded investors that after the budget of 2021, the shares of these companies saw a rise from 2 times to 8 times. At that time, the Central Government had allocated a Capital Expected of ₹ 4.1 lakh crore in the budget, which was 21% higher than ₹ 3.4 lakh crore in the previous financial year.
The brokerage firm says that when the rate of increase in capital expenditure (CAPEX) (CAGR) was in a single digit during the downs cycle from 2010 to 2020, industrial shares are in better position than this time.
Jefferies has explained according to the valuation of these stocks. According to Jefferies, stocks like ABB India, Siemens, Thermax, L&T and BHEL are currently trading at a discount compared to multiple, estimated P/E (price-to-earnings) of FY 2027. But stocks like Bharat Electronics and Kei Industries are trading at the highest premium on this parameter. This indicates that many industrial stocks are currently trading below their fair value, which may be an attractive point of entry for investors.
Jeffers has also released its target price for these companies. Brokerage said that its estimate could lead to a rise of up to 38% in L&T shares. At the same time, the shares of thermax and siemens are expected to rise by 45% from the current level.
Whereas in HAL shares, he has predicted a rise of up to 40% from the current level. Jefferies has given a target price of ₹ 4,715 for HAL, but this target price is also significantly below its record high Rs 5,674.
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