Stocks to buy: Birla Corp, Saregama India, Savita Oil among 5 fundamental stock picks by HDFC Securities
- Stocks to buy: HDFC Securities recommends to buy Birla Corporation, Marksans Pharmaceuticals, Saregama India, Savita Oil Technologies and Jash Engineering at current market prices and add on dips, keeping a time horizon of 2-3 quarters.
The Indian stock market indices, Sensex and Nifty 50, traded lower on Wednesday dragged by broad based selling amid mixed global cues. The equity market is likely to remain range-bound for the near term in the absence of strong positive or negative triggers.
HDFC Securities’ Retail Research has recommended five stocks to buy as their fundamental picks, which it believes have the potential to give a decent upside in the next six to nine months.
These stocks are Birla Corporation, Marksans Pharmaceuticals, Saregama India, Savita Oil Technologies and Jash Engineering. The brokerage firm advises buying these stocks at current market prices and add on dips, keeping a time horizon of 2-3 quarters.
Here are 5 fundamental stock picks by HDFC Securities:
Birla Corporation | Buy | TP: ₹1,891
Healthy pricing in north and central regions, increased capacity utilization at Mukutban plant and unitary EBITDA per tonne rebounding to a 10-quarter high augurs well for Birla Corporation, HDFC Securities said.
It believes along with the higher sales volume, combined with the lowest cost of production, will have a positive effect on the bottomline growth and profitability. Also, once the additional capacity is commissioned then the company will replace current supplies from Satna and Maihar in existing markets where the Company already has a strong presence; this will lead to lower logistics cost.
“We believe investors can buy the stock in the range of ₹1,725 - 1,760 band and add on dips to ₹1,556 - 1,588 band, for base case fair value of ₹1,891 and bull case fair value of ₹1,996,” the brokerage said.
Marksans Pharmaceuticals | Buy | TP: ₹175
Marksans Pharmaceuticals is concentrating on regulated markets of US and UK with focus on higher margin softgels and OTC products. The brokerage estimates 16% CAGR in revenue led by strong growth from the UK and US market over FY23-26E. Strong revenue along with steady margin would drive 20.3% CAGR in net profit over the same period.
HDFC Securities feels investors can buy the stock in the band of ₹158 - 161 and add more on declines to ₹141 for base case target of ₹175 and bull case target of ₹187.25 over the next 2-3 quarters.
Saregama India | Buy | TP: ₹447
The brokerage firm believes Saregama has pivoted at the right time from a music retailer to a pure play content company. The industry’s shift towards the highly underpenetrated subscription model from ad-based model, especially in the OTT-Audio (OTTA) segment, is what is believed to provide additional levers for improved realization of Saregama’s content.
It thinks the base case fair value of the stock is ₹447 and the bull case fair value is ₹477. Investors can buy the stock in ₹395 - 405 band and add more on dips in ₹354 - 360 band.
Savita Oil Technologies | Buy | TP: ₹493
Savita Oil Technologies has a balanced product portfolio with an increasing proportion of its white oils and lubricating oils business. Sustained growth in performance of its key business segment of transformer oils along with longstanding client relationships, should support topline growth, said HDFC Securities.
Considering the company’s strong financial profile, led by healthy profitability levels, and return indicators and a comfortable capital structure, the brokerage has a positive view on the stock. Its valuations are cheaper compared to its MNC and local peers and the company has been consistently paying dividends and offering buybacks to the shareholders in the recent past, it added.
The brokerage advises investors to buy in the ₹440 - 450 band and add more on dips to ₹397 - 405 band. Base case fair value of the stock is ₹493 and the bull case fair value of the stock is ₹524 over the next 2-3 quarters.
Jash Engineering | Buy | TP: ₹1,857
Jash Engineering with its portfolio of well recognised brands, well diversified and reputed clientele is well placed to sustain strong growth rate over near to medium term. The company has a strong order book of ₹851 crore as of Q3FY24, which is executable over the next 4-6 quarters. Though the stock has run up lately, given its leadership position and the scope of the industry in which it is present means that the stock may continue to outperform, HDFC Securities said.
According to the brokerage, the base case fair value of the stock is ₹1,857 and the bull case fair value is ₹1,958. Investors can buy the in stock ₹1,671 - 1,705 band and add more on dips in ₹1,504 - 1,535 band.
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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