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Business News/ Markets / Stock Markets/  Stocks to buy: HDFC Securities recommends Sanofi India, United Spirits and United Breweries as its fundamental picks
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Stocks to buy: HDFC Securities recommends Sanofi India, United Spirits and United Breweries as its fundamental picks

Stocks to buy: HDFC Securities has recommended three stocks to buy as its Fundamental Picks which it believes have decent upside potential. These three stocks are Sanofi India, United Spirits and United Breweries.

Stocks to buy: HDFC Securities’ Retail Research suggests buying Sanofi India, United Spirits and United Breweries at current market prices and adding further on dips, keeping a time horizon of 2 - 3 quarters.Premium
Stocks to buy: HDFC Securities’ Retail Research suggests buying Sanofi India, United Spirits and United Breweries at current market prices and adding further on dips, keeping a time horizon of 2 - 3 quarters.

Stocks to buy: The Indian stock market indices, Sensex and Nifty 50, traded over half a percent lower on Tuesday dragged by across the board selling.

The benchmark Nifty 50 formed a small negative candle on May 06 after a volatile but range-bound move. The index is now likely to stay in the 22,305 - 22,567 band with a mild negative bias in the near term, analysts said.

HDFC Securities has recommended three stocks to buy as its Fundamental Picks which it believes have decent upside potential. These three stocks are Sanofi India, United Spirits and United Breweries.

HDFC Securities’ Retail Research suggests buying these stocks at current market prices and adding further on dips, keeping a time horizon of 2 - 3 quarters.

Also Read: Stocks in focus: Ruchit Jain of 5paisa recommends buying these two stocks today

Here’s a look at these three stocks to buy:

Sanofi India | Buy | TP: 9,489

HDFC Securities projects 120 bps margin expansion led by change in business mix and higher revenue contribution from domestic branded business. Healthy revenue growth coupled with expansion in operating margin could drive 14% CAGR in Adj. net profit over the same period. Large share of revenue from domestic market, robust cash rich balance sheet, strong return ratios, minimal capex, and better cash conversion cycle are some of the key positives.

The demerger of the consumer healthcare business could help unlock value for the company as typically the branded consumer business fetches better valuation, HDFC Securities said. It feels investors can buy the stock in the band of 8,600 - 8,690 and add more on dips to 7,825 (23.5x CY25E EPS) for base case fair value of 9,489 (28.5x CY25E EPS) and bull case fair value of 9,988 (30x CY25E EPS) over the next 2-3 quarters.

Also Read: Marico share price jumps over 8% after Q4 results; Should you buy, sell or hold the stock?

United Spirits | Buy | TP: 1,319

The brokerage firm expects the innovation and premiumization to drive revenue growth for United Spirits, going forward. On the margin front, while the prices of certain commodities and glass bottles have stabilized over the last few quarters, ENA prices continue to remain elevated. However, the company has returned more than 16% EBITDA margins over the last few quarters with improved price mix and various cost interventions. In the medium-term long term, the focus remains on double-digit revenue growth with slightly higher EBITDA growth.

We think the base case fair value of the stock is 1,319 (60.0x FY26E EPS) and the bull case fair value is 1,386 (63.0x FY26E EPS). Investors can buy the stock in 1,190 - 1,210 band (54.5x FY26E EPS) and add more on dips in 1,060 - 1,080 (48.5x FY26E EPS) band, HDFC Securities added.

Also Read: Buy or sell: Vaishali Parekh recommends three stocks to buy today — May 7

United Breweries | Buy | TP: 2,245

United Breweries recently reported Heineken India’s revenue to have grown by 20% YoY in India in Jan-Mar 2024, driven by volume growth and positive price mix. Heineken India’s beer volumes grew in low-teens, ahead of the market, owing to route-to-market changes from last year, which bodes well for UBL, going forward. 

The brokerage believes the base case fair value of the stock is 2,245 (65.0x FY26E EPS) and the bull case fair value is 2,401 (69.5x FY26E EPS). Investors can buy the stock in 2,030 - 2,050 band (59.0x FY26E EPS) and add more on dips in 1,820 - 1,840 (53.0x FY26E EPS) band, it said.

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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 making any investment decisions.

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Published: 07 May 2024, 11:32 AM IST
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