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Business News/ Markets / Stock Markets/  Stocks to buy: Navin Fluorine, Neogen, Galaxy Surfactants among top picks in chemical sector by HDFC Securities
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Stocks to buy: Navin Fluorine, Neogen, Galaxy Surfactants among top picks in chemical sector by HDFC Securities

Stocks to buy: HDFC Securities said its preferred sectors are industrial and real estate, metal, power, insurance, cement & building materials, market infrastructure, pharma and gas. It remains underweight on consumer staples, NBFC, chemicals and small banks.

Stocks to buy: In the chemical sector, HDFC Securities has a ’Buy’ rating on Navin Fluorine, Galaxy Surfactants, Neogen Chemicals and Aether Industries. (MINT_PRINT)Premium
Stocks to buy: In the chemical sector, HDFC Securities has a ’Buy’ rating on Navin Fluorine, Galaxy Surfactants, Neogen Chemicals and Aether Industries. (MINT_PRINT)

The corporate earnings for the third quarter of FY24 witnessed mixed trends. The auto and energy sectors led Q3FY24 net profit beat, while select names from lending financials, home improvement, chemicals, infrastructure and consumer discretionary missed the estimates.

HDFC Securities said its preferred sectors are industrial and real estate, metal, power, insurance, cement & building materials, market infrastructure, pharma and gas. It remains underweight on consumer staples, NBFC, chemicals and small banks. 

In its model portfolio, the brokerage firm has added weights in steel, media, staffing and cash/InVIT while weights have been reduced in BFSI, industrial/ real estate and energy. 

Also Read: FPI holdings of Indian stocks dip to a decadal low of 16.3% in January

In the chemical sector, HDFC Securities has a ’Buy’ rating on Navin Fluorine, Galaxy Surfactants, Neogen Chemicals and Aether Industries.

Here are stocks to buy in the chemical sector.

SRF | Add | TP: 2,449

HDFC Securities has retained its ‘Add’ rating on SRF, with a target price of 2,449, on the back of deployment of capex for high-growth speciality chemicals business over the next 3-4 years to tap opportunities emerging from the agrochemical and pharmaceutical industries and a strong balance sheet.

Aarti Industries | Add | TP: 733

The brokerage tweaked its FY24 and FY25 EPS estimates for Aarti Industries by +3.5 and +4.3% to 8.8 and 17.3 to factor in performance in Q3FY24. It maintained an ‘Add’ recommendation on the stock with a target price of 733 per share. 

Aarti Industries’ constant focus on Capex and R&D will enable it to remain competitive and expand its customer base. The toluene segment in India is mainly untapped and catered to through imports; AIL will benefit in the long term by entering this segment, said the brokerage.

Also Read: PSU banks’ valuations still reasonable despite sharp re-rating, says Motilal Oswal; SBI, Union Bank among top picks

Navin Fluorine International | Buy | TP: 4,014

The brokerage firm retained its ‘Buy’ call on Navin Fluorine International with a target price of 4,014 per share on the back of earnings visibility, given long-term contracts; tilt in sales mix towards high-margin high-value business; capacity expansion led growth; and strong R&D infrastructure. 

HDFC Securities cut its FY24 and FY25 EPS estimates by 11% and 10% to 47 and 80 owing to a slower-than-expected ramp-up in the Honeywell plant and weak performance of Q3FY24.

Aether Industries | Buy | TP: 1,124

It retained its ‘Buy’ rating on Aether Industries, with a target price of 1,124 owing to capacity expansion-led growth, advanced R&D capabilities, technocratic management, market leading position in most of its products, strong product pipeline, and marquee customer base.

Galaxy Surfactants | Buy | TP: 3,529

Our Buy recommendation on Galaxy Surfactants with a price target of 3,529 is premised on (1) the stickiness of business, as over 50% of the revenue mix comes from MNCs, and (2) the ability to pass on fluctuations in raw material costs to its customers, HDFC Securities said.

Also Read: Stock market strategy: Emkay Global adds SBI, ONGC, TVS Motor; trims exposure to HDFC Bank, ITC in model portfolio

NOCIL | Add | TP: 288

It has an ‘Add’ recommendation on NOCIL with a TP of 288 per share, premised on a ramp-up in capacity utilisation and expansion of margin with a focus on specialised rubber chemicals. 

It cut FY24 and FY25E EPS estimates by 3% and 1% to 7.4 and 11.2 to factor in the Q3FY24 performance.

Ami Organics | Add | TP: 1,201

HDFC Securities cut its FY24 and FY25 EPS estimates by 7% and 6% to 20 and 32, owing to the Q3 performance and fall in product prices. It retained an ‘Add’ rating on the stock with a target price of 1,201 per share. 

Expansion of its speciality chemicals portfolio, contribution from long-term contracts which shall start contributing to revenue from 4QFY24, and strong product pipeline in its advanced pharma intermediate business are likely to act as catalysts.

Also Read: Stocks to buy: M&M Finance, Suraj Estate Developers among stock picks of the month by Anand Rathi

Neogen Chemicals | Buy | TP: 2,127

HDFC Securities’ ‘Buy’ recommendation on Neogen Chemicals with a target price of 2,127 per share is premised on entry into the new-age electrolyte manufacturing business; increasing contribution of the high-margin CSM business to revenue; capacity-led growth momentum in legacy business; and improving return ratios and strong balance sheet, going forward. 

It cut our FY24/25 EPS estimates by 26/21% to 18/38.to factor in Q3FY24 performance and management guidance.

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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 taking any investment decisions.

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Published: 27 Feb 2024, 01:31 PM IST
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