Birla Corporation Ltd from the cement space and Patanjali Foods Ltd from the FMCG sector are the two top stocks that domestic brokerage and research firm HDFC Securities suggest investors can buy with a time horizon of two to three quarters.
HDFC Securities’ top stock picks ,
Birla Corporation: Birla Corporation Limited (BCL) has directed the Mukutban plant to become EBITDA break-even by the end of FY23. With large capital expenditure, the brokerage expects the financial year 2013-24E to cool down, adding that it prefers BCL for its large retail presence in attractive north/central regions and various cost-cutting initiatives .
“We believe that investors can buy this stock within the range of 1082-1095 Add on Bands and Dips 1007-1027 Band, for a reasonable price for the base case Fair value of 1192 and bull case 1289,” suggested HDFC Securities.
Birla Corporation Limited is the flagship company of the MP Birla Group and has interests in cement and jute goods. The company produces a range of cement products under MP Birla Cement. It also sells construction chemicals and wall putty.
Patanjali Foods: “Since the acquisition of Patanjali in FY19, the company’s margins have grown from 1% in FY22 to 6.1%. Going forward, on account of increasing contribution from the food business and better realization of synergies, we expect margin expansion of 46 bps in FY 22-24,” the note said.
Higher revenue growth, improved profitability and lower finance cost could drive PAT growth at 43% CAGR in FY 22-24E. It said that even two years from now, considering the strength of the oil business, PFL may still be valued lower than its counterpart FMCG companies.
“However, it may grow much faster than its peers over the next two years. We have taken this into account while setting the price target. We think the stock’s base case is fair value. 1490 and the fair value of the bull case is 1602. Investors Can Buy in Stock 1341-1363 Add on Bands and Dips 1180-1200 band,” the brokerage said.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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