According to Jefferies, the recent market correction may provide a good opportunity to evaluate quality small and midcap stocks. recommend it as top stock picksThe global brokerage said it likes the structural indigenization opportunity and EMS plays Dixon and Amber, led by PLI.
It also favors market leaders Supreme Industries (SI), Kajaria Ceramics (KJC) and Crompton, because of their strong brand franchise (easiness in price hike), cost control (project advancement in Crompton), premium mix (40 in SI). % Value Added), and pan India reach.
“Three key catalysts that have primarily helped maintain Crompton’s OPM flexibility are cost control, price escalation and premiumisation. The company achieved cost savings of Rs 460 million in Q3 through the ‘Unnati’ project (Rs 480 million in Q2). Over the past 12 million, Crompton has made small hikes of 4-5 rounds in prices, cumulative at 17-18%; The latest price hike was in Q3, and full gains can be seen in Q4,” the note said.
For Kajaria, due to sharp year-on-year rise in brass prices (major RM), the price increase in the last 9 million plus tap-wares has been an overall +15% higher. Whereas, the prices of sanitary-ware saw an increase of around 8%. Jefferies believes strong price increases across segments indicate KJC’s strong brand prominence
However, input costs (rising crude oil) and supply-chain issues could pose a significant risk. Yet given the current global geopolitical tensions – volatility in commodities, freight and energy costs could also pose a major risk to FY23 margins, believes the brokerage.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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