2 Stocks To Buy As Sensex Drops 2,500 Points In 7-Days

Benchmark indices have plunged in the last 7 trading days. From levels of 58,000 points, we are seeing the Sensex dropping to levels of 55,550 Points. The Russian invasion of Ukraine has kept markets on the tenterhooks. Along with rising inflation, it is adding fresh worries to the markets. Here are 2 stocks that you can buy for the long-term even as the Sensex falls.

Mahindra CIE

Broking firm, Motilal Oswal is bullish on the stock of Mahindra CIE and sees an upside potential of at least 40% from the current levels of Rs 184. The firm has targeted a price of Rs 267 on the stock.

"Mahindra CIE's weak performance in 4QCY21 was reflection of high RM/energy cost and operating deleverage in both geographies. It is negotiating with customers to pass on hyper inflation in energy prices. There is good progress on order wins in EVs/hybrids in both geos," the brokerage has said.

According to the management commentary as highlighted by Motilal Oswal, the passenger and commercial vehicles are expected to grow on strong demand, subject to semiconductor availability, while Tractor and 2W sales are expected to remain sluggish. The Europe business is expected to grow on a low base. With some pent-up demand in the long-term, growth will be in line with broader GDP growth.

Mahindra CIE: Valuation and view

According to Motilal Oswal, any significant order wins, or growth in the EV portfolio, can act as a re-rating factor. The stock trades at 11.6x/9.5x CY22E/CY23E consolidated EPS.

"We have lowered our target multiple to 13x (from 15x earlier) as recovery in capital efficiency is slower than expected. We maintain our Buy rating with a target price of Rs 267 per share (13x Dec'23E consolidated EPS)," the brokerage has said.

Buy Crompton Greaves

Motilal Oswal has a buy rating on the stock of Crompton Greaves. The company has entered into a share purchase agreement with the promoter group of Butterfly Gandhimathi Appliances (Butterfly) to acquire up to 55% stake at Rs 1,403 per share, aggregating to Rs 13.8 bilion.

According to Motilal Oswal, tt will also acquire the trademarks relating to the Butterfly brand from various promoter owned entities for Rs 303.8 million. It will make the mandatory open offer to public shareholders of Butterfly (to acquire up to 26% stake) at Rs 1,433.90/share (3% premium to its current market price), aggregating to Rs 6.7 billion. The entire deal will be at a total consideration of Rs 20.8 billion.

According to Motilal Oswal, the management believes the deal will be EPS neutral in the first year (FY23), but EPS accretive from the second year onwards.

Motilal Oswal view and reasons to buy the stock

According to the brokerage, the deal is in line with the management commentary in the past few results. It has on a number of occasions stated its intention to enter into a new category and its openness for inorganic growth. This deal will help Crompton immediately scale up in its key Kitchen segment.

"The deal is in line with the management commentary in the past few results. It has on a number of occasions stated its intention to enter into a new category and its openness for inorganic growth. This deal will help Crompton immediately scale up in its key Kitchen segment. On FY21/TTM basis, deal implies EV/Sales of 2.8x/3.4x and EV/EBITDA of 31x/28 times," the brokerage has said.