3 Chemical & Pharma Stocks To Buy Now, Gain Upto 23% Return: Motilal Oswal Says

Stock markets were flat this week in India, Sensex closed at 61,663.48 points and Nifty closed at 18,307.65 points, on November 18. Here 3 stocks have been suggested by Motilal Oswal to buy for good returns.

Piramal Pharma

Piramal Pharma is being traded at around Rs. 157/share, and Motilal Oswal has suggested to buy this stock with Rs. 185 target price, for 18% potential return. Including other income, its EBITDA stood at Rs. 2.2b in Q2. Revenue grew 9% YoY and 16% QoQ to Rs. 17b in 2QFY23. The brokerage firm said, "We have recalibrated our FY23/FY24 earnings estimate based on its detailed financials, prolonged period of pandemic-induced challenges in the Contract Development and Manufacturing Organization (CDMO) business, and improved traction in the Complex Hospital Generics (CHG) and the India Consumer Products (ICP) segment. Using the SoTP methodology, we value Piramal Pharma's CDMO/CHG/ICH business at 17x/12x/18x FY24E EV/EBITDA."

NOCIL

NOCIL is being traded at around Rs. 229/share, and Motilal Oswal has suggested to buy this stock with Rs. 283 target price, for 23% potential return. "EBITDA at Rs. 51.9/kg missed our estimate, down 22%QoQ, with realization being flat QoQ (at INR329/kg, up 20% YoY). Raw material costs in 2QFY23 were also flattish QoQ even as volumes declined 13% YoY and 23% QoQ at 11.8kmt, as a result of the global recessionary trends, which primarily impacted export volumes QoQ. Domestic volumes, however, showed moderate growth. NOCIL believes that demand is expected to be muted for the next couple of quarters and its guidance of optimal capacity utilization for its expanded capacity is uncertain and could well go beyond FY24 (earlier guidance of full utilization by Sep'23). We have always been conservative and have guided for the same by the end of FY24," the firm mentioned.

Solara Active Pharma

Solara Active Pharma is being traded at around Rs. 446/share, and Motilal Oswal has suggested to buy this stock with Rs. 520 target price, for 17% potential return. Motilal Oswal stated, "We revise our earnings estimate to a loss of Rs. 214m from a loss of Rs. 341m for FY23 and slightly raise our earnings estimate for FY24 by 3% to factor in a scope for improved utilization, driving better profitability of the Vizag facility, the benefits accrued of backward integration, better product selection with focus on higher gross margin and d) ongoing cost improvement programs. We continue to value SOLARA at 11x EV/EBITDA to arrive at price target of Rs. 520. SOLARA continues to rework on its portfolio and focus on customer markets and improving manufacturing efficiency. We reiterate our Buy rating on the stock with a target price of Rs. 520."

Disclaimer

The above stocks were picked from the brokerage reports by Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.