Add These Bluechip Stocks To Your Portfolio As Markets Fall

The Sensex and the Nifty have given-up significant gains over the last one week. The Sensex, which had once again crossed the 60,000 points mark is now down to 58,400 points. There is still some value in the markets, if the right kind of stocks are picked. Here are a few stocks that investors could buy and add to their portfolio.

Buy VA Tech Wabag Ltd: Yes Securities

Broking firm, has placed a buy call on the stock of VA Tech Wabag Ltd. The brokerage has set a price target of Rs 391 on the stock.

The company is one of the leading companies in pure play water technology across the world offering complete range of value chain services with focus on conservation, optimization, recycle and reuse of water to the extent possible. It has achieved a healthy 30‐35% bid‐ hit ratio globally as well as domestically on the strength of its whole range of competitive and customized value chain services. Having successfully executed 6000+ projects across the globe, it was ranked 4th globally by GWI in 2021 for ensuring safe drinking water and clean environment.

Strong order book

According to Yes Securities, the company has a proven track record of bagging large and complex projects; as on Dec'21 its order book stands at Rs 100 billion. This is an order book‐to‐bill ratio of 3.3 times. All its major projects are covered with price variation clauses helping VATW maintain its profitability going forward.

Valuation and view on VA Tech

According to Yes Securities, t he growing attention of the government and multi‐ lateral funding agencies towards an escalating water shortage crisis, the water treatment sector is well poised for a secular, long‐term growth.

"In our view, VA Tech Wabag Ltd robust order book thriving on strong market leadership, execution ramp up, operational efficiencies would help it capitalize on the forthcoming opportunities. At current market price, the stock trades at a P/E of 15.2x/ 13.2x/ 10.9x on FY22/23/24 earnings estimates," the brokerage has said.

Sumitomo Chemical India

Broking firm Sharekhan has a buy call on the stock of agrochemicals player Sumitomo Chemical. According to the firm, the recent surge in international crop prices would support price hikes and improve margin for Sumitomo Chemical India Limited (SCIL) despite the elevated input and logistics costs. Moreover, the massive CRAMS opportunity, leveraging of parent's global distribution network and above industry growth in India market is likely to sustain mid-double digit revenue growth.

"We expect a strong 21% PAT CAGR over FY21-24E along with high RoE of 24%. We maintain a Buy on Sumitomo Chemical with an unchanged price target of Rs. 500," the brokerage has said.

Sumitomo Chemical India likely to have premium valuations

Sharekhan believes that Sumitomo Chemical India would continue to enjoy premium valuation versus domestic peers given its superior earnings growth outlook (growth could accelerate future given massive revenue opportunity from contract manufacturing), its strong parental advantage (robust R&D capabilities, global distribution, and financial strength) and a robust balance sheet (Rs. 664 crore of cash & cash equivalents as of December 2021).

"Hence, we maintain a Buy rating on Sumitomo Chemical India with an unchanged price target of Rs. 500. At current market price the stock is trading at 41.5x its FY2023E EPS and 35.3x its FY2024E EPS," the brokerage has said.