10 Consumer Discretionary Stocks To Buy As Sharekhan Recommends, Sees High Upside Potential

Broking firm Sharekhan is positive on the Consumer Discretionary Sector in its Q4FY2023 Results Review report on the sector. The broking firm listed 10 stocks from the sector with a Buy rating for a robust upside of up to 37% from the current market price.

These 10 stocks include Aditya Birla Fashion and Retail, Bata India, Relaxo Footwear, Jubilant Foodworks, Devyani International, Restaurant Brands Asia, Indian Hotels Company, KPR Mill, PVR, and Zee Entertainment.

Outlook - Hospitality to maintain momentum; Slow recovery for QSR and Retail

According to Sharekhan, Organic same-store-sales for retail/QSR companies would be muted due to weak consumer sentiments and revenue growth would be largely driven by strong store expansion. We expect discretionary spends to gradually improve and see strength prior to the upcoming festive season. Overall Q1FY2024 is expected to be another muted quarter for retail and QSRs. Easing inflation is also good for improvement in sentiments. Hotel companies would continue to post strong performance as room demand is expected to stay ahead of room supply over the next 3-4 years. Textile companies will gain momentum from Q2FY2024 with global retail shelves getting empty. Margins will improve in the quarters ahead due to reduction in the raw material prices and supply costs.

Valuation and preferred picks

Sharekhan said, "Among retailers, we like Titan because of its consistent resilient performance in uncertain environment and focused strategies leading to steady growth in key businesses in the coming years. After a relevant price correction in portfolio, Relaxo footwear is geared to post good recovery in volume growth in FY2024. This along with better margins will help earnings to grow in strong doubled digits in FY2024. Among hotels, we continue to like Indian Hotels Company while we have recently initiated viewpoint coverage on Chalet Hotels, which will benefit from current upcycle in the hotel industry."

It added, "In the QSR space, we like Restaurant Brands Asia due to 1) expected strong growth in the India business 2) recovery in Indonesia business and 3) discounted valuations post sharp fall in the stock price. Further, in the textile space, we like SP Apparels, KPR Mill and Himatsingka Seide which are expected to post improved performance in the coming quarters while long-term growth prospects for textile industry are intact due to China + 1 factor and expected FTA signing with UK & Europe."

Stocks - CMP, Target Price, & Potential Upside

Stocks	*CMP (Rs)	PT (Rs)	Upside
1	Aditya Birla Fashion and Retail	208.9	225	8%
2	Bata India	1616.1	1775	10%
3	Relaxo Footwear	923.35	1005	9%
4	Jubilant Foodworks	498.15	600	21%
5	Devyani International	192.2	215	12%
6	Restaurant Brands Asia	110	150	37%
7	Indian Hotels Company	403.25	425	6%
8	KPR Mill	634.6	685	8%
9	PVR	1450.95	1800	25%
10	Zee Entertainment	187.15	210	13%

*CMP as of Friday, June 16, 2023

Disclaimer - The above 10 Consumer Discretionary stocks have been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.