2 Angel One Top Picks From Chemical Space For May 2022

Updated: Thursday, May 12, 2022, 15:41 [IST]

After witnessing a rebound in March, Indian equities turned highly volatile during the first month of the Fy23 as the US central bank hinted at a more hawkish stance to tackle the inflationary burden. While Nifty made a strong start for the month and Space briefly moved above 18000 levels, it quickly erased the gains and headed southwards due to continued FII selling. Another threat of inflation being faced world over is tackled by raising rates as is seen by the US Fed which in its recent FOMC meet on May 4 has hiked rates by 50 bps and also iterated that they will continue to increase rates by 50bps another couple of times. Also, in India we saw an off-cycle rate hike by the RBI, leading the repo rate to now 4.4%.

Market outlook for the near term- Cautious stance given the multiple headwinds

Given the inflationary pressure and aggressive tightening by the global central banks, there is expectation of some slowdown down the line and this will eventually result in earnings cut. So, the near term outlook remains cautious while overall the brokerage Angel One is bullish on the long term growth potential of the Indian economy.

Top Stocks To Buy Now From Chemical Space As Recommended By Angel One

Meanwhile, in its Top Stock Picks for May 2022 the brokerage has recommended to buy 2 chemical stocks for good rally based on the fundamentals:

PI Industries: Buy for Rs. 3440 target price i.e. an upside of 43.5% given the last traded price of Rs. 2396 apiece.

PI Industries is a leading player in providing Custom synthesis and manufacturing solutions (CSM) to global agrochemical players. In the Fy21, the CSM business emerged as the top contributor to the company's revenues and is expected to be the key driver in future also. As per the brokerage, "The company has been increasing it's share of high margin CSM business
driven by strong relationship with global agrochemical players. PI is leveraging its chemistry skill sets and is looking to diversify its CSM portfolio to electronic chemicals, Pharma API, fluoro chemicals, etc. which will help drive business".

"We expect PI Industries to post revenue/PAT CAGR of 20.0%/22.5% between FY21-FY24 driven by 20% growth in the CSM business over the next 2-3 years. Moreover foray into new segments like electronic chemicals and APIs will also help drive growth over next 3-4 years for the company", adds the brokerage.

Jubilant Ingrevia:

Buy for Rs. 700 target price, implying potential return of 66% given the current share price of Rs. 420.85.

The company constituted as the result of spinning off the chemical and life science
ingredients of Jubilant Life Sciences Ltd. has a vast array of
products across its three divisions and is one of the top two producers of
Pyridine - Beta and vitamin B3 globally.

"At current levels the stock is trading at P/E multiple of ~14xFY23 EPS
which is at a significant discount to other chemical companies. Therefore,
we believe that there is value in the stock at current levels and hence rate
it a BUY", says the brokerage.

Disclaimer

The stock picks mentioned in the story are taken from Angel Top Picks for May 2022. Markets are highly jittery at the moment, one should exercise extreme caution at this juncture. More so, the stocks herein should not be construed as an investment advice into them.