Broking firm, Khambatta Securities has suggested buying the stocks of Sharda Cropchem and Subros Ltd. The firm sees gains of as much as 37% in the stock of Sharda Cropchem and around 17% in the stock of Subros Ltd. Investors are also advised caution, as the Sensex is now at a record of 55,000 points.
Buy Sharda Cropchem stock for an upside potential of 37%
Khambatta Securities sees as an upside in the stock of Sharda Cropchem to Rs 435, from the current market price of Rs 319.
Sharda Cropchem is a rapidly growing global agrochemicals company with a leadership position in generic crop protection chemicals comprising formulations and generic active ingredients in the fungicide, herbicide and insecticide segments.
"Backed by a strong applications pipeline, the key driver of business growth for Sharda Cropchem, its topline is expected to witness healthy growth in the next 2 years.
We have modelled lower EBITDA margin for FY22 to factor in higher raw material and shipping costs while increased D&A expenses arising from higher capitalised registration costs will result in lower net margins.
At current levels, the Sharda Cropchem stock trades at an attractive 11 times FY23E EPS. Assigning a target P/E multiple of 15 times FY23E EPS, we value Sharda Cropchem at Rs 435, informing a BUY rating with an upside of 36%," the brokerage has said.
Buy Subros Ltd stock for a potential upside of 17%
The Subros Ltd stock, according to Khambatta Securities has a potential upside of 17% and can rally to Rs 371 from the current levels of Rs 321. Subros's first quarter FY22 performance was affected by covid 2.0 and consequent lockdown in many states.
According to Khambatta Securities operations was suspended during May 21 as OEMs and dealers remained shut at several locations.
"The company's current capacity utilisation is 90% as management looks to invest in capacity expansion in the next 2 to 3 years. Subros' market share in the passenger vehicle, utility vehicle and truck segment is 42%/55%/45%.
The trend of trucks coming with air conditioned cabins is a positive market, consumer preference shift for Subros Ltd. The management has guided double-digit revenue growth for FY22. The Subros Ltd has appreciated 33% since we initiated coverage with a BUY rating on 17 September 2020.
We reiterate a buy rating on the stock of Subros Auto with a price target of Rs 371 (at 22.0 times FY23E EPS) with a 15% upside as we make marginal downward revision of estimates based on updated data-points and outlook," Khambatta Securities has stated.
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