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2 Small And Midcap Stocks To Buy For Returns Of 33% In 1-Year

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Broking firm, ICICI Direct has recommended buying the stocks of Sudarshan Chemicals and Indoco Remedies for quick returns in a period of 1-year.

 

Sudarshan Chemical Industries: Buy with a price target of Rs 795

Sudarshan Chemical Industries: Buy with a price target of Rs 795

Current market price Rs 596.95
Target price Rs Rs 795
Gains % 33%

ICICI Direct sees gains in the stock to Rs 795 from the current market price of Rs 596.95, thus implying profits of nearly 33% from the current levels. The time period to achieve the target is 1-year. Sudarshan Chemical Industries is a leading player in the Indian colour pigment industry with 35% market share and is also among the top four players globally.

According to ICICI Direct, the upcoming capital expenditure bodes well for speciality pigments revenue growth. “Higher share of value added business portfolio to improve margins profile of the business. Allocation of incremental FCF towards organic and inorganic growth likely to expand return ratios further,” the brokerage has noted.

“The stock appreciated at 30% CAGR in last three years. We retain our BUY rating on the back of better growth outlook from speciality pigments. We value Sudarshan Chemical at 25x P/E FY23E EPS to arrive at a revised target price of Rs 795 per share (earlier Rs 775 per share),” the brokerage has said.

Buy Indoco Remedies
 

Buy Indoco Remedies

Current market price Rs 463
Target price Rs Rs 575
Gains % 24%

ICICI Direct is also bullish on the stock of Indoco Remedies and sees an upside of 24% in 1-year. The brokerage has set a price target of Rs 575 on the stock as against the current market price of Rs 463. Indoco is a pharma player and manufactures and markets branded formulations and APIs for the domestic and export markets.

In domestic formulations, through its nine marketing divisions the company serves a range of specialties. According to ICICI Direct restructuring exercise for improvement in MR productivity & therapy calibration is likely to yield productive growth in Indian formulations business.

Also, the clearance from UK-MHRA & lifting of USFDA warning letters for Goa plant II and III is likely to improve operating leverage for export formulation. Indoco will benefit as domestic sales normalise while export formulations are likely to grow with a strong pipeline and visible launch schedule,” the brokerage has said. “We retain buy on the stock of Indoco Remedies and value Indoco at Rs 575 i.e. 24x P/E on FY23E EPS,” ICICI Direct has said. We wish to inform readers that the stock markets have rallied sharply over the last few months and therefore it is better to invest in small amounts. At 56,000 points on the Sensex the markets are highly overvalued. Therefore, buying into dips would be the right way to go about investing.

Disclaimer

Disclaimer

The article is informational in nature, which is taken from the brokerage report of ICICI Direct. Please do consult a professional advisor before buying into any of these stocks. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.

Story first published: Thursday, August 19, 2021, 9:14 [IST]
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