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2 Smallcap Stocks To Buy From Motilal Oswal For Up To 30% Profits

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Brokerage firm Motilal Oswal in its latest report has recommended buying the stocks of two small cap companies - National Aluminium Company (NALCO) and Whirlpool of India.

 

Motilal Oswal’s price target for NALCO

Motilal Oswal’s price target for NALCO

Current market price Target price Gains %
Rs 82.20 107 29.87%

The brokerage firm believes that the NALCO stock can hit as high as Rs 107, thereby taking the gains on the stock to as much as 30% from the current market price of Rs 82.45. National Aluminium Company is one of the top aluminium players in the country.

Motilal Oswal expects higher aluminum prices to absorb the cost shock and lead to improved margin in subsequent quarters. "With integrated mining operations, ational Aluminium Company is the best play on higher London Metal Exchange prices," the brokerage has said.

Buy NALCO stock for a target price of Rs 107: Motilal Oswal
 

Buy NALCO stock for a target price of Rs 107: Motilal Oswal

The brokerage expect the tight demand-supply scenario, to lead to aluminium prices remaining at elevated levels over the coming months.

"The management has announced a 1mtpa alumina refinery expansion at a capital expenditure of Rs 64 billion, and expects to complete the project in FY23. Given its slow execution, we expect commissioning by FY24E. We value the stock on a SoTP basis at 5 times FY23E EV/EBITDA and at 0.75 times book value for growth CWIP to arrive at our target price of Rs 107. At the current market price, it provides an attractive dividend yield of 5%. We maintain our Buy rating," the brokerage has said.

Shares of NALCO last closed at Rs 82.20 on the National Stock Exchange.

Whirlpool of India

Whirlpool of India

Brokerage firm, Motilal Oswal sees gains of nearly 32% on the stock of Whirlpool of India, which is engaged in the manufacture of Refrigerators, Washing Machines, Air Conditioners, Microwave Ovens etc.

Current market price Target price Gains %
Rs 2030 2650 31.82

According to Motilal Oswal institutional Equities, Whirlpool of India, is the only White Goods company in its coverage universe to meet its revenue expectations in the first quarter of QFY22.

Whirlpool of India: Buy with a price target of Rs 2,650

Whirlpool of India: Buy with a price target of Rs 2,650

"Whirlpool of India's revenue growth doesn't suggest any market share loss, providing us confidence in the strong White Goods franchise. On a relative basis, demand for Washing Machines and Refrigerators can potentially surprise over the next six months v/s a seasonal category like ACs, provided consumer demand holds good as the economy opens up. We cut our FY22E/23E EPS by 10% each to factor in higher than expected input cost pressures.

Our target price stands at Rs 2,650/share (earlier: Rs 2,900 per share) as we roll forward our valuation to Sep'23E EPS, but cut our target P/E to 50 times from 55 times earlier. We maintain our Buy rating," the brokerage has said in its report.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets have hit a new peak. Please consult a registered professional advisor before you take a decision.

Read more about: stocks to buy motilal oswal nalco
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