Broking firm Motilal Oswal has recommended buying the stocks of Tata Consumer Products and Orient Electric. Here are some of the reasons the brokerage is bullish on the stocks:
Buy Orient Electric
|Current market price||Target price||Gains%|
|Rs 344||Rs 500||46.00%|
According to Motilal Oswal revenue grew 37% YoY and came in 19% above our estimate. "While the surge in commodity prices led to a 480 basis points YoY deterioration in gross margin, strong volume growth, led by operating leverage, cushioned the impact at the EBITDA margin level v/s our expectation.
"EBITDA grew 7% YoY and was 31% ahead of our expectation. Adjusted PAT grew by 7% and came in 46% ahead of our expectation," the brokerage has said.
Target price of Rs 500 on the stock
"With demand scaling back gradually and the upcoming festive season ahead, we believe Orient Electric is best placed to capture this trend, with its strong manufacturing and distribution capabilities. On account of its superior performance in 2QFY22, we increase our FY22-24E EPS by 5-6%. We forecast a revenue/EBITDA/adjusted PAT CAGR of 19%/21%/25% over FY21-24E. We value Orient Electric at 45x FY24E EPS, with a target price of Rs 500. At the current market price, the stock trades at a FY23E/FY24E P/E of 36x/30x. On a FY24E P/E multiple basis, Orient Electric is trading at a discount of 40%/15% v/s Havells and Crompton. On an EV/EBITDA basis, the discount stands at 48%/36%. We maintain our Buy rating," the brokerage has said.
Buy Tata Consumer Products
Broking firm, Motilal Oswal is also bullish on the stock of Tata Consumer Products and has set a price target of Rs 945 on the stock. According to the broking firm, the unlocking of sales and distribution synergies from the merger of group companies has started to yield results. This is evident from the market share increase in Tea (+190bp YoY) and Salt (+160bp YoY) in FY21 (it also increased in 1HFY22) on the back of an increase in numeric distribution. Tata Consumer Products doubled its direct reach to 1.1m by Sep'21. The company is establishing a strong S&D channel, which would act as a key growth driver.
"We maintain our earnings estimates (as performance in 2QFY22 was broadly in line) and arrive at our SoTP-based target price of Rs 945 per share. We maintain our Buy rating on the stock," the brokerage has said.
The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.