2 Stocks To Buy That Can Yield Returns Of Upto 30%

Broking firm Emkay Global has placed a buy call on the stocks of TCNS Clothing and ONGC. The brokerage sees good upside in both these stocks going ahead.

TCNS Clothing

Emkay Global has set a price target of Rs 1050 on the stock of TCNS Clothing as against the current market price of Rs 796, implying an upside of nearly 30% from the current levels.

"Sales recovered to 75% of pre-Covid levels vs. 45% recovery YoY. The recovery has been slower compared to western peers, due to a relatively slower pick-up in the ethnic category, focus on profitability and lower net-store additions (-2% vs. 20%+ for ABFRL-Lifestyle/Westside). However, festive sales trends are positive, with a 100% recovery and in line with western peers. EBO additions picked up pace with 8 net-new additions. TCNS retained its guidance of 60 net-new additions in FY22. Among channels, online led with 125% recovery, while physical retail channels saw 70% recovery.

Among new launches, footwear has been gaining strong traction and has contributed in double-digits to sales in 70 'W' stores, where it has been launched," Emkay Global has said in its report.

TCNS Stock: Upside target of nearly 30%

TCNS is a leader in the salwar-kameez industry with design-sourcing edge, 2x-3x penetration potential and strong online/ omni presence.

"We expect TCNS to deliver a healthy EBITDA CAGR of 34% over FY20-24E, led by 11% revenue growth and the rest contributed by full recovery of margins. Maintain Buy with a revised TP of Rs1,050 (Rs 860 earlier) on 42x Dec'23E EPS (40x Sep'23 earlier)," the brokerage has said.

Buy ONGC, says Emkay Global

Brokerage Emkay sees an upside of nearly 20% on the stock of ONGC from the current levels to a target price of Rs 185.

"The gas pricing formula has always been under deliberation, but ONGC does not believe that higher prices won't be allowed next fiscal. It has not heard of any tinkering with formula. There have been delays in KG-DWN-98/2 production due to Covid and the company is currently reassessing timelines. Cyclone Tauktae has affected not just offshore but onshore
projects too.

ONGC expects FY22 SA crude production to be at 22.3-22.4mmt (incl JV) and gas at 22.5bcm. Covid reduced gas offtake, besides delays in crude installations at western offshore. With all FY22 original targets expected to be met, FY23 should be robust. OVL opex rose sequentially due to standby Mozambique charges as there is force majeure and hence being expensed. OVL is doing well now," the brokerage has said.

Valuation and view on ONGC

"We value ONGC on a Dec'23 DCF-based SOTP, comprising standalone, KG 98/2, OVL and Mozambique upsides. Investments are valued at our target price or current market price and with a 30% hold co discount," the brokerage has said. Shares in ONGC were last seen trading at Rs 158.

Disclaimer

The above stocks are picked from the brokerage report of Emkay Global. 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.