3 Midcap Stocks To Buy, Where Sharekhan Sees Good Potential Upside

Brokerage firm Sharekhan has recommended a few stocks in the last few days. Here are 3 from the midcap space, where the brokerage has given a "buy" call.

Gabriel India: Well positioned for EV space

According to Sharekhan, Gabriel India is well-positioned to benefit from rising penetration of EVs, especially in the 2W, 3W and PV segments, where the company has developed strong relationships with leading and promising companies. "The company is developing products for EV OEMs such as OLA Electric, Okinawa, Ather Energy, and TVS Motor among e-2W OEMs, and Bajaj Auto, M&M, and Tube Investment of India among e-3W OEMs. Gabriel to also benefit from new launches by Maruti Suzuki, M&M and Volkswagen in the SUV segment," the brokerage has said.

Gabriel India: Buy for a price target of Rs 217

Sharekhan has recommended buying the stock of Gabriel India for a potential upside to Rs 217. "We believe Gabriel's business performance will continue to outperform the industry, driven by its leadership position and preparedness to benefit from faster EV adoption. The stock is available at attractive valuations of 12.2x P/E multiple and 7.1x EV/EBITDA multiple its FY2025E earnings. We reiterate Buy rating on Gabriel with a 12-month price target of Rs. 217," the brokerage has said.

Devyani International

Another stock that Sharekhan is optimistic is the stock of Devyani International. "We interacted with the management of Devyani International (DIL) to understand the current business environment and medium-term growth outlook. The company saw good uptick in sales during the festive season but saw some slowdown in November. The company is optimistic about the strong sales in the last two weeks of December, which is one of the strongest months for the business (contributes ~40- 45% of Q3 sales). However, the management is confident of achieving consistent double-digit growth in long run with key drivers in place 1) improved footfalls through value offerings in KFC 2) Flavour fun Pizza aiding Pizza Hut to drive good average daily sales and 3) strong store additions. EBIDTA margins would remain flat in FY2023 while same is expected to improve in FY2024 and FY2025 with reduction in input cost inflation and better mix," the brokerage has said.

Price target of Rs 231 on the stock of Devyani International

According to Sharekhan, with aggressive store expansion plan, focus on increasing the delivery model and strong brands under kitty coupled with experienced parental background, Devyani International is well poised to achieve strong revenues and EBIDTA growth of 34% and 38%, respectively, over FY2022-25. Stock trades at 22.0x/17.1x its FY2024E and FY2025E EV/EBIDTA. "We maintain our Buy recommendation on the stock with an unchanged price target of Rs. 231 over the next 12 months," the brokerage has said.

Federal Bank: Sharekhan placed a buy call

On Midcap Stock Federal Bank, the brokerage has set an upside target of Rs 165. "The bank is targeting ~20% growth in loan book for FY2023E. Loan growth is expected to be broad-based across retail, agri, SME, and corporate segments. CASA and retail TD (less than Rs. 2 crore) constitute ~94% of total deposits. However, CASA ratio has been broadly flat over the past year at 36-37% as overall deposits and CASA growth was tepid at 11% y-o-y. Slower deposit growth was primarily on account of slower growth in NRE deposits. NRE deposits make up ~36% of overall deposits for the bank," the brokerage has said.

Disclaimer

The stock have been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.