Trent, Motherson Sumi, and Sudarshan Chemical are among the stocks that ICICI Securities has advised for investment. Even though the index has reached a new high, the brokerage anticipates additional upside in the below stocks.
Buy Sudarshan Chemical, Says ICICI Securities
Sudarshan Chemical, which was founded in 1951, is a major participant in the Indian colour pigment sector, with a 35 percent market share, and is also one of the top four companies globally.
ICICI Securities believes that the revenue growth of specialty pigments is expected to be aided by upcoming capex. To improve the business's margin profile, a higher share of value-added business portfolio is required. Allocating additional FCF to organic and inorganic growth is anticipated to expand return ratios even more.
|Current Market Price||Rs 642|
|Target Price||Rs 795|
Sudarshan Chemical: Upcoming capex offers strong visibility ahead
ICICI Securities has retained a Buy on the stock with a revised price target of Rs795. "The stock appreciated at 30% CAGR in last three years. We retain BUY rating on the back of better growth outlook from speciality pigments Target Price and Valuation: We value Sudarshan Chemical at 25x P/E FY23E EPS to arrive at a revised target price of Rs 795/share.
Apart from Sudarshan Chemical, we also appreciate Neogen Chemical in our chemical coverage. Future revenue growth for Neogen Chemical is projected to be driven by more bespoke synthesis opportunities," the brokerage has said.
Buy Motherson Sumi: ICICI Securities
Motherson Sumi (MSS) principally services the global PV industry with essential product lines such as wiring harnesses, vision systems (mirrors), and plastic body parts.
According to ICICI Securities, they expect a 12.6 percent net sales CAGR from FY21 to FY23E, backed by a healthy expected revival in global OEM client volumes and a strong orderbook. Minimal EV risk, with EV share of orderbook at 25% (FY21). Focus on higher content per vehicle to gain traction. Margins seen rising to 10.8 percent by FY23E, backed by higher capacity utilisation at greenfield plants and gene.
|Current Market Price||Rs 225|
|Target Price||Rs 270|
Target price of Rs 270 on the stock
"MSS' stock price has grown at ~10% CAGR from ~Rs 145 levels in August 2016, widely outperforming the Nifty Auto index. We retain BUY rating on global PV premiumisation play, EV neutral products Target Price and Valuation: We value MSS at 30x P/E on FY23E basis for a revised target price of Rs 270 (earlier Rs 300).
Apart from MSS, we favour Apollo Tyres in our ancillary coverage.
India's CV resurgence is centred on debt reduction and greater return ratios. BUY with a target price of Rs 275," the brokerage has said.
Buy Trent, Says ICICI Securities
Trent is India's largest retailer, having 400+ outlets and a presence in a variety of consumer sectors. Trent is one of the fastest growing companies in our retail coverage universe, because to the inherent power of its brands (Westside, Zudio, Star, Zara) and expedited store openings.
ICICI Securities believes that for FY22-23E, we estimate 175 new stores between Westside and Zudio. Expect revenue recovery to pick up speed from H2FY22 onwards, with revenue and profits CAGRs of 17 percent and 36 percent in FY20-23E, respectively. The company wants to expand its sales at a CAGR of 25%+ in the long run.
|Current Market Price||Rs 947|
|Target Price||Rs 1100|
Buy Trent with target of Rs 1100
"Trent has been an exceptional performer with the stock price appreciating at ~36% CAGR in the last five years. We maintain our BUY recommendation on the stock Target Price and Valuation: We value Trent at Rs 1100 based on SOTP valuation.
Apart from Trent, we also like Aditya Birla Fashions (ABFRL). ABFRL has charted out growth strategies to become a ~US$2.8 billion entity (Rs 21000 crore) by FY26E, translating to 15% CAGR in FY20-26E. BUY with a target price of Rs 265," the brokerage has said.
The 3 stocks or mentioned above are taken from the brokerage report of ICICI Securities. Investments mentioned here need not be construed as investment advice, the company and the author shall not be responsible for any decisions taken based on the above report. Investors are advised to caution as the markets are now at a new historic peak.