Retail investors, particularly in the broader market, continue to buy aggressively in the market, oblivious to the market's exorbitant values. Analysts predict that the equity market will maintain its bullish trend as economic activity picks up, with Covid cases remaining below 30,000, and vaccination rates picking up. ICICI Securities, a renowned brokerage firm in the country, has recommended the stocks listed below for future gains.
3 Stocks To Buy For Potential Gains Up To 52%, Says ICICI Securities
|Company||Recommendation||Target Price||Upside Potential|
|Time Technoplast||BUY||Rs 100||25%|
|Sagar Cements||BUY||Rs 390||26%|
|Triveni Engineering||BUY||Rs 270||52%|
Buy Time Technoplast with 25% potential gain
ICICI Securities is bullish on the Time Technoplast for gains of 25% as it has set the target price of Rs 100. With 34 manufacturing locations in 11 countries, Time Technoplast is a prominent manufacturer of polymer-based packaging and composite products.
Revenue growth led by easing of lockdown restrictions
As per the brokerage, increased utilisation, incremental demand for composite goods, and better EBITDA margin are driving revenue and PAT CAGRs of 17 percent and 50 percent in FY21-23E, respectively. According to the company's management, demand for type IV composite cylinders has surged, and revenue potential in this category might be as high as Rs 2,200 crore each year.
"Time Technoplast's share price has grown by ~2.3x over the past year. We maintain our BUY rating on the stock Target Price & valuation: We roll over our valuation on FY23E and value Time Technoplast at Rs 100 i.e. 5x EV/EBITDA on FY23E EBITDA.
By FY25, the business intends to generate revenues of Rs 5000 crores. During the same period, the value-added product (20 percent of revenue) will witness a 16 percent CAGR", the brokerage has said.
Buy Sagar Cements with potential upside of 26%
Sagar Cement's shares were divided on August 17, 2021 (ex-date) as a result of board and shareholder approvals issued on July 1, 2021, and July 28, 2021, respectively, for sub-division of shares.
"We expect revenue and EBITDA CAGR of 30.8% and 27.3%, respectively, in FY21-23E. At the current market price of Rs 311/share, the stock is still trading at attractive valuations of 6.4x FY23E EV/EBITDA leaving decent scope for further upside. Hence, our target price has also been revised upwards to Rs390/share (i.e. by raising multiple to 8.0x FY23E EV/EBITDA) vs. earlier target price of Rs 340/share. Accordingly, we continue to reiterate our BUY rating on the stock," the brokerage said in its research report.
ICICI Securities recommend a ‘BUY' with a target price of Rs. 390, implying an upside of over 26%.
Buy Triveni Engineering with a upside potential of 52%
ICICI Securities recommends a ‘Buy' on the stock of the Triveni Engineering company with a potential upside of 52%.
The company reported significant earnings growth. EBITDA was Rs. 149.6 crore, down 3.9 percent year on year, with 13.5 percent margins. With decreased tax provisioning, PAT was at Rs 92.3 crore, up 10.2 percent YoY.
Distillery expansion, surging sugar prices to drive PAT
"TEL's share price has gone up 3.2x in the last five years. We expect 2.1x increase in distillery volumes to boost earnings with CAGR of 24.2% during FY21-24E. We continue to maintain our BUY rating on the stock Target Price and Valuation: We maintain our target price on the stock at Rs 270, valuing the business at 13x FY23 PE.
With distillery capex, TEL would be able to increase its ethanol volumes 2.1x to 22 crore litre by FY24. Distillery sales may witnessed 35% CAGR to Rs1248.6 crore in FY21-24E, which would be 25% of total revenues, the brokerage said in its research report.
The stocks listed in the article are taken from the brokerage report of ICICI Securities and need not be construed as investment advice. The company and the author will not be held responsible for any losses on any investment call taken based on this report.