3 Stocks To Buy From The Small & Midcap Space As Recommended By Sharekhan

Brokerage firm Sharekhan has come-out with a host of stock recommendations in the last few days. Here are 3 stocks where the brokerage has a buy call. Take a look.

Bajaj Consumer Care: Buy the stock with a price target of Rs 185

According to Sharekhan, Bajaj Consumer Care's near-term performance will be affected by slowdown in rural demand and spike in input prices. "However, we expect the momentum to shift with recovery in rural demand and stabilisation in input prices. We like Bajaj Consumer Care revamped focus on driving growth through new product launches, distribution expansion, and market share gains in the light hair oil category to drive sustainable earnings growth in the medium term. Further, the company is focusing on improving its position in the overall hair oil market with improved traction to new launches (currently 12% of portfolio). The stock has underperformed the broader indices and is trading at discounted valuations of 16.6x and 13.1x its FY2023E and FY2024E earnings, respectively. We maintain our Buy recommendation on the stock of Bajaj Consumer Care with a revised price target of Rs. 185," the brokerage has said.

Bajaj Consumer Care: Revision in estimates

Sharekhan has revised its earnings estimates for FY2023 and FY2024 to factor in lower-than-earlier expected OPM (affected by higher input cost inflation and increased advertisement spends to support brands). "Management expects OPM to improve to 20% in the medium term with double-digit revenue growth. We have introduced FY2025 earnings estimates through this note," the brokerage has said.

Trent: Buy with a price target of Rs 1750

Trent posted mixed performance in Q2FY2023. Online sales and emerging categories are seeing strong traction and now contribute ~6% and 15% of Westside's revenue and Standalone revenue, respectively. Innovation in the product portfolio, scaling up of the supply chain, 100% contribution from own brands, aggressive store expansions and leveraging on digital presence will be key growth drivers in the medium term. "We expect Trent's revenues and PAT to grow at a CAGR of 38% and 65% over FY2022-25E. The stock is trading at 32.5x/25.5x its FY2023E/24E EV/EBITDA. We maintain a Buy recommendation on the stock with a revised SOTP-based price target of Rs. 1,750," Sharekhan has said.

Buy Gateway Distriparks stock for a price target of Rs 92

According to Sharekhan, Gateway Distriparks is slated to benefit from sustained EXIM growth and benefits accruing from the commissioning of DFC going ahead. It has shown healthy operational profitability leading to healthy cash flow generation, which is expected to sustain going ahead. Further, its greenfield expansion at Jaipur along with the acquisition and scale of Kashipur ICD, would aid in double-digit volume growth for Rail over the next two to three years. Its balance sheet leverage is expected to remain under control owing to strong operating cash flow generation over the next two years. "We introduce our FY2025E earnings in this note. We upgraded the stock to Buy with a revised price target of Rs. 92, factoring in an upward revision in estimates, rolling forward our valuation multiple to September 2024 earnings and lower leverage," the brokerage has said.

Marginally higher revenues

Gateway Distriparks reported marginally higher than expected consolidated revenues and OPM for Q2FY2023. Consolidated revenues were up 7% y-o-y to Rs. 359 crores led by healthy performance in rail division (revenues up 7% y-o-y aided by 10% y-o-y rise in volumes). CFS division reported 2% y-o-y decline in revenues with volume decline of 13% y-o-y owing to non-renewal of O&M for Punjab Conware CFS (adjusted volume growth of 16% y-o-y). Consolidated OPM at 26.7% was better than estimated with rail and CFS EBITDA/TEUs (including other income) staying healthy at Rs. 9500/TEU and Rs. 2200/TEU, respectively