3 Stocks To Buy: Motilal Oswal Gives A Buy On 2 Stocks & A Neutral View On 1

Motilal Oswal recommends investors three stock of companies. The brokerage asks investors to buy stocks of Mahindra CIE and NMDC Limited, at the same time it has a neutral view on Deepak Nitrite Limited. Here are the details.

Neutral View on Deepak Nitrite, with a price target of Rs 1,890 per share

Deepak Nitrite Limited, a Gujarat based company is a mid cap company that is specialised in manufacturing chemicals in India. The company was incorporated in March 1970. It has 2 manufacturing facilities in Gujarat, 2 in Maharashtra and 1 in Telangana. The current market capitalisation is Rs 24,632.58 crore. The current market price of the stock is Rs 1806. per share.

"Despite a capex of Rs 20 billion over the next three years, the compay is expected to turn net cash positive by FY24 with free cash flow generation of Rs 16.5 billion over FY23-25. Return ratios are expected to be at 24-27%, significantly lower than that of FY22. The company is on an aggressive path for backward as well as forward integration. However, the complete basket of products is commodity and the current valuation appears rich. We maintain our Neutral rating with a price target of Rs 1,890, valuing Deepak Nitrite at 20x Dec'24E EPS of Rs 95." as per the brokerage report

Buy shares of NMDC, with a target price of Rs 155 per share

NMDC, a Navratna public sector large cap company the Ministry of Steel, Government of India is the single largest producer of iron ore in India. Its current market capitalisation is Rs 34,302.74 crore. NMDC Ltd was established on November 15 1958 as a government company with the name National Mineral Development Corporation Pvt Ltd. The current market price of NMDC Limited is Rs 112.15 per share, which is up down by 1.02% on intraday basis.

Motilal Oswal has stated a potential growth of up 32% from the stock of the company. The brokerage feels the demand for ore will increase and NMDC Limited is well placed to capitalize growth. "Considering the recent hikes in iron ore prices in international markets and strong demand for iron ore in the domestic market, we expect further price hikes in iron ore in the coming weeks. 4Q is a stronger quarter with pickup in heavy capex infrastructure and construction activities, which will lead to higher steel consumption, and consequently, drive up iron ore demand.With export of steel and pellets picking up pace and no drag from the steel business, we expect NMDC to continue its volume growth journey. We reiterate our BUY rating on the stock with a target price of Rs 155 (5x EV/EBITDA). We believe NMDC is well placed to capitalize on the growth opportunity ahead."

Buy shares of Mahindra CIE, with a target price of Rs 450 per share

Mahindra CIE Automotive Limited, a mid cap is a subsidiary company of the CIE Automotive group of Spain which specialises in supplying components and sub assemblies for the automotive market. The Indian arm is a multi-technology automotive components supplier. The current market cap of the Mahindra CIE Automotive Limited is Rs 16,388.41 crore and its stock price is trading 11.77% higher on intraday basis to Rs 433 per share.

According to Motilal Oswal the company stock price can grow by up to 16%. The brokerage feels that Mahindra CIE Autommotive Limited' growth trajectory is on track. "Given the moderation in commodity costs and partial pass-through of energy costs, we expect margins in both geographies to improve from here on. The company's growth story is on track, driven by its organic initiatives (new products and customers in the India business). This, coupled with cost-cutting measures in both India and the EU, is expected to drive margin expansion going forward. Any significant order wins or growth in the EV portfolio can drive a re-rating on the stock. We increased our CY23/CY24 estimate by 4%/1% to reflect improvement in the EU business. The stock trades at 16.4x/14.1x CY23E/CY24E consolidated EPS, respectively. We reiterate our Buy rating with a price target of Rs 450 (~16x Mar'25E consolidated EPS)

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies and 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 consult with certified experts before making any investment decision.