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3 Stocks To Buy Next Week That Can Gain Up To 30%
Markets have rallied a fair bit over the last 1-month and investors are now looking at stocks that can offer value. Here are 3-stocks that Prabhudas Lilladher analysts are betting on for good gains in the long-term and where investors can buy next week.
GAIL India
Analysts at Prabhudas Lilladher believe the stock of GAIL can generate returns of almost 30% from the current levels and have set a target price of Rs 180 on the stock. "GAIL reported strong Q1 results higher than our estimates. EBITDA was at Rs 43.6bn (PLe: Rs 37.9bn;+18% QoQ), due to record gas trading profits which made up for weak petrochemicals and lower LPG. PAT was at Rs29.1bn (PLe Rs27.6bn; +9% QoQ)," the firm has said in its report. Transmission volumes have also improved with recovery in downstream demand.
"GAIL's Q1 transmission volumes were higher at 109.5mmscmd, while gas sales volumes were at 101mmscmd (95mmscmd in Q4). Transmission EBIDTA for Q1 was at Rs10.9bn (Q4 Rs11.5bn) with blended tariffs of Rs 1,494tcm," the brokerage has noted.
Gas economics at GAIL improves
US gas economics improved, as gas trading EBIDTA was at Rs24.0bn (Rs17.8bn for Q4). Gas trading was the key earnings driver, due to sharp rise in spot LNG prices coming from geopolitical tensions.
Another reason for buying the stock of GAIL, according to Prabhudas Lilladher analysts is that going forward, sharp rise in US gas price to USD7.2/mmbtu in Q2 from USD4.1/mmbtu in FY22 will be compensated by recovery in spot LNG prices to over $40/mmbtu from FY22 average of USD30/mmbtu; will support trading earnings. "We increase our trading gains assumptions for FY23E to Rs44bn (Rs27bn earlier), while we leave margins unchanged for FY24E," the brokerage has said.
KEC International: Buy the stock for a price target of Rs 473
Another stock where the firm has a buy for gains is the stock of KEC International. The brokerage has set a price target of Rs 473 on the stock. "We remain long term positive on KEC given its strong order book, healthy execution momentum, strong domestic & international T&D outlook and strong growth visibility from non-T&D segments like Civil, Railways, Oil & Gas etc. Factoring in expected margins revival in coming quarters across key
segments and healthy tender pipeline, we revise our EPS estimates upwards by 4.8% for FY24E. The stock is trading at PE of 20.7x/12.2x FY23/24E. We maintain ‘Accumulate' rating with revised target price of Rs 473 (Rs 451 earlier) valuing it at PE of 13 times FY24E EPS," the brokerage has said.
Avenue Supermarkets: Buy the stock for the long-term
Prabhudas Lilladher analysts have set a price target of Rs 4636 on the stock of Avenue Supermarkets and have recommended buying the same for the long-term. According to the brokerage, D'Mart aims to open higher number of stores in any given year vs its previous year. D'Mart has created a team of people to seek suitable properties for expansion and is confident of the team's execution and efficiency.
"D'Mart has guided for 15% gross margins for FY23 and remain in that range of 15-16% going ahead as well. The management has also indicated that D'Mart will not shy away from slashing prices if the competition intensifies. The share of General Merchandise & Apparel rose by 50bps in FY23 to 23.4% but remains below 27-28% of pre-covid levels. Though the share is 23.4% for the whole year, the share was much in the recent quarters," the brokerage has said.
Price target of DMART stock at Rs 4636
"We remain positive on D'Mart Ready as sales double in FY22 (Rs1.4bn in FY19 to Rs16.6bn in FY22), operations extend to 12 cities and pick-up points increase to 519. Gross margins for D'Mart Ready contracted by 78bps in FY22vs FY21 and EBIDTA loss increased by just 35% as margins improved by 134bps," Prabhudas Lilladher has said.
The management seems more confident of the scalability of this format and its ability to curtail cash burn till it becomes profitable. We believe it will take 3-4 years for the business to breakeven at the EBITDA level
"As have been highlighted by us in our previous notes, D'Mart has begun to witness strong rebound in growth with zero covid restrictions and the momentum is expected to sustain. We believe D'Mart has a huge growth runway ahead given low probability of heightened competition in modern trade, 1200+ store potential in existing clusters (current stores 294) and
gradual scale up to D'Mart Ready. We estimate 39.7% PAT CAGR over FY22-
25 and retain BUY with a DCF based target price of Rs 4636," the brokerage has said.
