3 Stocks To Buy Today As Recommended By Sharekhan For Long-term Investors

Broking firm Sharekhan has recommended buying the stocks of HDFC Bank, APL Apollo and Relaxo Footwear. Here are some of the reasons why the brokerage is upbeat on the stocks of these companies.

Relaxo Footwear: Corrective pricing action

Sharekhan's analysts interacted with Sushil Batra - CFO and Vikas Tak - Company Secretary, of Relaxo Footwear (Relaxo) to understand the current business environment and future growth prospects of the company. "The company has undertaken corrective pricing actions to help revive sales volumes, which were affected by raw material inflation, consumer demand slowdown and a hike in the footwear GST rate to 12% from 5%. After key input prices corrected, Relaxo undertook a price cut of 12-15% in key value-for-money brands such as Relaxo, Bahamas and Flite to reduce the prices and make it competitive with unorganised players," the brokerage has said.

Relaxo Footwear: Target price of Rs 1185 on the stock

Sharekhan has retained buy with revised price target of Rs. 1,185 on the stock. "Relaxo is well poised to achieve revenue and earnings CAGR of 14% and 22%, respectively, over FY2022-FY2025E, with key levers expected to drive consistent growth. The company has a strong, debt-free balance sheet with good cash generation ability. The stock currently trades at 80.6x/59.6x its FY2024E/FY2025E earnings. We have introduced FY2025E earnings through this note. We maintain a Buy recommendation on the stock with a revised price target of Rs. 1,185 (rolling it forward to October 2024 earnings)," the brokerage has said.

APL Apollo Tubes

According to Sharekhan, the company is well placed to benefit from rising application of steel tubes: APL's management expects the primary structural steel tube market to reach 6mtpa by FY25 (versus 3 mtpa currently) as volume would shift towards primary market from secondary as price gap has narrowed down significantly. "Also, steel tubular technology is gaining acceptance in construction projects (net benefit of +1.5% project IRR and +2% additional carpet area). With exiting capacity utilisation of 79% (based on H1FY23 volume) and upcoming 1.5 mtpa new Raipur plant, APL is well placed to capture growth opportunities as primary structural steel tube market is expected to almost doubles in size and rising applications of steel tubes for construction across airports, warehouses, high-rise buildings among others. We believe that APL is all set to consistently expand its market share," the brokerage has said in a report.

Buy APL Apollo with a price target of Rs 1275

Sharekhan expects APL to sustain a high earnings growth momentum (expect EBITDA/PAT CAGR of 31%/33% over FY22-25E) supported by robust double-digit volume growth and margin expansion. "Hence, we maintain a Buy rating on APL Apollo with a revised price target of Rs. 1,275 (increase in price target reflects rollover of PE multiple to October 2024 EPS)," Sharekhan has said in its report.

Buy HDFC Bank with a price target of Rs 1800

Sharekhan has also recommended buying the stock of HDFC Bank with a price target of Rs 1800 on the stock.

"We believe HDFC Bank is on an accelerated growth path with strong advances growth, led by retail, MSME, and corporate segments along with healthy low-cost deposit mobilisation. The bank's continuous building up of its digital capabilities and franchise network is likely to bode well for growth going ahead. The stock has underperformed its peers in the past 12 months. The bank is well capitalised and has the ability to manage its asset quality across cycles and deliver superior return ratios irrespective of economic cycles and reap opportunities from any revival in the economy going ahead. The stock is currently trading at 2.7x and 2.3x its FY2023E and FY2024E core ABV, respectively," the brokerage has said.