6 Stocks You Cannot Miss To Buy From Consumer Discretionary Sector

Sharekhan has recommended investors to buys stocks of these 6 companies from consumer discretionary sector. The brokerage recently shared a report about consumer discretionary companies performance during the quarter and based on that has recommended companies that show a potential upside of upto 24.56%. Here are the details.

The companies are Trent, Relaxo Footwear, Bata, Titan, Arvind, and Shoppers Stop. According to the report, "December 2023 was a mixed quarter for the consumer discretionary sector with branded apparel and footwear companies witnessing slowdown in consumption post the festive season, thereby impacting same-store sales, while strong room demand boosted the performance for companies under coverage. Q3FY2023 was yet another weak quarter for textile companies as a sustained slowdown in demand from export markets affected revenue performance, while higher input prices and lower operating leverage continued to impact margins"

In terms of revenue and EBIDTA margins, brokerage reported that "branded apparel/retail grew by 19% (largely led by store addition), while EBIDTA margin of most companies remained lower y-o-y due to normalisation of rental cost and higher advertisement spends. Sharekhan's branded apparel, retail, and footwear universe registered y-o-y revenue growth of 18.8% in Q3FY2023 (three-year CAGR of 17.4%), driven by aggressive store additions, while the same-store-sales moderated due to weak consumer sentiments (especially after the festive season), resulting in lower same store sales for retail companies. Trent registered industry outperformance with revenue growth reported at 61% y-o-y, aided by 17% Footwear companies - Bata. India and Relaxo Footwear were impacted by the slowdown in the mass category and reported muted performance in Q3FY2023. EBIDTA margin of our branded apparel, retail, and footwear universe was down by 351 bps y-o-y mainly on account of normalisation of rental cost, increased advertisement spends, and higher input prices."

"With a revamped business model focusing on digitisation, giving more thrust on private brands, expanding portfolio with fast-growing athleisure/branded ethnic wear, branded apparel and retail companies are expected to post consistent growth in the long run."

Company name	Target Price (Rs/share)	Potential Upside (%)	Current Market price (Rs/share)	Market capitalisation (Rs n Crore)
Trent Limited	1,550	14.81%	1305.10	46,394.67
Bata India Limited	1,775	24.56%	1421.60	18,271.48
Relaxo Footwear	930	18.62%	775.85	19,312.93
Titan Company Limited	2950	21.70%	2399.65	2,13,037.61
Shoppers Stop Limited	773	20.22%	650.05	7,127.66
Arvind Limited	95	17.28%	79.95	2085.88

Disclaimer:

The stocks have been picked from the brokerage report of Sharekhan, 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.