Sharekhan has recently come out with its report on the Q1FY2022 Results Review in which it has done a thorough sectoral review. The broking firm has also reviewed the performance of the consumer discretionary space more popularly called the retailing space. It has highlighted 7 stocks to buy from the space. We would advise some caution as well as the markets have run-up sharply.
Recovery in the retail space
Recovery in demand was reported since June with reduction in cases and gradual opening up of the economy, says Sharekhan. "Branded Apparel companies such as Trent, Shoppers Stop Limited (SSL), and Aditya Birla Fashion & Retail (ABFRL) witnessed a sequential dip of 55-70% whereas revenues of footwear companies like Bata and Relaxo Footwear declined by 35- 55% q-o-q.
In the jewelry segment, Titan registered a 75% y-o-y revenue growth on low base of Q1FY2021," the brokerage has noted.
According to Sharekhan the footwear companies like Bata and Relaxo Footwear declined by 35- 55% q-o-q. In the jewelry segment, Titan registered a 75% y-o-y revenue growth on low base of Q1FY2021.
Top 7 stocks buys of sharekhan from the consumer discretionary space
Sharekhan prefers companies with a pan-India presence, strong brand recognition and a stable balance sheet. Thus, it likes Trent and Aditya Birla Fashion and Retail, which are likely to see faster recovery post normalisation of the pandemic.
"Aditya Birla Fashion and Retail will benefit from strong traction to new launches, increased contribution from private labels, market share gains from unorganised players and increased contribution from online sales while aggressive store expansions and leveraging on digital presence will aid growth for Trent. Strong brand recognition in the jewellery space, balance sheet strength, and good return ratios make Titan one of the better plays in the retail space. We like KPR Mill and Himatsingka Seide in the textiles space," the brokerage has said.
KPR Mill, Himatsingka Seide, Jubilant FoodWorks among the top buys
According to Sharekhan, KPR Mill is expected to perform well due to an increase in garmenting capacity, improving sales of high-value products in the yarn/fabrics division and improving growth prospects in export markets coupled with value addition by sugar business.
"Himatsingka Seide is leveraging upon its experience in US and a vertically integrated business model to strengthen its presence in Europe and the Middle East, this along with capacity expansion will boost the company's performance in the medium term. In the QSR space, we like Jubilant FoodWorks as it is expected to gain from a shift towards organised players, frequent ordering, better penetration of delivery model in tier 2/3 towns, and widening of customer base," the brokerage has said.
Preferred stock picks
Preferred Picks: Titan, KPR Mill, Himatsingka, Jubilant Foodworks, Trent and SP Apparels, Aditya Birla Fashion and Retail.
The above stocks are based on the report of Sharekhan. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor.