9 Quality Stocks From Consumer Sector Showing Upside Potential, Motilal Oswal Says Buy

Motilal Oswal lists 9 high quality stock to buy in its December 2022 Result Preview report published in January 2023. These stocks are Dabur Ltd., Emami Ltd., Godrej Consumer Products Ltd., Hindustan Unilever Ltd., Indigo Paints, ITC Ltd., Marico Ltd., Tata Consumer Products Ltd., and Varun Beverages Ltd.Here are the key highlights about the stock according to the brokerage firm:

Stocks, Rating, Target Price

Sr.No.	Name of stock	Rating	Target Price (Rs.)
1	Dabur	Buy	650
2	Emami	Buy	520
3	Godrej Consumer	Buy	1035
4	Hindustan Unilever	Buy	2940
5	Indigo Paints	Buy	1550
6	ITC	Buy	405
7	Marico	Buy	595
8	Tata Consumer Products	Buy	940
9	Varun Beverages	Buy	1550

1. Dabur India Ltd.

The stock of Dabur is currently trading at Rs 552.80/share on NSE. Buy for a target price of Rs 650/share, says the brokerage. Stock is likely to give up to 18% returns if purchased at the current market price. The stock has given 54.29% highest return in the last 5 years. It is a large-cap company with a market capitalisation of Rs 98,439.18 crore.

According to the brokerage, Expect 3% YoY volume growth in 3QFY23. Expect GM pressure to ease QoQ but YoY pressure to continue on GM and EBITDA margins. Commentary on rural demand and international business a key monitorable. Demand outlook for Herbal, Immunity products and juices to be watched out for.

2. Emami Ltd.

The stock of Emami is currently trading at Rs 431.70/share on NSE. Buy for a target price of Rs 520/share, says the brokerage. Stock is likely to surge up to 21% from its current level. The stock has given 22.94% highest return in the last 3 years. It is a midcap company with a market capitalisation of Rs 19,042,24 crore.

According to the brokerage, Expect volumes to decline 4% YoY in 3QFY23 due to weak winter and rural sales. Expect 90bp/410bp YoY decline in GM/EM from a high base. Watch out for commentary on the outlook on pain management and healthcare range. Outlook for volume growth and growth in rural India are the key monitorables.

3. Godrej Consumer Products Ltd.

The stock of Godrej Consumer Products is currently trading at Rs 924.90/share on NSE. Buy for a target price of Rs 1035/share, says the brokerage. It has likely to give up s the potential to 12% returns. The stock has given 24.43% highest return in the last 5 years. It is a midcap company with a market capitalisation of Rs 19,042,24 crore.

According to the brokerage, Sharply lower palm oil prices to lead to sequential GM/ EM improvement but YoY pressures to continue. Commentary on new product launches a key monitorable. Watch out for outlook in Household Insecticides category. Watch out for the commentary on GAUM and Indonesia business.

4. Hindustan Unilever Ltd. (HUL)

The stock of HUL is currently trading at Rs 2,645.50/share on NSE. Buy for a target price of Rs 2,940/share, says the brokerage. Share is likely to give 12% returns on investments. The stock has given 28.38% highest return in the last 3 years. It is a large-cap stock with a market capitalisation of Rs 6,21,925 crore.

According to the brokerage, Expect 5% YoY domestic volume growth. Watch out for outlook on the Nutrition business and rural v/s urban demand. GM to contract 500bp YoY, led by higher material costs; GM to expand sequentially. Key monitorables: Outlook discretionary, and out-of-home demand.

5. Indigo Paints Ltd.

The stock of Indigo Paints is currently trading at Rs 1,265.50/share on NSE. Motilal Oswal has a Buy on the stock with a target price of Rs 1,550s/share. Share is likely to give 23% returns on investments. It was listed on 2 February 2021. Since its listing, it has given 59.42% negative returns. It is a small-cap stock company with a market capitalisation of Rs 6,037,.93 crore.

According to the brokerage, Expect 20 % sales growth, supported by festive demand and price hikes. Watch out for comments on demand trends. Expect GM to improve QoQ due to the full effect of price hikes. Commentary on progress on expansion to larger cities.

6. ITC Ltd.

The stock of ITC is trading at Rs 330/share on NSE. Buy for a target price of Rs 405/share, says Motilal Oswal. Share is likely to give 23% returns if purchased at the current market price. The stock has given a maximum 46.95% return in the last 1 year. It is a large-cap stock with a market capitalisation of Rs 4,10,288 crore.

According to the brokerage, Expect 12% volume growth in Cigarettes with 3-year average volume growth in mid-single digit. Expect GM to remain flat sequentially while improving 560bp YoY. Watch out for Hotels revenue growth and profitability as leisure and business travel return to normalcy. Outlook on the Agri, paper & packaging and Hotel businesses a key monitorable.

7. Marico Ltd.

The stock of Marico is trading at Rs 504.90/share on NSE. The brokerage has assigned a target price of Rs 595/share on the stock with a "Buy". Stock is likely to give 18% returns if purchased at the current market price. The stock has given a maximum 62.46% return in the last 5 years. It is a large-cap stock with a market capitalisation of Rs 65,359 crore.

According to the brokerage, Expect volumes to grow 6% YoY off a low base. Rural slowdown could affect domestic performance. Expect a YoY expansion in GM on lower RM prices. Outlook on Saffola edible oils and digital first brands is a key monitorable.

8. Tata Consumer Products Ltd.

On NSE, the stock of Tata Consumer Products is trading at Rs 745.10/share. Motilal Oswal has assigned a Buy on the stock with a target price of Rs 595/share. Stock is likely to give up to 27% returns if purchased at the current market price. The stock has given the highest 137.63% return in the last 5 years. It is a large-cap stock with a market capitalisation of Rs 68,664.82 crore.
According to the brokerage, Expect revenue for the India Foods business to grow by 27% YoY. Expect Nourishco to continue its strong performance. Tea prices and volumes to be a key monitorable; Expect Tea volumes to decline by 2% YoY. Expect International beverages to be muted due to inflationary environment.

 

9. Varun Beverages Ltd.

On NSE, the stock of Varun Beverages is currently trading at Rs 1,198.60/share. With a target price of Rs 1,550/share, the stock could give up to 30% return. The stock has given 512.86% highest return in the last 5 years. It is a large-cap stock with a market capitalisation of Rs 77,653.66 crore.

According to the broekrage, Expect CSD sales volumes to grow 21% YoY in 4QCY22. Expect EBITDA margin to improve to ~13% v/s 12% in 4QCY21. Update on volume mix; water mix is higher generally in 4Q. Update on market penetration of Sting and Mountain Dew Ice and new product launches.

Disclaimer

The stocks have been picked from the brokerage report of Motilal Oswal. Greynium Information Technologies, 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.