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Buy These 2 Stocks For Good Gains, Says Broking Firm Sharekhan

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Markets are expected to on a roller-coaster for yet another week, thanks to events like the RBI's Monetary Policy Committee meeting and rising covid cases. Most of the stocks are likely to be volatile, especially those from the banking sector. Here are a couple of stocks recommended by broking firm Sharekhan for long-term investors.

 

Buy Nestle India: Sharekhan

Buy Nestle India: Sharekhan

Broking firm Sharekhan has said to buy the stock of FMCG major Nestle in its latest report. According to the broking firm, Nestle India's Q2CY2021 performance was mixed with revenues growing 14%, while operating profit margins was flat at 24.4% (lagging its own as well as the street's expectation of 25%).

Current market price Rs 17,726
Target price Rs 20,435

Expectations of financials in years to come by Sharekhan

Calendar year 2021 Calendar year 2022
EPS Rs 260.6 Rs 303.8
Price to earnings 69.1 59.3
Price to book 73.5 65.8
RONW % 114.1 117.1
Target price of Rs 20,345 on Nestle India
 

Target price of Rs 20,345 on Nestle India

According to Sharekhan, the domestic business of Nestle India maintained double-digit growth momentum at 13.7%, across all key categories seeing an improvement in sales.

"We expect Nestle India to take prudent price hikes and focus on efficiencies to mitigate the impact of input cost inflation in the quarters ahead. The company has invested Rs. 1000 crore of the planned investment of Rs. 2600 crore (including the capital expenditure) for improving growth prospects," Sharekhan has said.

"The company will transfer Rs. 837.4 crore banked in its general reserve to retain earnings with effect from January 1, 2022 that can be utilised for higher payouts to shareholders in CY2022. Stock trades at 59.3/50.7x its CY2022/23E earnings. We maintain a Buy with a revised price target of Rs. 20,435," the brokerage has said.

Shares of Nestle were last seen trading at Rs 17,725 on the NSE.

Buy Dalmia Bharat stock, says Sharekhan

Buy Dalmia Bharat stock, says Sharekhan

Another stock that Sharekhan has a buy on is the stock of Dalmia Bharat. The brokerage sees a decent upside in the stock of this cement player.

Current market price Rs 2,138
Target price Rs 2,410

Expectations of financials of Dalmia Bharat (Sharekhan estimates)

FY 2021 FY 2022
EPS Rs 53.6 Rs 48.1
Price to earnings 40.0 44.7
Price to book 73.5 65.8
RONW % 114.1 117.1

Price target of Rs 2,410 on the stock

Price target of Rs 2,410 on the stock

According to Sharekhan, Dalmia Bharat has addressed its medium and long term growth plans through its decadal capital allocation plan which would ensure more predictable, sustainable and profitable growth path going ahead.

"The plan also addresses key issues such as transparency, corporate governance, treasury allocation and divestment of non-core assets which are key positive takeaways. The company would be focusing on achieving 14-15% RoCE over next few years and maintain balance sheet quality. We have marginally lowered our estimates for FY2022-FY2023 factoring lower Operating Profits Margin.

Dalmia Bharat stock is currently trading at an EV/EBITDA of 13x/11x its FY2023E/FY2024E earnings, which we believe leaves room for further upside considering its strong earnings growth trajectory over the next three years. Hence, we retain Buy with a revised price target of Rs 2,410," the brokerage has said.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor before taking any decision.

Story first published: Monday, August 2, 2021, 8:01 [IST]
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