One of India's top brokerage houses, Sharekhan has placed a "buy" on a number of stocks including Finolex Cables, Trent and Gland Pharma. Here are some of the reasons why the firm sees an upside potential in these stocks, with returns of as high as 20% in some of these shares.
The brokerage has placed a "buy" on the shares of Finolex Cables with a price target of Rs 623 on the stock, as against the current market price of Rs 521, which as an upside of almost 20% from the current levels.
"Finolex cables reported a strong quarter, driven by strong revenue growth along with stable y-o-y operating profit margins. Its standalone revenue grew by 41% y-o-y to Rs. 921.4 crore (better than estimates), led by higher volume growth across product categories.
We expect strong performance in FY2022 as the cables segment saw infrastructure investments; the communication cables segment has already seen good tendering in First quarter of FY2022 and scaling up of its FMEG business with improving demand and strong dealer network. The company's healthy operating cash flow generation, tight working capital management (policy of advance payments from dealers), and limited capex are expected to further build upon its cash reserves.
We retain our Buy rating on Finolex Cables with a revised target price of Rs 623, considering improvement in distribution efforts, which has led to pick up in volumes," the brokerage has said.
Sharekhan has also recommended to buy the stock of Trent. The company is a renowned retailer and operates Westside, Star Bazaar, a hypermarket chain and Landmark a family entertainment format. The company has set a price target of Rs 1,018 on the stock as against the current market price of Rs 901 on Trent.
"Trent is among India's strong branded retail players with a robust balance sheet, stable cash flows and one of the highest utilisation rates per store. Innovation in product portfolio, scaling up of supply chain, 100% contribution from own brands, aggressive store expansions and leveraging of digital presence will be near-term growth drivers. The stock is currently trading at 36 times its FY2023E EV/EBITDA. We maintain a Buy rating with a revised SOTP-based price target of Rs. 1,018," Sharekhan has said in its report.
Gland Pharma is another stock where the firm has a "buy" rating. The brokerage believes that Gland Pharma is expected to benefit from the emerging opportunities in the china markets, leveraging the strong muscle of its parent company which has an established presence in China.
"The arrangement with Russia's RDIF to manufacture 252 mn doses of Sputnik V Vaccine is a crucial point for the company as it has not only provided a new growth avenue but has also taken the company closer to its strategy to enter the lucrative biosimilar space. Structurally being an established player in the injectables, Gland is set to benefit from the rising preference for injectables. At the current market price, the stock is trading at a P/E multiple of 45.2x/29.4 times, its FY22E/FY23E earnings per share, thus pointing towards a further room for expansion. We have also introduced FY24E estimates in this note.
Strong domain expertise and growth prospects, a sturdy earnings track record and strong financials are the key positives for Gland. We retain a Buy recommendation on the stock with a revised target price of Rs 4,100," the brokerage has said.
The shares of Gland Pharma were last trading at Rs 3,402 on the BSE.
All of the above 3 stocks are picked from the research report of Sharekhan. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.