Stocks To Buy: 3 Consumer Durables Stock Where PL Is Upbeat

Broking firm Prabhudas Lilladher has recommended buying the stocks of CC Cons. Elect, Havells India and Voltas in its latest report. Here are some of the reasons the brokerage has a "buy" on these stocks.

Optimistic view of the long-term

The brokerage has resumed coverage on consumer durables sector with optimistic view for
long term, while near term slowdown prevails. In 3QFY23 companies are expected to register sales growth of 5.2% YoY with EBITDA/PAT decline of 4.0%/ 6.8% YoY.

"The sector has huge opportunity given low penetration and consolidation in the market, which we believe, will increase long-term demand. However, demand softness was witnessed in a seasonally weak quarter, due to winters affecting both RAC and fan sales along with no demand uptick in festive season. Rural demand has been poor, due to inflationary environment and outlook remains weak," the brokerage has said.

Buy Crompton Greaves Consumer Electricals stock, says Prabudas Lilladher

The brokerage has resume coverage on Crompton Greaves Consumer Electricals (CROMPTON) with a 'BUY' rating at target price of Rs 435. "We remain structurally positive on CROMPTON for a longer term given 1) market share gains in its core categories of Fans and Pumps 2) sustained investments in LT initiatives and cost leadership (brand building, GTM, innovation, business processes & teams) 3) well defined plan of entering and scaling up appliances business (through Butterfly) and new categories (Water Heaters, Air Coolers, Mixer-Grinders) and 4) strong balance sheet (Sep22 net debt/equity: 0.2x). We estimate Sales/ EBITDA/PAT CAGR of 17.4%/16.0%/10.9% over FY22-25E (including Butterfly). We value the stock at 36x FY25 EPS. The stock is currently trading at 39.7x/33.8x/28.3x FY23/24/25 earnings. Resume coverage with 'BUY' rating," the brokerage has said.

Buy Havells india, says PL

Prabhudas Lilladher has also resumed coverage on Havells India (HAVL) with a 'BUY' rating at DCF based target price of Rs1442 (implied P/E 47x FY25E). "We are optimistic on the company's long term growth prospects given 1) diverse product portfolio covering 70% of household electric sockets, 2) amongst top 3 players in most product categories 3) focus on innovation and to continuously drive brand affinity and 4) expanding distribution reach with focus on untapped rural market (through rural vistaar project covered 40,000 outlets in FY22 and
planned opening of >1000 Utsav stores by FY23). We estimate Sales/EBITDA/PAT CAGR of 15.1%/13.4%/17.0% over FY22-25E. Resume coverage to 'BUY'," the brokerage has said.

Disclaimer

The above-mentioned information is purely informational and is taken from the report of Prabhudas Lilladher 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. Goodreturns.in advises users to check with certified experts before taking any investment decision.