Broking firm Sharekhan has listed the stock of Tata Consumer Products and Schaeffler India Ltd as buys in its research reports. The firm sees good upside targets on the stocks.
Buy the stock of Tata Consumer Products, says Sharekhan
Sharekhan has a buy call on the stock of Tata Consumer Products with a price target of Rs 960, as against the current market price of Rs 866.
"Domestic raw tea prices are stabilising and declined by 35% from their high in August-September 2020. Stable raw-material prices, price hikes in the beverages portfolio, and synergistic benefits from acquired companies would help in better margins from Q3.
Tata Consumer Products is progressing well on strategic priorities of increasing the direct coverage (targets 1mn outlets by Sept, 21), adding innovation on various platforms/markets (targets 3.5% of sales in FY22), and embed digitalisation across the value chain," the brokerage has said.
Tata Consumer Products: Expanding its reach
According to Sharekhan, the company launched 14 products in FY2021 and targets to launch 50 new products in FY2022.
"Tata Consumer Products presence has expanded to 0.82 million outlets, rural feet on street grew by 3x, and contribution from e-commerce has gone upto 7.5%. Direct distribution reach is expected to reach 1 million outlets by September 2021 and will continue to increase in the coming quarters. TCPL targets to achieve high single digit volume growth in the domestic branded tea business and double-digit volume growth in the foods business in the medium term. Out-of-home businesses such as NourishCo and Tata Starbucks registered much better performance than the first wave in Q1FY2022," the brokerage has said.
"We maintain Buy on Tata Consumer Products with a revised price target of Rs. 960. With strong growth prospects and sturdy cash flows (FCF/EBIDTA of 100%), TCPL is one of our top picks in the FMCG space," Sharekhan has said.
Schaeffler India Ltd: Buy says Sharekhan
From the auto space, Sharekhan has a buy on the stock of Schaeffler India Ltd. "We remain positive on Schaeffler India Limited, driven by a strong outlook for its automotive, industrial businesses, and an improvement in content per vehicle. The company's management has given a cautious positive outlook during the Q1FY2022 conference call, as the company expects volumes to recover, as COVID-19 wave subsides and consumer sentiments improve. Schaeffler India Limited would benefit from the industrial and automobile aftermarket segments, strong growth traction in export markets, and better prospects for the bearings business," the brokerage has said.
Schaeffler India Ltd: Price target of Rs 8,000
According to Sharekhan, Exports is a high-growth area for Schaeffler India Ltd, given the pedigree of its parent company. Increasing localisation and focus on market share gains would help revenue and EBITDA growth. We retain Buy on Schaeffler India Limited with a revised price target of Rs. 8,000, led by a strong outlook for its automotive and industrial businesses and an upgrade in earnings estimates," the brokerage has said.
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