Two Stocks From Miscellaneous Sector Sharekhan Recommends To Buy

Sharekhan recommends buying shares of Dhampur Bio Organics and PI Industries. The brokerage believes that the stock price of both companies will grow significantly. Both the companies are from a miscellaneous sector as per the stock broking firm.

1. PI Industries Limited
PI Industries Limited is a wholly owned subsidiary of PI Health Sciences Limited (PIHSL). It has recently announced the acquisition of a 100 per cent stake in four pharma companies -Therachem Research Medilab (India), Solis Pharmachem, certain identified assets of TRM US, and Archimica.

The total investment for these acquisitions is roughly around $83 million ( or Rs. 923 crores assuming Rs/USD rate of Rs 82) and puts to rest PI's long pending pharma foray concern and removes key overhang issue of cash utilization (net cash stood at Rs. 2,897 crores as of December 2022).

'Buy' shares of PI Industries
As per Sharekhan's research report, PI's pharma foray would help the company diversify its earnings stream and drive the medium to the long-term growth of the company. Even post recent acquisitions, PI would have a strong net cash position of Rs 1,973 crore to pursue both organic and inorganic growth opportunities.

The brokerage suggests buying shares of PI "We expect PI's revenue, EBITDA, and PAT to post a strong CAGR of 21%, 25%, and 27% respectively over FY2022-FY2025E, led by robust CSM order book of $1.8 billion, ramping-up of nine new products commercialized in the last one year and launch of new products in FY2023. Growth would further improve post-integration of TRM and Archimica's acquisition. We maintain our Buy rating on PI with an unchanged price target of Rs. 4,200".

Share price movement
The current market price of PI Industries stock closed at Rs 3451.65 per share, it was up by 0.27 per on an intraday basis. The share price rallied by around 35.1 per cent in the last one year while over three years it has massively surged by nearly 125.36 per cent.

2. Dhampur Bio Organics
Dhampur Bio Organics Ltd is the demerged entity of Dhampur Sugar Mills. It got listed on the bourses in September 2022. It posted mixed Q4FY2023 results with revenue growth of 59% y-o-y to Rs 803 crore while a 708 bps y-o-y decline in the operating profit margins and higher interest expenses led to 3% y-o-y decline in adjusted PAT to Rs. 68.7 crores.

The company's sugar business sales grew by 66% y-o-y to Rs 815.9 crore led by a 59% increase in the sales volume. Sugar realisation stood flat at Rs 37.3 per kg. The biofuels & spirit business revenue has grown by 1.51x y-o-y to Rs 283.5 crore. The capacity of the distillery plant increased in Q4FY2022. Lower recovery in the sugar business and lower margins in the biofuel & spirits business due to contribution from low margin country liquor segment resulted in a 708 bps y-o-y decline in the OPM to 13%.

Buy shares of Dhampur Organics
Sharekhan has recommended investors buy shares of Dhampur Organics, "headed by an experienced management team the company has strategies to deliver consistent earnings growth in the medium term. Higher contributions from ethanol sales will help the company's earnings to grow in double digits with expansion in EBITDA margins over the next 2-3 years. The stock is currently trading at 9x and 8x its FY2024E and FY2025E earnings. We maintain our Buy rating on the stock with an unchanged price target of Rs 215 per share".

Share price movement
The current market price of Dhampur Organics stock closed at Rs 3451.65 per share, it was up by 0.27 per on an intraday basis. The share price marginally increased by 0.24 per cent since its IPO listing in September 2022.

Disclaimer:
The stocks have been picked from the brokerage report of Sharekhan. 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.