ITC, Dabur, Colgate Among 6 Stocks, HDFC Securities Recommends To Add This Diwali

The Indian stock markets are trading flat during Diwali. Stocks were falling marginally in the third week of the current month. However, HDFC Securities recommends adding these 6 below-mentioned stocks.

ITC - stock performances

The current market price of ITC is Rs. 332/ share, and HDFC Securities has estimated a target price for the stock at Rs. 330/share, with a strong Q2FY23 outlook. The brokerage firm stated, "We model 18% YoY growth in cigarette revenue, with volume growth of 15% YoY. The non-Cigarette business is expected to grow 42% YoY. We model 14% YoY growth in FMCG. We expect cigarette EBIT to grow by 18% YoY. We model an overall EBITDA margin contraction of 151bps YoY to 32.5%. EBITDA to grow by 19% YoY."

Marico - stock performances

The current market price of Marico is Rs. 512/ share, and HDFC Securities has estimated a target price for the stock at Rs. 565/share, with a strong Q2FY23 outlook. According to HDFC Securities, "We model PCNO val/vol growth of -6/-1% YoY. Saffola revenue is expected to grow by 4% YoY with volume growth of 9% YoY. VAHO is expected to report 4/0% val/vol growth. We model 12% YoY growth in International revenue. We model GM expansion of 154bps YoY to 44%. EBITDA margin to expand by 43bps YoY to 17.9%."

Godrej Consumer Products (GCPL) - stock performances

The current market price of GCPL is Rs. 833/ share, and HDFC Securities has estimated a target price for the stock at Rs. 850/share. The brokerage firm stated, "We model 8% YoY growth in consolidated revenue. Domestic revenue is expected to grow by 9% YoY. International business is expected to grow by 8% YoY. Consolidated GM is expected to contract by 354bps YoY to 46.3%. The EBITDA margin is expected to contract by 454bps YoY. EBITDA is expected to decline 15% YoY."

Colgate - stock performances

The current market price of GCPL is Rs. 1,553/ share, and HDFC Securities has estimated a target price for the stock at Rs. 1,650/share. "We expect revenue to grow by 3% YoY, with 2% YoY volume decline (three-year CAGR at +1%). We model GM to contract by 63bps YoY to 66.2%. The EBITDA margin is expected to remain flat YoY to 29.6%. EBITDA to grow by 3% YoY," HDFC Securities mentioned.

United Spirits (UNSP) - stock performances

The current market price of UNSP is Rs. 824/ share, and HDFC Securities has estimated a target price for the stock at Rs. 825/share. "We expect revenue growth of 2% YoY with 1% YoY volume growth (flat on three-year CAGR). We expect P&A realization/case to be up 1/4% YoY/QoQ and popular realization/case to be up flat YoY and 2% QoQ. The gross margin is expected to contract by 400bps YoY. We model a 15% EBITDA margin as compared to 17.4% in Q1FY22 and 12.6% in Q1FY23."

Dabur - stock performances

The current market price of Dabur is Rs. 531/ share, and HDFC Securities has estimated a target price for the stock at Rs. 565/share. According to the brokerage firm, "Consolidated revenue is expected to grow 6% YoY. We model the growth of 5% YoY in domestic revenue. Hair care/oral care /Healthcare/Home care/Foods are expected to grow by 5/5/-15/15/30% YoY. We expect international business to grow by 8% YoY. We model GM contraction of 354bps YoY to 45.3%. We model EBTIDA margin contraction of 241bps YoY to 19.6%."

Disclaimer

The above stocks were picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the 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.