HDFC Securities’ Retail Research Desk has initiated coverage on Akzo Nobel India, Vardhman Textiles and Star Cement with a 'BUY' recommendation on better growth prospects and attractive valuations.
The brokerage said these stocks can be bought at current market price or at dips for a time horizon of two quarters (six months)
Akzo Nobel India | TP: Rs 2,720
Akzo’s emphasis to produce quality, innovate and standardise products, strategy to constantly introducing new products to stay ahead of the general marketplace, operational and internal efficiencies and aggressive advertisement campaigns are the core capabilities of the firm, driving its growth, HDFC Securities said.
Akzo is trading at the lowest valuation amongst its peers. We feel investors could look to buy at CMP and add on dips to Rs 1,990-2,010 band for base case fair value of Rs 2,515 and bull case fair value of Rs 2,720 in the next two quarters, it added.
Vardhman Textiles | TP: Rs 1,350
The brokerage is positive on the future earnings growth trajectory of Vardhman Textiles and expects its revenue and PAT to record a growth of 4 percent and 17 percent CAGR over FY20-23E.
The company's superior market positioning, prudent expansion strategy along with the ability to consistently generate strong cash flows with constant debt reduction provides comfort.
The brokerage feels the base case fair value of the stock is Rs 1,245 and bull case fair value is Rs 1,350. Investors can buy on dips at the price of Rs 1,130 and add more on dips to Rs 1,045, HDFC Securities recommended.
Star Cement | TP: Rs 112
The brokerage expects that the company will get benefit from the strong regional presence, improving utilisation, and cost efficiencies, apart from industry triggers of higher realization.
We like Star Cement due to its strong, experienced management, healthy margins on the back of substantial ongoing cost reduction, net cash positive balance sheet with superior return ratio’s, and future growth visibility on the back of expansion plan, it said.
However, in the short to medium term, demand recovery in core markets continues to be the key monitorable, it added.
The brokerage house expects 10 percent CAGR in the topline and 12 percent EPS CAGR over FY20-23E.
It believes the base case fair value of the stock is Rs 97 and the bull case fair value is Rs 112. Investors can buy the stock at Rs 84 and add on dips to Rs 77, it said.
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(Edited by : Jomy)
First Published: Apr 6, 2021 3:21 PM IST
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