06 Apr , 2021 By : Kanchan Joshi
Focusing on the time horizon for the next two quarters, HDFC Securities has picked three stocks for recommendations which are from paints, cement and textile industries.
AkzoNobel India
The brokerage said that the demand across India for paints is at 5 year high, a portion of this can be attributed to pent up demand as result of lockdown impositions.
HDFC Securities believes that Akzo’s emphasis to produce quality, innovate and standardize 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. Akzo is trading at lowest valuation amongst its peers.
''We feel investors could look to buy at CMP and add on dips to Rs1990-2010 band for base case fair value of Rs2,515 and bull case fair value of Rs2720 in the next two quarters'', the brokerage said in a note.
Star Cement
Star Cement Ltd is a dominant player in the North-East region with ~25% market share. We believe that it has a strong, sustainable competitive advantage in the North East region, as entry of outside players in this market is limited. Eastern India region is largely underpenetrated and, thus, has good growth potential, where the company has major capacity, HDFC Securities said.
''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. Investors can buy the stock at Rs84 and add on dips to Rs77'', the brokerage added.
Vardhman Textiles
HDFC Securities believes that Vardhman Textiles (VTL) with its strong market positioning and robust balance sheet is well placed to capture the consolidation theme in the Indian textile industry.
''We are positive on the future earnings growth trajectory of VTL. We expect its revenue and PAT to record a growth of 4% and 17?GR over FY20-23E. Its superior market positioning, prudent expansion strategy along with ability to consistently generate strong cash flows with constant debt reduction provides comfort.'', the brokerage noted.
The brokerage has recommended that investors can buy on dips at the price of rs1130 and add more on dips to Rs1045.
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