NCC Ltd from civil construction industry, Marksans Pharmaceuticals Ltd from pharmaceuticals sector, and GMDC from industrial minerals are the three top stock picks that
domestic brokerage and research firm HDFC Securities has suggested that investors can look to buy with the time horizon of two to three quarters.
NCC: The company has well-diversified order book, robust execution capabilities, strong focus on debt reduction and improvement of working capital.
Segment diversity across building, mining, railways, electrical, water and environment is one of the key differentiators at NCC.
The brokerage expects revenue/EBITDA/PAT to grow at CAGR of 15.9%/17.8%/30.4% over FY22-25E.
"We think the base case fair value of the stock is ₹112 (9 times December 24E EPS) and the bull case fair value is ₹120 (9.75 times December 24E EPS) over the next two-three quarters," the note said.
"Investors can buy the stock in the band of ₹98-100 and add more on dips to ₹86-88 band (7 times December 24E EPS). At CMP, the stock trades at 8.1 times December 24E EPS," it said.
Marksans Pharmaceuticals Ltd: The brokerage estimates 17% CAGR in revenue led by strong growth from UK and Australia and New Zealand and healthy growth from US market over FY22-25E.
"We expect margin of around 17-18% over the next two years. We have factored into conversion of warrants from FY23E and
thus increased equity from 40.9cr shares to 45.3cr equity shares," the note said.
"We feel investors can buy in the band of ₹68.8-69.5 and add more on declines to ₹59.5 (9.25x Dec-24E EPS) for base case
target of ₹75.5 (11.75x Dec-24E EPS) and bull case target of ₹83.6 (13x Dec-24E EPS) over the next 2-3 quarters," it said.
GMDC Ltd: The brokerage said that the management's focus is to diversify the revenue base of the company from lignite and so the company plans to foray into manufacturing of rare-earth elements,
and non-lignite businesses such as silica sand, Fluorspar, multi metal, and limestone for which it has roped in BCG for feasibility study.
In the coming years, it aims to earn at least 50% revenue from the non-lignite portfolio. This will help the company to
mitigate the risk of dependence on a single commodity and also improve the ESG rating of the company.
The company is planning to develop 6 new mines over next 1.5-2 years to ensure that production stays above 10 million tons per annum (mtpa).
Further, there is a distinct focus on value added products in Bauxite and other minerals.