1 Tata Group & 2 Rekha Jhunjhunwala Stocks To Buy Next Week For Potential Upside Up To 19%

The top three stocks with upbeat trends according to key brokerage firms are Va Tech Wabag, Tata Consumer Products, and Federal Bank. Buy calls have been made on Rekha Jhunjhunwala's portfolio stocks, Va Tech Wabag and Federal Bank, by Sharekhan with a target price of Rs. 850 and Emkay Global with a target price of Rs 180. At the same time, Tata Consumer Products has been recommended to buy for a target price of Rs 1,352 from KRChoksey.

Tata Consumer Products

"TATACONS has continued to see strong topline and profitability traction through improvement in all businesses. TATACONS' focus on driving growth through organic as well as inorganic expansion will lead to continuing double-digit topline growth in the medium term. Organic growth will be driven by distribution expansion, innovation and premiumization. TATACONS will continue to see margin improvement due to improving international margins, improving scale of the Growth businesses and continued business simplification. Management has indicated that the current margins of ~15.0% will become the new base and there will be further margin expansion. The addition of Capital Foods (CF) and Organic India (OI) will ramp up the share of high-growth businesses and improve profitability due to the superior margins of the acquired business and further integration benefits. We incorporate the financials of CF and OI in the consolidated numbers. We factor in incremental revenues of 0.9%/ 8.0%/ 9.1% in FY24E/ FY25E/ FY26E, respectively and increase our finance costs estimates due to higher borrowings to fund the acquisitions," said the brokerage firm KRChoksey in a note.

"Accordingly, we revise our FY24E/ FY25E/ FY26E Adj. EPS by 1.7%/ 1.7%/ 10.2%, respectively. We expect Revenue/ EBITDA/ Adj. PAT to grow by 13.9%/ 21.1%/ 24.7% CAGR, respectively, over FY23-26E. We have valued TATACONS on a SOTP basis based on FY26E segmental EBITDA for all businesses except Starbucks which is valued on FY26E Revenue basis. For India Business (excluding CF and OI), we apply an EV/EBITDA multiple of 40.0x; for OI, we apply an EV/EBITDA multiple of 40.0x; for CF, we apply an EV/EBITDA multiple of 44.0x; International Business, we apply an EV/EBITDA multiple of 15.2x; and for Starbucks business, we apply an EV/Revenue multiple of 2.9x. Accordingly, we revise our target price to INR 1,352 per share (INR 1,322 earlier), an upside of 17.1% over the CMP. Accordingly, we reiterate a "BUY" rating on the shares of Tata Consumer Products Ltd," the brokerage further added.

Va Tech Wabag

"VA Tech Wabag Limited's (Va Tech) reported a decent performance during Q3FY2024. Sales grew ~8.1% y-o-y to Rs. 704 crore. Sales increased despite the company's strategic divestment of two European entities last year as new and large projects started generating revenue. OPM came in at 14% (flat y-o-y) as lower employee costs and other expenses were offset by higher raw-material costs. Adjusted profit increased 7% y-o-y to Rs. 63 crore, supported by decent revenue growth of 8.1% y-o-y, steady margin, and higher other income partially offset by higher taxes. Order backlog at the end of the quarter stood at Rs. 10,686 crore (excluding framework contracts worth ~Rs. 1,179 crore). Order intake has been robust at around Rs. 1,762 crore during 9MFY2024," said the brokerage firm Sharekhan.

" VA Tech has been exhibiting a good operating performance, driven by a better order mix and improved execution efficiencies. The company's order book is robust and, with a promising order pipeline, the company should deliver healthy revenue growth. Further, the company is focused on margin improvement and cash flow generation and is on the cusp of a healthy growth trajectory in the medium to long term. The company is optimistic about growth opportunities present in desalination, ZLD, ultrapure water, and water treatment solutions in both domestic and export markets. A well-funded and strong order book with healthy revenue visibility provides comfort in execution and collections going ahead. At the CMP, the stock trades at a P/E of ~12x its FY2026E earnings, which we believe is attractive, given an optimistic outlook on business and earnings. Hence, we maintain our BUY rating on the stock with a revised price target (PT) of Rs. 850," the brokerage further stated.

Rekha Jhunjhunwala Stake In Va Tech Wabag

During Q3FY24, Rekha Jhunjhunwala wife of her late husband Rakesh Jhunjhunwala held 50,00,000 shares of the company in her portfolio which is 8.04% of the total paid-up share capital of Va Tech Wabag.

Federal Bank

"After a correction post results, Federal Bank (FB)'s stock recently rallied ~10% owing to news-flow about inclusion of KVS Manian (Head - Wholesale & Private Banking, Kotak Mahindra Bank) as one of the 3 candidates for the post of MD & CEO (due to be vacated in Sep-24) at FB. Notably, Mr Manian has been handling wholesale banking at KMB for a while now, and has earlier headed consumer banking till 2014 - this position was then swapped with Shanti Ekambaram's. This raised hopes for the replacement at FB with a pedigreed external candidate from a large bank as MD, after the current MD's extension for another term was rejected by the RBI. But in a separate move, KMB has elevated Mr Manian as its JMD, subject to RBI approval and, hence, possibly dashed hopes of him being a candidate for the MD post at FB. Thus, we believe any stock run-up attributed to this news-flow should come off. That said, we retain BUY on FB and our TP at Rs180/sh, given the Bank's healthy RoA/RoE trajectory, reasonable valuations (1x FY26E ABV), and lower exposure to unsecured retail loans," said the brokerage firm Emkay Global in a note.

Rekha Jhunjhunwala Stake In Federal Bank

During the quarter ended 31st December 2023, Rekha Jhunjhunwala wife of the late big bull of India Rakesh Jhunjhunwala held 4,82,13,440 shares of the bank in her portfolio which is 2.00% of the total paid-up share capital of Federal Bank. On the other hand, through the account of Rakesh Jhunjhunwala, her wife currently owns a stake of 1.02% or 2,45,00,000 fully paid-up equity shares of the bank.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.