ICICI Securities Bullish On 3 Stocks, Sees 25-27% Growth Potential

Stock-broking firm ICICI Securities is bullish on the stocks of Zomato, EPL and Abbot India. The brokerage firm believes that the stock prices of the three companies will rise above 25% and suggested a potential target price for each of them. Given below are the details for each.

1. Buy Zomato Ltd with a target price of Rs 65, (25.85% potential upside)

Leading food delivery aggregator Zomato Limited has reported a sustained improvement in profitability of its food delivery business and a meaningful reduction in losses in the hyperpure and quick commerce businesses, ICICI Securities pointed out.

In Q4FY23, the company's gross order value (GOV) declined QoQ due to adverse seasonality and a muted demand environment. However, in April and May 2023, GOV for the food delivery business grew in the high single digits, according to the management, which raises hopes of an imminent recovery.

Seeing growth and improvement, the securities firm sees an improved visibility of profitability in the medium term. "We have upgraded our Revenue, EBITDA and PAT estimates for FY25E by 21%, 139% and 100%. We now think Zomato consolidated (including Blinkit) could turn profitable on an Adjusted EBITDA basis (Rs179mn) as early as FY24E. We therefore upgrade our DCF based price target from Rs65 earlier to Rs 83,", added ICICI.

The latest closing price of Zomato stock is Rs 63.57 per share, which has fallen marginally by 1.5% over the previous day's closing. In the last one year, the share price has risen by 11.53% but since its listing in 2021, the price has plunged by 54.87%.

2. Buy EPL Ltd with a target price of Rs 240, (27.49% potential upside)

EPL Limited's Q4FY23 print has shown sequential improvement in EBITDA margin. However, it is still far away from normal, suggests ICICI Securities. EPL, a packaging firm has shown remarkable growth in sustainable tubes (2.5x in FY23) which is aiding it to grab a higher tube market share and this phenomenon should only accelerate.

Additionally, the mid cap company was conferred with a gold medal certificate by EcoVadis rating. This puts EPL in an advantageous position in sustainable tubes which has been the highest-priority area for the entire FMCG customer base of the company.

The securities firm believes FY24 could potentially have exponential recovery with demand normalising across geographies, selective price increases, ramp up in Brazil operation and stable inflation.

"We expect EPL's EBITDA and net profit CAGR of 20% and 29%, respectively, over FY23-25E which should also drive higher FCF / dividend. We have tweaked our EPS estimates for FY24 / FY25. We are changing our valuation methodology from DCF to P/E multiple. Accordingly, we derive a price target of Rs240 (prior: Rs220) valuing the company at 20x FY25E EPS. Maintain BUY."added the stock broking firm.

The last closing price of EPL stock is Rs 193.70 per share, which has risen by 2.08% on an intraday basis. In the last one year and three years, the share price has surged by 22.17% and 13.84% resepectively.

3. Buy Abbot India with a target price of Rs 26,800 (26.46% potential upside)

Abbot India, a large cap pharma company, has been a consistent performer. Its strong set of brands has helped it report a YoY revenue growth for the last 22 quarters and heckled challenges like competition in existing brands, mandated price cuts. Despite being an MNC, Abbott has served to the local needs better by launching line extensions and entering new therapies, stated ICICI research report.

According to the securities firm, the company has managed its overhead cost better and ensured EBITDA margin remains above the 20% mark (core margin estimated at 30.5%). Management targets a revenue CAGR of 13% to US$1bn by FY26, while profit may grow faster. Maintain BUY with a revised target price of Rs 26,800/share. We trimmed our EPS estimates for FY24E by 2% to factor lower-than-expected margin in Q4FY23.

The last closing price of Abbot India stock is Rs 21,365.35 per share, which has grown by 2.30% over the previous day's closing. In the last one year, the share price has rallied by 17.44% and over the last three years, it has risen by 27.1%.

Disclaimer
The stocks have been picked up from the brokerage reports of ICICI Securities. Greynium Information Technologies, the author and the brokerage firms are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.