1 Gladiator And 1 Momentum Stock Pick Of ICICI Direct For Gains In Short To Medium Term
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1. V-Guard Industries:
This is the Gladiator stock recommendation of ICICI Direct which is seen to hit the target in next 3 months. The current scrip price is Rs. 261.75, while the price target set out by the brokerage is Rs. 302, implying an upside of 15%.
About the company: The company is a leading electrical appliance company and largest indeed in Kerala. The company’s product line includes voltage stabilizers, electrical cable, electric pumps, electric motors, geysers, solar water heaters, electric fans and UPSs.
Technical observations: There is improved sentiment in the consumer discretionary space ahead of the festivities, with this scrip not being an exception. There is seen elevated high demand in the counter. Only in this week, the chart formation was of a falling channel breakout that provides for a primary uptrend.
“The stock has taken 10 weeks to retrace 80% of its preceding three weeks rally (Rs. 219-285) signalling slower pace of retracement and highlighting strength. The weekly 14 periods RSI has generated a buy signal moving above its nine period’s average, thus validating the positive bias”, said the report.
Fundamentals which support the set target price
Electronics contribute approximately 28% to their topline while electricals contribute 45% and consumer durables 27%. South contributes a major chunk of their revenue with 60% coming from that region.
Better Q1Fy22
The company reported better-than-expected numbers in Q1FY22 despite lockdown led restrictions in key selling markets. Net sales were up 39% YoY. Gross margins were up 408 bps due to a better product mix and passing on of price hikes.
Dealer inclusion, expanded product mix, technology leverage and healthy balance sheet will all come as help
“Going forward, dealer additions, new product launches and market share gains from unorganised/regional players will drive revenue growth. The management has also indicated distribution expansion in non-south regions to capture a wider market. V-Guard also plans to improve its product mix by launching premium products through in-house manufacturing. The company also has plans to leverage technology benefit from its recent investment in battery startup “Gegadyne Energy” to launch new products going forward. A healthy balance sheet with a strong brand recall will help”, said the report.
| Stock | Current price | Price target | Potential Upside | Time horizon set out for the target |
| V-Guard | Rs. 261.75 | Rs. 302 | 15% | 3 months |
2. Jindal Stainless:
This is the Momentum stock recommendation of ICICI Direct wherein the brokerage firm has set out a target price of Rs. 168. The company has recommended the stop loss of Rs. 149. The target is to be realized in a short term of 7 days.
ICICI Direct lists down the technical observations for the scrip as follows:
The stock of Jindal Stainless has placed a strong demand from the support price of Rs. 130 and this coincides with the major breakout area, which provides for an indication of the uptrend and fresh opportunity to enter the scrip.
Breakout in the stock was seen that again points to strength going forward.
Now this upmove looks sustainable and we may see the scrip to again move to its July 2021 high of Rs. 168 in the coming weeks.
Other positive technical indicators
-Scrip held above its 50 day SMA since April 2021
– Good volume of 2.6 times its average 200 day
volume of 27 lacs share per day
-Positive bias indicated by the daily 14 periods RSI that has generated bullish crossover above its 9-periods average.
| Stock | Current price | Target price | Upside | Time horizon for the recommendation |
| Jindal Stainless | Rs. 159.4 | Rs. 168 | > 5% | 7 days |
Disclaimer:
The above two stocks listed here are taken from ICICI Direct research report and should not be construed as investment advice. Please seek professional help before making any risky bets.
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