3 Stocks To Buy For Solid Returns In One Year, Says ICICI Securities
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Sanofi India
Sanofi provides medications for diabetes (insulins and orals), cardiology, thrombosis, anti-infective, CNS, allergy, vitamins, minerals, and supplements, among other therapies.
Lantus, Allegra, and Combiflam are among India’s top 100 pharmaceutical brands.
Sanofi is one of India’s fastest-growing anti-diabetic drug firms.
Sanofi India Q2CY21 Results:
- Sanofi India announced strong earnings for Q2CY21.
- Sales increased by 11.1 percent year on year to Rs 789.1 crore.
- In Q2CY21, EBITDA was Rs 247.1 crore, up 39 percent year on year, with margins of 31.3 percent.
- PAT was 178.3 crore as a result of this (up 31.9 percent YoY).
Sanofi: Key triggers for future price-performance
“Sanofi’s share price has grown by ~1.7x over the past five years (from ~| 4447 in June 2016 to ~| 7672 levels in June 2021). We remain positive and retain our BUY rating on the stock. We value Sanofi at Rs 9750 i.e. 35x P/E on FY23E EPS,” the ICICI research report said.
Key triggers for future price-performance:
- Future launches, as well as brand extensions, are planned from the global staple.
- Access to new compounds from parent, such as the recently introduced anti-diabetic medicine Toujeo Strong balance sheet, solid dividend payout track record, and corporate governance comfort Consistent performance despite price controls on four core brands.
Alternate Stock Idea
Apart from Sanofi, we like Abbott among the MNCs we cover. We continue to believe in Abbott’s excellent growth track in power brands and capacity to launch new products on a consistent basis.
BUY with a target price of Rs 19,235.
TTK Prestige
TTK Prestige is India’s top kitchen solutions provider, having successfully transitioned from a pressure cooker manufacturer to a complete line of home and kitchen appliances.
TTK Prestige Q2CY21 Results:
- With most channels closed in Q1FY22 (save the web channel), revenue fell 36 percent quarter-on-quarter (up 71 percent year-on-year) to | 356.9 crore.
- Due to price hikes and a stronger product mix, gross margin contraction was limited to 100 basis points (bps) QoQ to 44.6 percent.
- EBITDA margins shrank by 750 basis points quarter over quarter (up 720 basis points year over year) to 10.9 percent due to negative operating leverage.
- It still has a significant amount of free cash Rs 490 crore.
TTK: Key triggers for future price-performance
“TTK has been a consistent compounder with stock price appreciating at 16% CAGR in the last five years. We continue to remain positive and maintain our BUY rating on the stock. We value TTK at Rs 10675 i.e. 44x FY23E EPS, ICICI said in its research report.
Key triggers for future price-performance:
- The cookware division’s capacity has roughly doubled, and the new factory is slated to be operational in Q2FY22.
- TTK is also trying to expand its distribution reach in tier-II and tier-III cities in order to capitalise on long-term growth prospects.
- The company has a robust pipeline of 80 SKUs set to launch in Q2FY22, which will help drive future growth.
CMP: Rs 9186
Target: Rs 10,675
Upside Potemtial: 16%
Target Period: 12 months
Alternate Stock Idea:
Apart from TTK, we also enjoy Butterfly Gandhimati Appliances in our retail coverage.
BUY with a target price of Rs 1000 BGAL has exhibited sustained progress on financial performance metrics, with working capital days and return ratios greatly improved in FY21, it added.
Dixon Technologies
Dixon Technologies, India’s top electronic manufacturing (EMS) provider and one of the government’s PLI scheme’s largest beneficiaries, works in both OEM and original design manufacturing (ODM).
Dixon Technologies Q1FY22 Results:
- Customer additions and a reduced base helped revenue grow 261 percent YoY to | 1867 crore.
- The EBITDA margin shrank by 70 basis points to 2.6 percent as a result of a shift in product mix, with larger contributions from lower-margin products.
- Due to a low base and larger revenues, PAT grew to | 18 crore (9x growth YoY).
Dixon Technologies: Key triggers for future price-performance:
“Dixon’s share price has grown by ~8x over the past three years (from ~| 566 in July 2018 to ~| 4,380 levels in July 2021). We maintain our BUY rating on the stock Target Price and Valuation: We value Dixon at Rs 5050 i.e. 52x P/E on FY23E EPS, ” ICICI said.
Key triggers for future price-performance:
- The Indian EMS business is worth $23.5 billion, and Dixon now has a market share of 3-4 percent, leaving room for expansion and growth.
- The PLI plan is expected to increase domestic mobile output by 5 times. Dixon is one of the biggest winners.
- Dixon’s future sales will be driven by new segments such as electronics/IT products, telecom devices, LED lighting, and AC components.
Alternate Stock Idea
In addition to Dixon, Havells is a favourite of ours.
A rebound in Lloyds sales and an improvement in margin would be a trigger for Havells’ future revenue growth. BUY with a target price of Rs 1345, it added.
3 Stocks To Buy For Solid Returns In One Year
| Company | CMP | Target | Upside Potential |
| Sanofi | 7960 | 9750 | 22% |
| TTK Prestige | 9186 | 10675 | 16% |
| Dixon Technologies | Rs 4,380 | Rs 5,050 | 15% |
Disclaimer
Stock investing is risky, and investors must exercise caution. Neither Greynium Information Technologies Pvt Ltd nor the author are liable for any losses caused as a result of decisions made based on the information provided in this article. Investors should exercise prudence while the markets have reached new highs. Please seek professional advice before investing large sums of money.
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