Stocks to Buy: FMCG And HospitalStocks To Buy: FMCG And Hospitality Stocks To Consider As Recommended By Brokeragesity stocks To Consider As Recommended By Brokerages

Dodla Dairy

ICICI Securities has a ‘Buy’ rating on Dodla Diary for a target price of Rs. 700, the last traded price of Rs.618 per share.

Dairy: One of the fastest-growing industries in India

According to ICICI Securities, Between FY15 and FY21, the Indian dairy industry grew at a CAGR of 9% in value terms. The primary growth drivers are steady nominal GDP growth, market share gains from the unorganized sector, and increased demand for value-added products. We anticipate that, in the medium to long term, expanding population, growth of HoReCa, and rising demand for milk as a source of protein will help the dairy sector sustain robust growth rates.

Valuation

“We value Dodla on DCF-basis arriving at a target price of Rs700. As per reverse DCF (assuming cost of equity at 11.3% and terminal growth at 4%), the company needs to achieve an EBITDA CAGR of 12% over FY21-FY32E. The EBITDA CAGR over FY11- 21 was 29.4%.

We model revenue and PAT CAGRs of 14.2% and 17.6%, respectively, over FY21-FY23E. We forecast RoE to be upwards of 17% in FY23E. We initiate coverage on the stock with a BUY rating and DCF-based target price of Rs700 (24x FY23E),” the brokerage has said.

Chalet Hotels

IDBI Capital has a ‘Buy’ rating on Chalet Hotels for a target price of Rs. 295, the last traded price of Rs.206 per share with a potential upside of 43%.

Strong positioning in high-end branded hotels in key business cities

According to IDBI Capital, Following a large revenue loss in FY21, the domestic hotel business is likely to rebound better in FY22, aided by a vaccination drive and pent-up demand in the leisure travel sector. To run its hotels under high-end worldwide names, the company has worked with well-known global hospitality giants such as “J W Marriott” and “The Accor.”

Valuation

“We expect on a low base of FY21, net sales to grow at a CAGR of 68% over FY21-24E supported by net sales CAGR of 77% and 42% in hotels and retail-commercial segment respectively. Cost optimization measures and increasing share of high margin commercial segment will drive EBITDA CAGR of 341% over the same period.

We believe Chalet is poised to benefit from multiple levers viz active asset management of the assets, inventory addition in the hotel and commercial segment, mixed-use of retail-commercial properties, inorganic growth opportunities, and value unlocking opportunities in the Koramangla project. BUY with a TP of Rs295,” the brokerage has said.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.