The Indian stock market indices, Sensex and Nifty 50, are trading flat with a negative bias on Tuesday dragged by selling in banks, realty and energy stocks. Broader markets underperformed the frontliners as the midcap and smallcap indices were down more than half a percent each.
The benchmark Nifty 50 hit a fresh record high of 23,110 on Monday and witnessed profit booking at the peak level. Investors’ sentiment remains cautious ahead of the Lok Sabha election results scheduled to be announced next week.
HDFC Securities has recommended two stocks to buy as its fundamental picks. These two stocks are NCC and Allsec Technologies. The brokerage recommends buying these stocks at currency market prices and add on further dips for a time horizon of two to three quarters.
Here are HDFC Securities’ stocks to buy:
NCC | Buy | TP: ₹306
NCC has a well-diversified order book, robust execution capabilities, strong focus on debt reduction and improvement in working capital. Its management has given revenue guidance from ~15%+ for FY25 on account of elections. Softening of raw materials is likely to improve margins going ahead. The company expects the EBITDA margin to be in the range of 9.5% – 10%.
Also Read: Stock to buy: Anand Rathi recommends Olectra Greentech as its stock pick of the month
Current order book contains more projects with an escalation clause, which insulates against any escalation in the input prices. Given the all-time high order book, execution ramp-up, and robust balance sheet, we rework FY25/26E estimates, HDFC Securities said. It expects Revenue, EBITDA and PAT to grow at CAGR of 14%, 19.2% and 32.4% over FY24-26E.
We think the base case fair value of the NCC stock is ₹306 and the bull case fair value is ₹326 over the next two-three quarters. Investors can buy NCC shares in the band of ₹275 – 280 and add more on dips to ₹245 – 250 band, said the brokerage firm.
Also Read: Stocks in focus: Ruchit Jain of 5paisa recommends buying these two stocks today
Allsec Technologies | Buy | TP: ₹1,162
HDFC Securities believes that expected acceleration in Allsec Technologies’ revenue growth momentum, stability in margins, strong consistent execution, delivery on guidance and strong cash generation would support valuations.
Investors can buy Allsec Technologies shares in the ₹1,043 – 1,065 band and add on dips in the ₹937 – 955 band. We believe the base case fair value of the Allsec Technologies stock is ₹1,162 and the bull case fair value of the stock is ₹1,261 over the next 2-3 quarters, HDFC Securities said.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 28 May 2024, 03:09 PM IST
