Diwali 2023: Buying these 3 stocks this festive season can more than double your wealth in 3 years, says InCred

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Camlin Fine Sciences(CSFL): The brokerage has an ‘add’ call on the stock with a 1-year as well as 3-year (bull case) target price of ₹300, indicating an upside of 133 percent. "We bake in vanillin benefits in our FY24F estimates to arrive at an EPS of ₹15.1 for FY24F and ₹21.8 for FY25F. We valued the stock at 20x FY24F EPS to arrive at our higher target price of ₹300 from ₹180 earlier," it said.

The brokerage noted that as CSFL will start manufacturing vanillin, it doesn’t have to sell catechol at an average loss of $1.5/kg. Therefore, on the likely sales of 3,000t in FY24F, CFSL’s loss on catechol sales can decline by $5 million (CFSL may have lost $9.9 million on catechol sales in FY23). It further stated that Negolyte's sales to Lockheed Martin also provide an option value of ₹150 crore in EBITDA.

However, the brokerage feels it may not materialise over the next couple of years. Bull-case argument not factored in by Street: The brokerage expects a 3,000t of vanillin sales in FY24F, and consequently the loss from catechol sales to decline to US$5m (vs. US$9.9m in FY23) and lead to an increase in gross profit by ₹300 crore.

Cyient DLM: The brokerage has an ‘add’ recommendation on the stock with a 1-year target price of ₹880 and a 3-year target price of ₹1,413. This indicates an upside of 37 percent and 120 percent for 1 and 3 years, respectively. "Cyient DLM’s revenue from the defense industry increased to 58 percent in FY23 from 29 percent in FY19 as the company developed the expertise in manufacturing complex defense systems for the Israel Aerospace Industry (IAI) and Rafael (Dassault Systemes), which jointly developed the Iron Dome Air Defence system for Israel.