Stocks to buy: Mahanagar Gas, Va Tech Wabag, Aditya Birla Sun Life, among six fundamental stock picks by HDFC Securities
Mahanagar Gas, Ahluwalia Contracts (India), Va Tech Wabag, Aditya Birla Sun Life AMC, FDC and Crisil. HDFC Securities believes the valuations of Mahanagar Gas are compelling, given superior return ratios among the city gas distribution players. With easing LNG prices and the pricing power of the company, margins are likely to normalise going forward.
Investors can buy in the band of ₹1,326-1,354 and add further on dips in the ₹1,194-1,218 band. The base case fair value of the stock is ₹1,485 and the bull case fair value of the stock is ₹1,577 over the next two to three quarters, said the brokerage firm. Also Read: Reliance share price rises after Goldman Sachs raises target price on stock, sees 54% upside potential Ahluwalia Contracts continues to see robust order flow prospects in healthcare, data centres, and industrial structures apart from government buildings.
Competitive intensity remains elevated but Ahluwalia Contracts remains very selective in bidding for projects. Despite near-term headwinds of high input costs, margin is expected to improve from FY24E with softening of commodity prices, a narrower gap of indices with input prices, slightly lesser competitive intensity and new projects bid at elevated input price assumption, HDFC Securities said. Ahluwalia Contracts’ robust and diversified order book, strong bidding pipeline, timely execution could help to bring more orders going forward, it added.
The brokerage suggests investors can buy the stock in the ₹1,124-1,148 band and add more on dips to ₹1,013-1,033. It feels the base case fair value of the stock is ₹1,254 and the bull case fair value is ₹1,353 over the next two to three quarters. Aided by a strong long-term outlook due to the expectation of order
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