2 Stocks To Buy Today That Are Value Picks For Long-Term Stock Pickers

It's been a volatile week for the markets even as we head into the last trading day. Investors are advised to buy and hold only for the long-term given the way the stock markets have fallen over the last few weeks.

Broking firm, Anand Rathi has recommended buying the stocks of Prism Johnson and Voltas for long term investors.

Prism Johnson: Buy the stock as company on track for revival

According to Anand Rathi, the seasonal effect and high input prices curbed Prism Johnson's cement division performance; its tile, bath and kitchen divisions' performances revived with the economy opening up, a low base and expanded margins.

"While demand is good, high costs may cut into profitability, though partially offset by price hikes and the rising proportion of renewable energy. The cement and HRJ expansions are on track. We retain our Buy rating, with a lower target price of Rs.152 (earlier Rs.153)," the brokerage has said.

Prism Johnson: Higher costs hamper operating performance

According to Anand Rathi, the higher costs and lower volumes and the decline in clinker production (due to the shutdown) led to the cement division's EBIT down 92% y/y, and the EBITDA/ton down 57% y/y to Rs392.

"The RMC division reported a small EBIT of Rs 6, vs. a Rs 61million loss the prior quarter. The TBK division reported Rs469m EBIT, one of the highest in the last few quarters. Overall EBITDA slid 34.7% y/y to Rs 1.5 billion. While short-term pressures would persist (high fuel costs), the rising share of renewable energy would help," the brokerage has said.

The stock of Prism Johnson were last seen trading at Rs 120.50 on the NSE.

Buy the stock of Voltas

According to broking firm, Anand Rathi, Voltas is another good stock to buy. "Rising mercury levels can brighten the outlook for Voltas' UCP category, impelling us to upgrade the stock to a Buy despite a slower pace of order inflows in its projects business and mounting losses in Voltas Beko JV. Hence, we lower revenue/net income 11%/13% over FY22-FY24," the brokerage has said.

Outlook and Valuations

Post-Q3 FY22, the brokerage has lowered its FY22e-FY24e revenue/ EBITDA by an average 13%/3%. "We now model 19%/40% CAGRs in revenue/net income over FY22-24, leading to the RoE expanding from 10% to 16%. We upgrade the stock to a Buy based on a sum-of-parts valuation of Rs 1,400 (earlier target Rs 1,367, 43x FY24e EPS of Rs 32).

According to Anand Rathi, the key risk would be slower pace of order inflows from government schemes pertaining to household water pipeline connections and rural electrification is the primary risk for the projects business.

The stock of Voltas was last seen trading at Rs 1205 on the BSE.

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. The author and has family do not own any stocks mentioned above.