5 stocks That Could Give Good Gains Of Upto 48%, Motilal Oswal Recommends

Leading brokerage firm Motilal Oswal in its analyst coverage report has notified about five stocks whose price can give you good return, potentially as high as 48% based on its estimates. These companies are Indigo Paints, Galaxy Surfactants Ltd, Lemon Tree Hotels, Castrol India and ZEE Entertainment. Among these five companies, there is one small cap, three mid caps and one large cap company. Here are the details below.

Buy shares of Indigo Paints, with a price target of Rs 1,410 per share

Motilal Oswal suggests investor to buy the shares of small cap Indian paint company, Indigo Paints Limited, specialised in metallic paints. The company is engaged in manufacturing, selling and distribution of decorative paints, emulsions, enamels, wood coatings, distemper, primers, putties and cement paints. If you invest in the stock of this company now, at the current market price of Rs 1071.90 per share, probably you may gain 31.54% return from it.

In terms of valuation the brokerage report explains the reasons for deriving at it. "Indigo Paints Ltd has successfully surmounted the high entry barriers of the Indian Paints industry, through its patient and multi-pronged strategy, comprising: introduction of differentiated products, purposefully building a distribution network in rural markets, creating brand equity through high investments in advertising, rapidly driving the penetration of tinting machines, and engaging with influencers painters / contractors) to build trust. We retain our BUY rating with a target price of Rs 1,410 (based on 38x FY25E EPS) because of the high-growth opportunity off a small base and inexpensive valuations."

Buy shares of Galaxy Surfactants, with a target price of Rs 3,475

Investing in Galaxy Surfactants Ltd, one of the leading players in the world of surfactants and specialty care ingredients, can fetch you return of upto 44.08%, based on current market price of Rs 2411.90 per share. This multinational mid cap chemical company posted a133% profit growth for the Q3FY23 over previous year.

According to the Motilal Oswal analyst report, "The management had raised its EBITDA guidance to Rs 21-22/kg from Rs 16-18/kg for FY23 in the previous quarter, but it looks like it is going to do much better than that on an average. However, it believes that with volumes recovering from FY24 onwards, there would be a decline in the per kg margins. Continued focus on R&D (with an annual expenditure of Rs 400-500m) and increased wallet share from existing customers is likely to drive volume growth and expand EBITDA margin. Volume clocked a CAGR of ~6% over the last five years and we build in an almost similar growth over FY23-25 as well. Although the company plans expansion of products across the board, its focus would be mainly on the specialty care products segment We reiterate our Buy rating with a target price of Rs 3,475."

Buy shares of Lemon Tree Hotels Limited, with a price target of Rs 115 per share

Going by current market price of stock of Lemon Tree Hotel Limited at Rs 78.65 per share, buying shares and holding till the target price is reached will earn you a profit of 46.22%. Lemon Tree Hotel Limited, is a mid cap hospitality chain of leisure hotels.

Based on the strong 3QFY23 performance of Lemon Tree Hotel Limited, the brokerage has initiated a buy rating on the stock of this company. "We expect Lemon Tree Hotel Limited to deliver a revenue/EBITDA/Adj. PAT CAGR of 27%/24%/36% over FY23-25 and RoE to improve to 21.6% by FY25. Factoring in strong 3QFY23 performance, we raise our FY23 EBITDA estimate by 5%, while maintaining our FY24/FY25 estimate. We reiterate our Buy rating on the stock. We expect the strong momentum to continue going forward, led by occupancy touching pre-Covid levels, on the back of resilient demand scenario, further increase in ARR; and strong addition of hotels under management contracts."

Buy shares of Castrol India Limited, with a price target of Rs 145 per share

Motilal Oswal feels buying stock of Castrol India Limited will earn you a return of upto 21 %. This mid cap company is the second largest manufacturer of automotive and industrial lubricants in the Indian lubricant market and owns around 20% market share in the overall Indian lubricant market.

As per the brokerage report, Castrol India Limited aims to outperform the market despite the headwinds. "Company has always enjoyed its brand legacy, and we believe it will be able to secure its profitability with a better product mix, cost control and the launch of advanced products with better realization. It is the perfect candidate for a value play with a return ratio of ~45% and dividend payout policy of >70% (translating into a 5% dividend yield). On a one-year forward P/E basis, the stock trades at a ~46% discount to its long term P/E average of 24.8x. We value the stock at 16x CY24E EPS to arrive at a price target of Rs 145. Maintain BUY."

Buy shares of Zee Entertainment Enterprises Limited, with a price target of Rs 265 per share

A potential upside of upto 21% is visible from the stock of media and entertainment company engaged in providing broadcasting services. Brokerage house explains the rationale for rating buy on this stock of large cap company, despite cutting the estimates. "While continued investment in digital content is expected to improve Zee5 KPIs, it will remain a drag on profitability, given the digital segment remains in the investment mode. We lower our FY24 EBITDA/PAT estimates by 10%/11%, given continued investments in both digital and linear content and a weak revenue outlook in the near term. The stock trades at an attractive valuation of 18x FY24E P/E. This is a far cry from its historic multiples of 25-30x about three years back. The potential re-rating will be governed by: a recovery in the ad market, and the completion of the Sony deal, given the strong market position for the merged entity and the growth opportunity. Valuing the stock at 22x FY24E EPS, we arrive at a price target of Rs 265. We maintain our Buy rating."

Share price details of the companies

Company Name	Current market price(Rs/share)	52-week high(Rs /share)	52-week low(Rs/ share)	Free float market cap(Rs in crore)	One year performance
Indigo Paints Ltd	1071.90	1,938.25	1,064.55	1,064.55	43.61% decline
Galaxy Surfactants Ltd	2411.90	3,445	2,302	2,479.89	14.41% decline
Lemon Tree Hotels Ltd	78.65	103.30	45.30	3,800.92	66.46% growth
Castrol India Ltd	119	136.80	99.20	5,761.43	1.23% growth
Zee Entertainment Enterprises Ltd	216.40	308.65	200.50	19,954.21	6.21% growth

(Source: BSE)

Disclaimer:

The stocks have been picked from the brokerage report of Motilal Oswal, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.