Fundamental Picks: 1 Forging Stock, 1 Pharma Stock Top Bets Next Week; BUY For 14-17% Gains In 8-10 Months

Brokerage SMC Global Securities have picked two stocks of diverse segment as its fundamental picks next week. The stocks are recommended to buy during trade session from July 28th to August 2nd, for strong double-digit gains of 14% to 17% in the timeframe of 8 months to 10 months.

These stocks are Sona BLW Precision Forgings and Dr Lal Pathlabs.

Sona BLW Precision Forgings Share Price:

The company is one of the world's leading automotive technology companies. The company has emerged as a global supplier with nine manufacturing and assembly facilities across India, USA, Serbia, Mexico and China. It is primarily engaged in designing, manufacturing and supplying highly engineered, mission-critical automotive systems and components to automotive OEMs.

In its investment rationale, SMC said that the company has completely revamped product and technology roadmap. It is widening its ambit to the broader mobility landscape. The diversified revenue with increasing contribution of Battery Electric Vehicles (BEV) auger well for the company.

Further, the brokerage highlighted that the company's strong order book and plans to develop products for a mobility future, i.e EPIC, indicates sustained business growth.

Thus, SMC expects that the stock will see a price target of Rs. 805 in 8 to 10 months' time frame on one year average P/BVx of 14.67x and FY25 BVPS of Rs.54.87. This will be potential upside of 15.2% ahead.

Among the risk factors to the stock will be economic slowdown and high commodity prices.

By end of July 26th, Sona BLW's stock ended at Rs 690.25 apiece with a market cap of Rs 40,480.44 crore. It has a PE ratio of 75.27x, while its return on equity is robust to at 20.89x.

Dr Lal Pathlabs Share Price:

Pharma company has 280 clinical laboratories, 5,762 patient service centers (PSCs) and 11,619 pick-up points (PUP) as of March 31, 2024.

SMC cited Dr Lal's management's strategic focus areas including geographical expansion, portfolio diversification and digital transformation, are driving significant progress. During FY24, it has provided services to 27.6 million patients and tested a total of 78.2 million samples, representing a growth of 8.1% in samples over previous year.

Further, SMC's note added that the company is expanding its reach in core markets by strengthening its presence in Tier 3 and Tier 4 towns. Simultaneously, the company is intensifying efforts in key clusters of Western and Southern India. The company continues to leverage its digital infrastructure, including advanced AI and data analytics, to enhance patient
experience and deliver operational excellence.

Hence, the brokerage expects the to see a price target of Rs.3516 in 8 to 10 months' time frame on current P/Bv of 13.89x and FY25 of Rs.253.11. This would be a potential of 14.3% upside in the period ahead.

Here, the risk factors would be strict operational and strategic regulation, and currency fluctuation.

Currently, Dr Lal's stock price stood at Rs 3076.85 apiece with market cap of Rs 25,685.65 crore. Its PE ratio is at 66.82x, and return on equity is at 20.23%.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.