2 Stocks To Buy From The FMCG And IT Space According To Sharekhan

Broking firm Sharekhan has recommended buying the stock of L&T Infotech and FMCG major Nestle in its recent research reports.

Buy Nestle India, says Sharekhan

Sharekhan has set a target price of Rs 22,395 on the stock of Nestle, as against the current market price of Rs 20,030. The broking firm believes that Nestle has maintained its thrust on achieving double-digit revenue growth by penetrating deep in rural markets (covered 89,288 villages), innovation (that contributes 4.3% of sales) and accelerating footprint through new channels.

Nestle is the largest food company with a strong portfolio of brands in the packaged food & beverages space, which will help it achieve good growth at a time when consumers are shifting to trusted brands, rural aspirations are improving, thereby boosting overall penetration.

According to Sharekhan, Nestle is planning to reward its shareholders with a higher dividend in the coming years by transferring Rs. 837 crore from the general reserve to retained earnings.

"We maintain a Buy on Nestle India with a revised price target of Rs. 22,395. Revenues and net profits are expected to clock a CAGR of 14% and 18% over CY2020-23," the broking firm has said.

Buy L&T Infotech, says Sharekhan

Sharekhan has set a price target of Rs 5,750 on the stock of L&T infotech as against the current market price of Rs 5142.

According to Sharekhan, L&T Infotech is expected to witness sustainable growth leadership in FY2022E on account of strong client relationships, recovery in impacted verticals, strong spending in top accounts in resilient verticals, prudent hiring and talent policies, and superior digital competency position.

"Further, management eyes net profit margin of 14-15% going ahead despite investments in capability building and bolstering of sales team, aided by strong revenue growth, higher offshoring, productivity enhancement, cost-optimisation measures, and hedging strategy.

We estimate L&T Infotech to report USD revenue/EPS CAGR of 17%/19% over FY2020-FY2024E. At the current market price, the stock is trading at 38x/32x/28x its FY2022E/FY2023E/ FY2024E earnings, which although expensive, is justified given its market-leading revenue growth potential with stable margin, strength in its business model, and strong return ratios. Hence, we maintain our Buy rating on L&T Infotech with a revised price target of Rs. 5,750,"

 

Disclaimer

The above stocks are based on the report of Sharekhan. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor