2 Stocks To Buy With Good Growth & Returns Potential

Motilal Oswal has a buy call on the stocks of Procter & Gamble Hygiene and Healthcare (PGHH) and Britannia Industries. The brokerage sees a decent upside and growth potential for these companies. However, one must also keep in mind that the Sensex at nearly 60,000 points is not very cheap, so be careful when buying large quantities.

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Motilal Oswal has set a price target of almost 21% over the current market price for the stock of the company and has placed a buy call.

According to Motilal Oswal, Procter & Gamble Hygiene and Healthcare delivered strong sales growth in the first half of the decade, with a 20.4% CAGR over FY10-15.

"The company saw a lull period over the next three years due to overhauls such as demonetization and the introduction of GST. However, since FY19, growth seems to have returned strongly (barring a temporary blip in FY20 due to COVID-related disruptions). With 19% sales growth delivered in FY21, PGHH appears to have returned to the growth levels seen in the earlier half of the decade," the brokerage has said.

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The company should see rapid growth over the long term on the back of certain encouraging developments: (a) the increasing pace of distribution expansion, (b) the continuingly strong pace of category development efforts in schools to boost awareness and growth, (c) rising ad spends after a lull in preceding years, (d) a healthy pipeline of new products, (e) accelerated consumer entries into the category through launches at low price points, and (f) the willingness to take price cuts, whenever required, to boost growth.

"We maintain a Buy rating, with a target price of Rs 17,450 (50x Dec'23 EPS)," the brokerage has said.

Buy Britannia Industries, says Motilal Oswal

Brokerage firm, Motilal Oswal also has a buy call on the stock of Britannia Industries, though it has not set a target price on the same.

According to a press release issued by Britannia, the company is witnessing unprecedented levels of inflation in the market prices of palm oil (+54%), industrial fuel (+35%), and packaging materials (+30%), leading to an overall inflation of 14% in 2QFY22.

According to Motilal Oswal, the management was able to partially offset this impact through strategic forward covers and accelerated cost efficiency programs. It has also initiated necessary price hikes across the portfolio.

Consolidated sales rose 5.5% YoY to Rs 36.1 billion (est. INR34.9b) in 2QFY22. Consolidated EBITDA/PBT/adjusted PAT declined by 17.3%/22.1%/23% YoY to INR5.6b/INR5.2b/INR3.8b (est. INR5.8b/INR5.7b/INR4.3b).

"Base business volume growth likely to be between 6% and 7% in 2QFY22 (est. 4%)," Motilal Oswal has said in a press release. The stock of Britannia last closed at Rs 3,611 on the National Stock Exchange.

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal. 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.