3 Stocks To Buy, Add: Kotak Securities Top 3 Picks From 2 Sectors Showing Return Potential

Kotak Securities has recommended 3 stocks from the sector of Capital Goods and Courier Services. The brokerage has given add call to Delhivery Ltd and buy call to 2 stocks from capital goods sector including KEC International and Kalpataru Power Transmission Ltd. Check key takeaways below:

1. Buy KEC International

Kotak Securities has maintained buy call for KEC International with a target price of Rs 530 apiece. If you buy the stock now at the current market price of Rs 488 apiece, it can surge to Rs 530 in near term thus giving investors a return of 9%.

The last trading price of KEC International is Rs 488 apiece with an intraday gain of 4.42%. The company has a market capitalisation of Rs 12,566 crore. The 52-week high is Rs 549 apiece and 52-week low is Rs 345 apiece, respectively.

The mid cap stock has jumped 69% in last 3-years and 47% in last 5-years. It has jumped 19% in last 1-month and 15% in 1-week only.

According to Kotak Securities, "The Ministry of Power has chalked out a plan for transmission system for the integration of over 500 GW RE capacity by FY2030. The plan entails an investment potential of Rs2.44 tn for setting up additional transmission systems required for having 500 GW of green energy fuel, including 8120 ckm of high voltage direct current transmission corridors, 25,960 ckm of 765 kV ac lines, 15,758 ckm of 400 kV lines and 1052 ckm of 220 kV cable."

2. Buy Kalpataru Power Transmission Ltd

The last trading price of the stock is Rs 561 apiece with an intraday gain of over 2%. The analyst has assigned buy call to the stock with a target price of Rs 635 apiece.

If you buy Kalpataru Power Transmission Ltd now, you can get 13% upside potential. The stock has given 48% return in last 1-year and 33% surge in last 3-months.

According to the analyst, "The strong order book of Rs276 bn/Rs386 bn for KEC and KPTL provides healthy revenue visibility. We expect a decline in commodity prices to start reflecting on margin improvement from FY2024. We, however, would remain watchful of the working capital cycle. Payments have started improving from railways, and we would await a further reduction in debt from the current levels. We maintain our estimates and revise our valuation multiple by 1X for both the companies for the core business, which takes into account fast-tracking of domestic T&D ordering related to renewable energy. We maintain BUY on both KEC (FV: Rs530), valuing it at 14X December 2024E EPS, and KPTL (FV: Rs635), valuing it on SOTP, based on 11.5X December 2024E EPS for the core business."

3. Add Delhivery Ltd

The last trading price of Delhivery is Rs 376 apiece with an intraday gain of 0.93%. The 52-week high is Rs 708 apiece and 52-week low is Rs 306 apiece, respectively. The company has a market capitalisation of Rs 26,755 crore. The stock has declined 36% in last 3-months.

Industry Growth In Ecommerce Potentially Growing In Single-Digit YoY: According to Kotak Securities, Our recent interaction with Delhivery management brings out the impact of both high base and increasing impact of inflation on discretionary spending items. Delhivery expects ~5% qoq growth in 3Q express parcel volumes, of which the festive season boost (impacts 3Q much more than 2Q) would be a decent contribution. In essence, Delhivery appears to be hinting at single-digit yoy growth in industry volumes on a comparable basis.

Valuation: According to Kotak Securities, "We retain Rs395 FV on lower near-term revenue and higher medium-term business estimates. We now expect mid-single digit qoq growth in express parcel revenues in 3Q. We expect 14%/3% yoy growth in express parcel and PTL revenues in FY2023. This leads to higher cuts in near-term financials and a modest 2% cut in FY2025E adjusted EBITDA."

Disclaimer

The stocks have been picked from the brokerage report of Kotak Securities. Greynium Information Technologies, 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 check with certified experts before taking any investment decision.