5 Stocks To Buy: ICICI Securities Sees Return Up To 67%, Initiates Buy, Accumulate Call

Leading brokerage firm ICICI Securities has recommended investors to buy 5 stocks with maximum return potential of up to 67%. These stocks are Somany Ceramics Ltd, Gujarat State Petronet, Gujarat Gas Ltd, Page Industries, and Power Finance Corporations. Check key takeaways below:

Name of the company	Potential Return
Somany Ceramics Ltd	67%
Gujarat State Petronet	64%
Power Finance Corporations	59%
Gujarat Gas Ltd	Accumulate
Page Industries	Accumulate

1. Somany Ceramics Ltd

ICICI Securities has assigned buy call to Somany Ceramics Ltd with a target price of Rs 896 apiece. The current market price of the stock is Rs 538 apiece.

If you buy Somany Ceramics today, you will get potential return of 67%. Somany Ceramics (SOMC) reported in-line Q2FY23 consolidated revenue growth of 10.2% YoY (3-year CAGR of 13.5%) with tile realisation growth of 11.3% YoY (+1.3% QoQ) as tiles volume declined 1.7% YoY (+11.5% QoQ; 3-year CAGR of 8.1%) on a high base.

The company has a market capitalisation of Rs 2,286 crore and the company operates in building materials sector. The maximum return it has given in last 3 years at 191%.

According to ICICI Securitie, "Going ahead, margins are expected to improve on falling gas prices and use of alternate fuel (LPG), which is cheaper. SOMC has demand tailwinds due to pick up in housing market and we thus, maintain our BUY rating on the stock with a rolled over Sep'23 target price of Rs896, set at an unchanged 22x PER FY24E."

2. Gujarat State Petronet

ICICI Securities has maintained buy rating to Gujarat State Petronet with a target price of Rs 383. The current market price of the stock is Rs 233 apeice.

If you buy Gujarat State Petronet today, you will receive potential return of 64%. The company has a market capitalisation of Rs 13,171 crore. The stock has given a maximum return of 10% in last 5-years.

According to ICICI Securities, "We have raised our FY23E-FY24E consolidated EPS estimates by ~15-17% to factor in marginally better tariffs and higher Gujarat Gas earnings post its Q2 result. GSPL's target price has been raised marginally to Rs383/sh, offering ~64% upside from CMP. Current valuations seem to capture the pessimistic view about Holdco discount and nearterm concern on tariffs. Maintain BUY." It operates in Gas & Petroleum sector.

Key risks for the mid cap company are higher than estimated tariff cuts, slower demand recovery, and execution delays on pipeline expansions, added the brokerage firm.

3. Power Finance Corporations

ICICI Securities has given buy call to Power Finance Corporations with a target price of Rs 191 and a potential return of 59%. The current market price of the stock is Rs 120 apiece. It has a market capitalisation of Rs 31,720.59 crore.

The large cap stock, operating in Lending Institutions sector, has given maximum return in last 1-month at 17%.

According to ICICI Securities, "Hedging proportion was improved to 68% (vs 44% YoY) to minimise the impact of rupee depreciation and it booked forex translation loss of Rs6.5bn. It declared interim dividend of Rs3 per share (35% payout of consolidated PAT in H1FY23). Maintain BUY with an unchanged target price of Rs191 (0.8x FY24 P/ABV)."

4. Gujarat Gas Ltd

ICICI Securities has maintained "Add" call for Gujarat Gas Ltd with a target price of Rs 554 apiece. The current market price of the stock is Rs 483 apiece with market capitalisation of Rs 33,311 crore. The stock has given maximum return of 174% in last 5-years. The mid cap company operates in Gas & Petroleum sector.

According to ICICI Securities, "We have turned a bit cautious on the next 12-18-month horizon for GGL due to i) continuation of adverse propane to gas economics for Morbi, ii) slower traction from new areas, iii) our estimates of spot LNG prices reverting to US$38-40/mmbtu for FY24e and iv) still healthy valuations of ~21x FY24E EPS, 12.5x EV/EBITDA. Reiterate ADD."

Key risks for the stocks are 1) Renewed LNG price escalation, 2) inability to take price hikes, and 3) failure to execute the company's ambitious network expansion plans.

Gujarat Gas (GGL) has delivered a strong 53% YoY increase in EBITDA and a 62% YoY jump in net earnings to Rs4bn in Q2FY23, despite a material 33% YoY dip in overall volumes.

5. Page Industries

ICICI Securities has maintained "Accumulate" call for Page Industries with a target price of Rs 52,000 apiece. The current market price of the large cap stock is Rs 47,531 with an intraday decline of 2.78%. The company has a market capitalisation of Rs 53,016 crore.

The company has announced an interim dividend of Rs 70 per equity share. The stock, operating in Apparels sector, has given maximum return of 111% in last 5-years.

Page had a softer-than-expected print with revenue growth of 16% YoY (1% volume growth). Management's clarification that core (excluding masks) sales grew 20% with 7% volume growth did help but we would have appreciated this clarity last year itself, said the analyst.

According to ICICI Securities, "We cut our earnings estimate by ~2% for FY23-24E; modelling revenue / EBITDA / PAT CAGR of 23% / 27% / 28% over FY22-24E. Maintain ADD with a DCF-based unchanged target price of Rs52,000."
Key downside risks are underperformance of men's innerwear and sharper-than expected RM inflation.

Disclaimer

The stocks have been picked from the brokerage report of ICICI 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.