Stock To Buy: ICICI Direct Bets on These 3 Stocks For Over 25% Potential Gains

The market closed on a Bitter note, as benchmark indices fell more than 1%, marking the first weekly drop in four weeks. Today, both Sensex & Nifty ended in red, the Sensex crashed 1017 points ending at 54,303, while NIFTY witnessed a fall of 276 points coming down to 16,202. Despite the fall and market volatility, ICICI Direct is bullish on these 3 stocks and sees over 25% upside in 1 year. Here are the 3 stocks the brokerage recommends buying for good returns in 12 months.

1. MM Forgings +Ltd.

MM Forgings (MMF) is a prominent forging player serving India, Europe and US markets. The company is involved in the business of manufacturing Steel Forgings in raw, semi-machined and fully machined stages in various grades of Carbon, Alloy, Micro-Alloy and Stainless steel. The company's market cap is Rs 2,156 crore.

The stock of the MM Forgings gained 1.04% today to end at the Current Market Price (CMP) of Rs 894.60 per share. The stock is trading at Rs 94.4 per share below the 52-week high of Rs 989 per share level. On the other hand, its CMP is Rs 385.6 per share above the 52-week low of Rs 509 per share level.

The stock has performed well over the year. It has given a positive return of 11.12% in 1 month, 11.99% in 3 months, 51.29% in 1 year, 67.76% in 3 years and 193.31% in 5 years, respectively. However, in the last 1 week, it has given negative returns of 1.71% as the market was volatile due to various international and domestic affairs. The stock is a good buy as it has given consistent positive returns over the years.

The brokerage in its report published on June 7, has stated that the company's stock price has grown at ~24% CAGR from ~Rs 305 levels in June 2017, thereby vastly outperforming the Nifty Auto Index.

"We retain BUY rating on the stock amid supportive macroeconomics, increasing share of machining in product profile & inexpensive valuations. Introducing FY24E, we now value MMF at 14x PE on an FY24E basis for a revised target price of Rs 1250 per share," the brokerage has said.

Considering the CMP and the given target price of the stock by the brokerage, the stock has a potential top gain of 39.73% in 12 months.

 

2. Ador Welding Ltd

Ador Welding Ltd is a leading player in the welding consumables with a 19% market share, welding equipment, automation and projects business. The company's market cap is Rs 926 crore. Welding consumables contributed 81% of revenue in FY22 for the company. The company aims to reduce legacy costs in the project business to improve return ratios.

Today, the stock witnessed a fall of 0.64%, bringing its Current Market Price (CMP) to Rs 680 per share. However, in the last 1 week, the stock performed well and given a good return. The CMP of the stock is trading 29.44% below, nearly Rs 200.2 per share below Rs 880.20, the 52-week high per share level of the stock. On the hand, it is trading 20.57% above, nearly Rs 116 per share above its 52-week low of Rs 564 per share level.

As mentioned the stock has given positive returns over the last 1 week. It also given positive return on 1 month-10.86%, 3-months-2.93%, 1 year-13.32%, 3 years-95.97%, and 5 year-103.56%. The brokerage has also stated that the Ador Welding is expected to continue strong RoCE, and a positive free cash flow trajectory in consumables in comings years despite a challenging environment.

The brokerage has stated in the report, "Going forward, better consumables volumes, rebound in equipment sales and projects business turnaround to drive growth, profitability. Considering strong growth outlook, margin revival, we maintain BUY rating. We value Ador Welding at Rs 890 i.e. 18x P/E on FY24E EPS."

According to the CMP and the given Target price of Rs 890 per share, the stock has the potential of a 30.88% upside during the investment period of 12 to 18 months forward.

3. Hikal Ltd

Hikal is predominantly a B2B player that provides intermediates and active ingredients to global pharmaceutical, animal health, crop protection and speciality chemical companies. The market cap of the company is Rs

Today, Hikal Ltd's stock tanked more than 2.28%, bringing the Current Market Price (CMP) down to Rs 267.80. The stock over the one year has given negative returns of 44.12%. However, in 3 years and 5 years, it has given positive returns of 59.07% and 94.06%, respectively.

With today's fall in share price, the stock is trading at just Rs 2.75 per share above the 52-week low of Rs 265.05 per share level. On the other hand, it is now Rs 474.2 down from its 52-week high per share level of Rs 742 per share. Considering the CMP is near a 52-week low, the stock is a good buy.

The stock has the potential to climb 26.96% in 12 months. ICICI Direct in its report published on June 6, has recommended buying Hikal Ltd for Rs 340 per share. The brokerage has maintains buy despite near-term headwinds. Brokerage continues to believe in the company's execution prowess, visibility capex and the management's expectation of gradual business normalisation in both segments. Recent steep correction continues to offer a decent risk-reward proposition.

Disclaimer

The stocks mentioned here have been picked from the brokerage reports of ICICI Direct. 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.