2 Midcap Stocks That Sharekhan Has Recommended To Buy

Markets have begun the new year on a buoyant note, with the Sensex and the Nify both surging. Here are 2 midcap stocks that are on the buy list of brokerage firm Sharekhan.

Buy Jubilant Foodworks stock, says Sharekhan

According to Sharekhan, Jubilant Foodworks recently launched a 20-minute delivery and Italian gourmet pizza, which will act as a key catalyst to improve consumer experience resulting in more traction on the delivery business. "The reduced delivery time from 30 minutes to 20 minutes is expected to enhance consumer satisfaction through better consumer experience and lead to increased frequency of ordering across the market. Launch of the gourmet range of pizza will help the company to improve volumes as it might attract new customers and existing customers might also be tempted to try the new variants. However, near-term headwinds persist in the form of high raw-material prices (cheese and wheat price up by 30% y-o-y) and softening demand post the festive season (November to mid-December witnessed weak momentum in footfalls)," the brokerage has said.

Buy the stock of Jubilant Foodworks for a price target of Rs 770

According to Sharekhan, the company's brand-wise differentiated strategy, aggressive store additions, improving customer experience on the delivery platform, sustained innovation, and customer-centric offerings will drive growth in the medium-long term. "With the right strategies in place, we expect the company's revenue and PAT to report a 22.5% and 37.1% CAGR, respectively, over FY2022-FY2025E. The stock has corrected by 18% from its recent high and currently trades at 37.9x/29.4x its FY2024E/FY2025E earnings. We maintain our Buy rating on the stock of Jubilant Foodworks with an unchanged price target of Rs. 770," the brokerage has said.

NMDC

Another stock that Sharekhan has suggested to "buy" is the stock of NMDC. "Post the export duty withdrawal on iron ore, pellet, and steel by the government, NMDC has rolled back the Rs. 300 price cut it took on lumps and fines on November 17, 2022. In November 2022, NMDC's iron ore sales increased by 5.6% y-o-y to 3.04 MT and India's crude steel production increased by 5.7% y-o-y to 10.4 MT. Chinese steel production for November 2022 increased by 7.3% y-o-y to 74.5 MT and India's iron ore exports reported a sharp increase of 131% m-o-m to 0.3 MT post the removal of export duty by the government. Domestic flat and long prices have been range-bound in Q3FY2023. At current prices, NMDC fines are at a 67% discount to international iron ore prices versus long-term average of 40%. All these factors show steady steel demand, which would help in the pricing of iron ore and, hence, would be positive for NMDC," the brokerage has said.

NMDC: Buy with a price target of Rs 145

The recent withdrawal of export duty on steel/iron ore/pellet and reopening of China will lead to higher prices for iron ore and improved volume growth, which will improve the profitability of NMDC. "Demerger of the steel business will reduce capital intensity and improve dividend pay-out ratio. At the current market price, we expect dividend yield of 8.5% for FY2025E. We upgrade our rating to Buy on the stock of NMDC with a revised price target of Rs. 145 at a target multiple of 4.3x its FY2025E EBITDA," the brokerage has said.

Disclaimer

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