Stocks to buy: BSE, Crompton Greaves – two stock picks by HDFC Securities with up to 40% upside potential

Brokerage firm HDFC Securities’ Institutional Research Desk has picked two stocks to buy amid this market momentum based on their fundamentals and decent upside potential.

These stocks to buy include BSE and Crompton Greaves Consumer Electricals. The brokerage firm has a ‘Buy’ rating on these stocks.

While BSE shares have given multibagger returns of more than 540% in the past one year, Crompton Greaves share price has eased 4% during the same period.

Also Read: Auto stocks to buy: Maruti Suzuki, Hero MotoCorp, Eicher Motors among 7 auto stock picks post March sales

Check out these two stocks to buy:

BSE | Buy | TP: ₹3,050

BSE has attained a 20% and 7% notional and premium market share, largely driven by the rising popularity of its derivatives contracts. Among these, the Sensex contract has matured, commanding 40% of the market share, while the BANKEX is in its build phase, currently holding a 12% market share.

HDFC Securities believes the derivative growth for BSE will continue to be led by the scaling of the BANKEX contract, the go-live of large discount brokers, a higher volume of algo and proprietary traders, an increase in active UCCs, and greater participation of FPIs. 

It expects a revenue and earnings per share (EPS) CAGR of around 34% and 42% over FY24-26E, led by a revival in transaction revenue. The brokerage has a ‘Buy’ rating in the stock with a target price of ₹3,050 per share.

Also Read: Buy or sell: Ruchit Jain of 5paisa recommends buying Century Textiles and IRCTC today

Crompton Greaves Consumer Electricals | Buy | TP: ₹380

The summer season has started on a positive note and Crompton Greaves Consumer Electricals has taken a 4-5% price hike in fans (cumulatively over the last few months) which has helped recoup all but 150 bps cost increase. 

The brokerage is of the view that In the medium term, fans are poised for double-digit growth, led by an increasing premium mix, a shift from unorganized to organized and a focus on scaling up the non-ceiling portfolio (TPW). 

“In the medium to long term, we like the Crompton 2.0 strategy, where the focus is on protecting and growing the core (fans and pumps); scaling up the kitchen portfolio as the new vector for growth; transforming the lighting business; premiumisation of the portfolio, led by innovation; GTM excellence and diversification; and entry into 2-3 new segments,” HDFC Securities said.

It believes the sustained execution of the Crompton 2.0 strategy and industry outperformance can help rerate the stock. It has a ‘Buy’ call on the stock with a target price of ₹380 per share, implying an upside of 40% from Monday’s closing price.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 02 Apr 2024, 01:12 PM IST