Due to the increase in rural demand in the country and the government’s emphasis on infrastructure, the demand for shares of companies related to FMCG and infrastructure sector manufacturing pipes, tankers and other products is showing an increase. Brokerage firms Motilal Oswal and Jefferies have expressed hope of good gains in two stocks in their latest recommendation. Let us know how strong they are in terms of returns.
Hindustan Unilever
Rating -BUY Target Price – Rs 3280 Brokerage Firm – Motilal Oswal
The increase in rural demand has increased the brightness of the shares of FAMCG company Hindustan Unilever. Due to recovery in the urban market after COVID and good prospects of Kharif crop, the demand in the rural market will be good. Meanwhile, commodity prices have risen and this will have an impact on the cost of the company. Especially the prices of bath and washing soap and tea can increase.
The company’s sales have grown by 90 percent in the last decade. The company’s management has set a target of double digit growth in the next decade. The prospect of rapid growth in FMCG demand in the country, driven by premiumization of the company’s products and HUL’s synergy (through merger) with GlaxoSmithKline Consumer Healthcare Limited is giving new strength to its shares.
The company is seeing a growth of 14 to 15 percent in the next ten years. Motilal Oswal has not changed its estimate considering the better position of the company and has kept a target price of Rs 3,280 with BUY rating.
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Astral
Rating – HOLD Target Price – Rs 2040 Brokerage Firm – Jefferies
Brokerage and research firm Jefferies has expressed good prospects in the shares of pipe maker Astral. The company has revealed its strategy in the Rs 50 billion market for water tanks. Based on this, Jeffries has predicted strong growth in the company. New products have been launched in the pipe and adhesive segment of the company. Distribution has also increased. According to a Jeffries analysis, Astra Pipe’s sales per distributor between 2015 and 2021 have been faster than that of its competitors. It has grown at a pace of about 64 percent. Between the financial year 2020-24, ASTRA can grow at 20 percent and. At the same time, the net profit can go up to 27 percent.
The company entered the water tank market a few quarters back with the Sarita brand and is seeing a market size of Rs 50 billion. It shows a growth of 10 percent. Astra has started production in Gujarat with the ASTRAL brand and production is slated to start in Rajasthan in September 2021. The company has launched new products in all verticals. Pipelines, water tanks, adhesives and infrastructure related pipeline products have increased the growth prospects of the company. That’s why Jeffries has given it a rating of ‘HOLD’ and has kept its target price at Rs 2040.
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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