Stocks to buy: During the first two months of the April-June quarter of consumer electronics, demand slowed due to the second wave of COVID-19. However, demand started improving in June. Domestic brokerage and research company Motilal Oswal said that according to the current trend, the demand remained strong at the end of the first quarter of FY 2022. He said that it is expected to increase further in the coming months. The coming festive season will play an important role in this.
However, demand is improving. But consumer electronics companies are still coping with the increased commodity prices. Analysts at Motilal Oswal said with raw material prices rising in the April-June quarter, overall margins were impacted. The amount of bearing varied, with consumer electricals having less impact than consumer durables. He further said that the management has suggested a price hike of 8 to 12 per cent in consumer electricals in 2021.
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Target Price – Rs 435
Orient Electric is the first choice of analysts in the electricals segment. Analysts said that as the company has made an economic recovery from the epidemic, then its margins can grow well. They estimate the Revenue / EBITDA / Adjusted PAT CAGR to be 17%/19%/23% during FY21–24. He further added that Orient Electric is trading with 37% and 11% discounts as compared to Havells and Crompton Greaves.
At present, Orient Electric’s revenue is mainly due to fans. But, the company has prepared a strategy of product expansion to improve the business. Currently, the share price of Orient Electric is trading at Rs 326 per share.
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Target Price – Rs 2,650
Whirlpool is a big choice among manufacturers. The company has a strong 17-18% market share in the refrigerator and washing machine category. The brokerage said that its market share in terms of volumes is increasing and its product portfolio is expected to witness strong structural growth of 12–14% over the next decade. He further said that the demand for washing machines and fridges in the next six months can be surprising. However, for this, with the opening of the economy, the demand of customers should be good.
Currently the stock is trading at Rs 2,174 per share.
(Story: Kshitij Bhargava)