Choice Broking recommends buying these 7 stocks for short term (2024)

Also Read: Is the Indian stock market fairly valued or overvalued? Experts weigh in

Experts expect volatility to subside only after the election results are out. Until then, the market may continue struggling to make a decisive directional move.

Amid the election heebie-jeebies, experts remain positive about the medium—to long-term prospects of the Indian stock market. They believe one should use the dips to buy and accumulate stocks as there are plenty of opportunities across sectors.

They recommend buying quality stocks with healthy fundamentals at this juncture.

Also Read: Stocks to buy: Infosys, Adani Ports among 10 stocks that may rise 8-16% in next 3-4 weeks, say analysts; do you own any?

Kripashankar Maurya, the AVP of research at Choice Broking, recommends buying the following seven stocks for the next one to three months. He expects healthy double-digit gains in these stocks in the short term. Take a look:

DCX Systems | LTP: ₹323.15 | Target price: ₹470 | Upside potential: 45%

DCX has established a joint venture (JV) with ELTA to enhance its profitability.

The JV focuses on railway products, with production slated to commence in FY25 under a product development category offering significantly higher margins than the build-to-print (BTP) category.

The backward integration with Raneal Advanced Systems for PCB assembly will boost margins by approximately 100- 150 basis points.

The company is also exploring opportunities for further expansion in the domestic defence sector.

"We anticipate that DCX's revenue, EBITDA and PAT will grow at compound annual growth rates (CAGR) of 19 per cent, 31 per cent and 32 per cent, respectively, over FY23-26, driven by the ELTA JV, backward integration, and new orders in both export and domestic defence markets. We arrive at a target price of ₹470, based on a 30 times (PE) ratio for FY26E EPS (earnings per share)," said Maurya.

Also Read: Stocks to buy: Tata Motors

Fiem Industries | LTP: ₹1,230.30 | Target price: ₹1,569 | Upside potential: 28%

The stock is driven by continued dominance in the E-2W lighting segment, healthy free cash flow generation, the addition of new clients, diversification into the PV segment (won new orders from EU OEM and domestic OEM) and partnership with Gogoro.

"We expect Fiem to see better than industry growth in the coming year backed by product diversification and capacity expansion. We roll forward the valuation to FY26 to arrive at a target price of ₹1,569 (18 times FY26E EPS)," said Maurya.

Also Read: Nifty 50 tops 23k mark; can Indian stock market sustain gains? Experts weigh in

Coforge | LTP: ₹5,263.60 | Target price: ₹6,007 | Upside potential: 14%

Coforge invests strongly in its sales and marketing capabilities to ensure continued and robust growth in the years ahead. It expects SG&A expenses to be nearly 15 per cent.

Management is confident of delivering robust organic growth in FY25E, led by a 17.3 per cent higher executable order book. It expects growth to be broad-based, led by a turnaround in the travel space.

There is continued opportunity in GenAI and Advanced Analytics. Management is confident of delivering robust organic growth in FY25E backed by high order intake during Q4 and from the synergies of acquisition.

"We arrive at a revised target price of ₹6,007, implying a P/E (price-to-earnings ratio) of 29 times on FY26E EPS of ₹207," said Maurya.

Also Read: Stock to buy: Anand Rathi recommends Olectra Greentech as its stock pick of the month

Cyient | LTP: ₹1,808.20 | Target price: ₹2,060 | Upside potential: 14%

Management intends to sharpen its focus on further strengthening of investment towards growth.

It expects FY25E DET EBIT margins to be between 16 per cent and 18 per cent, similar to FY24.

Management has guided for a high single-digit DET revenue growth YoY in constant currency terms for FY25E, despite weak macros.

The company shall continue to focus on efficiency levers, invest in growth, and strengthen its current platform of offerings across its balanced portfolio of chosen industries.

"We arrive at a revised target price of ₹2,060, implying a PE of 22 times (modified) on FY26E EPS of ₹94," said Maurya.

Global Health (Medanta) | LTP: ₹1,223.20 | Target price: ₹1,457 | Upside potential: 19%

The margins profile remained impacted for the next few years because of the ongoing expansion plan, the delay in getting final approvals on the new facilities, and the lack of a plan to increase tariffs in the coming year.

"We expect Medanta’s revenue, EBITDA and ARPOB (average revenue per occupied bed) to grow at 20.9 per cent, 23.5 per cent and 27.5 per cent CAGR, respectively, over FY24-26E, compared to 36.5 per cent, 76.3 per cent and 236.4 per cent CAGR, respectively, over FY21-FY23," said Maurya.

"The company is in the capex cycle and plans to invest ₹1,000-1,200 crore over the next two years, which will put some margin pressure on the FY25-27E period when the Noida facility operation starts. Factoring in all the above-mentioned parameters, we value the stock based on 31 times EV/EBITDA on FY26E to arrive at a target price of ₹1,457 per share," Maurya said.

Dr Reddy's Laboratories | LTP: ₹5,872.70 | Target price: ₹7,157 | Upside potential: 22%

Dr Reddy’s growth story is based on the growth in the base business and new product launches across geographies.

The company will leverage US and European developments in emerging markets and build on that portfolio, licensing innovative assets from innovative companies.

The internal R&D pipeline, consumer health (JV with Nestlé), biosimilar business, and digital health will drive the growth.

"We expect Dr Reddy’s revenue, EBITDA, and PAT to grow at a CAGR of 13 per cent, 17.4 per cent and 16.6 per cent, respectively, over FY23-26E. We value the stock at FY26E EPS and arrive at a target price of ₹7,157 (17 times FY26E EPS)," said Maurya.

Birla Corporation | LTP: ₹1,426.85 | Target price: ₹1,745 | Upside potential: 22%

The general elections and intense summer weather conditions nationwide are anticipated to affect the demand for cement in Q1FY25.

Traditionally, the Q2 experiences reduced demand due to the monsoon season.

The company will continue to enhance operations at the Mukutban facility, particularly targeting the Maharashtra market to capitalise on tax incentives.

The focus remains on expanding the market share of premium products in Maharashtra, Gujarat, and Rajasthan, where there is ample potential for growth.

Furthermore, management has guided to increase EBITDA/t by 8- 10 per cent in FY25E.

"We expect revenue and EBITDA to grow at a CAGR of 11.5 per cent and 15 per cent, respectively, over FY24-FY26E. Our target EV/EBITDA multiple is 9 times on FY26E EBITDA. Hence, we ascribe a target price of ₹1,745," said Maurya.

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Published: 28 May 2024, 11:12 AM IST