Market regains momentum after last week's 3.5% fall; top 4 stocks can give up to 50% returns

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26 Aug, 2025 12:21

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The Nifty reclaimed 9,800 on Monday, rising nearly 1 percent mostly on short covering in beaten down stocks, after seeing a sharpest fall of 3.5 percent last week post its 9-month rally.

Among other things putting pressure on the market are geopolitical tensions, weak earnings, SEBI's action on 'shell' companies, and high valuations. But there are few companies where we can expect up to 50 percent upside in next 12-month.

The stocks include Hindalco Industries, CESC, TVS Motor Company and Strides Shasun which were come out with their June quarter earnings, which were mix bagged but broking house Motilal Oswal is expecting up to 50 percent return from these companies.

CESC | Rating: Buy | Target Rs 1360 | Upside: 50%

The company’s PAT grew 2.3 percent Y-o-Y to Rs 178 crore, marginally below estimate of Rs 182 crore and sales grew 2.6 percent Y-o-Y to 2,853MU in the June quarter, after declining for the last few quarters.

Dhariwal PLF rose 24pp YoY to 54 percent in 1QFY18, led by the start of Noida PPA and sale in merchant market. The firm expect Dhariwal’s EBITDA to increase from Rs 10.9 crore in FY17 to Rs 281 crore in FY18 on full benefit of the PPA.

Its retail business under Spencer has shown slow growth rate as its same-stores sales growth decelerated from double-digit in the last few quarters to just 2 percent YoY.

The demerger into four separate businesses would drive value by unlocking the potential of the distribution and retail businesses. While, the distribution business valuation will get re-rated on reduced volatility in earnings, and thus, its cost of equity.

TVS Motor Company| Rating: Buy | Target Rs 612 | Upside: 14%

In the June quarter, the company has reported volumes growth of 12.2 percent and realisation rose 5.2 percent, Y-o-Y.

However, the increase in raw material cost has hurt the margins of the company, which came at 6.2 percent, down 80 bps, Y-o-Y due to one-time GST compensation of Rs 16.5 crore and pending discounts of BS3.

The management indicated that the cost increase due to BS-3 to BS-4 is not fully passed on to customers, so to compensate this, the company intends to take price increase of 1 percent by 2HFY18.

The company is targeting market share gain of 1-1.5 percent in FY18 to reach 15-15.5 percent led by product actions.

The firm has cut its EPS estimates for FY18 and FY19 by 12.1 percent and 8.7 percent, respectively, on increase in raw material cost and higher tax rates.

Strides Shasun | Rating: Buy | Target Rs 1300 | Upside: 48%

The broking firm has maintained positive stance on Strides Shasun despite muted performance of the company in 1QFY18.

The company’s Q1 sales increased 10 percent Y-o-Y to Rs 840 crore in 1QFY18, led by higher regulated market formulation and API sales. However, the EBITDA margin shrunk sharply from 16.8 percent in 1QFY17 to 10.4 percent in 1QFY18 due to pricing pressure in some products in the US and an inferior product mix in anti-malaria.

The company has filed five ANDAs YTD and 29 are pending for approval. It maintained the guidance of 15-20 filings in FY18. Its partners are expected to receive approval for Sevelamer in the near term, which is driving API sales.

In Q1FY18, the company had four USFDA inspections, of which, three had zero 483. The Bangalore facility was issued 483 with three observations. However, there has been product approval post inspection, indicating minimal regulatory risk over the medium term.

The firm remain positive on the company, given its R&D capabilities, vertical integration, strong compliance culture and diversified presence.

Hindalco Industries | Rating: Buy | Target Rs 309 | Upside: 40%

According to Motilal Oswal the company’s standalone 1QFY18 EBITDA grew 1 percent Y-o-Y to Rs 1150 crore, lower than estimate of Rs 1200 crore. Meanwhile, its adjusted PAT has increased 41 percent YoY to Rs 420 crore.

The Production of the company was strong at 109kt, but sales were lower at 105kt.

The company remains focused on deleveraging, cost reduction and asset sweating. The free cash flows of the company are rising rapidly and capital allocation is strictly towards the high IRR projects.

Disclaimer: The author is Motilal Oswal. The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.