Nuvama Picks 4 Stocks: Up to 52% Upside Potential Seen

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AuthorAarav Shah|Published at:
Nuvama Picks 4 Stocks: Up to 52% Upside Potential Seen
Overview

Nuvama Institutional Equities has identified four companies—Devyani International, Godrej Consumer Products, Marico, and Oswal Pumps—with potential stock price upsides ranging from 7.6% to 51.8%. Analysts cite corporate mergers, falling raw material costs, green energy initiatives, and strong volume growth as key drivers, positioning these firms for significant gains.

Nuvama Institutional Equities has released a series of research reports identifying four companies poised for substantial growth, with upside potential reaching up to 51.8%. The firm points to a combination of significant corporate mergers, declining raw material expenses, and a national push for green energy as key catalysts creating new market opportunities.

Devyani International: Merger Benefits

Nuvama has set a target price of ₹211 for Devyani International, signaling a potential 51.8% increase from its current ₹139 level. The long-anticipated merger with Sapphire is a major positive, expected to yield significant cost savings on raw materials and streamline daily operations. The combined entity will operate over 3,000 stores, generating nearly ₹80 billion in annual turnover. Additionally, Devyani International is acquiring 19 KFC stores from Yum India at a favorable price, while strategically closing underperforming Pizza Hut outlets to focus on delivery-centric smaller formats.

Godrej Consumer Products: Steady Growth Drivers

The brokerage maintains a 'Buy' rating on Godrej Consumer Products, with a target of ₹1,350, suggesting a 7.6% gain. The company's home care segment is experiencing robust double-digit sales volume growth. Despite pricing pressures in Indonesia due to intense competition, the Indian market remains strong, with Nuvama forecasting a 20% year-on-year earnings growth in India. Reduced costs for key raw materials are also contributing to improved profitability, alongside steady double-digit growth from international markets including Africa, the USA, and the Middle East.

Marico: Margin Improvement and Digital Push

Marico receives a 'Buy' recommendation and a target price of ₹865, indicating a potential 13.8% upside. Nuvama expects total revenue to climb by 27%, driven by a significant 22% expansion in the specialized hair oil business and strong performance in Bangladesh. Profit margins are anticipated to improve due to a 30% drop in copra prices, a crucial ingredient. The company's newer digital-only brands are also showing promising scalability and increasing contributions to the overall business.

Oswal Pumps: Solar Energy Leader

Nuvama initiates coverage on Oswal Pumps with a target price of ₹720, a 42.5% increase from its current trading level. The firm identifies Oswal Pumps as a leader in India's agricultural solar power transition, particularly through the government's PM-KUSUM scheme. The company's in-house manufacturing of solar modules and controllers provides a cost advantage, enhancing its ability to secure government contracts. Oswal Pumps has outpaced competitors in solar pump installations and is set to benefit from the government's target of installing an additional 3 million solar pumps, with expansion plans in key states like Maharashtra and Haryana.

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