Gensol Engineering, IPCA Labs Top 2 Stocks That can Fetch Up to 17% Return


by Sandip Das on 19 February 2024,  7 min read

Gensol Engineering, IPCA Labs Top 2 Stocks That can Fetch Up to 17% Return

Indian equity market ended the week on a positive note with benchmark indices Nifty50 and Sensex gaining 1.15 percent and 1.16 percent to settle at 22,040 and 72,426 levels respectively.

Broader markets underperformed the benchmarks as Nifty Midcap 100 gained 0.4 percent while Nifty Smallcap 100 lost 0.5 percent during the Week. There was increased demand for shares in PSU banks, oil & gas, and the auto sector, while FMCG, healthcare, and media shares experienced downward pressure. However, at the beginning of the week selling pressure was seen primarily driven by a surge in exchange margin requirements, particularly impacting mid and small-cap positions.

While on the global front, higher-than-expected U.S. CPI data pushed back traders’ expectation of rate cuts by the Federal Reserve anytime soon. Dow Jones Index tumbled after a higher-than-expected consumer inflation reading pushed back market expectations of imminent interest rate cuts, driving US Treasury yields higher. US Consumer Price Index rose by 3.1 percent for the 12 months ended in January.

Going forward, one can expect stock-specific action to continue. Investors are advised to stick to quality names in the current market situation. Talking about levels, the zone of 21,650-21,600 is likely to act as a crucial support for the Nifty50 index. Any sustainable move below the level of 21,600 will lead to further selling pressure on the index.

Here are the top 2 buy ideas that can fetch up to 17 percent return:
Gensol Engineering | CMP: Rs 1273.5 | Target: Rs 1490 | Upside: 17%

Gensol Engineering is a solar EPC company that accounts for 80 percent of total revenue. Apart from solar EPC the company has also a presence in the EV leasing business and Solar tracker business. It accounts for 16 percent and 5 percent of topline respectively. Over the past 2 years, the management has decided that Gensol as a company will play a larger
role in India’s energy transition story and management diversified from EPC into EV leasing and EV manufacturing.

The company has completed more than 600 MW of diverse solar projects including rooftop projects, ground mount projects, and floating solar projects spread across almost all the states in the country.

It has executed 400+ projects across both Turnkey and BOS formats. The company has a total order book of Rs 1,000 crore and has a large bid pipeline. Currently, the solar EPC market is witnessing rapid expansion because of the increased demand for clean and affordable energy sources. This is also greatly supported by the government’s visionary initiatives and policies promoting renewable energy, including the announcement by the Prime Minister to set up solar roof-top systems for homes in India.

Gensol’s credibility and great engineering prowess help the company to capitalize on this growing trend of renewable energy and electric mobility.

Also read: Zenith Drugs IPO: Check Price Band, Issue Size, Objectives & More
IPCA Laboratories | CMP: Rs 1243 | Target: Rs 1375 | Upside: 10.6%

Ipca Laboratories is a fully integrated Indian pharmaceutical company. It manufactures a wide array of formulations and APIs for various therapeutic segments. The domestic formulations business is expected to grow at a healthy pace. It is likely to be a key growth driver for the company.

The company is witnessing strong demand traction in the API segment and is implementing de-bottlenecking to ease capacity constraints. Over the next year, Dewas expansion would come on stream and drive the topline.

Moreover, the company has set up a new API plant at its Ratlam facility with a 50MT capacity, which is on the verge of commercialisation. Expected improvement in the formulation business, increased opportunities in the API space, and healthy traction from the institutional segment indicate strong earnings potential for the company.

The company reported a strong set of Q3 FY24 numbers. Its revenue grew 33 percent YoY. EBITDA margin improved by 218 bps YoY. Net profitability grew by 67 percent YoY during the quarter.

Research Analyst: Mr. Krishna Kumar Agarwal
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Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.

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