HUL, Narayana Hrudayalaya Top 2 Stocks Which Can Fetch Good Returns


by Sandip Das on 13 March 2024,  6 min read


Wall Street traders breathed a sigh of relief, with Jerome Powell once again signaling that he expects the Federal Reserve to cut rates this year even as a strong economy keeps officials on hold for now.

Asian indices traded mixed last week as investors showed their disappointment at Beijing’s plans to support the economy as its week-long annual session of parliament, the National People’s Congress, got underway. China’s “Two Sessions” meeting got underway, with investors watching out for the details of its economic plans after the country projected a GDP growth target of around 5 percent for 2024.

On the domestic front, India’s GDP growth in the current fiscal year ending in March could be very close to 8 percent, as stated by Reserve Bank of India (RBI) Governor Shaktikanta Das. The Governor provided impetus for the market to maintain its positive trajectory.

Also read: AVP Infracon IPO: Top Things to Know Before Subscribing to the Issue

Going ahead, a positive statement by the Fed Chair in the US Congress to cut interest rates this year, falling 10-year bond yield to a 1-month low, the US Dollar Index cooling down to a 5-month low, and rally in the global market, is likely to maintain a positive outlook in the Indian market in the near term.

Here are the top 2 stocks which can fetch up to 9.9% return:
Hindustan Unilever | CMP: Rs 2415 | Target: Rs 2650 | Upside: 9.7%

Hindustan Unilever (HUL) reported a marginal decline in revenue during Q3 FY24. The management expects gradual demand recovery to continue. The company continues to expect marginal negative price growth in Q4 FY24. The current EBITDA margin range of 23-24 percent is healthy and HUL wants to maintain that in the near term.

Home-care volumes grew in the mid-single digits led by premium Laundry but were more than offset by price reductions leading to value-sales declining. Beauty and personal care (BPC) volumes grew in the mid-single digit as well with hair-care and premium skin clocking double-digit growth in volumes. Mass skin care and oral care grew in the mid-single digits.

Further, to boost the sourcing of its key raw materials, HUL is collaborating with the Andhra Pradesh government for palm oil production. This initiative is likely to require investments exceeding Rs 300 crore. Palm oil is a key Raw material for HUL for its body wash and a few food products. Localising palm oil production can potentially give HUL enhanced cost efficiencies, lower forex volatility, and a more secure supply chain.

Narayana Hrudayalaya | CMP: Rs 1183 | Target: Rs 1300 | Upside: 9.9%

Narayana Hrudayalaya Q3 FY24 numbers came in line with the consensus estimates. The company reiterates its aggressive capex plan mainly towards its core and high-performing regions such as Bangalore, Kolkata, and Cayman which enhances growth visibility. Revenue during Q3 FY24 grew by 7 percent YoY to Rs 1200 crore. Average Revenue Per Occupied Bed (ARPOB) for Indian business was up 10 percent YoY to Rs 38,630 per day. This was aided by a better payor mix. Discharges were flat YoY for India.

Cayman revenues improved 9 percent YoY to $30.6 million. Discharges and OP volumes were highest by 26 percent YoY and 25 percent YoY for Cayman aided by commercialization of a new radiation block in Q1.

New hospital margins were at 4 percent against 7 percent in Q2 FY24. The management cited a strong recovery in Q4 FY24. Mumbai unit is expected to be positive by the end of Q4 FY24. Revenue growth was muted in the north and west regions which witnessed an impact from seasonality.

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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