Stocks to Buy for Upto 14% Upside

Nifty rose for the sixty consecutive week on the trot on and registered a new all-time high at 21006 in the week gone by. This was backed by pleasantly surprising GDP data, fall in crude oil prices to 4-month low at $77/bbl, ease in the US bond yields to 3-monthlow at 4.18 percent, higher FPI inflows and strong global cues.

On the global front softening economic data and recent comments from Fed officials, including Chair Jerome Powell, have heightened expectations that the US central bank has ended its interest-rate-hiking cycle and will begin to cut rates as soon as March.

RBI Monetary policy was on expected lines. The Monetary Policy Committee (MPC) kept its stance the same as withdrawal from accommodation to ensure taming inflation under target.

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However, at the same time, the RBI highlighted the risk of over-tightening in the backdrop of global slowdown. This is despite the increase in GDP forecast to 7 percent for FY24 compared to 6.5 percent earlier.

Going ahead key focus next week would be the December 12-13 meeting. The US Federal Reserve is set to announce its policy outcome. The Fed has signalled the end of the rate hiking cycle and will pause in the coming policy meet. A rate cut by the Fed is likely by mid-2024.

Here are the top 2 stocks which can return up to 14 percent upside:

Chambal Fertilisers & Chemicals | CMP: Rs 341.95 | Target: Rs 385 | Upside: 12.6%

Chambal Fertilisers & Chemicals reported lower phosphorus and potassium (P&K) prices and volumes translate to subdued revenue growth during Q2 FY24.

However urea production continues to be at optimal levels. EBITDA during the quarter shoot up 38 percent YoY due to lower inventory. EBITDA margin sharply improved during the quarter on YoY basis. The company reported 55 percent YoY growth in net profit during the quarter. Company is diversifying its business towards TAN (Technical Ammonium Nitrate) and Chemicals business.

The company is setting up of TAN manufacturing plant of 2.4 lakh MTPA and weak Nitric Acid plant of 2.1 lakh MTPA. It will invest Rs 1645 crore in these two projects with expected RoCE of 15-17 percent per annum.

The company’s foray into TAN business will boost its growth going ahead. TAN demand is expected to grow at CAGR of ~8-10 percent over FY’22-30 period in multiple core sectors such as Coal, Metal Mining, Infrastructure, etc.

By setting weak nitric acid manufacturing plant, it also shows its intention to foray into nitric acid value chain.

GMR Airports Infrastructure | CMP: Rs 68.6 | Target: Rs 78 | Upside: 13.7%

GMR is the largest airport operator in the country with stake in two of the largest airports, Delhi and Hyderabad, with concession life of 45 years. Delhi and Hyderabad handled 66 million passenger and 21 million passenger, respectively, (market share of ~27%) in FY23.

Also, it has just commenced operations in Goa which is a lucrative destination. Airport businesses are monopoly, as a result, they are regulated in nature. However, non-aero charges and land side development provide attractive upside for the airport operator.

GMR has been expanding its terminals in Delhi and Hyderabad with capex of Rs 17000 crore, thus increasing the regulated asset base by 2x. The terminal capacity is likely to increase to 100 million passenger in Delhi and 34 million passenger in Hyderabad by FY24E-end.

_{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.}