Nuvama’s Investment Recommendations: Key Stocks to Consider for Smart Investing

February 18, 2025 | 12:46 IST

In a recent analysis, Nuvama Institutional Equities has shared its top stock picks for investors, maintaining a Buy rating on three notable companies. Citing a combination of decisive factors such as quarterly financial results, price performance, and shifts in consumer demand, these stances present a focus on strategic investment opportunities. The selected stocks are Bajaj Consumer Care, United Breweries, and Aditya Birla Fashion and Retail.

Bajaj Consumer Care: Navigating Challenges

Nuvama has reaffirmed its Buy rating for Bajaj Consumer Care, though it has lowered the target price from Rs 300 to Rs 274, a cut of 8.6%. This adjustment reflects concerns over weak consumer demand and margin pressure impacting the company’s financial outlook. The brokerage downgraded its earnings per share (EPS) estimates by 9% for FY26 and FY27 after observing a dip in EBITDA during Q3 FY25, attributed to rising costs associated with copra and employee expenses.

Despite these challenges, Bajaj Consumer has enacted a 5% price hike during the quarter in response to increased copra prices. Management has indicated that the current EBITDA margin of 11% is an outlier and is targeting a recovery to 15% in the near future. Nuvama’s analysis indicates a cautiously optimistic outlook for the company’s recovery.

United Breweries: A Positive Outlook

United Breweries has retained its Buy rating, with an increased target price now set at Rs 2,505—up 5.9% from a previous Rs 2,365. Nuvama highlights a recent 15% price hike in Telangana, which covers approximately 17% of the company’s volume and shifts its state EBITDA from previously loss-making to neutral.

The brokerage appreciates United Breweries’ ongoing investment in growth, including a substantial capex of Rs 750 crore allocated to produce both mainstream and premium products, such as Heineken. However, despite these positive strides, Nuvama has cut its EPS estimates by 6% for FY26 and FY27 due to unexpected growth in premium products leading to challenges with bottle return rates and a declining gross margin, alongside increased interest costs related to capital expenses.

Aditya Birla Fashion and Retail: Growth on the Horizon

Aditya Birla Fashion and Retail also continues to enjoy a Buy rating from Nuvama, although its target price has been revised down to Rs 315 from Rs 343, representing a decline of over 8%. The brokerage emphasizes that the company’s margins have seen improvement in Q3 FY25, attributed to a reduction in discounts, while like-for-like growth in retail channels has shown double-digit increases.

Moreover, Aditya Birla has successfully completed a series of fund raises totaling Rs 4,300 crore with promoter participation, which effectively makes it a debt-free entity. The funds are earmarked for balance sheet de-leveraging and expansion in emerging business segments, including Ethnic and TMRW. This strategic positioning underlines the company’s potential for facilitating growth in a competitive market.

Conclusion

As investors evaluate their portfolios, Nuvama’s recommendations present attractive opportunities for those looking to invest smartly. With solid analysis behind the Buy ratings, stakeholders may consider these stocks in line with their financial goals and market strategies.

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