Nuvama’s Updated Stock Picks: A Closer Look at Bajaj Consumer, United Breweries, and Aditya Birla Fashion
February 18, 2025, 12:46 IST
In a significant reshuffle of its model portfolio, Nuvama Institutional Equities has provided fresh insights and recommendations on several stocks, advising investors to consider Bajaj Consumer, United Breweries, and Aditya Birla Fashion and Retail as strong buys. These recommendations have been based on thorough assessments of quarterly results, share price performance, and various market metrics including consumer demand and recent price adjustments.
Bajaj Consumer Care: Cautious Optimism Amid Challenges
Nuvama has retained a Buy rating for Bajaj Consumer Care, although, it has lowered its target price from Rs 300 to Rs 274—an adjustment of 8.6% due to the prevailing weak consumer demand and pressures on profit margins. The brokerage noted that the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q3 FY25 were hampered by increased copra prices and rising staff costs, leading to a year-on-year drop in EBITDA margins by 388 basis points, settling at 11.2%.
In response to these market pressures, Bajaj Consumer Care has implemented a 5% price hike in the recent quarter. Management has expressed confidence that the recent drop in EBITDA margins is not indicative of long-term performance, projecting a return to a 15% margin in the near future.
United Breweries: Strengthening Growth Potential
On the other hand, Nuvama has reaffirmed its Buy rating for United Breweries, with a newly increased target price of Rs 2,505—up 5.9% from an earlier Rs 2,365. Nuvama points to a strategic price hike of 15% in Telangana, which accounts for 17% of the company’s volume, positioning United Breweries to achieve EBITDA neutrality in the state, in stark contrast to previous losses.
The brokerage emphasized the company’s commitment to growth, highlighting a planned capital expenditure of Rs 750 crore earmarked for expanding production capabilities for mainstream and premium products, including popular brands such as Heineken. However, challenges remain, as growth in premium products has impacted bottle return rates and gross margins, prompting a 6% cut in EPS estimates for FY26 and FY27, particularly considering the additional debt servicing costs linked to the new capital expenditure.
Aditya Birla Fashion and Retail: Positive Signs Amid Target Price Reduction
Nuvama has also maintained a Buy recommendation for Aditya Birla Fashion and Retail, albeit with a revised target price of Rs 315 down from Rs 343, a reduction of over 8%. The brokerage remains optimistic following a quarter that saw an uptick in margins due in part to lower discount strategies. Notably, the company achieved double-digit growth in like-for-like metrics across retail channels.
Recently, Aditya Birla Fashion and Retail successfully completed a series of fundraising initiatives, raising approximately Rs 4,300 crore with significant involvement from its promoters, leading to a debt-free status. The raised capital is expected to enhance the company’s growth trajectory, particularly in its ethnic wear and TMRW divisions.
Conclusion: Smart Investing in a Dynamic Market
Investors looking for potential opportunities may find Nuvama’s recommendations a strategic avenue for investment. Each featured company showcases a blend of challenges and growth potential, emphasizing the importance of assessing market dynamics carefully. As always, expert advice and continuous monitoring of market conditions will be crucial in making informed investment decisions.
For the latest analyses on market movements and comprehensive insights into stocks like Bajaj Consumer, United Breweries, and Aditya Birla Fashion, visit Financial Express for expert advice and up-to-date stock market news. Stay informed and enhance your investment strategy with timely alerts and analysis available at your fingertips.
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