Financially and fundamentally strong stocks have been identified by Jefferies and Morgan Stanley, offering potential upsides of up to 47 percent. For instance, Cool Drink stock is currently trading at a 29 percent discount, while Cable stock has declined 33 percent from its peak. Given these insights, investors may consider holding these stocks for potential gains.
Here are a few financially strong stock recommendations from top brokerage firms, with upside potential up to 47 percent
Varun Beverages Limited
Varun Beverages Limited (VBL) is a key player in the beverage industry and the second-largest PepsiCo franchisee globally, outside the U.S. It operates across India and in countries like Nepal, Sri Lanka, Morocco, Zambia, and Zimbabwe. VBL offers a variety of drinks, including Pepsi, 7up, Mirinda, Tropicana juices, Aquafina water, and Cream Bell Milkshakes.
Stock Price Movement:
With a market capitalization of Rs. 1,64,353.56 crore, the shares of Varun Beverages Limited were currently trading at Rs. 485.35 per equity share, down nearly around 0.85 percent from its previous day’s close price of Rs. 491.50. The stock is trading below its 52-week high by 28.92 percent.
Target:
Jefferies has maintained a buy rating on Varun Beverages Limited and given a target price of Rs. 715 per equity share, which has an upside potential of 47 percent from the current price of Rs. 485.35.
Rationale for Target:
Jefferies sees strong growth potential for Varun Beverages as its brands continue to gain market share over local competitors. A strong summer season is expected to drive higher demand, benefiting established brands like Pepsi and Coca-Cola.
In contrast, Reliance’s Campa Cola faces supply chain challenges, making it difficult for retailers to maintain stock. Despite offering better margins and aggressive marketing, Campa Cola struggles to compete, as customers still prefer Pepsi or Coke whenever they are available, even at a higher price.
Polycab India Limited
Polycab India Limited is based in Mumbai and manufactures wires, cables, and fast-moving electrical goods (FMEG) like fans, LED lighting, switches, solar products, and conduits. It leads India’s organized wires and cables market with strong manufacturing and distribution networks.
Stock Price Movement:
With a market capitalization of Rs. 76,533.68 crore, the shares of Polycab India Limited were currently trading at Rs. 5,087.85 per equity share, up nearly around 0.33 percent from its previous day’s close price of Rs. 5,071.30. The stock is trading below its 52-week high by 33.12 percent.
Target:
Morgan Stanley has maintained an overweight rating on Polycab India Limited and given a target price of Rs. 7,395 per equity share, which has an upside potential of 45.34 percent from the current price of Rs. 5,087.85.
Rationale for Target:
Morgan Stanley sees a strong growth outlook for Polycab India, driven by rising demand for cables and wires in Q4, boosted by higher government spending and restocking by channel partners. Copper price trends are expected to support better revenue.
Polycab’s exports remain strong, and India’s cable industry could benefit from U.S. tariffs on China and Mexico. Additionally, new competition is unlikely to impact the market for the next four to five years, ensuring stable growth for the company.
Written By – NIkhil Naik
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