High Conviction Ideas: Religare lists 4 midcap picks with up to 21% potential upside

Mphasis: The brokerage has a ‘buy’ call on this midcap IT stock with a target price of ₹2,960, indicating an upside of over 21%. Despite the macro challenges the IT sector is facing for the near term, the brokerage believes Mphasis strategy of investing in the right growth areas such as new generation technology, partnering with companies for technology and adhering to a customer-centric approach will aid growth for the company. Also, management's optimistic view on margin range because of improving utilisations and gaining large deals would support growth. It estimates the firm's revenue/EBIT to grow at a 15% & 19% CAGR over FY23-25E.

Nuvoco Vistas: The brokerage is bullish on this midcap cement stock with a target price of ₹455, suggesting a healthy upside of 19.5%. Nuvoco plan is to focus on debt reduction & improve utilisation but not be aggressive in capacity addition for next 1-2 years. Besides, their focus will also be on getting high realisation from markets in East and North as well as the idea is to improve sales in markets like Bihar, Bengal, Jharkhand, Gujarat and Rajasthan. On the profit front, Its EBITDA/ton is likely to improve from ₹644/ton in FY23 to ₹826/ton by FY25E, driven by improving product mix & utilisation level as well as some moderation in raw material prices, said Religare. It expects the firm's revenue/EBITDA to grow by 11.4%/22.5% over FY23-25E.

Jyothy Labs: The brokerage is positive on this midcap FMCG stock with a target price of ₹428, implying a 16.5% upside. The brokerage believes Jyothy Labs has come a long way by innovating products across categories, investing in advertisements & promotional activities and gaining market share. Going ahead, the management aims for volume-led growth and at the same time maintain margins. Additionally, they want to invest behind brand building initiatives, manufacturing and strengthening distribution reach in rural areas as well as grow digitally, stated the brokerage. It is optimistic about the growth prospect of the company and estimates its revenue/EBITDA to grow at 15%/37% CAGR over FY23-25E. 

CCL Products: The brokerage also has a ‘buy’ call on this midcap FMCG stock with a target price of ₹776, which indicated an upside of over 20%. Religare believes over the years, CCL Products has been strengthening its position in the coffee market and its focus on premium & value-added products, strengthening the B2C segment as well as continuous capacity expansion will drive growth for the company. Further, its market share in the domestic market and exports stands at 3% and 8% respectively in FY22, and it has plans to gain market share. Moreover, its stable financials, brand recall value and its relationship with customers globally and in India in the B2B segment lead to a repetitive business that is helping growth, the brokerage explained. It remains positive on the growth prospect of the company and has estimated its revenue/EBITDA/PAT to grow at 25%/29%/31% CAGR over FY23-25E.