Bharat Forge, TVS Motor, KEC International among 11 stocks that can double your wealth in 3 years
In line with this performance of the Indian share markets, DAM Capital has listed 11 stocks that have the potential to double returns from the current level in three years.
Domestic equity indices Sensex and Nifty recently hit record highs as the NSE Nifty crossed the 20,000 mark and the S&P BSE Sensex surpassed the 67,920 level. Not just that, even the broader market indices, the BSE Midcap 100 and the Smallcap 100 have outperformed by surging around 28 per cent.
In line with this performance of the Indian share markets, DAM Capital has listed 11 stocks that have the potential to double returns from the current level in three years. DAM Capital has suggested to 'buy' the below stocks based on earnings before interest, tax, depreciation, and amortization or EBITDA.
DAM Capital is bullish on KEC International on the back of a sustained uptick in transmission and distribution activity across both domestic and international markets, receding competition in railways, and sustained momentum in the civil segment.
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The brokerage expects the traction to remain strong and drive healthy earnings at a 39 per cent compound annual growth rate (CAGR) over FY23-25.
India's leading retailer with brands such as Westside, Zudio, and Star, and a joint venture with global brand Zara in its portfolio, according to the report, Trent (India) has the potential to double its return in three years on the back of the Westside store count, expected to expand to around 310 stores by FY26, and a CAGR growth of 12 per cent over FY24-26E. For Zudio, the stores are expected to grow to around 900 by FY26, with a 32 per cent CAGR.
India's fourth-largest tractor original equipment manufacturer (OEM) company's stock could give double returns supported by margin expansion, healthy cash flow, and strong return ratios to expand the valuation closer to the MNC premium, the report says.
According to the report, overall traction in domestic as well as non-auto segment exports would compensate for a likely slowdown in the automobile space over the next two years, which would be beneficial for Bharat Forge.
The brokerage recommends buying Astral Pipes as it has reasonable valuations, a significant addressable market, talismanic leadership at the helm, a proven track record of ground-level execution, specially when the odds were against it, and clean corporate governance.
DAM Capital expects TVS Motor to surprise the Street on the EBITDA margin front FY25 onwards on account of a sizable improvement in the exports market from the current distressed level, while its domestic margins are already trending up closer to double digits.
IDFC First Bank
As per the report, IDFC First Bank will benefit from a lowering credit cost of 1.1 per cent to 1.3 per cent against 2 per cent to 2.5 per cent during pre-COVID-19 and COVID-19 as the asset cycle has turned favourable, leading to lower slippages and gross non-performing assets/Net Non-Performing Assets of 1.6 per cent to 1.7 per cent and 0.5 per cent to 0.6 per cent over FY24-FY25E.
DAM Capital expects the company's revenue to grow in FY24 with a combination of a 14 per cent increase in paid suppliers and an 8.5 per cent increase in Annualised Revenue per user, according to them. Overall, this, combined with a 26 per cent increase in Lifetime Membership collections and a 25 per cent increase in deferred revenues, should lead to 24 per cent revenue growth in FY24.
Strong core revenue growth across segments as well as a turnaround in Lloyd margins can drive a 35 per cent CAGR over FY23-25E, as per the report.
DAM Capital is bullish on the premiumisation theme of the company as young consumers aspire for ‘value for money’ in terms of maximum features in the base model itself. The brokerage expects this trend to continue over the next five years.
Mahindra and Mahindra Financial Services
With the brighter outlook of the company's OEM, the brokerage expects the buoyancy in the growth of its business assets to continue in FY25–FY26 as well.