Buy Cipla and Pidilite Industries; Sell TCS and Marico | Indianotes.com
STOCK IN FOCUS
Pidilite Industries closed 1.5% higher in trade today at Rs901, compared to 0.6% fall in the benchmark Nifty.
Pidilite is a dominant player in India’s adhesives & sealants and construction chemicals industry with iconic brands like Fevicol, M-Seal, Fevikwik and Dr. Fixit.
Unmatched market leadership in under-penetrated category, strong brand equity, robust pricing power and superior management bandwidth would continue to drive growth for Pidilite, going forward.
The company posted stellar set of numbers in 3QFY18 with consolidated net sales and net profit growing by 16% and 18% respectively. Volume growth was impressive at 22% albeit on a lower base.
We expect Pidilite’s revenue and earnings to clock 13.5% and 16.5% CAGR, respectively through FY17-20E. Based on expected EPS of Rs26.7, the stock currently trades at 33.7x FY20E earnings.
We have a BUY recommendation on the stock with a Target Price of Rs997
TCS (LTP: 3035)
For today’s trade, short position can be initiated at 3070-3100 for target of Rs 2895 with a strict stop loss of Rs 3190.
CIPLA (LTP: 589)
For today’s trade, long position can be initiated at Rs 584-588 for target of Rs 602 with a strict stop loss of Rs 579. Traders are advised to avoid early morning whipsaw.
MARICO (LTP: 308)
For today’s trade, short position can be initiated at Rs 310-313 for target of Rs 301 with a strict stop loss of Rs 316. Traders are advised to avoid early morning whipsaw.
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