Stock market recommendations: According to Motilal Oswal Financial Services Ltd, the top stock picks for the week (starting March 17, 2025) are HPCL and Varun Beverages. Let’s take a look:
HPCL:
HPCL’s 3QFY25 earnings beat estimates, driven by strong refining margins and robust marketing volumes. Key catalysts include LPG under-recovery compensation, the commissioning of the Rajasthan refinery, and the bottom upgrade unit in 4QFY25. Despite potential headwinds from reduced Russian crude usage, HPCL’s GRM remains resilient.
Marketing margins are strong, and the capex cycle is tapering, improving ND/E to 1.1x by FY26. Trading at 1.3x FY26E P/B with an RoE of 17.3%, valuations are attractive. Reiterate BUY, reflecting upside from operational improvements and potential value unlocking.
Varun Beverages:
Varun Beverages posted a 38% YoY revenue growth in Q4, with strong volume contributions from South Africa and Congo. Organic volume grew 5% YoY, and PAT increased 40% YoY to INR12.5b, driven by higher sales and stable margins. Mgmt. guided for continued double-digit volume growth in dom. market & much higher in international mkt. Indian beverage market remains largely untapped & continue to grow with no signs of slowdown in VBL growth trajectory despite rising competition.
VBL is poised to sustain its earnings growth, driven by increased penetration in new African markets, stable domestic growth, continued expansion & distribution (10% annual addition in outlets), and growing refrigeration in rural areas. We expect a CAGR of 12%/17% in revenue/PAT over CY24-26.
Disclaimer: The opinions, analyses and recommendations expressed herein are those of brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.
