Indian equity benchmarks BSE Sensex and NSE Nifty 50 fell on Wednesday amid weakness across sectors, tracking losses across global markets after dire consumer confidence data from the US dampened investor sentiments and fueled recession concerns. Financial, IT, FMCG and oil & gas shares were the biggest contributors to the losses in headline indices. Broader markets mirrored the losses in both main indices, falling around one percent in early deals. Investors globally awaited a key GDP reading from the US due later in the day for cues. Amid the volatile market conditions, analysts have been advising investors to take a stock-specific approach. Catering to this, analysts at ICICI Direct have picked a gladiator stock that they believe could rally as much as 15% in the next three months.
Jamna Auto: Buy
Target price: Rs 133
Within auto ancillary, analysts at ICICIDirect remain positive on CV space in which Jamna Auto with high relative rank is their preferred pick which they expect to outperform. On the technical front, analysts at ICICI Direct said that buying demand is seen emerging in the stock from the major support area around Rs 100 being the confluence of the rising 52 weeks EMA (currently placed at Rs 100 levels) and the previous major multiyear breakout area signalling resumption of up move and offers fresh entry opportunity. The brokerage recommends buying the stock at Rs 111-116 with a stop loss of Rs 97.50.
Stock to extend the current up move and head towards Rs 133
According to the report, structurally, Jamna Auto share price has retraced its four months up move (Rs 79-125) by only 61.8% over the last six months. Slower pace of retracement indicates inherent strength and a higher base formation after the strong rally of CY21 “We expect the stock to extend the current up move and head towards Rs 133 levels in coming months as it is the 123.6% external retracement of the last six month’s base formation (Rs 125-95),” it said. This would translate to an upside of 15% from the current price of Rs 117 per share.
Stock trading at inexpensive valuations
Jamna Auto Industries is a manufacturer of suspension products (leaf & parabolic) for commercial vehicles (largely M&HCV space). With macro tailwinds in place and the company’s intent to diversify its product as well as client mix, analysts at ICICIDirect expect 29.6% net sales CAGR over FY22-24E. This coupled with its ability to maintain around 14% margin trajectory amid increasing share of new markets, PAT is seen growing at a CAGR of 40.6% to Rs 278 crore by FY24. “At the CMP, it trades at inexpensive valuations of ~16x P/E and ~11x EV/EBITDA on FY24E,” it said.
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