Motial Oswal has picked three stocks: Tata Consumer Products, Dalmia Bharat, and Mahanagar Gas to bet on in a falling market. The brokerage sees an upside potential of up to 20% in one of these stocks. Read to know the detailed analysis behind these picks.
Motilal Oswal on Tata Consumer Products
Motilal Oswal maintained its Buy rating on Tata Consumer Products, with a target price of Rs 1,270, implying an upside of 20% from the current market price.
The brokerage expects margins to recover in the Indian beverage business due to increasing gross margins in the tea business (led by moderating tea prices) and signs of decent tea crop growth this harvest season.
Further, growth businesses are expected to show strong traction from Q2 onwards. The International business is expected to maintain a similar performance in FY26.
The brokerage firm expects Tata Consumer Products to clock a CAGR of 10% for revenue, 12% for EBITDA, and 13% for net profit during FY25-27.
Motilal Oswal on Dalmia Bharat
Dalmia Bharat’s operating performance was above the brokerage’s estimates, led by better cost control. Though volumes were slightly below estimates.
Motilal Oswal believes that the resilient pricing in its core markets, which are East and South, and a likely recovery in cement demand post-monsoon will help the company drive a healthy operating profit margin.
Further, the company announced expansion plans to fuel its medium-to-long-term growth and remain competitive in its core markets.
The brokerage has a Buy rating on Dalmia Bharat and a target price of Rs 2,660, which implies an upside potential of 17%.
Motilal Oswal estimates a volume CAGR of 7% over FY25-28 and an EBITDA per tonne of Rs 1,130 for FY26, Rs 1,170 for FY27, and Rs 1,210 for FY28 compared to Rs 820 in FY25. TO give you context, the average EBITDA per tonne was of Rs 1,070 over FY20-24.
Motilal Oswal on Mahanagar Gas
Motilal Oswal has a ‘Buy’ rating on Mahanagar Gas and a price target of Rs 1,700 for the next 12 months, implying an upside of 15%.
“We expect a 9% CAGR in volume over FY25-27, driven by multiple initiatives implemented by the company, such as collaborating with OEMs to drive conversions of commercial CNG vehicles and providing guaranteed price discounts to new I/C-PNG customers,” said Motilal Oswal.
Management has guided for a Rs 0.6-0.7 per standard cubic meter (scm) CNG EBITDA margin impact due to Petroleum and Natural Gas Regulatory Board’s (PNGRB) upcoming shift from a 3-zone to 2-zone gas transmission tariff regime.
While we continue to believe that MAHGL is best-placed to pass on the cost increase to customers, we lower our adjusted EBITDA/scm margin assumption for FY26 by Re 1 to Rs 9.2 and by Re 0.5 to Rs 9.5 for FY27.