Stocks to buy: Kripashankar Maurya of Choice Broking recommends these 4 fundamental picks for the next 6 months

The Indian stock market's performance in 2024 so far has been decent. The benchmark index Nifty 50 is up about 8 per cent year-to-date despite volatility due to domestic and global factors.

The medium-term outlook for the market is positive even though risks of sticky inflation, elevated interest rates for an extended period, and geopolitical developments loom.

The domestic economy is on a healthy footing, and there are high expectations that the government's policy reforms will continue to bolster growth and employment.

The prospect of an above-normal monsoon is another positive point that will augur well for the domestic market.

However, rich market valuation, especially the mid and small caps, remains a concern.

Considering the above factors, experts recommend betting on quality stocks with strong fundamentals for the medium to long term.

Kripashankar Maurya, the AVP of research at Choice Broking, recommends buying four stocks for the next six months. He expects healthy double-digit gains in these stocks. Take a look:

Greenply Industries | Previous close: ₹305.20 | Target price: ₹350 | Upside potential: 15%

Greenply Industries, a major player in India's plywood sector with a 26 per cent market share, has expanded its manufacturing capacity from 24.9mn in FY20 to 65.9mn in FY24 and positioned itself to meet rising market demand.

The company delivered a 10 per cent volume CAGR from FY18 to FY23 and is expected to achieve a 9 per cent CAGR and 10 per cent EBITDA margins by FY26E.

In the MDF (medium-density fiberboard) market, Greenply exceeded its volume guidance by 25 per cent, reaching 124,772 CBM in FY24 with a 14 per cent margin, and anticipates a 60 per cent volume growth due to a lower base and with 16 to 17 per cent margins.

With a net debt reduction of ₹5.02 billion following the transfer of its Gabon business shares, Greenply is set to improve its ROE (return on equity) and ROCE (return on capital employed) from 12.6 per cent and 10.4 per cent, respectively, to 20.4 per cent and 18.9 per cent, respectively, by FY26E.

"We project revenue, EBITDA, and PAT growth of 22 per cent, 31 per cent and 23 per cent CAGR, respectively, over FY23-26E and ROCE expansion to 21 per cent, arrive at a target price of ₹350, rated 'outperform'," said Maurya.

Fiem Industries | Previous close: ₹1,281.35 | Target price: ₹1,569 | Upside potential: 22%

Fiem Industries recently secured new contracts for lighting solutions from domestic OEMs (original equipment manufacturers) and European car makers, with production starting in Q4FY25.

The company's partnership with Gogoro, supplying lighting and mirror solutions for their domestic and export markets, positions Fiem as a key player in the EV (electric vehicle) revolution.

Currently holding a 6 per cent EV revenue share, Fiem supplies lighting solutions to 35+ EV clients, including Ola, Okinawa, and Hero Electric, and will serve the newly launched Ola scooter.

Management projects a 12-15 per cent top-line growth for FY25, driven by new OEM launches and increased revenue from the PV (passenger vehicle) segment.

A planned capex of ₹250-300 crore over the next two to three years, excluding regular maintenance, supports this growth.

"With continued dominance in the E-2W lighting segment, robust cash flow, client diversification, and capacity expansion, we maintain a positive outlook. Rolling forward valuations to FY26, we set a target price of ₹1,569, rating it 'outperform'," said Maurya.

Allied Digital Services (ADSL) | Previous close: ₹155.17 | Target price: ₹209 | Upside potential: 35%

ADSL sees significant growth opportunities in the Middle East, establishing a subsidiary in Dubai and anticipating large deal wins.

At the end of FY24, ADSL's order book stood at ₹14 billion, excluding renewals and annuity business.

Management targets ₹10 billion in revenue in the next two years, driven by global demand recovery, traction in Smart/Safe city projects, and a strong project pipeline.

The company aims to expand into the US and strengthen its position in India, particularly in Tier-II cities, with opportunities from the government's proposed 1000 small-town smart city projects.

ADiTaaS (digital desk) is gaining traction as a low-code/no-code conversational AI SaaS platform. EBITDA margins for FY24 were 12.1 per cent, with the Indian business at 15 per cent, aspiring to reach 20 per cent.

Government projects and O&M (operations and maintenance) contracts promise high margins, with mid-teen margins expected in the next four to six quarters.

"We maintain an outperform rating with a target price of ₹209, based on a P/E (price-to-earnings ratio) of 13.5 times FY26E EPS (earning per share) of ₹15.5," said Maurya.

DCX Systems | Previous close: ₹358.40 | Target price: ₹470 | Upside potential: 31%

DCX Systems is set to capitalise on the 'Make in India' program, allocating ₹2 billion for defence manufacturing to meet the 60 per cent indigenous content mandate.

The company is developing a radar-based railway obstacle system in collaboration with ELTA, positioning itself as a key player in this niche.

DCX targets a significant share of the $13.21 billion offset obligations pending with foreign OEMs, aiming for $1 billion.

The JV with Raneal Advanced Systems for PCB assembly is expected to enhance margins by 100-150 basis points while further domestic defence sector expansion is underway.

Projected revenue, EBITDA, and PAT CAGRs of 19 per cent, 31 per cent and 32 per cent from FY23-26 will be driven by the ELTA JV, backward integration, and new orders.

"We maintain a positive outlook on DCX Systems with an 'outperform' rating and a target price of ₹470, based on a 30 times P/E ratio for FY26E EPS," Maurya said.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.