Stocks to buy: Natco Pharma, LTIMindtree among top four picks by SMC Global for this week, eyes 20-30% upside at TP

Stock market today: Indian stock market benchmarks —Nifty 50 and Sensex—extended their losing streak into the fourth consecutive session on Wednesday, July 24, due to profit booking in financial and banking shares after Finance Minister Nirmala Sitharaman announced a hike in securities transaction tax (STT) and short-term capital gains tax in Union Budget 2024.

The 30-share BSE Sensex declined 280.16 points or 0.35 per cent to settle at 80,148.88 with 19 of its components closing lower and 11 with gains. During the day, the benchmark tumbled 678.53 points or 0.84 per cent to 79,750.51, even as the mid-and small-cap segments recorded healthy gains by the end of the day.

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Nifty 50 ended the day with a loss of 66 points, or 0.27 per cent, at 24,413.50. Analysts said that the ongoing April-June quarter results for fiscal 2024-25 (Q1FY25), which have been largely muted, will decide the near-term trend.

In the current market scenario, domestic brokerage firm SMC Global Securities has released its top four stock picks for this week. The brokerage has selected the quality stocks on technical as well as fundamental parameters. The stocks have robust fundamentals and are well-placed to yield good returns for investors in the next one-year time frame, according to the brokerage.

Weekly Stock Picks by SMC Global Securities

Let's take a look at the top four technical and fundamental stocks for this week by brokerage SMC Global Securities:
 

1.Natco Pharma: Current Market Price (CMP): ₹1,224.10; Target Price: ₹1,551, Upside: 27 per cent

Natco Pharma is recording organic growth in its Chlorantraniliprole (CTPR) business in India, and is also registering the product in international markets, with Brazil already being completed. The management expects CTPR to contribute significantly to both the company's bottom line and top line, growing the business to Rs. 400-500 crore within the next 3-4 years.

Strict operational and strategic regulation and currency fluctuation, are the key upside risks to the pharma company's growth trajectory. The company has effectively established a local presence through its partners, ensuring sustained business growth. Going forward, the management plans to focus more on markets like Canada and Brazil, which offer robust growth opportunities. 

The management is confident about its business growth, order books, and earnings outlook. The brokerage expects that the stock will see a price target of Rs. 1551 in 8 to 10 months on a current P/BV of 3.75x and FY25 BVPS of Rs.414.19.

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2.Bikaji Foods International: CMP: ₹697.95; Target Price: ₹830, Upside: 19 per cent

Bikaji Foods Internationa has targeted a volume growth of 13 per cent-15 per cent for the next two years with the expectation of 2-4 per cent price rise in FY25. Also guided for 32.5-33 per cent gross margin for FY25 on account of focused on utilizing existing capacity and looking for potential acquisition opportunities.

On the bottom-line front, the EBITDA margin for the year improved, which was led by a reduction in commodity prices, superior mix, operating leverage and effective cost management. Moreover, the company is strengthening its distribution network to achieve deeper distribution across its core and focus markets. The brokerage expects that the stock will see a price target of Rs. 830 in 8 to 10 months on current P/BVx of 14.34x and FY25 BVPS of Rs.57.90E

3.LTIMindtree

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at 5,164. For a significant period, the stock endured downward pressure, consistently trading below its 200-day exponential moving average (DEMA) on the daily timeframe. 

Recently, however, there has been a notable resurgence as the stock regained momentum, surpassing both its 200 DEMA and a crucial resistance level of 5,100. Currently, there is a clear breakout above a Symmetrical Triangle pattern, supported by continued buying activity. Therefore, according to SMC Global Securities, one can buy the stock in the range of 5,750-5,760 for the upside target of 6,550-6,600 levels with SL below 5,200 levels.

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4.Bajaj Finserv

The stock's 200-day Exponential Moving Average (DEMA) on the daily chart is currently at ₹1,590. For more than three months, the stock has been consolidating in a broader range of 1,520-1,620 levels, with prices hovering around its 200-day exponential moving average on daily charts. Over the period of consolidation, the stock has formed an Inverted head-and-shoulder pattern. 

This week, the brokerage observed a fresh breakout into the stock above the neckline of the pattern formation. The sudden spike in volume activity along with the breakout suggests further upside in the stock. Therefore, according to SMC Global Securities, one can buy the stock in the range of 1,620-1,640 levels for the upside target of 1,750-1,760 levels with SL below 1,540 levels.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.