Caution: Consider Selling These Stocks for Potential 11% Decline, Advises HDFC Securities
When investing in the stock market, reaping profits involves understanding when to exit. Failing to do so might lead to unintended losses. HDFC Securities, a prominent domestic brokerage firm, has identified three stocks that could witness a downward slide of around 11% from current levels. These stocks are Bata India, V-Mart Retail, and Endurance Tech. To safeguard your investments, read on for insights into the projected trajectory and target prices of these stocks.
Bata India: A Slippery Slope
Bata India’s revenue for the June quarter showed a modest 1.6% year-on-year increase to Rs 958 crore. Despite beating HDFC Securities’ estimate of Rs 1,056 crore, the sales of core products demonstrated a decline. This, coupled with a negative outlook for end-of-season sales, has led the brokerage to downgrade its rating to “reduce.” Anticipating low growth and margins, the firm has revised down its FY2024/25 EBITDA estimates by 5-7%. The recommended target price for selling is Rs 1500, reflecting a 9% downside from current levels.
V-Mart Retail: A Potential 10% Decline
V-Mart Retail, while witnessing a sequential revenue growth of 15.4% to Rs 678.52 crore in the June quarter, faced challenges in maintaining profitability. Despite organic business growth at 15%, the profitability figure stood at 7.7%, falling short of the projected 11.8%. This discrepancy can be attributed to changes in the product mix and discounts on premium items. Additionally, margin reduction resulted from expenses related to Limeroad. Evidently, the road ahead is challenging, prompting HDFC Securities to trim its EBITDA for FY25 by 23% and FY26 by 7%. The revised target price of Rs 2050 reflects a potential 10% decline from current levels.
Endurance Tech: Mixed Signals
Endurance Tech reported better-than-expected net profits in Europe for the June quarter, surpassing estimates at Rs 160 crore. Yet, the European business performance lagged behind the European auto industry for the second consecutive quarter. Concerns regarding sluggish demand from domestic and export markets and weak demand in Europe persist. Despite cost reductions and falling energy costs in Europe, the stock is trading at a high multiple of FY2025 EPS. HDFC Securities maintains a “reduce” rating but raises the target price to Rs 1467, signaling an 11% discount from current levels.
In a fluctuating market, staying vigilant and considering expert advice is essential to protect your investments and secure your financial goals.