Overview of Market Trends
The Indian stock market experienced a mixed trading session, with indices Senex and Nifty 50 trading flat. While sectors like metals, PSU banks, realty, and auto stocks saw gains, there was selling pressure in pharma, IT, and FMCG sectors. Despite this, broader markets showed positivity, with the Nifty Smallcap 100 index gaining 0.8% and the Nifty Midcap 100 index rising 0.2%.
HDFC Securities’ Recommendations
HDFC Securities, a leading brokerage firm, has identified two smallcap stocks with strong fundamentals for investors to consider. These stocks, HG Infra Engineering and Styrenix Performance Materials, are expected to offer promising returns in the short-to-medium term.
HG Infra Engineering
HG Infra Engineering has a robust order book and has diversified its business beyond road projects into Rail, Metro, and Solar projects. The company expects significant order inflows in various sectors, with a revenue growth guidance of 15-20% for FY25. HDFC Securities projects steady revenue, EBITDA, and PAT growth for HG Infra Engineering over the next few years. Investors are advised to buy the stock within specified price bands for potential returns.
Styrenix Performance Materials
Styrenix Performance Materials is a key player in ABS with a strong customer base and a debt-free balance sheet. Despite a slight decline in sales in FY24, the company reported healthy performance and is embarking on a large capex program for future growth. HDFC Securities anticipates steady revenue and net profit growth for Styrenix Performance Materials and recommends investors to buy the stock within defined price bands.
Buying Strategy for Investors
Investors are advised to consider buying the recommended stocks within specified price bands and add more on dips for potential returns. The analysis provided by HDFC Securities offers insights into the expected fair value of each stock over the next 2-3 quarters, based on different scenarios.
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