Stock Market Recommendations

According to Motilal Oswal Financial Services Ltd, the top stock picks for the week starting March 17, 2025, are HPCL and Varun Beverages. Let’s dive into the details:

HPCL: A Strong Buy

HPCL’s 3QFY25 earnings exceeded expectations, thanks to strong refining margins and robust marketing volumes. Key growth drivers include LPG under-recovery compensation, the commissioning of the Rajasthan refinery, and the bottom upgrade unit in 4QFY25. Despite potential challenges from reduced Russian crude usage, HPCL’s GRM remains resilient. With marketing margins staying strong and the capex cycle tapering, HPCL is looking at an ND/E improvement to 1.1x by FY26. Trading at 1.3x FY26E P/B with an RoE of 17.3%, valuations are attractive. We reiterate a BUY recommendation, reflecting upside from operational improvements and potential value unlocking.

Varun Beverages: Poised for Growth

Varun Beverages reported a 38% YoY revenue growth in Q4, with significant volume contributions from South Africa and Congo. Organic volume grew 5% YoY, and PAT increased 40% YoY to INR12.5b, driven by higher sales and stable margins. Management anticipates continued double-digit volume growth in the domestic market and even higher in the international market. The Indian beverage market remains largely untapped, with no signs of a slowdown in VBL's growth trajectory despite rising competition. VBL is set to sustain its earnings growth, fueled by increased penetration in new African markets, stable domestic growth, continued expansion & distribution (10% annual addition in outlets), and growing refrigeration in rural areas. We expect a CAGR of 12%/17% in revenue/PAT over CY24-26.

Disclaimer: The opinions, analyses, and recommendations expressed herein are those of the brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.