1-LIC’s stock price has recovered in the past six months following a sharp decline after its listing in May 2022.
Analysts expect the momentum to continue driven by attractive valuation and strong growth in premium income.
The stock is expected to gain from cyclical tailwind for life insurance companies, after two years of poor showing due a rise in death claims on account of the COVID-19 pandemic.
Analysts also expect LIC’s enterprise value to improve, aided by continued growth in its premium income and an improvement in the value of new business (or VNB).
Trailing P/E of 9.1x and price-to-book value (P/BV) of 9x is also lower than its private sector counterparts.
On average, analysts expect a 20 per cent upside in LIC’s stock
2-Godrej Consumer Products: A Sleeper Pick Making a Comeback in the FMCG Sector
In the ever-evolving landscape of the stock market, identifying potential winners requires a keen eye and a patient strategy. One such contender that has recently caught analysts’ attention is Godrej Consumer Products. Despite its recent underperformance, the company is now garnering upgrades, thanks to a notable turnaround in its earnings, particularly in the soap and home insecticides segments.
Current Market Standing:
Over the last 12 months, Godrej Consumer Products’ stock has exhibited a modest 9.1% increase, trailing behind the impressive 17.5% rallies in both the Nifty50 and Nifty FMCG indices. However, recent financial indicators suggest a positive shift in the company’s trajectory.
Q1FY24 Performance:
Godrej Consumer’s Q1FY24 net sales marked a commendable 10.5% year-on-year growth, outpacing the 5.1% Y-o-Y growth seen in the combined net sales of listed FMCG companies during the same period. This surge is indicative of the company’s ability to navigate challenging market conditions successfully.
Challenges Faced:
While net sales reflect a positive trend, the net profit for Q1FY24 faced a dip of 7.6% Y-o-Y. This decline can be attributed to the financial costs associated with the acquisition of Raymond’s FMCG business. It’s important to note, however, that analysts expect this impact to diminish in the coming quarters, indicating a potential rebound in profitability.
Valuation and Investment Perspective:
Godrej Consumer Products is currently trading at a trailing P/E ratio of 60x and 7x its consolidated book value. Interestingly, this places the stock at a discount when compared to the valuations of its peers, such as Dabur India and Hindustan Unilever. This discount might present an attractive entry point for investors seeking exposure to the FMCG sector.
In the dynamic world of stock markets, identifying hidden gems can be a rewarding but challenging endeavor. Godrej Consumer Products, with its recent uptick in sales and strategic moves in the FMCG sector, is positioning
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