Nuvama Institutional Equities has identified three stocks and rated them 'Buy' with significant upside potential based on strong Q1FY27 performance and positive outlook for FY27 growth. The brokerage house sees up to 40% upside potential in one of these stocks over 12 months, following detailed analysis of their quarterly business updates. The recommendations include Godrej Consumer Products, Sobha, and Dabur India, all showing encouraging financial performance despite global headwinds.
Nuvama maintained its Buy rating on Godrej Consumer Products with a price target of ₹1,505, implying an upside of almost 40% from the closing price of July 3. The brokerage expects consolidated revenue/EBITDA to expand 17.1%/12.4% YoY (earlier 12%/10% YoY), with India volumes and sales to grow 8% and 12% YoY, respectively. The company's Q1FY27 performance showed input costs remained elevated but eased towards quarter-end, with the company mitigating via calibrated pricing actions and cost savings programmes. Indonesia volumes/sales are expected to grow 10%/15% YoY as competitive intensity eases, while GAUM sales are projected to expand 20%.
Nuvama maintained its Buy rating on Sobha with a price target of ₹1,702, representing an 18% upside from current market price. The real estate company delivered its best-ever quarterly pre-sales of ₹3,660 crore, up 76% YoY and 79% QoQ. Sobha's share of bookings shot up 74% YoY to ₹2,990 crore, driven by 6.9 msf of launches during the quarter, including the much-awaited Hoskete project. Bengaluru's share in overall sales by value surged to 57% during the quarter, with realisation rising 9% YoY to ₹15,655 per square feet. The strong performance was supported by better geographical diversification and improved sales outlook for the company.
Nuvama retained its 'Buy' rating on Dabur India with a target price of ₹620, implying an upside of approximately 40%. The company's Q1FY27 business update was marginally ahead of the brokerage's initial expectations. Nuvama estimates consolidated revenue and EBITDA to grow 11% YoY and 10.7% YoY, respectively (initial estimate: 9.5% and 7.2% YoY). India volumes are expected to rise 7% YoY, aided by improving demand trends and rural outpacing urban growth. The brokerage expects international business to grow ahead of estimates at 17% and 11-12% in INR/CC terms, while the Home and Personal Care segment is projected to grow near teens driven by high-teens growth in Hair Oils and Shampoo, and Oral Care likely to grow at near double-digit led by Meswak.
The Q1 business updates indicate an encouraging start to the financial year for these three companies despite global headwinds. Improving demand trends, especially in rural areas, helped offset the impact of geopolitical tension on raw material prices. However, the second half of the year is seen as the ultimate game-changer for India Inc. The brokerage's analysis suggests that better geographical diversification and operational improvements across these sectors position these companies well for sustained growth in the coming quarters.
