Brokerage house ICICI Securities has picked metal stocks with a blend of favourable risk-reward proposition and higher relative strength in this edition as its top recommendation with three months time frame which includes multibaggers Hindalco and Jindal Stainless.
The share price of Jindal Stainless has remained resilient within the metal stocks. It has entirely retraced past 27 months decline ( ₹132-21) in just 16 months and is seen sustaining above the same, highlighting structural turnaround. The brokerage and research firm expects stock to endure its relative outperformance and gradually head towards its all time high of ₹207 in the coming months.
“JSL is planning to double the melting capacity in Jajpur, Odisha through the brownfield expansion route. Along-with the melting capacity, the company also plans to increase its downstream capacity by increasing the capacity of hot rolled annealed pickled (HRAP) and cold rolled annealed pickled (CRAP). Furthermore, JSL is also strengthening backward integration through ferro chrome augmentation,” its note highlighted.
ICICI Securities’ another top stock pick in the metal space includes another multibagger Hindalco. The stock after six quarter of strong up move has witnessed shallow retracement in the last two months. The entire price action is well channelled as can be seen in adjacent chart signalling inherent strength, as per the brokerage.
“We expect the stock resume up move and head towards our target of ₹508 levels as it is the 80% retracement of the entire decline ( ₹551-407),” it said on Hindalco’s stock price outlook.
Furthermore, over the last few years, healthy performance from wholly owned subsidiary Novelis has aided Hindalco’s consolidated operation’s performance. Going forward also on the back of healthy demand from key user industries, Novelis is likely to continue with its good performance, auguring well for consolidated entity, the note added.