Stock market recommendations: According to Motilal Oswal Financial Services Ltd, the top stock picks for the week (starting February 17, 2025) are Shriram Finance and Varun Beverages. Let’s take a look:
Shriram Finance
SHFL is well-positioned to capitalize on the recovery in vehicle finance, particularly as demand for commercial and passenger vehicles gains momentum. With a diversified lending portfolio, the company is set to benefit from lower borrowing costs, which will enhance net interest margins and profitability. SHFL delivered robust performance with 14% YoY PAT growth to INR20.8b and healthy AUM growth of 19% YoY to INR2.54t. Shriram Finance’s diversified product suite helped it mitigate the CV business cyclicality. Its strong focus on asset quality and collection efficiency suggests that it is well-prepared to navigate the evolving credit environment. We expect 18%/19% AUM/PAT CAGR over FY24-27 and expected RoA/RoE of 3.2%/16% in FY26.
Varun Beverages (VBL)
Varun Beverages posted a 38% YoY revenue growth in Q4, with strong 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. VBL guided for continued double-digit volume growth in dom. mkt & much higher in international mkt. Indian beverage mkt remains largely untapped & continue to grow with no signs of slowdown in VBL growth trajectory despite rising competition. VBL is poised to sustain its earnings growth, driven 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.
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