Orient Bell Limited is HDFC Securities' top stock pick for the week. HDFC Securities has recommended buying Orient Bell Limited (OBL) for an immediate target price of Rs 299 and above Rs 299 it expects the stock to go up to Rs 329 in two-three quarters. Orient Bell Ltd, earlier known as Orient Ceramics & Industries, was incorporated in May 1977. The company is engaged in manufacturing, trading and selling of digital, vitrified, ceramic and ultra-vitrified tiles under brands Orient, Orient International, and Bell across India.
HDFC Securities in a note to its clients said, "Company is the first to have an in-house European designer. Company has a manufacturing capacity of 20 mnsq meters in house and an additional third party manufacturing capacity through its Joint Ventures of 4 mnSq meters. OBL has manufacturing facilities in Sikanderabad (Uttar Pradesh), Dora (Gujarat), and Hoskote (Karnataka)."
According to HDFC Securities, "OBL's strong foothold in the domestic market with value-added product portfolio, higher penetration in rural and smaller cities and better working capital management could provide better growth opportunities going forward."
"Visibility of decent growth in industry wide sales, shift in share from unorganized to organized players and improvement in brand value of Orient Bell will help OBL to register good topline and bottomline growth going forward. Reduction in debt due to the latest sale of trust shares will also help cut interest costs. Gradual inching up of margins to the levels of peers will result in fast increase in profit after tax and rerating of the stock. Additional capacity due to the latest capex initiatives will enable faster topline growth in FY18E and FY19E."
HDFC Securities recommends buying Orient Bell stating that "We feel investors could buy the stock at the current market price (CMP) and add on dips to Rs 238-241 band for sequential targets of Rs 299 and Rs 329. At the CMP of Rs 262.40 the stock trades at 13.2 times FY19 estimated earnings per share."
At 10:18 am, Orient Bell shares traded 5.25 per cent higher at Rs 276.50, outperforming the Nifty which was down 0.3 per cent.