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As India vaccinates, and India Inc rejuvenates, five stocks to track

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ITC is also being seen as a top beneficiary of the post-vaccine normalisation of consumer behaviour through a pick up in cigarettes business which is ITC’s bread and butter.
The vaccination rollout is picking up pace in India and investors are now looking to bet on stocks that are likely to benefit the most from economic activity returning to pre-Covid levels. Analysts say companies that are into personal care and fabric care could be beneficiaries along with makers of ice-creams, juices, alcoholic beverages, cigarettes and fashion apparel. Dine-in restaurants, which have still not recovered to pre-pandemic revenue levels, could also benefit as would airline stocks and hotels. ET takes a look at 5 stocks which could gain from normalisation of consumer behaviour post the vaccination drive.

Hindustan Unilever
CMP : Rs 2,198

Credit Suisse believes HUL is one of the key beneficiaries of the post-vaccine consumer behaviour normalisation through personal care and fabric care segments. The firm has an outperform rating on HUL with a target price of Rs 2,650 since the GST cuts give it a windfall that can drive volumes. HUL’s earnings visibility is anyway high due to the parent’s cost focus while the missing link to volume growth is coming back, said Credit Suisse.

Nestle India
CMP : Rs 16,899

Abneesh Roy, EVP-Institutional Equities at Edelweiss, said Nestle gets a reasonable chunk of sales from out of home consumption, offi ces that use its products. “With travel picking up and offices starting, milk powder, coffee, other discretionary product sales should pick up. Valuations are comfortable. Consumer stocks have not been in favour and have underperformed other sectors with money going towards high beta names after the Budget, but rural demand remains quite strong and consumer names like Nestle should benefit from the normalisation trend,” said Roy. Edelweiss has a target price of Rs 21,110 on the stock with a buy rating.

ITC
CMP : Rs 207

ITC is also being seen as a top beneficiary of the post-vaccine normalisation of consumer behaviour through a pick up in cigarettes business which is ITC’s bread and butter. “ITC’s cigarette business is trading at an implied P/E (price-to-earnings) multiple of 10 times, which is significantly below the top end of global tobacco valuations which are around 15 times… we see positive risk reward given ITC’s superior volume resilience, high market shares and ROIC,” said Credit Suisse which has an outperform rating on ITC with a target price of Rs 265.

PVR
CMP : Rs 1,409

A return in normalisation post vaccination could boost PVR. Analysts said multiplex stocks have moved up along with the market rally and PVR’s cash burn is a concern but a return to normalisation could increase interest in the stock. As social distancing measures ease, more than 50 per cent of PVR’s screens can now operate at 100 per cent occupancy and strong content (both Bollywood and regional movies) is lined up in the near-term, said UBS, maintaining its buy rating with a target price of Rs 1,800.

Indian Hotels
CMP : Rs 123

Motilal Oswal, which sees Indian Hotels’ stock touching Rs 143 in a year, said it expects a sharp recovery in FY22 on a low base, improvement in average room rates once things normalise, improved occupancies and increase in food and beverage income as banqueting and conferences resume.

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