- Data Patterns (India): ICICI Direct upgrades its rating to ‘Buy’ from ‘Hold’ on this defence and aerospace electronics company with a target price of Rs 1,555. This indicates an upside of 10.4%. The company’s board has approved the allotment of 40.97 lakh shares through QIP, at an issue price of Rs 1,220.31 per share, aggregating to Rs 500 crore. Analysts Chirag Shah and Vijay Goel “believe that fundraising for working capital and product development will benefit the company in faster execution of existing contracts, and in bidding for more contracts”.
The analysts are optimistic as the defence player has strong order inflows with a healthy pipeline of orders worth Rs 2,000-3,000 crore in the next three years. They also expect electronic components used in Indian defence platforms to be sourced locally, instead of from foreign manufacturers, as indigenisation efforts continue.
Shah and Goel anticipate revenue and profit CAGR of 29.3% and 28.5% respectively over FY22-25.
Kalpataru Power Transmissions: Sharekhan maintains a ‘Buy’ call on this electric utilities company with a target price of Rs 695, indicating an upside of 22.3%. “Our interaction with Kalpataru Power Transmission reinstates the positive stance on the company’s capability to accelerate its revenue growth and margin expansion,” say the analysts.
They believe that the company is a leading player with a strong order book (Rs 46,642 crore, up 46% YoY) as well as fresh orders (surpassed order inflow guidance for FY23), which will lead to improved revenue visibility.
They are also positive about the company due to its merger with JMC Projects. The merger is expected to increase the group’s geographical reach and improve its capability to bid for large-size and more complex projects. According to the analysts, the company also expects a decline in debt and improvement in the working capital cycle thanks to better operating performance and monetisation of non-core assets.
PVR: Prabhudas Lilladher retains its ‘Buy’ call on this multiplex company with a target price of Rs 2,096, indicating an upside of 33.1%. Analysts Jinesh Joshi and Stuti Beria expect synergy benefits of Rs 200 crore from the PVR-Inox merger to accrue over the next two years. They expect that the merger will enhance balance sheet strength, enabling rapid expansion into new markets.
Joshi and Beria believe that the merged entity will lend a size advantage and improve bargaining power with various stakeholders in the value chain, like film distributors, real estate developers, ad networks and ticket aggregators, resulting in material revenue/cost synergies.
The analysts are also positive about PVR and estimate that it will open 155 screens per annum for the next two years after the merger.
LTIMindtree: ICICI Securities maintains its ‘Buy’ rating on this IT consulting & software company with a target price of Rs 5,651, implying an upside of 21%. Analysts Sumit Jain and Aditi Patil are positive about the company’s prospects on the back of strong cross-selling opportunities and its ability to bag larger deals post-merger. They believe that Larsen & Toubro Infotech (LTI) and Mindtree complement each other and this allows them to scale up operations.
According to the analysts, “Mindtree is stronger in front-end digital solutions and LTI shines in back-end ERP-related core transformation solutions.” They expect the company’s EBIT margin to improve by 260 bps over FY23-26 to 18.6%, driven by operating leverage with a higher scale of operations and integration-related synergies.
Jain and Patil believe that, with their track record of strong management execution, the combined entity’s management is well-equipped to enable industry-leading profit growth in the coming quarters. The analysts expect the firm’s net profit to grow at a CAGR of 18.8% over FY22-25.
Tata Motors: Motilal Oswal keeps its ‘Buy’ rating on this automobile manufacturer with a target price of Rs 540, indicating an upside of 31.3%. Analysts Jinesh Gandhi, Amber Shukla and Aniket Desai believe that the Jaguar Land Rover (JLR) brand is on a sustainable growth path and will be one of the key drivers of growth for the company. They add that Tata Motor’s domestic passenger and commercial vehicle business is already on a healthy growth trend. They see the prospects of JLR improving as supply-side pressures subside and demand remains healthy. “As supplies improve, JLR should reach near zero net debt levels by FY25, thanks to improved production, better margins and working capital release,” the analysts say.
Gandhi, Shukla and Desai believe JLR will firmly position itself as a luxury premium brand as it changes its branding strategy and redefines Jaguar with premium launches in the electric vehicle market in CY25. The analysts expect the company’s revenue to grow at a CAGR of 14.2% over FY23-25.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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