- Prudent Corporate Advisory Services: ICICI Securities maintains its 'Buy' rating on this financial services company with a target price of Rs 1,048. This implies a potential upside of 13.7%. Analysts Ansuman Deb and Ravin Kurwa are optimistic about Prudent as it is one of the premier mutual fund distributors with assets under management (AUM) amounting to Rs 56,000 crore as of March 2023.
In FY23, the company earned commissions of Rs 500 crore on the back of its extensive network of 27,000 distributors across the country, giving it a notable competitive edge. The analysts also point out that the firm's stock-based business model and growing AUM contributed to a 30% revenue CAGR and a 54% earnings CAGR in FY19-23, supported by a monthly Systematic Investment Plan (SIP) of Rs 520 crore.
The analysts predict that the company’s shift to digital platforms will unlock new revenue streams from non-mutual fund financial products. They foresee an 11% CAGR in non-mutual fund revenue from FY24-25, driven by effective cross-selling of insurance through existing distributors. Positive trends in the capital market could also boost the broking segment, the analysts say.
Blue Dart Express: Motilal Oswal upgrades its rating on this logistics services provider to ‘Buy’ from ‘Neutral’, with a target price of Rs 8,040. This indicates an upside of 11.6%. Analysts Alok Deora and Saurabh Dugar note that Blue Dart’s margins were impacted in FY23 as aviation turbine fuel (ATF) prices did not align with the declining trend of global Brent crude prices. However, “ATF prices have still corrected significantly over the past months, and Blue Dart implemented a 10% annual general price hike in January 2023,” the analysts add. They believe that these factors, along with improvement in volumes, will lead to margin improvement in the coming quarter.
Blue Dart added two Boeing 737 aircraft to its fleet in FY23 to cater to the growing demand for air express services. With a robust network, the analysts believe that the company can capitalize on the growth opportunity in the express logistics space. Deora and Dugar remain positive on the company due to its 60% market share in the organised air express segment and the growth in market share in the surface express segment.
Bharat Petroleum Corp (BPCL): HDFC Securities upgrades its rating on this petroleum products company to a ‘Buy’, with a target price of Rs 442. This indicates an upside of 22.7%. According to analysts Harshad Katkar, Nilesh Ghuge, Akshay Mane and Rutvi Chokshi, BPCL has performed well in the past six months on the back of improving auto fuel marketing margins. This was due to an 11% decline in Brent crude prices. The analysts expect refining margins to remain robust, supported by improving global petroleum product demand, limited supplies and lower inventories.
Given the current trend in crude oil prices, the analysts believe that “the oil marketing companies are likely to be allowed to recover losses incurred on the sale of petrol and diesel before implementing any cuts in retail selling prices”. BPCL has committed a capex of Rs 35,000 crore over the next few years, with an expected capex of Rs 13,000 crore in FY24. The analysts expect capex intensity to sustain in FY25 as well. Political stability in oil markets such as Russia and the Middle East will continue to be an important factor.
Gujarat State Petronet: Bob Capital Markets initiates coverage on this utility services provider with a ‘Buy’ call and a target price of Rs 370, indicating an upside of 25.3%. Analyst Kirtan Mehta expects growth in the refining and petrochemicals businesses, and in city gas distribution, to drive volume recovery in the short term. Average monthly LNG imports in March-May were around 50% higher than the levels in January-February. As the company has four key LNG terminals and is also expanding its capacity, the analyst believes that it will benefit from increased gas penetration in Gujarat and north India.
Addressing investment concerns, Mehta says that the company has already repaid loans taken for the acquisition of a stake in Gujarat Gas. Its city gas distribution business has also shown substantial progress. Factoring in FY23 volume returns and upcoming tariff revision, the analyst expects Gujarat State Petronet to post 3% YoY revenue growth and 26% YoY volume growth in FY24.
Cholamandalam Investment & Finance: Sharekhan upgrades its rating on this non-banking financial company to a 'Buy', with a target price of Rs 1,350. This implies a 23.4% upside. The analysts at Sharekhan are positive about the company due to its strong performance in existing businesses and the expansion of new ventures. They expect the company’s assets under management to grow by 20-25% in FY24, with home loans and new businesses outpacing the vehicle finance sector.
According to the analysts, the company will fully offset the additional cost of funds with incrementally higher disbursement yields. They say this will help the firm maintain net interest margins at FY23 exit levels. They are optimistic about its growth in the medium term, especially in tier-II and tier-III cities, and predict a sustainable return on equity of around 20%. The company's strong performance in past business cycles gives the analysts confidence in the quality of its high growth. They also speculate that an equity fundraising in FY24 could serve as an additional growth catalyst.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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