- Mahindra CIE Automotive: Axis Direct initiates coverage on this auto parts and equipment manufacturer with a ‘Buy’ call and a target price of Rs 475. This indicates an upside of 29.1%. Analysts Aditya Welekar and Shridhar Kallani believe that the company has outperformed in Indian and European markets. Its sales reported a robust growth of 29% YoY in CY22, driven by the outperformance posted by key customers, increased orders and input cost pass-through to customers. The analysts note that new order wins in India stand at Rs 1,000 crore, and to meet the growing demand, Mahindra CIE is enhancing capacities across all verticals.
Welekar and Kallani are optimistic about the company, due to the improving outlook of the PV business and negligible debt on the balance sheet. After considering the management’s focus on improving margin trends and the company’s capability to generate strong operating cash flow, the analysts say that “the stock is trading at a reasonable 1-year forward consensus PE multiple of 13x.”
Tata Consultancy Services: ICICI Securities maintains a ‘Buy’ call on this IT consulting and software company with a target price of 3,786, indicating an upside of 21.1%. In Q4FY23, the company’s profit has grown by 5% QoQ to Rs 11,392 crore, while its revenue increased by 2.7% QoQ. Over the entire FY23, its profit and revenue grew by 9.97% to Rs 42,147 crore and 16.9% respectively.
Analysts Sumeet Jain and Aditi Patil believe that the company’s Q4 profit was 1.4% below consensus estimates due to lower margins caused by higher onsite manpower costs from subcontractor replacements and additional onsite hiring.
Jain and Patil say, “We believe TCS remains a defensive play in the current environment where they are gaining market share by aggressively winning cost optimisation deals.” They also expect the company to benefit from a pickup in demand in FY25, as currently-postponed discretionary projects are starting to get executed.
Coal India (CIL): ICICI Direct upgrades this coal company from ‘Hold’ to ‘Buy’ and gives it a target price of Rs 260. This indicates an upside of 12.1%. According to analyst Dewang Sanghavi, Coal India has extensive mining capabilities and possesses advanced technology in open-cast mining.
In March 2023, the company’s production volume increased 4% YoY to 83.5 million tonnes (MT), while the offtake volume grew by 3.4% YoY to 64.2 MT. For FY24, CIL has set a production and offtake target of 780 MT, but Sanghavi believes that only 610 MT is needed to meet the power sector’s demand, leaving the rest for the non-regulated sector. “This augurs well for CIL’s e-auction volumes for FY24,” says Sanghavi.
Sanghavi also expects CIL’s consolidated top line to grow at a CAGR of 7.9%, and consolidated EBITDA and profit to register a CAGR of 13.5% and 16.4%, respectively.
EPL: Motilal Oswal maintains its ‘Buy’ rating on this containers & packaging company with a target price of Rs 215, indicating an upside of 32.8%. Analysts Sumant Kumar, Meet Jain and Omkar Mangesh Shintre believe that the company has faced many challenges over the past few quarters due to pandemic-induced lockdowns and soaring raw material prices. But with demand recovering and raw material prices falling, they see the company’s plans to expand its business as a key positive. “With the demand recovery visible across geographies, along with the softening in raw material prices and price hikes across regions in recent months, we expect the sequential recovery in margins to continue,” the analysts add.
Kumar, Jain and Shintre expect the firm’s profits to grow in double digits in the coming quarters, driven by rising customer additions, increasing geographical presence, cross-selling opportunities and focus on sustainability. The analysts expect the company’s net profit to grow at a CAGR of 34% over FY23-25.
Infosys: Despite a weak result and missed guidance, BoB Capital Markets maintains its ‘Buy’ rating on this IT consulting & software giant with a target price of Rs 1,760. This implies an upside of 39.4%. Analyst Saptarishi Mukherjee maintains his positive outlook on the company’s growth prospects, notwithstanding the lackluster Q4FY23 performance. While the analyst consensus on Infosys has moved to ‘hold’, Mukherjee makes his ‘buy’ case saying that the firm’s “strength in managing the twin journeys of digital transformation (Cobalt) and cost takeout will drive growth leadership”, despite the management’s cautious outlook on key verticals like banking, financial services and insurance.
The analyst sees an increase in orders related to cost optimisation projects, digital analytics and automation despite weak global macro-economic weakness as a key positive.
Mukherjee also believes that the company achieving the guided target of 50,000 recruits for FY23 will benefit it in the long run. He expects the increased focus on fresher hiring to increase Infosys’ bench strength and support the employee pyramid in the long term. The analyst estimates the company’s revenue to grow at a CAGR of 19.2% over FY22-24.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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