Ceat: Motilal Oswal reiterates a ‘Buy’ call on this tyre manufacturer with a target price of Rs 1,860. This indicates an upside of 28.8%. After visiting its Halol facility and an overview of its research and development centre, analysts Jinesh Gandhi, Amber Shukla and Aniket Desai say the company has showcased its capabilities to scale international business to Rs 35 billion and explore electric vehicles. The tyre manufacturer also indicates improved efficiency at the Halol plant.
According to the analysts, “Cyclical recovery in both OEMs and replacement will enable faster absorption of new capacities and drive operating leverage benefits. This, coupled with softening raw material prices, would help a partial recovery in margins in FY23 and full recovery in FY24.” They remain optimistic as the company continues to focus on key strategic areas as well as expansion in international markets and electric vehicles. In addition, they believe prudent capex plans to be long-term catalysts for Ceat.
KSB: ICICI Direct retains its ‘Buy’ call on this industrial machinery and pump manufacturer company with a target price of Rs 2,390, indicating an upside of 23.3%. According to an institutional investor call arranged by KSB and ICICI Securities on February 28, 2023, the company’s profit has grown 41.9% YoY to Rs 55.9 crore in Q3FY23, while its revenue improved 17.8% YoY to Rs 533.3 crore. KSB has an order intake of Rs 2,045.6 crore for the year ending December 2022.
Analysts Chirag Shah and Vijay Goel say, “Domestic business is doing better with healthier demand for standard pumps and engineered pumps.” The analysts remain optimistic as nuclear, petrochemical and mechanical seal segments of KSB witness strong traction and the company focuses on increasing its share in services and spares. Shah and Goel expect revenue, EBITDA and profit to grow at 18.1%, 22.1% and 21.6% CAGR respectively over CY22-24, led by strong execution.
Federal Bank: Axis Direct maintains its ‘Buy’ rating on this private bank with a target price of Rs 170, implying an upside of 27%. Analysts Dnyanada Vaidya, Prathamesh Sawant and Bhavya Shah believe the company is well-placed to deliver healthy growth in the medium term as its operational metrics continue to improve. They expect the bank to see robust credit growth, driven by an improvement in the share of high-yielding products. The analysts also see the firm’s improving fee income, moderating operating expenses and improving asset quality as key positives and that “this would result in the bank’s credit costs trends continuing to remain benign”.
Vaidya, Sawant and Shah are upbeat about the bank’s prospects due to its high share of retail-dominated deposits and healthy CASA ratio. The analysts anticipate healthy growth in the medium term due to the company’s expansion plans and its healthy metrics. They expect the bank’s net profit to grow at a CAGR of 15.3% over FY23-25.
Axis Bank: ICICI Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 1,130. This indicates an upside of 32%. Analysts Chintan Shah and Renish Bhuva believe the company’s acquisition of Citibank’s consumer business in India will enable the bank to capture premium market share growth. The total purchase consideration for the acquisition is Rs 11,603 crore. The analysts say the deal is favourable for Axis Bank as it gets “access to Citibank’s huge retail deposit base, affluent and profitable consumer franchise and strategic synergy benefits over the medium term”.
Shah and Bhuva see this deal as a boost towards the bank’s long-term growth as it aligns with its premiumisation strategy. It gets access to a sizable granular deposit base and an opportunity to cross-sell its products to Citibank’s affluent customers. The analysts expect the company’s net profit to grow at a CAGR of 39% over FY22-24.
Infosys: Bob Capital Markets maintains a ‘Buy’ call on this software and services company with a target price of Rs 1,760, indicating an upside of 18%. Analyst Saptarshi Mukherjee says, “Private 5G is expected to be a key enabler for the digital transformation of enterprises.” He adds that the market for private 5G services in India is likely to be around $570 million by 2026, and the software expense will be materially higher than hardware and services over the next decade.
According to Mukherjee, the company is well-placed to leverage its global 5G expertise to deliver private 5G-as-a-service. “Despite Infosys’ cautious outlook on a few verticals, we believe its strength in managing the twin journey of digital transformation and cost takeout will drive growth leadership,” he concludes.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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