This week we take a look at five analyst picks with high Trendlyne Durability scores. A high durability score (>60) indicates a company with strong financial health and management quality.
- Greenpanel Industries: BOB Capital maintains a ‘Buy’ call on this forest products manufacturer with a target price of Rs 595. This indicates an upside of 72%. Greenpanel Industries has a Trendlyne Durability score of 90.
After an interaction with Greenpanel’s CFO Venkatramani, analyst Ruchitaa Maheshwari said, “Greenpanel Industries has strong growth prospects due to its leadership position in India’s fast-growing, medium-density fibreboard (MDF) market, coupled with an improving balance sheet and return ratios.” The forest products manufacturer's management is optimistic about demand recovery in Q4 despite MDF and plywood businesses slowing down due to the festival season in Q3.
The company has plans to incur capex to the tune of Rs 600 crore for new MDF brownfield capacity and add 400 dealers to the MDF business, as well as 40-50 dealers to plywood by the end of FY23. Maheshwari models revenue and profit CAGR of 13% and 15% over FY22-24, aided by better capacity utilisation at the MDF facility and EBITDA margins from operating leverage.
- Central Bank of India: LKP Securities recommends a ‘Buy’ on this bank with a target price of Rs 37, indicating an upside of 9%. The bank has a Trendlyne Durability score of 75.
Analyst Ajit Kumar Kabi is optimistic about the bank as it returned to profitability in FY22, after incurring losses in FY16. It also reported consistent growth in net profit over the past six quarters. He said the bank has been reporting stable credit growth with an improving cash deposit ratio, and its recovery is in line with the guidance.
On the back of the digital lending platform, Kabi expects the bank’s loan book to fatten cautiously. “We believe that the asset quality hurdles are behind it and the bank will witness gradual improvement in profitability,” he concluded.
- Solar Industries India: ICICI Securities upgrades its rating on this explosives manufacturer to ‘Buy’ from ‘Hold’ and raises its target price to Rs 4,760 from Rs 4,225. This indicates an upside of 16.3%. Solar Industries has a Trendlyne Durability score of 70.
Analysts Amit Dixit, Mohit Lohia and Pritish Urumkar believe that the company is well-placed to capitalise on the expected ramp-up in orders from the defence sector. They are positive about the firm’s prospects, given its strong technological capabilities, growing order book and focus on the high-margin defence explosives segment. They added, “The company has sufficient capacity, expertise and land bank to increase revenue contribution from the high-margin defence business.”
The analysts also expect Solar Industries’ export book to surge from its current level of Rs 300 crore in the coming years. This is due to its product expertise on missiles and rockets fitting well into the Centre’s push towards indigenisation and increasing defence exports. They expect the company’s net profit to grow at a CAGR of 47.2% over FY22-24.
- ICICI Bank: IDBI Capital maintains its ‘Buy’ rating on this large-cap bank with a target price of Rs 1,260. This indicates an upside of 35.4%. In Q2FY23, the company’s standalone net profit grew 37.1% YoY to Rs 7,557.8 crore and revenue rose 22.6% YoY. ICICI Bank has a Trendlyne Durability score of 65.
Analysts at IDBI Capital believe that the bank’s focus on improving digitalisation and technological capabilities will aid this leg of growth. It also aims to improve customer experience and simplify all processes from boarding to servicing through digitalisation. “The bank has created a position of Chief Data Officer for the same and increased its technology spend as a percentage of operating expenses to 9% (vs 6% in FY20). It expects the spend to remain at elevated levels in near future,” they added. The analysts expect the bank’s net profit to grow at a CAGR of 20.1% over FY22-25.
- Motherson Sumi Wiring India: ICICI Direct maintains its ‘Buy’ rating on this auto parts & equipment manufacturer with a target price of Rs 75, indicating an upside of 25.9%. Motherson Sumi Wiring India has a Trendlyne Durability score of 60.
Analysts Shashank Kanodia and Raghvendra Goyal believe that the company is “a good proxy to play upon the recovery in the domestic automobile space with a superlative return ratio profile (RoCE of 40-50%) and structural levers for long-term growth”. They expect the company to benefit in the long term on the back of increasing components per vehicle along with increasing electrification.
The analysts also pointed out that the company is committed to achieving an annual revenue of $36 billion by FY25 and intensifying expansion into non-auto-related segments. They expect the company’s net profit to grow at a CAGR of 25.9% over FY22-25.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
