Ashok Leyland: Axis Direct retains its ‘Buy’ rating on this truck maker’s stock but reduces its target price to Rs 160. This indicates an upside of 28.5%. The company reported subdued performance that was below Axis Direct’s estimates. “This was primarily on account of a steep rise in raw material costs, a lower-than-expected increase in average selling price, and higher expenses,” says analyst Darshan Gangar. The net profit for Q3FY22  stood at Rs 5.8 crore against Axis’s estimates of Rs 37 crore and net revenue stood at Rs 5,535 crore as against Axis Direct’s estimate of Rs 5,697 crore. Yet the brokerage remains positive on the automobile company due to a rise in replacement demand, and the government’s thrust on infrastructure and scrappage policy for older vehicles and trucks. Additionally, the analyst at Axis Direct believes that bus demand will increase as travel restrictions ease off from Q4FY22 onwards and hence retains the ‘Buy’ rating.

Eicher Motors: Motilal Oswal maintains ‘Buy’ on the owner of the Royal Enfield brand with a target price of Rs 3,050, indicating an upside of 12.84%. The company’s Q3FY22 net profit fell 14% YoY to Rs 420 crore while revenue grew 2% YoY to Rs 2,880 crore. For 9MFY22, net profit grew 30% to Rs 1,060.1 crore and revenues 23% YoY to Rs 7,104.6 crore, respectively, in 9MFY22. The fall in net profit was due to lower realisations but that’s not a long-term problem. “Focus on exports and revenue from accessories is helping Royal Enfield improve its realisation,” say analysts Jinesh Gandhi, Vipul Agrawal, and Aniket Desai. The company added two more suppliers of semiconductors to deal with the shortage, which will help increase the supply. Additionally, “the demand remains good, with a healthy order book,” they dd. Royal Enfield (RE) exports rose by 57%. The brokerage believes with the recently launched classic 350, and upcoming products will expand markets and drive the next phase of growth for RE.

Greenply Industries: Bob Capital gives a ‘Buy’ rating to this plywood maker’s stock, with a target price of Rs 260 (indicating an upside of 39%). The company’s Q3FY22 revenues grew 24% to Rs 420 crore. The company hiked prices by 8% in Q3 to mitigate the rise in input cost and also plans to foray into medium density fibreboard (MDF) manufacturing, setting up an 800 cubic metres per day capacity at a cost of Rs 550 crore. This has an estimated revenue potential of Rs 650 crore at peak utilisation. “This will be the first MDF facility in Western India, giving the company a freight advantage over peers when catering to demand in the region,” says analyst Ruchitaa Maheshwari. “With this foray, Greenply will be able to broaden its wood panel portfolio and deepen its presence in a growing market.” She “expect(s) strong plywood recovery” due to considerable balance sheet strengthening post-Covid and strong recovery in the secondary real estate market and hence stays positive on the stock.

Hero MotoCorp: Prabhudas Lilladher gives this two-wheeler maker’s stock a ‘Buy’ rating with a target price of Rs 3,221, an upside of 17.9%. “Hero’s Q3FY22 EBITDA margin at 12.2% surprised positively and came ahead of our estimates (of 11.8%),” say analysts Varun Baxi and Mansi Lall. This was due to multiple price hikes over the year, a focus on a cost savings program, and higher spares revenue (up 15% YoY). The average realisations stood at Rs 61,000, improved 15% YoY. The analysts believe that in FY23, the company will have a strong rebound in volumes on the back of Covid-19 third wave in India phasing out, the opening of colleges, etc., and commodity prices now peaking out. Additionally, exports during January stood at 2,39,000 units (up 80%). The brokerage stays positive on the company due to increased savings that the company achieved through cost savings program, and success in electric vehicles.

KNR Constructions: ICICI Securities maintains a ‘Buy’ rating on this infrastructure development company with a target price of Rs 360 (an upside of 12.9%). According to analysts Bhupendra Tiwary and Lokesh Kashikar, KNR Constructions reported a decent set of numbers during Q3FY22. The company’s net profit stood at  100.8 crore, up 29.9% YoY and standalone revenue improved 11.7% YoY to Rs 766.3 crore, led by a strong order book position and pick-up in execution. This, the analysts believe, will further translate into a 17.7% CAGR over FY21-24. The company is aiming to bag Rs 2,000-3,000 crore worth of orders in the rest of FY22. ICICI Securities believes that the company will surpass current revenue levels in FY23 and operating margins will remain elevated at 18-19%. According to the analysts, KNR Constructions is likely to be one of the prime beneficiaries of the roads and water segment.