National Aluminium Company: Axis Direct initiates coverage on this mining company with a ‘Buy’ rating and a target price of Rs 150, indicating a 27.23% upside. Aluminium is expected to remain in deficit for a second consecutive year in CY22, supporting higher prices. “The company is the only pure equity play on Aluminium and Alumina commodities in India,” says analyst Aditya Welekar. The recent geopolitical tensions in Europe have pushed prices to a 13-year high, above $3,300 per tonne and the company is well placed to benefit from higher prices. In response to the surge in aluminium prices, the company started optimising its aluminium production by targeting 100% utilisation of its 460ktpa (kilo tonnes per annum) smelter. With higher aluminium prices, Axis Direct forecasts revenue and net profit CAGR of 23% and 50% respectively over FY21-23. According to the analysts, with capacity utilisation and higher prices, the company looks to benefit well in the current market situation.

One97 Communications (Paytm): ICICI Direct initiates coverage on the digital payments company with a ‘Buy’ rating and a target price of Rs 1,352, indicating a 72.78% upside. “Paytm has built a sizable two-sided digital ecosystem with proven leadership in payments,” say analysts Kunal Shah, Chintan Shah and Vishal Singh. The company amassed a sizable base of 64.4 million MTUs (monthly transacting user base) and 24.4 million merchants on its platform. It claims it now commands more than 40% market share in mobile payments. The brokerage expects the digital payments industry to expand a lot more as P2M (person-to-merchant) digital payments are expected to grow six-fold from Rs 22 lakh crore in FY21 to Rs 130 lakh crore ($1.8 trillion) by FY26. The online transacting user base is estimated to grow three-fold to 70-75 crore by FY26. The brokerage expects Paytm’s monthly transacting user base to double to 12 crore over FY22-26 and the company’s gross merchandise value (GMV) to grow at 30% CAGR. It estimates 18-19 million consumers and 1.2 million merchants to avail lending products through the company’s platform by FY26. The brokerage expects financial services revenue for the company to grow at a CAGR of 57% over FY 22-26.

Ambuja Cements: Prabhudas Lilladher maintains a ‘Buy’ rating on this cement company’s stock but reduces its target price to Rs 390. This indicates an upside of 27.4% on the stock. The cement company reported a 49.4% YoY fall in profit to Rs 251.7 crore. The increase in fuel and power cost was 58% YoY to Rs 576, higher compared to peers. “High-cost inventory and restrictions on usage of cheaper high-sulphur pet coke in Gujarat operations resulted in a steeper increase in Ambuja Cements’ energy cost,” say analysts Kamlesh Bagmar and Amit Khimesra. The company is expanding its capacity by 9.4 million tonnes in the east and 1.5 million tonnes in Punjab. According to the brokerage, with multifold increase in volumes under measurement systems analysis, acceleration in investments in waste heat recovery plants, and new expansion plans the company showed a positive earnings growth in the last couple of years. “Given the better visibility on volume growth and improved margins trajectory,” the analysts said. 

Deepak Fertilisers & Petrochemicals Corporation (DFPCL): AUM Capital recommends ‘Buy’ on this chemicals company with a target price of Rs 627 and an upside of 11.6%. “Market leadership in key segments and astounding demand outlook would strengthen top line growth, EBITDA & profitability, perpetually,” say analysts Rajesh Agarwal and Tanya Kothary. Going forward the company is expected to benefit from increased Tantalum Nitride and Nitric Acid off-take, a trend that the brokerage believes will likely continue. In Q3FY22 the company attained a topline of Rs 1,956 crore, revenue growth of 35%, the operating profit increased 63% YoY to Rs 369 crore and EBITDA margins expanded 300 basis points to 18% YoY. The analysts are positive on the stock as the company’s “net profits virtually doubled owing to significant margin expansion in the chemicals segment”.

Mahindra CIE Automotive: Motilal Oswal maintains a ‘Buy’ call on this automotive parts maker, but reduces its target price to Rs 245 which indicates an upside of 40.7%. “Mahindra CIE Automotive’s weak performance in Q4CY21 was a reflection of high raw material/energy cost and operating deleverage in both geographies,” say analysts Jinesh Gandhi, Vipul Agrawal, and Aniket Desai. The analysts further added, “there is good progress on order wins in EVs/hybrids in both geographies.” The company’s adjusted profit fell 20% YoY to Rs 89.3 crore while consolidated revenues grew 5% YoY to Rs 2,060 crore. The brokerage expects the private and commercial vehicles (CV) business to grow on strong demand, subject to semiconductor availability. CVs are seeing good demand in Europe, contributing 39% to total European revenues.  The analysts say, “The company’s growth story is on track, driven by its organic initiatives. This, coupled with cost-cutting initiatives in both India and the EU, will drive margin expansion.”