1. Gujarat Gas: Prabudas Lilladhar maintains a ‘Buy’ rating on this gas company, but cuts the target price to Rs 675 from Rs 764, indicating an upside of 35.12%. The brokerage reduced the target price due to an upswing in spot LNG prices caused by geopolitical tensions. The EU's decision to cut reliance on Russian gas will increase demand and push prices further up. However, the brokerage remains bullish on the company’s business model and expects higher margins in Q4FY22. “We continue to like Gujarat Gas’ resilient business model that remains well placed to benefit from any resolution in geopolitical conditions”, says analyst Avishek Datta.

To tide over current market conditions, the company slashed supplies to industrial customers by 1 mmscmd (million metric standard cubic meters per day), thus reducing dependence on procurement through the spot market. It has also introduced dynamic pricing to pass on rising spot LNG prices. Both these initiatives are expected to double Q4FY22 margins for the company. Gujarat State Petroleum Corporation’s (Parent company) recent gas purchase of 0.58 mmscmd at 22% of Brent or $ 24/MMBtu (Metric Million British thermal unit) will enable pricing flexibility during these uncertain conditions. 

2. Indiamart Intermesh: Axis Direct initiates a ‘Buy’ call on this software & services company with a target price of Rs 6,800. This indicates an upside of 53.7%. The company has a leadership position in India in the Business to Business (B2B) segment and has a robust presence across the country with over 60% market share. The company has 14.3 crore registered buyers on the platform and 0.7 crore registered suppliers. Buyer traffic has increased at a CAGR of 29%. “Indiamart’s products and services are well-diversified across categories and geographies,” says analyst Omkar Tanksale.

Tanksale adds, “We believe Indiamart has built a resilient business structure from a long-term perspective, supported by multiple verticals and higher penetration in the rural areas of the country. Lower input costs and higher realization, healthy cash flow generation, and acquisition strategy for inorganic growth led to the brokerage initiating a ‘Buy’ call.

3. Asahi India Glass: ICICI Securities maintains a ‘Buy’ rating on the auto-parts company but reduces the target price to 553, indicating an upside of 29.1%. “We believe it would be tough for Asahi India Glass to sustain its present elevated profitability levels amidst a steep rise in energy costs,” say analysts Basudeb Banerjee and Pratit Vajani. ICICISec expects power/fuel costs to witness a 20-25% increase in the next two quarters, assuming present natural gas and crude oil prices. The brokerage also expects logistic costs to rise. These rising prices will impact the margins and overall cost. 

But against rising costs, residential unit sales have grown by 50% YTD-FY22 and “with scope for further opening up of the economy, demand for glass in the residential segment is likely to witness 15% CAGR in FY22-FY24,” the analysts say. The brokerage estimates a CAGR increase of 15% in demand for glass in the residential segment. The brokerage stays positive on the stock on the assumption that the company will operate at close to full capacity by FY24.

4. Zydus Wellness: BOB Capital Markets initiates coverage on this FMCG company with a ‘Buy’ rating and a target price of Rs 2,185, indicating an upside of 47.5%. The brokerage expects product innovation, distribution expansion, and the Heinz India merger to fuel further growth for the company. The company’s Heinz India acquisition is expected to be significantly valuable as it adds substantial scale advantages in distribution, higher bargaining power with suppliers, faster product launches, and warehouse consolidation. “The acquisition of Heinz India has significantly enhanced Zydus Wellness’ product basket, expanding its ownership to popular brands such as Complan, Glucon-D, and Nycil”, says analyst Ruchitaa Maheshwari.

The company is a market leader in the niche consumer wellness categories such as sugar substitutes, peel-offs, and glucose powder having a market share of 96%, 76.4%, and 58.1% respectively. The company has found gaps in the market and has the R&D backbone to launch new variants and extensions. Apart from network synergies, growth in eCommerce channels is expected to further boost sales.

5. Endurance Technologies: Hem Securities initiates a ‘Buy’ call on this Auto-Parts company with a target price of Rs 1,342 and an upside of 14%. The company received new orders worth Rs 580 crore in 9MFY22 from Hero MotoCorp, Royal Enfield among others. The company is also increasing its disk brake assembly capacities to 5.7 lakh sets/month (from 2.9 lakh) and alloy wheel capacities to 3.2 lakh/month (from 2.4 lakh). During Q3FY22, the company acquired a 100% stake in Veicoli SrI, Italy. According to analyst Abhishek Sharda, “Endurance Technology has strong positioning in the Indian two-wheeler segment.” Sharda also adds, “Driven by new customer wins and increasing EV penetration, we believe Endurance Technologies is the best bet for the revival in Indian two-wheeler space.” The brokerage expects revenue to increase 13.5% in FY22 led by new order wins and an increase in capacities. 

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.