1. Macrotech Developers: ICICI Securities upgrades its rating to ‘Buy’ from ‘Hold’ on this realty company with a target price of Rs 1,348, indicating an upside of 17.9%. The company’s Indian business sales booking rose 37% YoY to Rs 3,460 crore against the brokerage's estimate of Rs 3,250 crore. “We believe that the sales were largely sustenance driven with no major launches during the quarter and the company has achieved its FY22 sales guidance of Rs 9,000 crore,” says analyst Adhidev Chattopadhyay. The company added new projects with a total saleable area of 8.8 million square feet that are slated to launch in FY23. 

Considering the strong launch pipeline and momentum in sustenance sales, the brokerage expects a sales booking of Rs 11,010 crore.  The company’s net debt reduced 20.6% QoQ to Rs 9,930 crore in Q3FY22 and further reduced by 6.2% QoQ to Rs 9,310 crore which the brokerage believes is driven by improved collections and may enable further debt reduction over FY 23-24.

2. Tata Steel: Axis Securities initiates coverage on this steel-maker with a ‘Buy’ rating and a target price of Rs 1,700, indicating an upside of 30%. The brokerage is bullish on Tata Steel as it expects steel prices to remain high in the coming quarters due to the Russia-Ukraine conflict. This bodes well for the company as it could drive strong cash flows in the upcoming quarters and allow it to continue deleveraging, while pursuing its growth capex. Analyst Aditya Welekar says “strong steel prices, disciplined capex outflow, and working capital management has put the company’s balance sheet on a solid footing”. 

The brokerage expects high international steel prices and China’s decarbonisation leading to lower steel exports, to create export opportunities for Indian steelmakers like Tata Steel. A 40% MoM jump in steel prices in Europe incentivises Indian steelmakers to export to the EU. Although higher coking coal prices would impact margins in H1FY23, the analyst expects the margin trajectory to be above the historical average due to strong steel prices, thereby driving profitability higher.

3. Oil And Natural Gas Corporation (ONGC): HDFC Securities gives this oil and gas explorer a ‘Buy’ rating with a target price of Rs 275 indicating an upside of 62.1%. ONGC “outperformed the Sensex by 74/42% over the last twelve months, as Brent crude price increased by 68%. We expect the outperformance to continue,” say analysts Harshad Katkar, Nilesh Ghuge, Akshay Mane, and Rutvi Chokshi. 

Domestic administered pricing mechanism gas price was revised upwards by 110% to $6.1 per metric million british thermal unit in H1FY23 and the brokerage expects it to rise further by 45%. The brokerage also expects the company to produce 20.8 million metric tonnes of oil and 22.3 billion cubic metres of gas in FY23. It also expects oil and gas production to grow at a CAGR of 3% and 1% respectively in FY23. The analysts add, “ONGC should also benefit from the increase in gas production from the Krishna Godavari basin, with an estimated production target of 3 billion cubic metre and 3.8 billion cubic metre in FY23 and FY24.” 

4. HDFC Bank: Prabhudas Lilladher maintains a ‘Buy’ call on this bank stock and raises its target price to Rs 2,000. This indicates an upside of 34%. The brokerage maintains its stance as HDFC will merge with HDFC Bank. As of December 2021, the total loan size of the merged entity would be Rs 18 lakh crore with the share of mortgages expected to increase from 11% to 33%. “Post the merger, the Bank would be the second-largest entity in terms of loan advance share,” say analysts Gaurav Jani and Palak Shah. HDFC was prohibited from taking CASA Deposits, however with the merger, CASA accretion would be possible resulting in lower funding cost that would improve spreads in the mortgage business.” 

The brokerage expects HDFC to benefit from lower funding cost of HDFC Bank and large distribution franchise, while the bank would gain from the former’s expertise in real estate and efficient loan processing.  The merger would also provide both entities to cross-sell opportunities to their respective customers.

5. Transportation Corporation of India: Motilal Oswal reiterates its ‘Buy’ call on this logistics company with a target price of Rs 880, indicating an upside of 27.5%. “The company has developed robust capabilities in multimodal logistics via its presence across major transportation modes,” say analysts Alok Deora and Dhirendra Patro. 

The company diversified its service offerings into road freight, integrated supply chain solutions, sea freight, etc. The brokerage expects these capabilities to enable consistent growth in volumes and earnings for the company. Easing of Covid-19 restrictions led to a strong pick-up in volumes from the start of Q2FY22 which are expected to continue in FY23. The company recorded margins of 13% each in Q2 and Q3FY22. 

The analysts say, “Road freight will benefit from the impact of reforms like GST and e-way bill, which will result in a shift in market share towards organised players, and improved road connectivity, reducing the turnaround time.” The brokerage expects the company to clock profit, revenue, and EBITDA CAGR of 36%, 18%, and 28%, respectively over FY21-24.

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