The Baseline    
16 Aug 2022
Five Analyst Picks with a Buy Consensus Recommendation

This week, we look at picks from analysts that also have high consensus recommendations and a high upside to their target price. 

  1. Indraprastha Gas: Brokerage Prabhudas Lilladher reiterates its ‘Buy’ call on this city gas distributor with a target price of Rs 576, indicating an upside of 32.3%. In Q1FY23, the company’s net profit rose  73.1% YoY to Rs 481.2 crore, and revenue by 128.6% to Rs 3,224.6 crore. Analyst Avishek Datta says, “Indraprastha Gas’ volumes improved at 8.0 million standard cubic metres as economic activity picked up.” He added that the company, “remains an enviable business model with high volume growth due to geographical expansion and the addition of new buses and taxis.” But Datta is cautious as rising natural gas prices still remain a concern. 

This city gas distributor’s stock also has a consensus recommendation of Buy according to Trendlyne’s Forecaster. Out of 28 analysts, 19 have a ‘Strong Buy’ recommendation on the stock, five have a ‘Buy’ rating, two have a ‘Hold’, and two have ‘Sell’ recommendations on the stock. 

  1. State Bank of India: KR Choksey maintains its ‘Buy’ call on this bank’s stock with a target price of Rs 680. This indicates an upside of 28.9%. Analyst Priyanka Baliga says, “State Bank of India will continue to see strong traction on the credit growth front, led by improvement of the corporate capex cycle and robust momentum in retail, especially home loans and Xpress credit segment.” 

In Q1FY23, the bank reported a 0.7% fall in its net profit to Rs 7,325.1 crore while revenue rose 1.4% to Rs 94,524.3 crore. Net interest income was up 12.9% YoY to Rs 31,195.9 crore and net interest margin or NIMs came in at 3.23% in Q1FY23 against 3.15% in Q1FY22. The analyst Baliga adds that “the bank is better placed than its PSU peers to manage the uncertainties, given its size & leadership in the banking system.” 

The bank’s stock also has a consensus recommendation of a Strong Buy from analysts, according to Trendlyne’s Forecaster. Out of 39 analysts, 33 analysts have a ‘Strong Buy’ recommendation, five have a ‘Buy’, and one has a ‘Hold’ recommendation. 

  1. Birla Corp: HDFC Securities maintains a ‘Buy’ call on the cement company with a target price of Rs 1,337. This indicates an upside of 37.5%. In Q1FY23, the company’s profit fell 56.2% YoY to Rs 61.9 crore despite a 26.1% rise in revenue to Rs 2,218.1 crore. Analyst Rajesh Ravi and Keshav Lahoti expect EBITDA to fall in FY23 due to operating losses amid the completion of the Mukutban plant. “We expect ramp-up from this plant and slower capex in the medium term to moderate gearing over the next two years,” the analysts said. They are positive on Birla Corp due to its large retail presence in the “lucrative” north and central regions, apart from various cost-cutting initiatives. 

The cement company’s stock also has a consensus recommendation of a Strong Buy, according to Trendlyne’s Forecaster. Out of the 14 calls by analysts, 12 have a ‘Strong Buy’ recommendation and two have a ‘Hold’ recommendation. 

  1. Bharti Airtel: Axis Securities maintains its ‘Buy’ rating on the telecom company with a target price of Rs 900. This indicates an upside of 27.7%. The company’s Q1FY23 net profit is up 5.7X YoY to Rs 1,606.9 crore and while revenue rose 22.2% YoY to Rs 32,804.6 crore. 

The analyst Omkar Tanksale attributes this growth in profit to “the company’s efficient execution, superior customer mix, and strong customer additions in 4G”. Revenue growth was led by the enterprise and home business segments, he added. He believes the company’s EBITDA margins will expand in the near term due to its efficient execution capabilities. Overall, he remains positive on the company’s prospects due to its superior margins, strong subscriber growth, and higher 4G conversions. The analyst expects the company’s profit to grow at a CAGR of 103.2% over FY22-24.

Bharti Aitel has a consensus recommendation of a ‘Strong Buy’, according to Trendlyne’s Forecaster. Out of 33 analysts, 25 have a ‘Strong Buy’ recommendation on the stock while six have a ‘Buy’ rating, one has a ‘Hold’, with one ‘Sell’ recommendation on the stock.

  1. Indian Hotels: ICICI Securities maintains its ‘Buy’ rating on this hotel chain with a target price of Rs 332. This indicates an upside of 20.7%. The company’s Q1FY23 revenue of Rs 1,266.1 crore beat the brokerage’s revenue estimates by 9%. The analyst Adhidev Chattopadhyay says this growth was “driven by stronger than expected average room rates across its hotels in India''. This also led to the company’s EBITDA (Rs 380 crore) to beat the brokerage’s estimates by 20%.

The analyst is positive on the company’s prospects as the management expects demand momentum to grow in the coming quarters. He has raised his revenue estimates for FY23 by 11%, and by 7% for both FY24 and FY25. Chattopadhyay believes the hotel chain will benefit from rising demand given its pricing power across its brands. He expects the company’s revenue to grow at a CAGR of 43.1% over FY22-25.

This hotel chain also has a consensus recommendation of a ‘Strong Buy’, according to Trendlyne’s Forecaster. Out of 13 analysts, 10 have a ‘Strong Buy’ recommendation on the stock while one has a ‘Buy’ rating, one a ‘Hold’, with one ‘Sell’ recommendation on the stock. 

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

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