- Rites: Axis Direct maintains its ‘Buy’ rating on this construction & engineering company with a target price of Rs 405. This implies an upside of 21.9%. The analysts at the brokerage remain positive about the company due to its strong order book, execution capability, clean balance sheet and attractive valuations.
The analysts also expect the firm to be a key beneficiary of the Centre’s push towards increasing infrastructure spending. “Being a leading player in the transport consultancy, Rites is expected to be a significant beneficiary of the Indian Railways’ infrastructure push,” they added. Given the higher capex for railways, the company is aggressively trying to bag new consultancy tenders from the metro and high-speed rail projects.
The analysts believe the company’s well-diversified order book of Rs 5,950 crore gives revenue visibility for the next two years. They expect Rites’ net profit to grow at a CAGR of 11.7% over FY22-24.
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Bharat Forge: Prabhudas Lilladher maintains its ‘Buy’ rating on this manufacturer of industrial products with a target price of Rs 1,005. This indicates an upside of 14.2%. Analyst Mansi Lall remains optimistic about the firm’s prospects given its diversification into multiple segments such as defence, aerospace, e-mobility and other industrial verticals.
She expects the automotive segment in particular to drive growth as there are “multiple growth levers in the domestic & export automotive segment with the cyclical turnaround in the commercial vehicle industry”. Chip shortages are also expected to ease.
Lall sees double-digit growth in high-margin non-auto segments such as aerospace and defence. The company has already bagged export orders for its artillery systems and is expected to win huge orders from the Indian Armed Forces, she added. The analyst sees the firm’s defence revenue rising to Rs 1,000 crore in a few years from the current Rs 300-500 crore. She anticipates Bharat Forge’s net profit to grow at a CAGR of 18.7% over FY22-25.
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SBI Cards and Payment Services: Motilal Oswal reiterates its ‘Buy’ call on this credit card and payment solutions provider with a target price of Rs 1,000. This indicates an upside of 26.4%. Analysts Nitin Aggarwal and Yash Agarwal arranged an interactive session with Rama Mohan Rao Amara, Managing Director and Chief Executive Officer of SBI Cards. From this discussion, the analysts understood that the mix of EMI loans has increased and the revolver mix has moderated, while it has been increasing on an absolute basis.
The analysts said, “SBI Cards has been reporting a modest performance with healthy spends momentum, while higher credit cost and lower margins are dragging earnings.” They expect the revolver mix to increase gradually as spends mature, while near-term margins may continue to remain under pressure as borrowing cost increases further. Aggarwal and Agarwal believe that growth in spends is likely to stay healthy, aiding overall loan growth. They expect a profit CAGR of 41% for FY22-24.
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Dalmia Bharat: ICICI Securities maintains its ‘Buy’ call on this cement manufacturer with a target price of Rs 1,906, indicating an upside of 19.7%. Dalmia Bharat’s arm, Dalmia Cement (Bharat), recently acquired clinker, cement and power plants from Jaiprakash Associates at a capital cost of $73 per tonne (replacement cost of the cement asset is currently at $115-120 per tonne). Analyst Harsh Mittal remains optimistic about the company due to the asset acquisition at a competitive price.
Mittal believes that this acquisition will help the cement manufacturer strengthen its presence in Central India. He adds that Dalmia Bharat aims to be a pan-India cement company with a capacity of 75 metric tonnes per annum by FY27 and 110?130 metric tonnes per annum by FY31. The analyst said, “We await the completion of the deal before factoring in the acquired capacity. However, we increase our realisation growth assumption for FY23/FY24, given the healthy price hikes in East and South India during Q3FY23.”
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Carysil: Edelweiss initiates coverage on this small-cap sink and kitchen appliances manufacturer and gives it a ‘Buy’ call with a target price of Rs 784. This indicates an upside of 56.8%. According to the analysts at Edelweiss, Carysil doubled its quartz and steel sink capacity to meet increasing demand. “We believe strategic partnerships with large-scale retailers would sustain the revenue growth momentum in exports,” they added.
The analysts believe that strong industry tailwinds, high home-improvement spending and demand for aesthetically appealing products globally would continue to drive growth. They expect Carysil’s earnings per share to record a 20% CAGR over FY22-25, led by capacity addition, improved utilisation in quartz/steel sinks and increased penetration in domestic and international markets.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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