1. Gujarat Gas: Motilal Oswal maintains a ‘Buy’ call on this utilities company with a target price of Rs 679, indicating an upside of 51.7%. According to analysts Swarnendu Bhushan and Rohit Thorat, the Russia-Ukraine conflict led to an increase in liquefied natural gas (LNG) prices, which in turn harmed Gujarat Gas. Higher prices forced consumers to switch to cheaper alternatives such as propane and liquefied petroleum gas (LPG). The analysts believe that “the storm seems to be running out of steam with spot LNG prices declining 48% from their peak.” 

After analysing historic prices of over eight years, Bhushan and Thorat revealed that  LNG, on average, has been cheaper than propane and LPG by 15% and 19% respectively, when the entire demand is met through long-term contracts. They said, “Barring the current flux in gas markets, LNG should continue to remain cheaper than alternate fuels by a similar magnitude, except for 3-4 months in a year.”

They remain optimistic as Gujarat Gas can raise volumes through several avenues, in addition to the growth from the industrial and compressed natural gas pick-up in the existing areas.

2. Bank of Baroda: Prabhudas Lilladher reiterates its ‘Buy’ call on this bank with a target price of Rs 220. This indicates an upside of 18.3%. Analysts Gaurav Jani and Palak Shah say that domestic corporate credit growth has touched an 8-year high of 13% YoY and is reviving. According to them, Bank of Baroda would be a key beneficiary as its corporate loan share is 40% and market share in overall advances is sizeable at 6.6% post-merger. The analysts also believe that the bank could expand net interest margins for half a year, while private bank margins peak in Q3FY22, due to a higher share of MCLR (marginal cost of funds-based lending rate) linked loans.

Jani and Shah believe that the bank’s balance sheet is stronger than ever with net non-performing assets to equity ratio at a multi-quarter low of 10.5%, which gives it leeway to grow. Talking about the sector, the analysts said, “With sustained loan growth and benign asset quality environment, there could be further earnings upgrades across PSU banks.”

3. Macrotech Developers: ICICI Securities maintains its ‘Buy’ rating on this realty company with a target price of Rs 1,304. This indicates an upside of 27.8%. Adhidev Chattopadhyay remains positive on the realty firm as its Q3 sales bookings have outperformed the brokerage’s estimates. The analyst believes the company will exceed its FY23 sales bookings guidance of Rs 11,500 crore, given that it has “already achieved 9MFY23 sales bookings of Rs 90.4bn (79% of FY23 guidance)”. He adds that the robust sales are  “driven by a combination of monetization of ready/completed inventory and new launches”.

Chattopadhyay believes that the company’s robust launch pipeline and expansion into new markets like Pune and Bengaluru provide healthy growth visibility in the medium term. The analyst is also upbeat on the sequential reduction in net debt on the back of higher collections and falling interest costs. He expects the firm’s net profit to grow at a CAGR of 36.3% over FY22-24. 

4. VIP Industries: Axis Direct upgrades its rating on this luggage and travel accessories maker to ‘Buy’ from ‘Hold’ with a target price of Rs 750, indicating an upside of 7.2%. Analysts at the brokerage expect demand to rise on the back of the upcoming wedding season and robust pick-up in travel & tourism. They also see the company gaining market share as they expect demand for premium products to rise. Along with the uptick in travel, “increasing number of International departures of students to foreign universities shall help boost demand for Hard Luggage”, they say. 

The analysts believe the company’s focus on adding depth and diversifying its product portfolio will make its products more appealing to a wider audience. They are hopeful that this will boost market share gains and sales. Overall, the analysts anticipate VIP Industries to capitalise on the improvement in demand, given its diverse product offerings. They expect the firm’s revenue to grow at a CAGR of 40.9% over FY22-24.  

5. Tata Consultancy Services (TCS): ICICI Direct maintains its ‘Buy’ rating on this IT consulting & software company with a target price of Rs 3,780. This indicates an upside of 12.7%. In Q3FY23, the IT giant’s net profit has risen by 4% QoQ to Rs 10,846 crore and revenue by 5.3% QoQ. 

Analysts Sameer Pardikar and Sujay Chavan believe the company’s EBIT margin rising by 50 bps QoQ is a key positive. They expect “margins to improve from FY23 onwards due to utilisation improvement and moderation of sub-contractor costs''. They see margins growing by 110 bps over FY23-25, and expect cash flow to remain robust in the coming quarters.

Pardikar and Chavan view the company’s new organisational structure, which is aimed at improving clients’ stickiness, as likely to enhance market share gains. The analysts say that increased outsourcing in Europe, vendor consolidation, and a healthy deal pipeline will drive growth. They expect TCS’ net profit to grow at a CAGR of 11.5% over FY22-25. 

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

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