1. Prestige Estates Projects: Motilal Oswal maintains its ‘Buy’ rating on this realty company with a target price of Rs 675, implying an upside of 66%. Analysts Pritesh Sheth and Sourabh Gilda note that the company’s plans to double its sales bookings to Rs 25,000 crore by ramping up new launches is a key positive. They point out that Rs 7,500 crore of the firm’s planned capex (Rs 15,700 crore) for the next five years will be funded through external debt. Investors have been concerned about the strain this additional debt may cause on the balance sheet. But analysts believe Prestige’s rising cash flows and net worth will keep its debt-to-equity ratio stable. 

Sheth and Gilda are optimistic about the company’s ambitious growth guidance for the next five years, but believe the realty firm’s business development is key to realise the growth potential. They anticipate robust growth in rental income as well. They say, “Once the commercial portfolio fully stabilises over the next five to six years, it will generate rental income of Rs 3,200 crore.” The analysts expect the company’s revenue to grow at a CAGR of 8.6% over FY23-25. 

2. Minda Corp: Axis Direct maintains its ‘Buy’ rating on this auto parts & equipment company with a target price of Rs 230, indicating an upside of 19.3%. Analysts Aditya Welekar and Shridhar Kallani maintain their previous recommendation and target price following Minda’s acquisition of a 15.7% stake in Pricol for Rs 400 crore. As this has been a financial investment and the company holds a minority stake, no synergies are expected from the acquisition, they add.  

The analysts maintain their positive outlook on the company’s growth prospects. They expect Minda Corp to be the prime beneficiary of product premiumization, growth in electric vehicle usage and increased business from commercial and passenger vehicle manufacturers. They are also upbeat about the management’s confidence to outperform the industry by 10-12% on the back of margin optimisation measures. 

However, they believe risks such as inflation, interest rate hikes and demand slowdown persist. “We maintain our cautious outlook on the 2W domestic market and overall export market in the next few quarters,” the analysts point out, and add that they expect the firm’s net profit to grow at a CAGR of 21.8% over FY23-25. 

3. Supreme Petrochem: KRChoksey maintains its ‘Buy’ rating on this petrochemicals stock with a target price of Rs 427, indicating an upside of 12.1%. In Q3FY23, the company’s net profit fell 45.6% YoY to Rs 89.6% and revenue declined by 8.9% YoY. 

Analyst Abhishek Agarwal attributes this weak Q3 performance to lower realisations and volumes. However, the analyst remains optimistic about the company’s growth prospects given its capacity expansion projects, as he believes it will drive future growth. According to him, “The firm is enhancing its polystyrene (PS) and expanded polystyrene insulation (EPS) production capacities to cater to the increasing demand for its products. With enhanced capacity and healthy demand from end-user industries, it will see strong growth in the future.” 

Agarwal expects capacity expansion projects to add 1.2 lakh metric tonnes per annum of additional PS and EPS to its current capacity. The launch of new products and the production expansion will boost volume growth in the coming quarters, he says. He expects the company’s net profit to grow at a CAGR of 10% over FY22-24. 

4. Muthoot Finance: Chola Wealth Direct maintains its ‘Buy’ call on this NBFC with a target price of Rs 1,350. This indicates an upside of 39.4%. According to analyst Huseain Kaizer Bharuchwala, the company has witnessed better gold loan demand in the past two months and it expects to return to double-digit gold loan growth in a few quarters. He believes that the tradeoff between loan growth and margin will persist “in the foreseeable future”.

The analyst says, “Muthoot, in our view, is unlikely to pursue gold loan growth at the cost of profitability. As pressure from banks and fintechs start subsiding and teaser loan rates impact vanish, we expect 10% growth in standalone AUM in FY24.” The analyst remains optimistic, expecting the company to regain some lost market share starting FY24 and returning to a double-digit growth rate in Q2FY24.

5. Mahindra Lifespace Developers: ICICI Securities retains its ‘Buy’ call on this realty company with a target price of Rs 483, indicating an upside of 29.5%. After the company’s Chief Executive Officer (CEO) and Managing Director (MD) Arvind Subramanian resigned from his post, Mahindra Group replaced him with Amit Kumar Sinha. The resignation will take effect from May 22, 2023. Analyst Adhidev Chattopadhyay says, “The management transition comes at a time when the wheels for growth have been already set in motion, and barring any large churn in department heads, continuity in growth plans should not be a major hurdle.”

The analyst expects the company to achieve Rs 1,900-2,000 crore of FY23 sales bookings, implying 58% growth over FY22 sales. He estimates FY24 and FY25 sales bookings to be at Rs 2,340 crore and Rs 2,710 crore respectively on the back of a robust launch pipeline for FY24 and new project additions. “We believe that the company is on track to achieve its medium-term guidance of Rs 2,500 crore of residential sales bookings by FY25,” the analyst concludes. 

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

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