This week in analyst picks we look at companies that relatively outperformed the Nifty 50 over the past month:
- Supreme Industries: Geojit BNP Paribas upgrades its rating on this plastic products company to ‘Buy’ from ‘Hold’ and raises the target price to Rs 3,223 from Rs 2,703. This implies an upside of 15.7%. The firm has outperformed the Nifty 50 index by 3.6% over the past month. In Q4FY23, its net profit increased by 11% YoY to Rs 359.4 crore and revenue grew 1.6% YoY.
Analyst Anil R is optimistic about this stock, as its Q4 performance has exceeded expectations on the back of a 15% YoY increase in volumes. He sees this volume growth as driven by strong demand in the housing and agricultural sectors. The expansion of the firm’s EBITDA margin by 320 bps YoY to 18.5%, led by stable raw material prices, he notes, is a key positive.
Given the softening of raw material costs, the analyst anticipates healthy margin and profit growth in the coming quarters. “Stable demand from the housing & agriculture sectors will continue to drive volume & revenue going ahead,” Anil adds. He expects the company’s revenue to grow at a CAGR of 11.4% over FY23-25.
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IDFC First Bank: ICICI Direct retains its ‘Buy’ call on this bank as valuations look reasonable, and gives it a target price of Rs 75. This indicates an upside of 15.5%. The bank has outperformed the Nifty 50 index by 13.7% in the past month. In Q4FY23, its profit increased by 131.7% YoY to Rs 816.1 crore, while its revenue grew 45.3% YoY.
IDFC First’s share price rose by 60% in the past year. Customer deposits grew by 46.8% YoY to Rs 1.36 lakh crore, which according to analysts Kajal Gandhi, Vishal Narnolia and Pravin Mule was led by a 41% YoY rise in CASA. The analysts say, “Credit growth continued to remain strong and ahead of industry growth, coupled with a gradual improvement in cost to income.” They also believe that the bank has steady asset quality – Return on Assets reached 1.1% in FY23, and the analysts expect it to improve to 1.3% in FY24.
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Godrej Properties: Motilal Oswal reiterates its ‘Buy’ call on this realty company with a target price of Rs 1,575, indicating an upside of 15.1%. The company has outperformed the Nifty 50 index by 22.4% in the past month. In Q4FY23, Godrej Properties posted a net profit growth of 58.2% YoY to Rs 412.1 crore, while its revenue increased by 20.8% YoY. According to analysts Pritesh Sheth and Sourabh Gilda, the revenue was driven by strong completion and they expect the company to sustain its improved profitability level
The realty company reported pre-sales of Rs 4,000 crore in Q4 (up 25% YoY and 12% above the brokerage's estimates). For FY23, the bookings surpassed its full-year guidance by Rs 2,200 crore, say the analysts. They add, “The company continues to provide strong visibility on pre-sales growth with sustained aggression in business development activity as it is targeting to add Rs 15,000 crore worth of new projects in FY24.”
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Mold-Tek Packaging: IDBI Capital upgrades its rating on this containers and packaging company to a ‘Buy’ with a target price of Rs 1,252. This indicates an upside of 26.8%. It has outperformed the Nifty 50 index by 1.3% in the past month. In Q4FY23, the company’s profit increased 23% YoY to Rs 23 crore and its revenue grew marginally by 3.7% YoY. The results were in line with the brokerage's estimates on key parameters, says Archana Gude. According to her, the Q4 sales volume off-take was impressive due to weak demand in Q3 and low-base sales. The management has also guided sales volume to be in the range of 15%-20% in the near term.
Gude says, “Mold-Tek Packaging’s strategy of timely capacity expansion and entry into high-value products have been key drivers of sustainable earnings growth of the company.” She believes that expansion into the northern markets will pave the way for further improved earnings. She expects this expansion, along with healthy earnings growth, will lead to decent returns for the stock.
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Kotak Mahindra Bank: KRChoksey keeps its ‘Buy’ rating on this bank with a target price of Rs 2,330, indicating an upside of 7.5%. The company has outperformed the Nifty 50 index by 6.6% over the past month. In Q4FY23, the firm’s net profit rose by 26.3% YoY to Rs 3,495.6 crore and revenue grew by 39% YoY.
Analyst Abhishek Agarwal believes that the bank’s healthy performance in Q4 has been driven by robust growth in net interest income, lower expenses and improved asset quality. This led to lower provisions and further strengthened the balance sheet. He adds that the bank continues to be a market leader in terms of the CASA ratio.
Agarwal says, “Overall, on the credit side, the bank is optimistic about the demand trajectory in the upcoming quarters, with improved contributions from high-margin segments.” For the coming quarters, Kotak Mahindra will continue to invest in digital capabilities and expand its branches, according to the analyst. He expects the company’s net profit to grow at a CAGR of 12.7% over FY23-25.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
