This week we take a look at analyst picks with high upside, that have performed positively in Q4FY23.

1. Mahindra & Mahindra: BOB Capital Markets maintains its ‘Buy’ rating on this cars & utility vehicles manufacturer and raises the target price to Rs 1,665 from Rs 1,496. This implies an upside of 18.4%. In Q4FY23, the company’s net profit rose 17.9% YoY to Rs 2,636.7 crore, and revenue increased by 24.8% YoY. 

Analysts Milind Raginwar and Yash Thakur attribute the healthy Q4 performance to volume growth, price hikes, a better product mix and higher realisations. They add that falling raw material prices helped increase gross margins and profitability. Overall volume growth was driven by rising passenger vehicle sales, but its farm equipment segment’s volumes were subdued. 

Raginwar and Thakur remain optimistic about the firm’s prospects on the back of increasing production capacity and new launches. They say, “New capacity and high-end launches are likely to boost M&M’s revenue even as moderating cost, a good product mix and improving realisations support margin gains and mitigate supply chain issues.” The analysts expect the company’s net profit to grow at a CAGR of 21.9% over FY23-25. 

2. Tata Consumer Products: KRChoksey maintains its ‘Buy’ rating on this packaged foods manufacturer with a target price of Rs 964. This implies an upside of 22.7%. In Q4FY23, the company’s net profit grew 23.5% YoY to Rs 268.6 crore, while its revenue rose 14% YoY.

Analyst Abhishek Agarwal believes that the company successfully offset volume pressures in  Q4 through stronger distribution, new product launches, and cost efficiencies. He adds that modern trade and e-commerce have also contributed to growth. The analyst sees the company’s focus on improving distribution as a key positive, as it will drive future growth. He says, “During FY23, the firm increased its direct distribution by 15%, allowing it to take its portfolio to a larger outlet universe with more impact.”

The company is also increasing its expenditure on research and development, with a focus on innovation and new products. The analyst expects the firm’s net profit to grow at a CAGR of 17.5% over FY23-25.  

3. TCI Express: Sharekhan retains its ‘Buy’ call on this logistics services provider with a target price of Rs 2,070, indicating an upside of 27.2%. The company’s profit in Q4FY23  grew by 7% YoY to Rs 38.5 crore, while its revenue increased by 9.2% YoY.  Analysts at Sharekhan believe that profits have been better than expected, led by higher utilisation and demand from corporate and SME customers.

The analysts say, “TCI Express has been affected by a sluggish macro environment during H2FY23, although it performed well vis-à-vis industry peers.” They expect the company to continue its revenue growth and margin expansion over the next two years as the domestic economy revives. They believe that expansion in terms of new centres, automation of existing centres, addition of new branches and scale-up of new businesses will contribute to a net earnings growth of over 20% CAGR in FY24-25.

The analysts also remain positive on the back of TCI’s strong balance sheet, healthy cash flows and high return ratios. 

4. KNR Constructions: HDFC Securities maintains its 'Buy' rating on this construction and engineering company with a target price of Rs 318, indicating an upside of 30.8%. In Q4FY23, the company's net profit increased by 5.8% YoY to Rs 147.3 crore, and revenue increased by 13% YoY. Analysts at HDFC Securities believe that the company’s growth exceeded expectations across all areas. 

The analysts expect the revenue/EBITDA for the previous fiscal to guide the company towards achieving revenue of Rs 40+ billion in FY24. KNR Constructions’ order book as of March 2023 stands at Rs 88.7 billion, which is 2.3 times its revenue. They believe that the company is effectively tackling tough competition by expanding into different segments such as state highways, metro, railways, and irrigation.

The analysts further emphasise that the company maintains a strong net cash position with zero gross debt. The management has partly offset the impact of higher input costs and raw material prices by reducing employee expenses and improving overhead utilisation.

5. Praj Industries: Axis Direct maintains its ‘Buy’ call on this construction and engineering company with a target price of Rs 500. This indicates an upside of 29.2%. In Q4FY23, the company reported a 52.8% YoY rise in net profit to Rs 88.1 crore, while its revenue increased by 21.9% YoY. According to analyst Prathamesh Sawant, the company beat analyst estimates on all fronts. 

Sawant says, “Praj Industries is now marching its footprints globally.” Due to its focus on the engineering business, providing solutions across segments that cater to a growing industry, Sawant remains confident in the company’s growth prospects.

The analyst has increased its FY24-25 EBITDA estimates to factor in higher margins from new projects, increased exports, and a decrease in raw material prices. He also believes that the management's focus on growth and an increase in service segment revenues will support better margins.

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

(You can find all analyst picks here)