1. Hero MotoCorp: Motilal Oswal maintains its ‘Buy’ rating on this two-wheeler manufacturer and increases the target price to Rs 3,500 from Rs 3,100. This implies an upside of 25%. Analysts Jinesh Gandhi, Amber Shukla and Aniket Desai believe that the company is well-placed to benefit from the recovery in domestic demand for two-wheelers, particularly in the 100cc motorcycle segment, which is its core strength. 

They also note that the firm is less vulnerable to the impact of electric vehicles (EVs), as scooters, the category where EVs have gained traction, make up just 8% of its volumes. 

Gandhi, Shukla and Desai highlight the firm’s focus on increasing its penetration in the 100cc motorcycle segment, where it already has a market share of 80%, by attracting first-time buyers through retail financing options. They also like the company’s plans to regain its lost market share in the 125cc segment through product portfolio expansion. The analysts expect the bike maker’s revenue to grow at a CAGR of 11.4% over CY23-25. 

2. KPR Mill: Sharekhan keeps its ‘Buy’ rating on this textiles company and raises the target price to Rs 800 from Rs 685, implying an upside of 19.6%. Analysts at Sharekhan believe that the firm’s integrated business model and capacity expansion plans will drive growth and improve EBITDA margin in the coming quarters, as demand for sugar textiles and sugar recovers. They also expect strong margin expansion in the garment business on the back of the reduction in cotton prices and an enhanced product mix. They add, “The China+1 strategy, potential free trade agreement (FTA) with the UK, and increasing opportunities in the US market provide a scope of consistent growth for its high margin garment business.”

The analysts expect the garments segment to be the main driver of growth in the medium term, with an order book of Rs 1,000 crore for the next 6 months. They also anticipate the firm to benefit from the gradual demand recovery in Europe. The analysts project this textile manufacturer’s net profit to grow at a CAGR of 27% over FY23-25.  

3. UltraTech Cement: HDFC Securities maintains a 'Buy' rating on this cement and cement product company with a target price of Rs 9,305. This signals a potential upside of 12.9%. Analysts Rajesh Ravi and Keshav Lahoti hold a positive outlook, given its robust volume growth fuelled by escalating demand. With its recent expansions and strong distribution network, the analysts are confident that the company is well-positioned to meet the growing demand in the market.

The analysts also anticipate improved margins for the company, supported by the significant decline in fuel prices, which will result in reduced operational expenses. They expect the company to sustain accelerated growth in the ready-mix concrete sector, with an increasing plant count at a CAGR of 28% since Q4FY20. As of March 2023, UltraTech Cement has successfully expanded to 231 plants and intends to double this figure. The analysts further project that the company will transition into a net cash position by FY25.

4. Sundaram Finance: Axis Securities maintains a ‘Buy’ call on this auto-finance company with a target price of Rs 3,015, indicating an upside of 15.4%. In Q4FY23, the company reported a profit of Rs 433.2 crore (up 27.4% YoY), beating Axis’ estimate by 13.8%. But the company missed the brokerage’s net interest income estimate by 4.5%. 

Analysts Prathamesh Sawant, Bhavya Shah and Dnyanada Vaidya say, “We continue to have a positive outlook on Sundaram Finance, given that it’s one of the industry leaders in the vehicle finance segment, and its consistent delivery of superior return on assets.” They believe that the growth prospects in construction and agricultural equipment remain bright, and the recovery in commercial vehicles (CV) was strong throughout FY23. 

The analysts say that Sundaram Finance is well-positioned to maintain its growth momentum due to factors such as good disbursement growth aided by rising CV demand, moderation in cost-income ratio, amiable credit cost aiding improvement in asset quality, and adequate capital.

5. KEC International: ICICI Securities reiterates its ‘Buy’ call on this heavy electrical equipment manufacturer with a target price of Rs 664. This indicates an upside of 18.4%. Analysts from ICICI, Ashwani Sharma, Mohit Kumar, Bharat Kumar Jain and Nikhil Abhyankar, who attended the company’s annual investor day, say that the management is confident of achieving a top line of Rs 20,000 crore and is cherry-picking orders to focus on profitability. 

The analysts remain optimistic as the company has already secured order inflows of Rs 2,400 crore, which account for approximately 10% of its guidance of Rs 25,000 crore in FY24. The management has also indicated a strong order pipeline worth Rs 1 lakh crore. 

The analysts say, “With a robust orderbook and order pipeline, stability in commodity prices and an improving supply chain, we expect execution to pick up over FY24, followed by improvement in margins.

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

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