This week’s analyst picks look at stocks with high net profit and revenue growth in the recent Q1FY24 results.
1. Tata Motors:
Geojit BNP Paribas upgrades its rating on this automobile company to a ‘Buy’ with a target price of Rs 737. This indicates an upside of 19.1%. In Q1FY24, Tata Motors reported a profit of Rs 3,202.8 crore, as against a loss of Rs 5,006.6 crore in Q1FY23. Its revenue has also grown by 42.3% YoY to Rs 1,03,596.6 crore. Analyst Saji John says, “Tata Motors reported strong profitability, driven by robust demand for luxury cars and continued growth in the commercial vehicles and private vehicles segments.”
The analyst believes that Tata Motors’ Indian business is steadily recovering, and anticipates sustained growth in the near term. He expects the company’s continuous efforts to minimise cost, especially in the Jaguar-Land Rover (JLR) division, and the favourable product mix to drive margin expansion in the coming quarters. John is optimistic on the stock, given JLR’s robust order backlog, rising demand, awareness of electric vehicles and favourable industry trends.
2. Maruti Suzuki India:
KRChoksey maintains its ‘Buy’ call on this vehicle manufacturer with a target price of Rs 11,170, indicating an upside of 18.6%. In Q1FY24, the company’s net profit grew by 143.7% YoY to Rs 2,525.2 crore, while its revenue increased by 25.3% YoY to Rs 33,316.9 crore. Analyst Ashvath Rajan says, “Maruti Suzuki outperformed the industry and the management expects the demand momentum to continue on the back of a good model lineup.”
The analyst believes that the growth in Q2FY24 will be impacted due to a high base effect, but absolute sales will continue. He also believes that the company has seen consistent improvement in its product mix due to the growing share of utility vehicles and new launches, which has led to better realizations. Rajan expects margin expansion to be led by stable commodity costs, a better product mix, better realizations and cost-saving efforts. He expects the company’s revenue and profit to achieve a CAGR of 14.9% and 25.7%, respectively, over FY24-25.
3. APL Apollo Tubes:
ICICI Securities maintains its 'Buy' rating on this iron & steel products company with a target price of Rs 1,740, indicating an upside of 10.4%. Analysts Aman Dixit, Mohit Lohia and Pritish Urumkar hold a positive outlook due to the management's commitment to achieving a capacity of four metric tonnes per annum (MTPA) by the end of FY24 and five MTPA by the close of FY25. In Q1FY24, the company's profit surged by 80.8% YoY to Rs 193.6 crore, while revenue witnessed a 32.2% YoY increase.
The analysts believe that the company is resolute in its growth trajectory, focusing on capacity expansion, geographical diversification, and enriching the product mix. They project the company achieving a 10 MTPA capacity by FY30. Additionally, the management plans to raise the share of value-added sales to 70% by the end of FY25, compared to 57% in Q1FY24. The analysts see potential for a stock rally, given the management's growth plans and the expectation of improved profitability through value-added products and the advantages of scale in the short term.
4. Indigo Paints:
Sharekhan maintains its ‘Buy’ rating on this paint manufacturer with a target price of Rs 1,850. This implies an upside of 21.8%. In Q1FY24, the company’s net profit surged by 57.2% YoY to Rs 31.3 crore and revenue grew by 23.7% YoY. Analysts at Sharekhan point out that the firm’s YoY revenue growth rate has outperformed the industry rate by nearly three times. They attribute this to “the company’s special focus on Tier-1 and 2 cities, along with various initiatives. Growth in Tier-1 and 2 cities is ahead of Tier-3 and 4, and rural areas. The management expects the trend to continue”
The analysts believe that the company’s strategy of focusing on Tier 1 & 2 cities will help it outperform the industry’s growth rate over the next 2-3 years. They also view Indigo’s entry into the construction chemicals and waterproofing segments as an additional growth driver. Also, the analysts see the firm’s capacity expansion in water-based paints as a positive indicator for the coming quarters. They expect the company’s revenue to grow at a CAGR of 21.7% over FY23-25.
5. Max Healthcare Institute:
Edelweiss keeps its ‘Buy’ rating on this healthcare facilities company with a target price of Rs 680, implying an upside of 27.8%. In Q1FY24, the firm’s net profit grew by 38.9% YoY to Rs 240.1 crore and revenue increased by 20.5% YoY to Rs 1,285 crore.
Analysts Thakur Ranvir Singh and Harsh Shah say that the company’s healthy Q1FY24 performance was “driven by higher average revenue per operating bed (ARPOB), healthy occupancy, increased revenue from international patients, and a rise in operating beds.” They add that the firm’s ARPOB grew by 13% YoY.
The analysts are optimistic about the stock, given its focus on capacity expansion, scaling up in its asset-light business, and scouting for potential acquisitions. They also highlight the firm’s healthy balance sheet, which positions it to expand organically and inorganically without taking on too much debt. The analysts expect the hospital chain’s revenue to grow at a CAGR of 19.9% over FY23-25.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
