1. Pidilite Industries:
Geojit BNP Paribas upgrades its rating on this adhesives manufacturer to ‘Buy’ from ‘Hold’ and raises the target price to Rs 2,792 from Rs 2,726. This implies an upside of 8.4%. In Q1FY24, the company’s net profit rose 32.4% YoY to Rs 468.2 crore and revenue grew by 5.6% YoY. Analyst Anil R says, “Performance in Q1FY24 was driven by volume growth in domestic Consumer & Bazaar (C&B) business segments.” He also points out that a reduction in raw material prices along with operational efficiencies aided healthy growth in net profit.
The firm’s management expects deeper expansion into rural areas, uptick in construction activity and a good monsoon to push growth in the near term. Also, the company sees exports rising in Q2FY24 and Q3FY24.
In light of Pidilite’s healthy Q1 performance and the recent correction in the stock price, Anil R believes the firm is trading at an attractive valuation, thus the upgrade in recommendation and target price. He expects the company’s net profit to grow at a CAGR of 30% over FY23-25.
2. 3M India:
ICICI Securities maintains its 'Buy' rating on this industrial machinery company with a target price of Rs 35,200, implying an upside potential of 11.5%. Analysts Aniruddha Joshi, Karan Bhuwania, and Nilesh Patil have a positive outlook, given the growth of 3M’s end-user industries such as automotive, infrastructure, and manufacturing. These factors bode well for 3M India.
The analysts highlight the company's pricing power, successfully transferring added costs and boosting EBITDA margins to 15.3% in FY23 from 11.7% in FY22. They foresee growth through new products and strategic partnerships, coupled with expenditure reduction in ad spend and working capital, driving improved FY23 margins.
Additionally, the analysts are of the opinion that the company boasts robust brand value and stands to gain from its well-established distribution network. They also factor in 3M India's global relationships with major manufacturers. They believe that 3M India should benefit significantly from its access to the technological resources of its parent company.
3. Mahindra & Mahindra:
Sharekhan maintains its buy call on this automobile manufacturer and raises its target price to Rs 1,736. This indicates an upside of 9.9%. Analysts from Sharekhan say, “Mahindra & Mahindra strategically aims to strengthen positioning in the overseas market with the introduction of global products.”
The analysts remain optimistic as the company introduced multiple concept vehicles to cater to domestic as well as international markets in the tractor, E-SUV, and pick-up vehicle segment. Mahindra launched the OJA platform in the lightweight tractor segment and Thar.e in the electric SUV segment. Even though historically the company’s operating performance was largely dependent on the tractor segment, the analysts now believe that the auto segment will drive its operating performance in the coming years due to increasing volumes going ahead.
The analysts maintain the call on the back of a robust order book in the private vehicle segment, market leadership in the tractor segment, opportunity to grow in farm machinery and its road map for the electric vehicles space.
4. CIE Automotive India:
ICICI Direct assigns a ‘Buy’ rating to this auto parts manufacturer with a target price of Rs 625, indicating an upside of 21.4%. The company’s management plans to incur a growth capex of approx 5% of its sales. At the same time, it plans on improving operational efficiencies in its European operations.
Given the new order wins in the electric vehicle (EV) domain accompanied by the growing domestic market, cyclical upswing in commercial vehicle space, and steady demand for two-wheelers, the analyst Shashank Kanodia says, “CIE is well poised for double-digit revenue growth and a further improvement in margins.”
The analyst believes that India is being looked at as a credible alternate manufacturing hub amid the China +1 trend, and so will be a focus for auto ancillaries. He also remains positive about the company as it is actively de-risking its existing business product profile by entering into EV products, which provide growth longevity. He assigns the call on the back of improving margins, return ratios and consistent healthy cash flow generation.
5. Bajaj Auto:
Axis Securities maintains a 'Buy' rating on this 2/3 wheeler company with a target price of Rs 5,400, indicating an upside of 15.8%. Analysts Aditya Welekar and Shridhar Kallani are optimistic about the company's future due to its focus on electric vehicles (EV) and premium motorcycles, which align with changing industry trends.
Despite lower sales volumes in FY23, analysts at Axis Securities believe the company performed well. They attribute this success to higher average selling prices (ASPs) of their vehicles, driven by price hikes, increased domestic sales, and a larger share of the 125cc+ segment and three-wheeler sales.
The analysts also highlight the company's strong brand value, citing its exclusive dealership networks for KTM and the recent launch of Triumph motorcycles. They consider the company's investment plans for FY24 as a significant growth driver, with Rs 1,000 crore allocated for expansion, which includes Rs 500 crore specifically for the EV segment.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
