1. Thermax:
Sharekhan maintains its ‘Buy’ rating on this heavy electrical equipment manufacturer and raises the target price to Rs 3,235 from Rs 2,790. This implies an upside of 14.2%. The analysts believe that the firm is well-positioned to benefit from India’s transition to green energy, given its diverse product portfolio. They add, “Thermax’s focus on launching innovative products in all its segments supports its long-term growth.” They expect the order inflow to be dominated by steel, oil & gas and petrochemicals in the near term.
The analysts expect the firm’s margins to improve in the coming quarters as commodity prices are declining. Along with a healthy orderbook, they foresee the firm’s robust balance sheet, strong cash flows, and low working capital to drive growth. They project the company’s revenue to grow at a CAGR of 15% over FY23-26.
2. Reliance Industries:
Bob Capital Markets keeps its ‘Buy’ rating on this refineries giant with a target price of Rs 3,015. This implies an upside of 19.8%. Analysts Kirtan Mehta and Yash Thakur remain optimistic about the firm’s growth prospects due to its focus on consumption and technology-driven growth. They add, “The company is also looking to tap global growth potential with its digital and FMCG businesses.”
Mehta and Thakur also find the company’s strategy of embracing new technologies like 5G, and integrating its retail arm with the e-commerce platform, JioMart, as key positives. They expect the rollout of the 5G network to boost market share and average revenue per user (ARPU) for Jio. The analysts believe that the firm is equipped for “robust long-term growth” and anticipates its net profit to grow at a CAGR of 12.1% over FY23-25.
3. Mahanagar Gas:
Geojit BNP Paribas maintains its 'Buy' rating on this non-electrical utilities company with a target price of Rs 1,224, indicating an upside of 18.6%. Cyril Charly at Geojit BNP Paribas is positive about the company’s expanding profit margins, due to lower input costs and increased price realizations in the compressed natural gas business.
Charly is upbeat as the government has approved the Parikh Committee's recommendation to cap the cost of domestic gas at USD 6.5/mmBtu, leading to decreased gas expenses. Its EBITDA has surged by an impressive 82.5% YoY, primarily due to reduced natural gas procurement costs. He expects this positive momentum to continue, as the cap on input costs is projected to remain in effect for the medium term.
The acquisition of Unison Enviro is also a strategic move that enables expansion into regions like Ratnagiri and Karnataka. The investment in distribution infrastructure, strategic acquisitions, and the government's commitment to increasing the share of sustainable energy is expected to drive volume growth for the company.
4. SKF India:
ICICI Direct maintains its ‘Buy’ call on this ball and roller bearings manufacturer company with a target price of Rs 6,400, indicating an upside of 22.1%. Analysts Chirag Shah and Vijay Goel say, “SKF India is well placed to ride the strong demand cycle in the domestic bearings market, led by its focus on high-growth sectors, new product developments and increasing localisation of products.”
The analysts are optimistic about SKF India’s rich experience in the design, development and manufacturing of bearings, seals and lubrication systems. They also believe that it is well positioned with a wide range of products & services. The company is also focusing on growth in segments like electric vehicles, renewable energy, railways and mining.
Shah and Goel expect SKF India’s operational and financial performance to improve considerably and estimate revenue and PAT to grow at 15% and 22.8% CAGR respectively over FY24-25.
5. Coal India:
ICICI Securities maintains a 'Buy' rating on this coal-mining company, with a target price of Rs 285, indicating an upside of 14.6%. Analysts Amit Dixit, Mohit Lohia, and Pritish Urumkar hold an optimistic outlook due to the company's consistent outperformance in production and sales volume, which has extended into the fifth consecutive month in FY24.
According to ICICI Securities analysts, the company's earnings are highly sensitive to volumes. Its year-to-date performance suggests an upswing in volume for both regulated and non-regulated customers. This trend is expected to lead to improved operating leverage and higher fuel supply agreement prices.
The analysts note that the pithead inventory, currently at 45.3 million metric tonnes, remains comfortably positioned due to production ramp-up. They foresee that the company will benefit from operating leverage due to increased sales volumes, in both non-regulated sector and e-auction customers. This is despite a slight decrease in premiums compared to FY23. However, Dixit, Lohia and Urumkar also project a progressive rise in e-auction bookings at higher prices due to the 20-25% surge in international coal prices in July 2023.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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