1. Ashok Leyland:
Axis Direct maintains its ‘Buy’ rating on this commercial vehicle manufacturer with a target price of Rs 210, implying an upside of 14.4%. Analysts Aditya Welekar and Shridhar Kallani believe that the company is well-positioned to benefit from the long-term upswing in the commercial vehicle (CV) sector, given its dominant market share and new product launches. They also see its margins improving in the long run due to “operational efficiencies, a material cost reduction programme, softening of commodity costs, and pricing discipline”.
After interacting with Ashok Leyland’s pan-India dealer network, Welekar and Kallani report a general optimism about the CV upcycle. They note that the demand for medium and heavy commercial vehicles is still strong, while there is a slowdown in the light commercial vehicle segment. The analysts are optimistic about the firm’s strategy to penetrate traditionally weak markets in Northern and Eastern India, grow in the central region, and defend its market share in the southern market. The analysts expect the company’s net profit to grow at a CAGR of 34% over FY23-26.
2. Astra Microwave Products:
ICICI Securities maintains a 'Buy' rating on this defence company with a target price of Rs 510, indicating an upside of 20.4%. Analysts Chirag Shah and Vijay Goel emphasize the company's significant strengths in research and development, and manufacturing.
The analysts highlight Astra’s ascent up the value chain, transitioning from the manufacturing of subsystems to the development and production of a wide range of high-end, critical microwave and radio frequency-based equipment. They note that the company has a healthy order book, currently standing at Rs 1,580 crore, which is twice its FY23 revenue.
Shah and Goel expect a substantial influx of future orders, given the government's increased capital allocation to the defence and space sectors, which is aimed at reducing defence imports and promoting domestic production. The analysts project impressive growth rates, with EBITDA and PAT expected to grow at a CAGR of 26.3% and 46.7%, respectively, over FY23-25.
3. Bharat Heavy Electricals:
Geojit Financial Services maintains a 'Buy' rating on this heavy electrical equipment company with a target price of Rs 154, indicating an upside of 21.8%. Analyst Vinod T P holds a positive outlook, primarily because the company, in collaboration with Titagarh Rail Systems, has secured a contract worth Rs 24,000 crore from the Indian Railways. This contract is for the manufacture and supply of 80 Vande Bharat sleeper trains by 2029. Vinod highlights an additional order for an annual maintenance contract, under which Bharat Heavy Electricals will undertake comprehensive maintenance of these trains for 35 years.
The analyst foresees improvements in margins and profitability in the future, driven by increasing revenues in both the power and industrial segments, This outlook is further supported by a robust order book due to the Vande Bharat project, and ongoing efforts towards cost optimization. Moreover, with its well-established reputation and government support, the company looks well-positioned to thrive in India's evolving energy sector.
4. Maruti Suzuki India:
Motilal Oswal reiterates its ‘Buy’ call on this car manufacturer with a target price of Rs 11,900, indicating an upside of 13.1%. Analysts Jinesh Gandhi, Amber Shukla and Aniket Desai say, “Stable growth in the domestic private vehicles (PV) market and a favourable product lifecycle augur well for Maruti Suzuki India.”
The analysts remain optimistic as the company plans to increase its production capacity by another two million units over the next nine years. They notethat Maruti aims to “establish market leadership in the SUV segment”, given its current and upcoming launches in this product category. Moreover, the development of electric vehicles is underway at its Gujarat plant and the first model is to be launched in FY25. The company is also focusing on CNG and other clean fuel options, as it has extended the S-CNG technology to six more models. This would reduce its carbon footprint.
The analysts expect market share gains and margin recovery in FY24, driven by an improvement in supplies, a favourable product lifecycle, a stronger product mix, and operating leverage.
5. Archean Chemical Industries:
ICICI Securities maintains its ‘Buy’ call on this chemicals company with a target price of Rs 750. This indicates an upside of 24.1%. Analysts Sanjesh Jain, Akash Kumar and Ashvik Jain maintain their stance on the back of recent trends in Bromine prices. They say, “Bromine prices dropped to a 15-year low in China in June but partly recovered in August.” They believe the price fall is due to a mix of greed, speculation and a sudden drop in demand.
The analysts expect China’s ongoing destocking to last through 2023, positively impacting all bromine producers. This is because China depends on imports to meet its demand, and thus, it cannot create overcapacity.
Jain, Kumar and Jain say that Archean Chemical’s Q1FY24 result was relatively better despite volatile bromine prices. The resilience is thanks to the company's long-term contracts, and strong performance in the industrial salts segment. The analysts expect Bromine to witness volume recovery by Q4FY24, and prices to firm up only in FY25. They are also optimistic as the company is in the process of commissioning its derivative plant, which increases earnings visibility during the forecasted period.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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