1. HDFC Bank:
ICICI Securities maintains its ‘Buy’ rating on this private bank with a target price of Rs 2,000. This implies an upside of 30.3%. Analysts Jai Prakash Mundhra, Chintan Shah, Renish Bhuva and Vaibhav Arora remain optimistic about the bank's prospects after its analyst conference on September 18. The highlight of the conference was that the NIMs and net worth of the merged entity (HDFC Bank and HDFC) will fall due to the need for additional liquidity, to increase the liquidity coverage ratio. The analysts expect the bank’s NIM to stabilise after Q2FY24 as the merger has resulted in higher non-performing assets.
Despite short-term performance challenges, the analysts believe the bank's key growth drivers for the medium to long term are intact. They add, “We believe HDFC Bank has given reasonable clarity on the movement of net worth and related matters. The mobilisation of retail deposits and NIM trajectory are likely to be key drivers for the stock price.” They expect the bank’s net profit to grow at a CAGR of 15.9% over FY23-25.
2. PNC Infratech:
ICICI Securities maintains a 'Buy' rating on this roads and highways company with a target price of Rs 460, indicating an upside of 25%. Analyst Bhupendra Tiwary is upbeat about PNC's robust execution capabilities, supported by modern equipment and an in-house team for timely project delivery.
Tiwary highlights PNC's healthy order book, now at Rs 18,900 crore after adding new projects worth Rs 4,083 crore. It suggests strong revenue visibility. He expects inflows of about Rs 10,000 crore in FY24, driven by road projects, resulting in an estimated revenue CAGR of 13.5% from FY23-25. He also foresees internal accruals funding equity requirements, supported by the company's strong cash flow generation. As of Q1FY24, PNC maintains a net debt-to-equity ratio of 0.17X.
The analyst notes that the company is in talks with potential investors to monetize its assets, including 12 projects, aiming to complete this process by FY24-end. This strategic move is expected to facilitate the company's scalability in the future.
3. GAIL (India):
Geojit Financial Services upgrades its rating on this utilities company to 'Buy', with a target price of Rs 142. This implies an upside of 15%. Analyst Vinod T P maintains a positive outlook, citing GAIL's substantial infrastructure expansion and improving sequential performance, thanks to a brighter economic outlook.
Vinod points out that a decrease in operational costs and other expenses has helped the company swing from an operating loss of Rs 336 crore in Q1FY23 to an operating profit of Rs 1,797 crore in Q1FY24. He expects GAIL's planned capex of Rs 9,000 crore for FY24—allocated to pipelines, petrochemicals, city-gas distribution, and equity investments—to drive growth. He is also optimistic about GAIL's plans to construct 100 CNG stations and 2 lakh DNPG stations over the next two years.
The analyst believes that GAIL's earnings performance will benefit from increasingly stable prices and consistent global LNG supplies. Vinod notes that the company is well-placed to capitalise on the growing demand for energy, owing to its diverse revenue streams and ongoing infrastructure expansion.
4. Hero MotoCorp:
Sharekhan maintains a 'Buy' rating on this 2/3-wheeler company with a target price of Rs 3,629, indicating an upside of 22%. Analysts at Sharekhan are optimistic about the company's focus on volume growth, premiumisation, expansion in the electric vehicle (EV) market, and robust festive sales.
They anticipate volume growth in the premium segment, with over 25,000 bookings for the Harley Davidson X 440 and the launch of the Karizma XMR. They believe Hero’s strategic product rollouts in FY24, targeting both the entry-level and premium segments, will elevate the average selling price and attract new customers, particularly with the launch of Hero 2.0 stores.
The analysts say Hero's electric vehicle (EV) strategy is well-defined with a two-pronged approach. The company is building its own brand, VIDA, while also investing in Ather Energy, a rising name in the domestic EV market with new electric scooter launches. Given the healthy uptick in retail sales during Onam and Ganesh Chaturthi, they expect this momentum to persist, particularly during the 42-day festive period in Q3FY24.
5. Tata Steel:
Prabhudas Lilladher maintains a ‘Buy’ call on this steel manufacturer with a target price of Rs 144, indicating an upside of 13%. Analyst Tushar Chaudhari bases his call on the company’s recently announced proposal to set up an electric arc furnace at its Port Talbot steel-making facility for a capex of 1.3 billion pounds. The UK government will grant 40% of the project cost. Chaudhari believes this move will address market share, competitiveness and substrate import challenges. Tata has also planned further capex over the next three years, subject to relevant regulatory approvals.
Chaudhari expects Tata Steel’s current cash losses to end, as the company will import substrate instead of producing at its old facilities. He remains optimistic, expecting a fall in energy costs and believes that the volatility of coking coal prices won’t directly affect the company. He revises FY25 EBITDA estimates upwards by 5% to Rs 41,100 crore.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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