1. Birla Corp:
ICICI Direct maintains a 'Buy' rating on this cement manufacturing company with a target price of Rs 1,540, indicating an upside of 23.2%. Analyst Vijay Goel is optimistic about the company's efforts to enhance capacity utilisation and operational efficiency, which are expected to boost margins and profitability.
Goel is upbeat about the recently commissioned 3.9 million-tonne cement facility in Muktaban, Maharashtra. He foresees robust sales volume growth as Birla Corp expands in the west while maintaining a strong footprint in the northern, central, and eastern parts of India. He projects a strong CAGR of 8.2% in sales volume over FY23-25.
The analyst notes the company's efforts to improve operational efficiency through streamlined raw material sourcing, increased utilisation of coal from its captive mines, and a shift towards captive power, including solar and waste heat recovery. Goel also highlights government incentives for the Muktaban facility, lower fuel costs, and a strategic focus on premium product sales as key contributors to potential margin and profit growth in FY24-25.
2. Federal Bank:
Sharekhan maintains its ‘Buy’ rating on this private bank with a target price of Rs 170, implying an upside of 14.8%. Analysts at the brokerage expect the bank to sustain its healthy operational performance, with strong loan growth, healthy fee income, and lower credit costs, despite net interest margin (NIM) pressure in the near term. They add, “The bank saw an impressive loan growth of 20% YoY and 5% QoQ in Q2FY24. This growth was broad-based across retail (22% YoY) and wholesale (17% YoY) segments.”
The analysts highlight the management’s optimistic outlook on credit growth, which is guided to be 18-20% in FY24, with broad-based traction across asset classes. Federal Bank plans to scale up the share of high-yielding assets in its loan book. The analysts also expect NIMs to bottom out in H1FY24 and gradually pick up in H2FY24. They forecast the bank’s standalone net profit to grow at a CAGR of 17.5% over FY23-25.
3. APL Apollo Tubes:
Motilal Oswal maintains a 'Buy' rating on this iron and steel products company with a target price of Rs 1,930, indicating an upside of 22.6%. Analysts Sumant Kumar, Meet Jain, and Omkar Shintre hold a positive outlook due to the company's well-distributed manufacturing plants, giving it a robust geographic presence and keeping it close to customers.
Analysts at Motilal Oswal see the company's focus on value-added products as a big plus, especially with the addition of the Raipur plant, which has a capacity of 1.2 million tonnes per annum (MTPA). They expect the Raipur unit to produce innovative roofing products designed for better corrosion protection and durability. They believe that these value-added products will boost margins.
Kumar, Jain and Shintre expect that increased capacity, debottlenecking, and the addition of high-margin products from the Raipur unit, will drive volume growth and margin expansion in the future.
4. Navin Fluorine International:
HDFC Securities maintains its ‘Buy’ rating on this commodity chemicals manufacturer with a target price of Rs 5,368, implying an upside of 44.6%. Analysts Nilesh Ghuge, Harshad Katkar and Akshay Mane are optimistic about the firm’s growth prospects despite the resignation of its Managing Director, Radhesh Welling. Their positive outlook is on the back of the firm’s strong earnings visibility, given its long-term contracts, increasing share of high-margin segments in total sales, and rising production capacity. They also add, “The company’s operating model, with individual CEOs leading each business vertical, supported by senior management teams from various departments, will help it maintain its growth strategy.”
Ghuge, Katkar and Mane are positive about the management’s focus on maintaining capex spending, and research & development investments. They believe the company’s focus on expanding its existing capacity will enable it to win bigger projects in the future, thus maintaining the growth momentum. The analysts expect the firm’s revenue to grow at a CAGR of 27.7% over FY23-26.
5. Ujjivan Small Finance Bank:
Axis Direct reiterates its ‘Buy’ call on this bank with a target price of Rs 64, indicating an upside of 9.9%. Analysts Dnyanada Vaidya, Prathamesh Sawant and Bhavya Shah say, “FY23 was characterised by a sharp rebound in the MFI business and a gradual pick up in the non-microfinance book.” The bank’s disbursements have grown by 42% YoY. As the challenges posed by the pandemic fade, the analysts highlight improvements in both asset quality and profitability metrics.
Vaidya, Sawant and Shah expect Ujjivan Small Finance Bank to grow rapidly with these building blocks in place. They are optimistic that the bank will now focus on sustaining growth momentum and improving efficiency. They believe that the bank is well-poised to deliver robust RoA and RoE of 3-3.1% and 25-27%, respectively, supported by improving cost ratios and consistent credit costs.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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