While looking at what analysts recommend as stocks to buy, the average target price upside is crucial. This metric looks at the potential share price growth of a stock, as forecasted by analysts. A higher upside percentage indicates a more positive outlook, and a potential for growth beyond the stock’s current valuation.
It's important to note that analyst predictions are not always accurate – there are unexpected factors that can affect a business, and its stock price. This is a cloudy crystal ball. But analyst calls are one among several factors investors can consider before picking a stock.
In this edition of Chart of the Week, we focus on this screener, which highlights stocks with high target prices and a significant upside according to analysts. We have selected sectors with the highest upside % and the stocks within these sectors driving this upward trend. We have only included stocks with positive price changes in the past six months.
Analysts highlight chemical sector’s high upside amid expansions
The chemical & petrochemical sector has been on the mend, and Anupam Rasayan India is set for an especially strong performance, according to analysts, with an average share price upside of 42.2%. The stock has risen by 9.7% in the past month. Prabhudas Liladher expects the company’s revenue to grow on the back of three factors: its commercialization of innovative products, a robust order book, and its expansion into fluorination chemistry, which signifies diversification within the industry.
PI Industries also shows promise with an average price upside of 17.5%. The stock has risen by 12.4% in the past six months. According to Axis Direct, PI Health Sciences aims to boost its research capabilities by acquiring firms for a new pharmaceutical centre in Hyderabad. New brand launches and reduced working capital point to the company's growth plans. Finally, we have Aarti Industries with an average share price upside of 16.8%. It has risen by 5.3% in the past six months.
Analysts expect high growth in internet software and services
Next, we move to the software & services sector, where Infibeam Avenues has an average share price upside of 28.7%. Its stock price has risen by 48.6% in the past six months. New-tech company Zomato has an average share price upside of 20.4% and rose by 80.6% in the same period. According to Motilal Oswal, India's food delivery sector is still developing and holds significant growth opportunities. They predict Zomato's revenue to grow at a CAGR of 53% annually from FY23 to FY25 due to its strong market presence in the food delivery and Hyperpure segments.
PB Fintech’s average share price upside stands at 7.8% and its stock price has risen by 29.7% in the past six months. According to Keynote Capital, the company is going through a crucial growth phase, driven by increased commission revenue, expansion into smaller cities, and effective cost management. Its insurance premiums have grown by 36.5%, due to a surge in health insurance, while lending disbursals rose by 41.6% in Q2FY24.
Moving on to the banking & finance sector, the Indian Energy Exchange has an average share price upside of 19.6%. The stock has risen by 1.4% in the past month. Similarly, Union Bank of India has an average share price upside of 15.6%, with a 57.9% rise in the past six months. The upside is thanks to management efforts to maintain gross non-performing assets (GNPA) below 6% and net non-performing assets (NNPA) under 1% for FY24.
As for Can Fin Homes, analysts expect a price upside of 10.2%. The stock has risen by 17% in the past six months. This upside is attributable to an increase in net interest margin (NIM) despite higher credit costs. By closely managing credit and operating expenses, the company aims to improve return ratios.
In the automobiles and auto components sector, CIE Automotive India has the highest average share price upside of 22.1%. The stock has risen by 8.7% in the past six months. Analysts anticipate increased profits due to CIE's decision to sell its German operations, which is expected to increase EBITDA margins for its European business, in line with the company's targeted EBITDA range of 17-18%.
The two companies of the Minda group, Uno Minda and Minda Corporation, have price upsides of 9.4% and 9.1%, respectively. These stocks have risen by 22.9% and 25.1% in the past six months.
Cement & construction sector’s outlook strong amid robust order books
In the cement & construction sector, IRB Infrastructures Developers leads with the highest average share price upside of 39.1%. The stock has risen by 28.8% in the past six months. The positive outlook is tied to the company's steady FY24 construction revenue projection, expected to be in the range of Rs 5,000-5,500 crore, a 20-25% rise from the previous year. Looking forward, the company plans to bid on projects worth Rs 80,000-85,000 crore by Q3FY24.
KNR Constructions follows with an upside of 14%. The stock has risen by 24% in the past six months. According to Motilal Oswal, although the order inflow has been low so far, the tender pipeline remains strong. Due to reduced awarding activity by NHAI in H1FY24, KNRC has adjusted its FY24 order inflow estimate to Rs 2,000-3,000 crore. With an existing order book of Rs 7,500 crore, the company is projected to achieve an 11% CAGR in revenue for FY23-25. Birla Corporation also has a price upside of 7.8%. The stock has risen by 31.6% over the past six months.
In the FMCG sector, Dabur India is at the forefront with the highest average share price upside of 16.4%. The stock has risen by 4.2% in the past six months. It is followed by Godrej Consumer and Tata Consumer, with price upsides of 15.8% and 6.3%, respectively. Analysts hold a positive outlook for this sector as they foresee improvements driven by lower core inflation, increased government spending, higher urban remittances, and the likelihood of easing raw material prices boosting profit margins.
General industrials and Pharmaceutical stocks rise on regulatory approvals
3M India is the top performer in the General Industrials sector with an average upside of 13.9%. The stock has risen by 29.5% in the past six months. Next in line is defence player Bharat Dynamics, with an upside of 11.3%. The stock has risen by 6.4% in the same period. This optimistic view comes from the Defence Acquisition Council's approval in September 2023 for the production of Dhruvastra missiles, intended for the indigenous ALH Mk-IV helicopters. Elgi Equipments also has an average share price upside of 7.9%. It has risen by 9.6% in six months.
Shifting to the pharmaceutical & biotechnology sector, Gland Pharma leads with an 11% average share price upside and a stock price rise of 55.2% in the past six months. According to Axis Direct, the company has expanded in Europe by acquiring Cenexi for CDMO operations and established new B2B partnerships in various markets by optimizing its US-approved ANDA portfolio. Major international players like Procter & Gamble Health and Pfizer are also in the spotlight with average upsides of 8.4% and 6.6%, respectively
