1. Amara Raja Energy & Mobility:
ICICI Direct maintains a 'Buy' rating on this auto parts and equipment company with a target price of Rs 900, indicating an upside of 17.1%. Analyst Shashank Kanodia is positive about the company’s growth in the automotive and industrial battery space.
Kanodia believes that the company is a major player in steady-state lead-acid batteries, with 70% of its sales coming from the automobile sector and the rest from the industrial side. He notes its strong presence across OEM and aftermarket channels, and its leadership in the aftermarket space. According to the analyst, the company is increasing its focus on the new energy sector, in response to the global shift towards electric vehicles.
With the recent MoU with the Government of Telangana to establish a Li-Ion battery Giga factory, involving an investment of Rs 9,500 crore over the next 10 years, Kanodia sees promising long-term prospects for the company. He notes that the company's stock is currently trading at an inexpensive valuation, considering the steady growth in its base business and its increasing focus on the new energy domain.
2. Kaynes Technology India:
HDFC Securities initiates coverage on this electrical equipment manufacturer with a ‘Buy’ rating and a target price of Rs 2,850. This implies an upside of 14.9%. Analysts Naveen Trivedi, Paarth Gala and Riddhi Shah believe the company’s superior execution capabilities will enable it to become the biggest beneficiary of the improving market conditions in the electronics system design & manufacturing (ESDM) sector. They expect the ESDM sector in India to grow at a CAGR of 30% over FY22-27, driven by rising domestic demand and the Centre’s focus on import substitution.
The analysts point out that Kaynes has outperformed its peers in revenue growth over the past three years. They expect the firm to continue this trend, given its presence in the business-to-business segment, focus on value-added products and scale of operations.
Trivedi, Gala and Shah are also optimistic about the company’s expansion into the semiconductor engineering segment with its outsourced semiconductor assembly and test (OSAT) plant in Telangana. They expect its revenue to grow at a CAGR of 42% over FY23-26.
3. Siemens:
BOB Capital upgrades its rating on this heavy electrical equipment manufacturer to a ‘Buy’, with a target price of Rs 4,400. This indicates an upside of 15.6%. The company’s revenue increased by 25.1% YoY in Q2FY24, while its profit fell 12.4% YoY. Analysts Vinod Chari, Arshia Khosla and Swati Jhunjhunwala say, “Siemens saw double-digit growth across segments during the quarter, with the mobility segment posting the highest increase of 61% YoY”.
The company’s management expects a 33% hike in public capital outlay for FY24 to Rs 10 lakh crore, including a rail expenditure of Rs 2.4 lakh crore and a production-linked incentive outlay of Rs 30,000 crore. This, they believe, will create a positive capex environment. The analysts believe that the company will continue its current trend as the plan to sell the low-voltage motors business for Rs 2,200 crore has been rejected by minority shareholders. They believe that Siemens' base business is strong and well-positioned to benefit from the capex cycle due to its diverse customer segments.
4. State Bank of India:
Motilal Oswal reiterates its ‘Buy’ call on this bank with a target price of Rs 700. This indicates an upside of 17.7%. In Q2FY24, the bank’s profit increased 8% YoY to Rs 14,330 crore, while its profit grew 26.4% YoY. Analysts Nitin Aggarwal, Dixit Sankharva and Disha Singhal say, “State Bank’s robust performance has been helped by strong loan growth and lower provisions.”
In an interactive session with the bank’s Chairman, Dinesh Kumar Khara, the analysts say they gained insights into the bank’s capital adequacy and growth plans. Despite recent declines in NIMs, the management has guided for broadly stable margins (with a downside bias of 3-5 basis points), as the bank has measures in place to mitigate the rising cost of deposits. The analysts say, “The asset quality performance remains strong with consistent improvements in headline asset quality ratios, while the restructured book remains under control at 0.6%.” They estimate the bank to deliver RoA of 1.1% and RoE of 18.3% by FY25.
5. Raymond:
SBI Securities maintains its ‘Buy’ rating on this textile company with a target price of Rs 1,762, implying an upside of 11.3%. In Q2FY24, the firm’s reported revenues stood at Rs 2,321 crore, growing by 5% YoY, while the net profit increased by 150% YoY to Rs 1,514 crore. Analysts believe that despite subdued domestic demand and lower discretionary spending, the firm has managed to deliver a strong EBITDA of Rs 384 crore, an 8% YoY increase. This is mainly due to sustained demand in the real estate segment, where the firm is developing 100 acres with a potential revenue of Rs 20,000 crore.
According to the analysts, the firm has turned debt-free after the sale of its FMCG vertical to Godrej Consumer for Rs 2,825 crore this year. Additionally, the company has paid external debt of Rs 1,029 crore by issuing Non-Convertible Debentures in Q1FY24. The firm has added 46 new retail stores in Q2FY24 and plans to add over 200 more in the next 12 months. The analysts are optimistic about Raymond's marketing strategies in the textile segment and its personalised interactive bot, which improves the customer journey through WhatsApp-based interactions.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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