1. Amber Enterprises India:
Axis Direct maintains its ‘Buy’ call on this consumer electronics manufacturer with a target price of Rs 3,700, indicating an upside of 19.1%. Analyst Akshay Mokashe says, “The company reported robust growth outlook across all segments, resulting in strong earnings visibility from FY23 to FY26.” He notes rising contribution from the railway and mobility (R&M) division, which yields higher operating margins, and expects it to help improve operating profits in the coming quarters.
Revenue from Amber Enterprises’ electronics division grew at a 48% CAGR over H1FY21-H1FY24. Mokashe believes this was backed by its strategic JV with NOISE, which helped the company expand its market reach in the wearables segment and other smart electronics categories. He remains optimistic about the company on the back of a robust order book in the R&M division, increasing value-added products, and improving operating leverage, which he expects to drive higher ROE, ROCE and operating margins by FY26. He projects a revenue and PAT CAGR of 15% and 34%, respectively, over FY24-26.
2. Siemens:
BOB Capital Markets maintains its 'Buy' rating on this heavy electrical equipment company with a target price of Rs 4,600, indicating an upside of 13.8%. Analysts Vinod Chari, Arshia Khosla, and Swati Jhunjhunwala are optimistic as the company's order backlog increased by 165% YoY to Rs 45,520 crore at the end of Q2FY24. They expect Siemens to benefit from a Rs 26,310 crore order for 1,200 electric locomotives from the Indian Railways.
Chari, Khosla, and Jhunjhunwala forecast a surge in incoming orders/tenders from private companies, as the capacity utilization in the private sector has reached 75% (the point at which companies make new capex plans). They note that margins have expanded across segments as Siemens was able to negotiate better prices, except in the mobility segment due to factory ramp-up costs and R&D expenses for the new rail order. The analysts are also closely monitoring the demerger of its energy business, which is expected by 2025. They believe that Siemens, with its strong order book and diverse customer base, is well-positioned to sustain different capex cycles.
3. Coal India:
Motilal Oswal reiterates its ‘Buy’ call on this coal company with a target price of Rs 430. This indicates an upside of 9.5%. According to analysts Alok Deora and Parthiv Jhonsa, Coal India has made a long-term commitment through FSA agreements to meet the increasing demand in the power sector amid government push for reliable 24x7 electricity supply.” They say that the company aims to increase production to 780 mt in FY24 and 850 mt in FY25.
They also note that the revival in demand and rise in international prices have led to e-auction premiums of 80-100% over the past few months.
Deora and Jhonsa say that Coal India has intensified its focus on capex to improve its evacuation infrastructure. Its capex has tripled from FY20 to Rs 18,600 crore in FY23, and analysts expect it to surpass the budgeted target for FY24. They conclude, “Considering the limitations of renewable energy, the dependence on thermal power plants is expected to grow in the coming years. This will likely increase the demand for thermal coal from Coal India.”
4. Bata India:
Geojit Financial Services maintains its 'Buy' rating on this footwear company with a target price of Rs 1,870, indicating an upside of 17.1%. Analyst Vincent Andrews holds a positive outlook due to margin improvements backed by growth in the premium segment and an asset-light expansion model.
In Q2FY24, the company’s revenue had declined by 1.3% YoY to Rs 834.6 crore, driven by a shift in festive season buying, weaker demand in the mass category due to inflationary pressure, and increased GST rates.
With the premium segment growing at 1.5 times the overall rate, Andrews forecasts an improvement in gross margins. He believes that the recent licensing and manufacturing agreement with the globally renowned fashion brand Nine West will contribute to Bata’s top line, leveraging the company's strong brand recall and reach.
Bata India added 28 stores in Q2FY24, taking the total to 476. It aims to reach 500 franchise stores by 2024. Andrews believes that the company's asset-light, franchise-based expansion model will help in controlling fixed costs and contribute to a gradual improvement in margins. As of December 2023, Bata India has 2,150 stores in 725 cities.
5. Saregama India:
ICICI Direct assigns a ‘Buy’ rating on this movies and entertainment company with a target price of Rs 445. This implies a 19.2% upside. Analyst Bhupendra Tiwary believes its “B2B licensing revenue will grow at 24% CAGR over FY23-25 to Rs 692 crore, supported by monetization of existing music copyrights and new music acquisitions”.
Tiwary believes that growth in licensing revenue will be further aided by the transition into a subscription model, which could increase revenue by 150% to 300% as the industry moves towards a paid subscription model. According to the management, increasing their share of new content across regional languages and acquiring minority stakes in regional music companies will raise licensing revenue by 22%-25% in FY24.
Recently, the company acquired Pocket Aces, a digital entertainment firm with access to more than nine crore digital followers. Analysts expect revenues from TV, films, and events to grow at a 33% CAGR between FY23 and FY25, thanks to Pocket Aces’ digital presence and distribution strength. The management also expects the combined revenues to grow at 27% in the medium term.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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