1. Bajaj Finance:
HDFC Securities upgrades its rating on this non-banking financial company to a ‘Buy’ with a target price of Rs 8,650, indicating an upside of 11.3%. Analysts Krishnan ASV, Deepak Sinde, and Akshay Badlani note that Bajaj Finance has maintained a robust 26% annual AUM growth from FY22-24E, despite its growing scale and complexity.
Although the RBI's directive on higher risk weights for consumer credit might impact the near-term capital adequacy ratio, the analysts believe that the recent equity raise of Rs 8,800 crore will cushion the impact and support growth. They express confidence in the company’s new products, such as auto loans and tractor financing, and their potential to boost the top line.
A highlight for the analysts is the rapid growth of Bajaj Housing Finance. In a surprisingly short time - since its inception in 2018 - it has become the second-largest housing finance company, reaching an AUM of approximately Rs 81,200 crore as of September 2023. This represents a 28% CAGR over the past three years, from a mix of B2B channels, their captive customer base, and B2C channels involving builders and open market sourcing.
2. Global Health:
Motilal Oswal maintains its 'Buy' rating on this healthcare facilities company, with a target price of Rs 1,170, indicating a 17.2% upside. Analysts Tushar Manudhane, Sumit Gupta and Akash Dobhada are optimistic about the company's financial transformation, where it turned net cash positive in FY23 from a debt of Rs 300 crore in FY19. Anticipating continued growth, they foresee the company expanding its bed capacity to over 3,500 in the next two to three years.
The analysts project capacity increases in North and Central India. They highlight the significance of the upcoming Noida facility, expected to commence operations by the end of FY25, which is predicted to boost the company's footprint in the Delhi NCR region.
Manudhane, Gupta, and Dobhada forecast robust growth driven by the addition of 552 beds to existing facilities and 1,000 beds to upcoming facilities. They expect a 28% CAGR over FY23-26 due to a faster scale-up of existing hospitals, additional business from new hospitals, and better operating leverage.
3. NTPC:
Axis Direct initiates coverage on this electric utilities company with a ‘buy’ call and a target price of Rs 345, implying a potential upside of 8.4%. Analyst Aditya Welekar says, “The firm benefits from thermal capex revival to meet power demands during non-solar hours, and its thermal capacity is entirely backed by long-term PPAs, providing stable long-term cash flows.”
Welekar notes the key role of thermal power in providing grid stability due to the seasonality of renewable energy (RE). NTPC has set a target of producing 34 million tonnes of coal in FY24 and scaling up this capacity to 70 million tonnes over the next five years. With domestic renewable energy capacity expected to increase from 172 GW in FY23 to 596 GW by FY36, the firm is set to raise its RE capacity from 3.3 GW in FY23 to 60 GW by FY32. The company’s lower cost of debt compared to its peers, due to its sovereign debt rating, provides a competitive advantage in fundraising for RE projects.
Welekar believes that the firm can use a mix of conventional and renewable energy sources to meet the round-the-clock power needs of corporates, who usually have better credit profiles compared to state distribution companies. Additionally, NTPC’s 10 GW under-construction thermal capacity is expected to be commissioned by FY26, along with its entry into various green energy initiatives like green hydrogen and nuclear power.
4. Affle (India):
Sharekhan maintains a ‘Buy’ call on this internet software and services company with a target price of Rs 1,535, indicating an upside of 18.2%. Analysts from Sharekhan say, “Affle has registered healthy revenue growth despite a high base and industry headwinds, driven by consistent growth across key global emerging markets, including India.”
The analysts believe that the company is well-positioned to capture a larger market share, benefitting from improving advertising spends in its key markets and also international markets. This growth is aided by the acquisition of Youappi and the firm’s growing investments in AI. They expect sales and profit CAGR of 23% and 22%, respectively, over FY24-26. Affle is also actively expanding its patent portfolio to stay ahead in the data-driven industry. Currently holding 21 patents, the company is pursuing 15 more in advanced AI areas.
The analysts remain optimistic on the back of Affle’s growth in key global emerging markets and improvements in developed markets, aided by turnaround plans and investments.
5. Jio Financial Services:
KRChoksey initiates a ‘Buy’ coverage on this finance company with a target price of Rs 290. This indicates an upside of 19.4%. Analyst Unnati Jadhav says, “Jio Financial Services hopes to democratize financial services across the country by offering innovative products that will be delivered digitally.” She believes that the consumer lending segment in particular will dominate the company’s business profile, driven by robust credit offtake in this segment. Jadhav notes the company’s plans to build an ecosystem to cater to various financial services. It is exploring partnerships to offer co-branded credit cards to its customers.
Jio Financial is still in its infancy with many plans still on paper, but Jadhav believes that Jio Financial Services is well-positioned to gain higher traction across all business segments, given its strong parentage and the existing customer base it can tap into. She adds that the company’s diversified business model is well-suited to meet the financial requirements of its customers. She also expects capital adequacy to remain strong, supporting its growth aspirations.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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