1. Ashoka Buildcon:
IDBI Capital maintains a 'Buy' rating on this roads and highways company with a target price of Rs 206, indicating an upside of 30.8%. Analysts Vishal Periwal and Shubham Shelar made a visit to the MOPA Airport (Goa) and reported on the progress of the Rs 670 crore project. This initiative, which includes three flyovers, roadwork, and interchange segments, is expected to be completed ahead of its scheduled date in August 2024.
Ashoka Buildcon is close to finalizing the asset monetization for nine hybrid-annuity model (HAM) projects, with the share purchase agreement expected to be signed by FY24. The analysts believe this monetization, which includes HAM along with BOT (build-operate-transfer) assets, will help reduce the company's consolidated debt of Rs 7,200 crore. However, the monetization of BOT assets is delayed to FY25 as it awaits NOC approval.
Analysts Periwal and Shelar predict a rise in revenue from international projects. They also forecast EBITDA margins will improve from 8% in FY24 to 11% in FY25, with a stable order book of over Rs 14,800 crore.
2. Arvind Fashions:
Nuvama Wealth initiates coverage on this textile company with a ‘Buy’ rating and a target price of Rs 660, implying an upside of 36.1%. Analyst Palash Kawale notes that the firm has exited multiple loss-making brands in recent years, which has resulted in falling debt and a 500 bps increase in operating margins over the past five years. He expects a 12% CAGR growth in revenue over FY24-26, driven by product and store expansion plans.
The firm’s working capital cycle has improved over FY20-23, dropping from 72 days to 43 days. Along with that, a superior retail channel mix and better collections resulted in a fall in debtor days from 74 to 46. Palash Kawale believes that the firm has posted an ROCE of 13% in FY23, owing to the improved working capital cycle. Arvind is aiming for an ROCE of over 20% in the medium term by improving its margins and working capital cycle.
With a focus on its core brands, the firm is expected to benefit from the ongoing trend of premiumization in India. Kawale predicts significant revenue growth from the firm’s USPA, Arrow, Calvin Klein, and Tommy Hilfiger brands. It is projected to generate Rs 2,000 crore in revenue from USPA sales alone in FY24. Currently, sales from USPA form just over 40% of the firm’s total revenue. The analysts say, it aims to scale up these brands further, thanks to their healthy operating cash flows and double-digit margins.
3. Metro Brands:
Motilal Oswal maintains its ‘Buy’ rating on this footwear retailer with a target price of Rs 1,530, implying an upside of 22%. Despite the current muted demand for discretionary products in the country, analysts Aliasgar Shakir, Tanmay Gupta, and Harsh Gokalgandhi remain optimistic and say that “the company has continued to post industry-leading growth, led by steady footprint expansion.”
The analysts note Metro Brands’ robust store economics with 2x revenue productivity compared to its peer, Bata India. They believe that the company’s right store size, diverse product portfolio, and focus on premiumization will contribute to its healthy store economics. They add that with the addition of brands like Fila and Foot Locker, Metro Brands has an opportunity to generate Rs 1,500-2,000 crore in sales in India in the next three to five.
The analysts expect a 21% and 26% growth in the company’s revenue and EBITDA, respectively, for FY24-26 (except Fila and Foot Locker’s earnings). They also foresee Metro Brands generating operating cash flows of Rs 6,000 crore over the same period to fund its plan to open 250 new stores per year.
4. JTL Industries:
Axis Direct maintains its ‘Buy’ call on this iron and steel products manufacturer with a target price of Rs 300. This indicates an upside of 22.8%. In Q3FY24, the company’s net profit grew by 48.8% YoY to Rs 30.2 crore, slightly missing the brokerage’s estimates by 6%. However, its revenue increased by 101.9% YoY to Rs 568.3 crore, exceeding the brokerage’s estimate by 5%.
Analyst Aditya Welekar says JTL Industries’ capacity expansion plan is underway, following its announcement to raise Rs 1,310 crore. This funding will enhance its capacity to 2 million tonnes per annum (MTPA) by the end of FY27. He believes that the fundraising plan, involving Rs 540 crore from the promoters, Rs 270 crore from non-promoters, and Rs 500 crore through a QIP, will spur growth. The capacity is expected to reach 2 MTPA by the end of FY27, with high utilization (around 65%, the industry standard) expected in FY28. The analyst says, “With phase-wise volume expansion in progress, we model revenue and profit CAGR of 42% and 45%, respectively over FY24-26.”
5. Tata Consultancy Services (TCS):
Sharekhan maintains its ‘Buy’ call on this IT consulting and software company with a target price of Rs 4,200, indicating an upside of 8.8%. In Q3FY24, the company’s net profit rose marginally by 2% YoY to Rs 11,058 crore, while revenue grew by 4.6% YoY to Rs 61,445 crore. Sharekhan's analysts say, “Q3 earnings were better than our estimates in a seasonally soft quarter, driven by growth in the energy resources and utilities, manufacturing, and life sciences & healthcare verticals.”
The analysts believe that despite a QoQ decline in order wins, the order pipeline remains robust. The management is hopeful of a recovery in FY25, owing to the easing of sector headwinds and expected growth in the BFSI sector in the next quarter. The analysts expect 9% sales and 11.7% profit CAGR over FY24-26. They conclude, “We believe TCS is well-positioned to capitalize on cost optimization and transformational opportunities as sector headwinds recede and witness a strong pick-up in growth momentum given its strong domain capabilities, contextual knowledge and strong execution.” However, revenues from the US have declined for top Indian IT players this quarter including TCS, causing analysts to worry that this could be a longer term trend.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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