1. Varun Beverages:
Axis Direct maintains its ‘Buy’ call on this non-alcoholic beverages company and Pepsi bottler with a target price of Rs 1,550, indicating an upside of Rs 10.6%. Analysts Preeyam Tolia and Suhanee Shome say, “The company achieved a strong all-round performance, despite a weak and challenging demand environment. It saw a volume growth of 13.9% YoY in CY23 driven by robust double-digit volume expansion.”
The analysts are optimistic about the company’s focus on investment and expansion of manufacturing facilities at Bundi and Jabalpur for juices and value-added dairy products. It is also setting up new plants in Uttar Pradesh, Maharashtra, and Odisha, which will increase its total capacity by 45%. The company also announced the acquisition of South African-based BevCo. The analysts believe that this acquisition will provide significant synergy benefits along with a market expansion opportunity.
The analyst expects the company to continue its growth momentum led by expansion in its distribution reach mainly in rural areas with an expected addition of 4-5 lakh outlets per year.
2. Zydus Lifesciences:
Sharekhan reiterates a ‘Buy’ call on this pharma company with a target price of Rs 1,100. This indicates an upside of 7.9%. In February, the company’s domestic sales and volumes grew 11.2% YoY and 0.8% YoY, respectively. The analysts note that this growth was driven by key brands like Lipaglyn, Monotax and Amicin.
Analysts like Zydus Lifesciences’ move to acquire the Liqmed business, which has 16 products approved in the UK and five new products approved in the US. Liqmeds currently is a profitable business with a small revenue size which is expected to scale up.
The analysts say, “Zydus is focusing on specialty products both in India and the US, through its rare and orphan disease portfolio which will aid the firm towards reaching $100 million in the specialty portfolio by FY26.” They expect Zydus Lifesciences’ earnings to grow by 15% CAGR from FY24-26 led by approvals in multiple high-margin businesses like specialty and injectables, leading to double-digit growth in both the US and India.
3. Granules India:
ICICI Direct recommends a ‘Buy’ call on this pharma company with a target price of Rs 515, indicating an upside of 18.1%. Analyst Siddhant Khandekar is positive about the company due to its plans to expand its product and therapeutic basket. He says, “The company is focusing more on formulations to drive growth backed by volumes, especially in the US and Europe. It plans to file eight products in the US every year. The analyst likes the firm also due to its backward integration plans with a green technology focus.
Khandekar says that despite its recent history of flat revenue growth, Granules India’s margins have improved. He believes that this was a result of 47% YoY growth in formulations to Rs 766 crore, driven by increased volumes in the US across all major products, especially controlled substances. He recommends the call on the back of the company’s compelling risk-reward matrix and its ability to play in its strength areas.
4. Mahanagar Gas:
HDFC Securities recommends a ‘Buy’ call on this utilities company with a target price of Rs 1,535. This indicates an upside of 12.8%. Analysts Harshad Katkar, Nilesh Ghuge, Akshay Mane and Prasad Vadnere believe that the company’s recent price correction – due to the Petroleum and Natural Gas Regulatory Board’s notice on the end of infrastructure exclusivity in Mumbai – is overdone. The analysts say that this notice will not have a material impact on the company’s operations as it would be extremely difficult for any competitor to access significantly cheaper natural gas and set up a new CNG station network at similar costs and locations.
The analysts are also optimistic about the company due to the recent improvement in new CNG vehicle registrations. New CNG vehicle registrations for February 2024 rose 64% YoY to 6,196 units. They expect the company’s volume growth to accelerate, led by its increased focus on expanding the CNG retail network, its marketing efforts, improvement in CNG vehicle registrations, incremental volume growth from UEPL acquisition, and additional volumes from the industrial segment. They expect a 9% CAGR volume growth over FY24-26.
5. Prince Pipes & Fittings:
Geojit BNP Paribas reiterates its ‘Buy’ call on this plastic products manufacturer with a target price of Rs 659, indicating an upside of 15.9%. In 9MFY24, the company’s revenue declined by 6.1% YoY, attributed to a drop in realization. However, analyst Anil R believes that going forward, steady real estate sector and plumbing demand will drive volume growth, and he anticipates revenue to grow at an 18.6% CAGR from FY24-26. He expects the margins to remain healthy at 13.4% over FY24-26, supported by lower input prices and a better product mix.
Anil R is also optimistic about the company’s acquisition of the Aquel bathware brand. He believes that at peak capacity, the revenue contribution from Aquel would be Rs 120 crore. He concludes, “We anticipate that healthy demand from construction and plumbing, a strong summer, better pricing actions, and stable input prices will drive volumes.”
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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