1. Welspun Living:
Sharekhan maintains its ‘Buy’ rating on this textiles company with a target price of Rs 181. This indicates an upside of 19.3%. In Q4FY24, the company’s net profit rose by 16.4% YoY to Rs 146 crore, and its revenue increased 19.2% YoY to Rs 2,616.7 crore. Analysts at Sharekhan are positive as the company stands to benefit from India signing a free trade agreement (FTA) with the UK, which will help boost revenue in the long term.
Management has given cautious guidance for the near term given the geopolitical tensions. However, the analysts are confident of long-term growth prospects due to large opportunities in the export markets, entry into the home textile segment, and benefits from the ‘China + 1’ strategy.
Analysts at Sharekhan forecast a 10-12% revenue growth in FY25 driven by fashion towels and flooring segments, coupled with capacity additions. They maintain EBITDA margin guidance at 15-15.5% for FY25.
2. Nestle India:
Axis Direct maintains a ‘Buy’ call on this packaged foods manufacturer with a target price of Rs 2,880, indicating an upside of 14.8%. In Q4FY24, the company’s profit increased 12.4% YoY to Rs 934.2 crore and its revenue grew by 8.8% YoY. It reported EBITDA margins of 25.7%, up 289 basis points YoY. Analysts Preeyam Tolia and Suhanee Shome say, “Nestle delivered resilient all-round performance, driven by growth across all categories, with a healthy balance in product mix, pricing, and volume growth.”
Tolia and Shome are positive about the company due to its efforts toward rural penetration and premiumization in its core categories, and differentiated product launches by adding new categories like Nespresso and Purina Pet Care. They believe the firm’s direct-to-customer platform and its focus on a fast-growing nutraceutical portfolio will help it increase demand. They expect Nestle sales and profit to grow at 13% and 18% CAGR respectively over FY24-25. The analysts are also optimistic about Nestle’s joint venture with Dr Reddy’s to launch a nutritional portfolio.
3. Hatsun Agro Products:
ICICI Securities upgrades this packaged foods manufacturer to a ‘Buy’ call with a target price of Rs 1,190. This indicates an upside of 8.3%. In Q4FY24, the company’s net profit rose by 108.7% YoY to Rs 52.2 crore and its revenue increased 14.4% YoY to Rs 2,049 crore. Analysts Aniruddha Joshi, Manoj Menon, Karan Bhuwania, and Nilesh Patil are optimistic due to its strong volume-led revenue growth and no price hikes in the past year. The analysts noted that the company reported 10-quarter high gross margins of 30.7% on the back of deflationary trends in raw material prices.
The analysts expect margin expansion to continue in FY25 due to lower milk prices, higher revenue share of ice cream, accumulation of low-priced inventory, and improved capacity utilisation at the Solapur and Govindapur facilities. They estimate EBITDA margin to be 12.1% in FY25 compared to 11.3% in FY24. The company has introduced two chocolate brands, Hanobar and Havia in FY24 which analysts believe to be margin and value accretive in the medium-term.
4. HDFC Asset Management:
KRChoksey maintains a ‘Buy’ rating on this asset management company with a target price of Rs 4,235, indicating an upside of 12.3%. In Q4FY24, the company’s net profit increased 43.8% YoY to Rs 540.8 crore, and its revenue went up by 33.5% YoY to Rs 851.3 crore. Analyst Unnati Jadhav is upbeat as assets under management went up 39.1% YoY to Rs 60,730 crore driven by a higher tilt toward equity-oriented assets. In FY24, the company expanded its product offerings by launching five new funds. Also, it has enhanced its passive front by launching five index funds and two ETFs.
According to the management, the employee cost for FY24 increased by 13.0% YoY as it included an ESOP cost of Rs 47 crore. However, Jadhav is optimistic as management expects ESOP costs to reduce in FY25 to Rs 20 crore. At the same time, she believes that the company will continue to invest in its digital infrastructure to support its distribution partners. In FY25-26, Jadhav expects revenue and profit CAGR of 21.5% and 19.7% respectively.
5. Patel Engineering:
Hem Securities initiates a ‘Buy’ call on this construction and engineering company with a target price of Rs 80. This indicates an upside of 26.2%. The analyst Mudit Jain believes the firm’s order book of Rs 19,134 crore and its book-to-bill ratio of 4.3X provide multi-year revenue visibility.
Jain says, “Patel Engineering being the leader in hydroelectric EPC projects is expected to get a good amount of orders in this space.” The firm has 42 hydropower projects with an aggregate capacity of 18,034 MW under construction. He believes that around 27,000 MW of hydropower projects will be announced in the coming years and expects the company to win major orders from this pipeline.
Jain notes that the order inflow was muted during the quarter mainly due to the Lok Sabha elections. However, the management is confident that order awarding will be robust post elections. They have guided for 15-20% growth in the order book for FY25. The analyst expects the small-cap company to post decent numbers going forward on the back of increased execution, and expects order inflows to increase.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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