1. Bank of Baroda:
Geojit BNP Paribas maintains its ‘Buy’ rating on this bank, raising its target price to Rs 294, indicating a potential upside of 8.7%. In Q4FY24, the company reported revenue growth of 15.2% YoY to Rs 33,774.9 crore, with net profit rising 2.3% YoY to Rs 4,886.5 crore. Analyst Vinod T P attributes the muted profit growth to higher interest expenses, which rose 24.1% YoY to Rs 17,791 crore.
Vinod says, “The bank’s interest income rose 14.4% YoY to Rs 29,583 crore, driven by expansion in the retail loan segment which increased 20.7%.” He is upbeat about BoB as their asset quality improved in Q4, buoyed by a decline in gross non-performing assets (GNPA) and net non-performing assets (NNPA) to 2.9% and 0.7% respectively.
Analyst Vinod is optimistic as the bank has guided deposit growth in the range of 10-12% for FY25. He is also positive as Bank of Baroda aims to lower its GNPA and NNPA further, to 2.5% and 0.5% in FY25.
2. Astral:
Edelweiss maintains a ‘Buy’ rating on this plastic products manufacturer with a target price of Rs 2,476, indicating a potential upside of 13.9%. In Q4FY24, the company’s revenue increased 8.1% YoY and 18.8% QoQ to Rs 1,635.3 crore while its net profit decreased 11.7% YoY (but rose 60% QoQ) to Rs 181.6 crore. He notes that the decline in net profit was due to a decline in EBITDA due to higher employee cost (up 39% YoY) after the ramp up of new plant locations.
Analyst Nikhil Shetty attributes the quarterly improvement to growth in plumbing volumes, which rose 27% QoQ. He is upbeat as the management plans to set up manufacturing in Central India after the expansion in Hyderabad and Kanpur. He highlights the company’s plans to enter the PVC-O pipes segment, which is a cheaper alternative to iron pipes and is used in fresh water and high-pressure applications. He expects a revenue CAGR of 22.6% in FY25-26, buoyed by lower commodity prices and higher real estate activity.
3. JSW Steel:
ICICI Direct assigns a ‘Buy’ call to this steel products manufacturer with a target price of Rs 1,125, indicating an upside of 24.7%. In Q4FY24, the company’s net profit fell 64.6% YoY to Rs 1,299 crore, while revenue decreased marginally to Rs 46,511 crore. According to analysts Shashank Kanodia and Manisha Kesari, the profit was impacted due to higher raw material costs at its Indian operations and a drop in metal realizations.
However, the analysts are optimistic about JSW Steel’s expansion plan. The company plans to increase its domestic steel production capacity to 42 million tonnes per annum (mtpa) by H1FY28, and gradually expand it to 50 mtpa by FY31. It also plans on increasing its downstream capacities to raise its share of high-margin value-added products. The analysts model a volume growth of 10% CAGR over FY25-26 to 30 metric tonnes in FY26.
Kanodia and Kesari expect the EBITDA per tonne to improve with demand recovery in global markets, improved steel prices, and lower coking coal costs. The analysts conclude, “With strategic capacity expansion in place, favorable steel demand, and improvement in profitability, JSW Steel is poised to deliver a 450 bps improvement in margins in FY25.”
4. Shree Cements:
KR Choksey upgrades its rating on this cement manufacturing company to ‘Buy’ with a higher target price of Rs 30,662. This indicates a potential upside of 20.5%. In Q4FY24, the company reported a revenue growth of 6.4% YoY to Rs 5,582.4 crore, with net profit rising 28.4% YoY to Rs 674.9 crore. Analyst Unnati Jadhav highlights that EBITDA rose 59.9% YoY due to margin expansion led by higher inventory gains, better usage of alternate fuels, lower freight costs and employee expenses. She also attributes the growth in revenue to capacity expansion and higher capacity utilisation.
Jadhav is upbeat as the company intends to fund its capex plans worth Rs 4,500 crore for FY25 through internal accruals and does not intend to raise additional funds. Shree Cements also intends to reduce its logistics costs by investing in their private railway siding and expects to move 25% of their goods via rail in 3-4 years. She expects the firm to post revenue CAGR of 11.8% and adjusted net profit CAGR of 14.2% over FY25-26.
5. Ujjivan Small Finance Bank:
Axis Direct maintains its ‘Buy’ call on this small finance bank with a target price of Rs 64, indicating an upside of 19.7%. In Q4FY24, the bank’s net profit rose 6.5% YoY to Rs 329.6 crore, beating the brokerage's estimates, while its net interest income improved by 26% YoY. Analysts Dnyanada Vaidya and Prathamesh Sawant note that the growth was led by a 24% YoY increase in advances and margin expansion. The bank’s deposits improved 26% YoY while disbursements grew 11% YoY, which the analysts say was driven by strong growth in the non-MFI segments.
Vaidya and Sawant say, “Healthy demand across products, along with a gradual scale-up in new products (gold and vehicle loans), should help the bank sustain its growth momentum over the medium term.”
The analysts expect NIM to remain at 9% in FY25, supported by loan repricing, but expect margins to contract due to a shift in portfolio mix towards secured lending. They also estimate that operating costs will remain elevated as the company plans to invest in technology and human resources to build a better platform.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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