1. Lemon Tree Hotels:
IDBI Capital upgrades this hotel company to a ‘Buy’ with a target price of Rs 162, indicating a potential upside of 13.2%. In Q4FY24, the company’s profits increased 52% YoY to Rs 67 crore, while revenue grew 30.3% YoY. The results were in line with the brokerage's estimates for net sales, while net profit was a beat. The company’s EBITDA margin declined 295 basis points YoY. Analysts Archana Gude and Sarthak Awasthi attribute this fall to higher expenses in renovating existing hotels in order to garner higher average room rates.
The analysts say “We anticipate robust inventory addition through management contracts and franchises, to drive sustainable margin improvement in the mid-long term.” The company has signed 12 new management and franchise contracts, adding 667 new rooms in Q4 to their pipeline.
Gude and Awasthi see the company as a strong player in mid-scale hotels due to its operations and renovation efforts. They expect the average daily rate (ADR) to get a substantial push in the mid-term. Additionally, they commend the company's outlook on inventory addition and balance sheet strengthening through debt repayment.
2. HCL Technologies:
Axis Direct recommends a ‘Buy’ rating on this IT consulting & software company with a target price of Rs 1,550, indicating a potential upside of 8.3%. Analyst Omkar Tanksale says, “HCL Technologies’ Q4 results outperformed its Indian counterparts, mainly because of diversified business – IT services contributed 74% of its revenue while engineering and research & development (ER&D) and product & platform contributed 16% and 10% to total revenues respectively.” During Q4FY24, its profit increased marginally YoY to Rs 3,986 crore, while revenue grew 6.8% YoY to Rs 28,915 crore.
Tanksale is optimistic about the deal pipeline and expects the company to sign deals in FY25 as well. The firm’s new deal-wins increased to $2.3 billion in Q4, of which 21 were large deals — 13 in the services vertical and 8 in the software vertical.
The analyst mentions that ER&D has seen strong investment and resilient demand compared to other traditional services during economic uncertainty. He believes this long-term demand will remain strong, and expects the IT sector to regain momentum in H2FY25 and onwards. However, he is cautious of near-term demand amid lower spending and AI headwinds. Tanksale expects revenue to grow in the range of 3%–5% YoY in FY25 while the company’s management retains EBIT margin guidance of 18%–19%.
3. Birla Corp:
ICICI Direct gives a ‘Buy’ call to this cement and cement products manufacturer with a target price of Rs 1,870, indicating an upside of 22.3%. Analysts Vijay Goel and Ankit Shah are optimistic about the company’s new cement facility at Muktaban with a 3.9 mtpa capacity. With the new facility giving the company access to newer growth markets in western India, they expect cement volumes to pick up. They estimate a volume CAGR of 8.7% over FY25-26.
Goel and Shah say, “Focus on operational efficiencies will drive improvement in EBITDA per tonne over FY25-26.” They note that EBITDA per tonne improved sharply – by 66% YoY to Rs 815 in FY24, driven by measures like raw material sourcing and captive coal & power usage.
They believe that with the government’s incentives for the Muktaban facility, lower fuel prices, and an increasing share of premium products, the company’s margins and profitability will improve over FY25-26. They estimate EBITDA per tonne to improve to Rs 925 in FY25 and Rs 1,017 in FY26, and expect revenue to grow at 9% while profit grows at double digits, of 51% CAGR over FY25-26.
4. Supriya Lifescience:
KR Choksey retains a ‘Buy’ rating on this pharma company with a target price of Rs 401, indicating a potential upside of 7.6%. In Q4FY24, the company’s net profit fell 3.4% YoY to Rs 36.9 crore due to an increase in inventory expenses, while its revenue grew 11.1% YoY to Rs 158 crore, beating the brokerage’s estimates by 5.8% due to growth in the vitamin and anti-histamine segment.
Analyst Unnati Jadhav believes that the company’s regulated market share will increase going forward and support its profitability as it will launch new products in FY25 and commercialise contracts in the pipeline in H2FY25.
The analyst is optimistic about the firm’s Ambernath facility (CDMO projects) as it starts production in Q2FY25 and expects it to reach peak capacity in two to three years. She expects this plant to contribute 20% to 25% of total revenue within the next two to three years. Going forward, Jadhav expects the revenue to grow at 20.1% CAGR and profit to grow at 22.3% CAGR over FY25-FY26.
5. Kewal Kiran Clothing:
Anand Rathi upgrades to a ‘Buy’ call on this apparel and accessories manufacturer with a target price of Rs 811, indicating an upside of 17.1%. In Q4FY24, the company’s net profit improved by 20.2% YoY to Rs 37.9 crore, while revenue grew by 10.2% YoY in line with the brokerage’s estimates. Analysts Vaishnavi Mandhaniya and Shreya Baheti note that the company’s efforts to reduce finished goods inventory to align with the fast-changing trends in the fashion industry, and its focus on profitability led to a 75% YoY increase in operating cash flows to Rs 140 crore.
Mandhaniya and Baheti are upbeat on the company and note that it strengthened its presence in women’s wear by acquiring a 50% stake in Kraus Casuals for Rs 170 crore. They believe future growth is promising despite the intense competition in this space, and will be driven by the channel mix, network expansion, and category extensions to kids’ and women’s wear. The analysts estimate sales and profit to grow at a CAGR of 15.9% and 12.6%, respectively, over FY25-26.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
(You can find all analyst picks here)
