1. Escorts Kubota:
Emkay upgrades its rating to ‘Buy’ for this commercial vehicles manufacturer, setting a target price of Rs 4,700, an upside potential of 21.2%. Analysts Chirag Jain, Jaimin Desai, Nandan Pradhan and Omkar Rane highlight that tractors are likely entering an upcycle from the second half of the fiscal year due to healthy monsoons and an increase in Kharif acreage, which is at the highest in four years. The recent monsoon brought about 8% more rainfall than the long-term average, supporting farm incomes.
Analysts note that while industry volumes declined by 8% YoY in FY24, prospects for a cyclical recovery appear strong. Global tractor manufacturers are also increasingly sourcing components from India, creating a potential opportunity of around $500 million for the company as it expands exports and develops new products.
Jain, Desai, Pradhan, and Rane note that the company is pursuing several initiatives across products, channels, and capacity to capture growth opportunities in both Indian and export markets. As a result, they project a revenue CAGR of 23.7% and an EBITDA CAGR of 26% over FY25-27.
2. Blue Dart Express:
Motilal Oswal reiterates a ‘Buy’ rating on Blue Dart Express with a target price of Rs 9,900, indicating an upside of 16.6%. Analysts Alok Deora and Saurabh Dugar cite the strong growth potential of this transportation logistics company, which has seen improved demand and network expansion.
Blue Dart Express has announced a price hike of 9-12%, effective January 2025, to offset inflationary costs and protect margins. Analysts mention that with the festive season approaching, the company expects higher capacity utilization for its new aircraft, leading to improved efficiency and margins. New routes like Guwahati are gaining momentum. Additionally, the company’s surface express segment, which contributes 30% of its revenues, is expected to grow faster than its air segment, supporting overall growth.
Deora and Dugar highlight that Blue Dart Express’ standalone EBITDA margin is expanding, driven by improved capacity utilization and the shift of volumes from third-party cargo to its own aircraft. They project a CAGR of 18% in net sales and 33.8% in EBITDA over FY 25-27.
3. Tata Consultancy Services:
Sharekhan maintains a ‘Buy’ rating on this IT consulting and software company with a target price of Rs 5,230 indicating a potential upside of 27.7%. Tata Consultancy Services' net profit fell by 1.1% QoQ to Rs 11,909 crore in Q2FY25 due to higher employee benefits and equipment & software license expenses. However, revenue grew by 2.2% QoQ to Rs 64,988 crore, supported by improvements in the banking, financial services & insurance (BFSI), manufacturing, consumer, and life sciences & healthcare segments.
Analysts note that, energy & utilities grew 7%, while manufacturing rose 5.3% YoY. However, communication & media fell by 10.3% and technology by 1.9%. Analysts highlight that the order book stood at $8.6 billion, with North America contributing $4.2 billion. Growth markets like India surged by 95.2%, while North America saw a 2.1% decline.
Analysts mention that the easing cycle of US Federal Reserve rate cuts and stable macro data, supports a strong growth recovery outlook for the IT sector and TCS. They project a CAGR of 8.2% in sales and 10.3% in profit after tax over FY 25-27.
4. Narayana Hrudayalaya:
ICICI Direct maintains a ‘Buy’ rating on this hospitals player with a target price of Rs 1,485, indicating a potential upside of 15.3%. Despite a slowdown in recent quarters, the company showed signs of recovery in India during Q1FY25, with revenue improving by 8% YoY to Rs 1,341 crore, driven by a 10% growth in India, reaching Rs 1,086 crore. However, growth in the Cayman Islands (a UK overseas territory) was limited, with revenue rising by 5% to Rs 267 crore. The average revenue per occupied bed (ARPOB) for Indian hospitals reached Rs 41,370 during the quarter, reflecting an 11% YoY increase.
Analysts Siddhant Khandekar and Shubh Mehta are upbeat about Narayana Hrudayalaya’s plans for capital expenditure of Rs 3,000 crore over the next 2-3 years, focusing on cities like Bengaluru and Kolkata where it has established strong brand loyalty. They said, "We believe the company is well-positioned to handle the impact on its balance sheet, despite negative free cash flow in FY25-26, as its margins and return ratios are strong."
The company has seen a significant reduction in losses from its new hospitals, which has positively impacted margins. Additionally, a new hospital in the Cayman Islands is set to commence operations in H2FY25. Khandekar and Mehta project a revenue CAGR of 10.2% and a net profit CAGR of 7.6% for FY25-26.
5. Eureka Forbes:
ICICI Securities initiates a ‘Buy’ rating on this consumer electronics company with a target price of Rs 660, indicating an upside of 6.9%. Analysts Aniruddha Joshi and Manoj Menon highlight that Eureka Forbes’ planned phase-1 transformation, focused on expanding its distribution network, is progressing as expected. The company’s investments in this area have started delivering positive results and are expected to drive growth in FY 25-26. Its service network has expanded to 19.5K pin codes in FY24 from 10.5K in FY22, growing at a CAGR of 36.3%.
Joshi and Menon are optimistic about the phase-2 transformation, which is set to revolve around improving the service business. Eureka plans to improve customer service experience through better technology and higher service quality. Its digital-based complaint resolution system has enabled the company to achieve a 33% reduction in quality-related complaints during FY24.
Eureka is also investing heavily to improve its market penetration in India's water purifier industry (currently 6%) by launching affordable products, increasing media campaigns, and expanding its distribution network to attract first-time buyers. The analysts also believe that the company’s investment in the distribution network will drive growth in FY25-26.
Note: These recommendations are from various analysts and are not recommendations by Trendlyne.
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