1. REC:

Axis Direct maintains a ‘Buy’ rating on this public sector NBFC with a target price of Rs 530, indicating a potential upside of 11.2%. REC's management plans to double its assets under management (AUM) to Rs 10 lakh crore by 2030, with renewable energy making up about 30% of its portfolio. The company also aims to capture 20% of the market share in the coal-based power plant business. Analysts Dnyanada Vaidya and Pranav Nawale project an AUM growth of ~18% CAGR over FY25-27.

REC has managed higher risks from state government-backed entities by relying on government guarantees for timely repayments. Its selective lending strategy and efforts to resolve stressed loans have helped improve asset quality. Vaidya and Nawale say, “We expect slippages to stay under control, leading to a gradual improvement in asset quality. With credit costs remaining in check, we anticipate healthy earnings growth of 14% CAGR over FY25-27.”

The company’s management expects to maintain net interest margins (NIMs) between 3.5-3.8%, with FY25 NIMs estimated at around 3.6%. The analysts believe that while there may be a slight decline in NIMs, low credit costs will offset this, enabling REC to achieve a stable return on assets (RoA) of 2.5-2.6% and return on equity (RoE) of 20-21% in the medium term.

2. Bharat Electronics:

Motilal Oswal reiterates its ‘Buy’ rating on this defence equipment manufacturer with a target price of Rs 360, indicating an upside potential of 29.1%. Bharat Electronics (BEL) has grown its overall defence market share to 12.8% in FY24 from ~12% in FY23, driven by government focus on defence indigenization. Analysts Teena Virmani, Prerit Jain, and Harsh Tewaney note that the BEL holds nearly 60% market share in the specialized defense electronics segment.

The analysts highlight BEL’s strong order book of Rs 74,600 crore as of Q2FY25. They also note that the company is expanding its presence through strategic business units and focusing on increasing exports and non-defense projects in its order book. In FY24, the company filed 146 intellectual property rights (IPRs), including 82 patents, in areas like AI, radars, and embedded systems. During the same period, 161 patents were granted, comprising approvals from some of the FY24 filings as well as applications submitted in previous years, bringing the total number of granted patents to 208.

Virmani, Jain, and Tewaney project order inflows of Rs 25,000 crore, Rs 32,100 crore, and Rs 38,500 crore for FY25, FY26, and FY27, respectively. They expect a revenue CAGR of 19% and a net profit CAGR of 20% over the FY25-27. However, the firm is in the PE Sell Zone, currently trading above its historical PE.

3. HCL Technologies:

Sharekhan maintains its ‘Buy’ rating on this IT consulting firm with a target price of Rs 2,180, indicating an upside of 21%. In Q3FY25, the company reported a revenue growth of 3.6% QoQ, reaching Rs 29,890 crore, driven by improvements in the software, engineering research and development (ER&D), and services segments. EBIT margin expanded by 90 bps to 19.5%, surpassing analyst estimates of 19.3%. Net profit increased by 8.4% to Rs 4,591 crore, beating Trendlyne’s Forecaster estimates marginally by 0.3%.

HCL Tech's total contract value (TCV) stood at $2,095 million in Q3FY25, marking a 6% QoQ decline. The company’s management noted that the average duration of signed deals has shortened, leading to moderated TCV. While smaller deals are converting faster, larger deals are taking more time. Analysts believe that HCL Tech is well positioned to deliver growth among Tier-1 IT companies in FY25 and beyond, thanks to its diversified offerings and partnerships with hyperscalers like SAP and ServiceNow.

The company’s share price dropped by 9.3% over the past month and 4.4% during the previous quarter. However, analysts expect the company to continue its growth in the IT services business, which makes up 89% of its total revenue. They forecast a revenue CAGR of 9% and a net profit CAGR of 12% over FY25-27.

4. HDFC Life Insurance Company:

KRChoksey maintains its ‘Buy’ rating on this life insurance company with a target price of Rs 820, indicating an upside potential of 31.4%. In Q3FY25, the company reported a 11.6% YoY growth in gross written premium (GWP) to Rs 17,275 crore, driven by higher contributions from individual and group businesses.

Analyst Dipak Saha mentions that the market share of the company rose by 70 bps to 10.8%. The number of policies sold increased by 15%, outpacing the private sector’s growth of 9%. He notes that the annuity business is expected to grow due to rising awareness of retirement planning and a growing customer base, along with increased demand for guaranteed income products for post-retirement financial security. 

In Q3FY25, the value of new business (VNB) grew by 9.1%, driven by a solid increase in annualized premium equivalent (APE). The company aims for double-digit APE growth in FY25, supported by strong seasonal demand in the January-March quarter. 

Saha expects the annuity and protection businesses to see steady growth, supported by increased demand in tier 2 and tier 3 cities. They expect 15.2% CAGR growth in net premiums, 15.9% in VNB, 23.1% in net profit and 13.8% over FY25-27.

5. Rainbow Childrens Medicare:

Prabhudas Lilladher initiates coverage with a ‘Buy’ rating on this healthcare facilities company with a target price of Rs 1,785. This indicates an upside potential of 23.7%. Analysts Param Desai and Sanketa Kohale believe that the company leveraged its first-mover advantage to establish itself as a leader in India’s pediatrics market, offering specialized healthcare services.

As of Q2FY25, Rainbow Childrens Medicare has 1,523 beds operational out of its total capacity of 1,935 beds. The company plans to add over 380 beds between H2FY25 and FY27 by expanding spokes in Bengaluru and establishing regional hubs in Coimbatore and Rajahmundry. Additionally, the board is exploring mergers and acquisitions in Northeast and West India.

Desai and Kohale project the company’s revenue to grow at a CAGR of 19% over FY25-27, driven by improvements in FY25, new bed additions, and scaling up of recently launched units.

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

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