1. Larsen & Toubro:
This construction conglomerate is up 2% over the past month after receiving orders worth over Rs 30,000 crore. In late March, L&T secured its largest order to date, worth over Rs 15,000 crore from QatarEnergy LNG, to establish two offshore complexes.
L&T continues to reduce orderbook risks from domestic fluctuations in recent quarters, with a growing number of orders now coming from international clients. L&T Management has expressed confidence in easily surpassing the 10% order inflow growth target set for FY25, as they anticipate that capital expenditures in India will pick up starting in Q4, supported by a strong international pipeline. Forecaster projects revenue to increase by 18.4% YoY in Q4, with net profit expected to rise by 8%.
The company’s net working capital to sales ratio improved significantly, declining by 390 bps in December 2024, driven by robust customer collections during the quarter. P. Ramakrishnan, Head of Investor Relations, expects the ratio to remain at this level in FY25. The company appears in a screener of stocks that efficiently utilise their capital to enhance return on employed capital.
Thanks to free cash flow generation over the past couple of years, Ramakrishnan says, “The company is stepping up capital allocation into newer business areas like green energy, data centres and semiconductor design.” These initiatives are expected to bear fruit in the company’s upcoming Lakshya plan for FY27-31.
Geojit BNP Paribas maintains a ‘Buy’ rating on L&T. The brokerage anticipates that a strong order pipeline will drive revenue growth at a CAGR of 16% over FY25-27. With a target price of Rs 3,863, the stock has a potential upside of over 18%.
2. Tata Motors:
This car and utility vehicle manufacturer dropped 8.2% in the past week due to concerns over new US tariffs. On April 2, US President Trump imposed a 25% tariff on foreign auto products. Tata Motors is the most affected among Indian automakers as Jaguar Land Rover (JLR) sales in the US contribute over 20% of its revenue.
JLR, the luxury vehicle arm of Tata Motors, contributed most of the company's revenue in FY24. Its wholesale volume in the US increased from 26% in FY24 to 33% in 9MFY25. Analysts estimate a 5-10% drop in JLR’s volume due to US tariffs, which could reduce its earnings per share (EPS) by 15-20%.
JLR’s North America sales grew 48% YoY in Q3FY25. JLR’s CFO Richard Molyneux set a 10% EBIT margin target for Q4FY25 but cautioned that macroeconomic challenges could make it difficult. Recently, Tata Motors’ management reaffirmed its 10% EBIT margin target for Q4 and its plan to be net debt free by FY25.
Tata Motors’ India business reported an 8.4% YoY drop in commercial vehicle (CV) revenue due to weak demand, while passenger vehicle (PV) revenue fell 4.3% YoY in Q3FY25. Shailesh Chandra, MD of Tata Passenger Vehicles and Electric Mobility, said, “We saw 2% growth in 9MFY25 and expect the same for FY25. Demand has been unpredictable, rising in some months and falling in others due to macroeconomic factors.” He added that if economic conditions improve and the budget provides support, the industry could return to 6-7% growth in FY26. Tata Motors, like other auto majors, is facing competition from Chinese players in the international markets and from domestic competitors like M&M and Maruti in the Indian market, as new launches ramp up.
ICICI Securities has a ‘Buy’ rating for the stock with a target price of Rs 831, implying an upside of 35.4%. The brokerage expects Tata Motors' new PV launches and the revamp of its small commercial vehicle (SCV) business to drive growth. It projects a 7.2% revenue CAGR and 19.2% net profit CAGR over FY25-27.
3. Mazagon Dock Shipbuilders:
This aerospace & defence company declined by over 7% today. On April 3rd the company’s promoter, the President of India, proposed to sell a total of around 1.9 crore equity shares (4.8% stake) in the firm via an offer for sale (OFS) issue at Rs 2,525 per share.
On April 2nd, the company began production of a Multi-Purpose Vessel (MPV) for M/s Navi Merchants Denmark. Mazagon will design, build and deliver six MPVs at a value of approximately $14 million (approx. Rs 119 crore).
The company’sQ3FY25 results saw net profit rise 28.8% YoY to Rs 807 crore, on the back of declines in raw material and project related costs. Its revenue increased by 30.4%but missed forecaster estimates by 2.2% due to a 9% YoY decline in its order book to Rs 34,800 crore. It appears on the screener for stocks lying in the ‘Sell’ zone.
Morgan Stanley highlighted that naval contracts for submarines and warships involve substantial, long-lead-time projects. The company's strong Q3 profit margins were driven by cost efficiencies on existing, older contracts. However, as new, specifically assigned orders come in, the company will not be able to maintain similar cost efficiency. Consequently, the brokerage believes that profit margins will return to normal levels within approximately 2.5 years, coinciding with the completion of the current order backlog.
Sanjeev Singhal, Chairman & MD of Mazagon Dock, commented on the order book, “ We are executing the existing orders. So the FY25 normalized margin for our industry should be around 12-15% level. Except for the exceptional items like reversal of Liquidated Damages (LDs) and depending upon the D-448 (the acceptance documents for the delivery of ‘Vaghsheer’ submarine) execution, so we don't see much change for the existing orders.”
Geojit BNP Paribas notes that the stock was trading at a 61% premium to its 5 year average last week. Considering this expensive valuation coupled with its likely moderation in earnings growth the brokerage has assigned a ‘Sell’ rating to the stock with a target price of Rs 2,318, based on an expected 24.5x FY27 adjusted EPS.
4. PNB Housing Finance:
This housing finance company surged 20.3% over the past month, driven by 202% YoY growth in its affordable-segment loan book to Rs 5,000 crore in FY25 and two upgrades from credit rating agencies.
On March 29, CARE Ratings upgraded the company’s long-term bank facilities to 'CARE AA+' with a 'Stable' outlook, citing stronger asset quality and an improved market position. In reaction, the stock rose 5% on April 1.
Meanwhile, ICRA also upgraded the PNB Housing Finance’s rating to '[ICRA]AA+' with a 'Stable' outlook due to improved asset quality, strong capital resilience, and the stock’s inclusion in the futures and options segment. This upgrade also drove the rise in share price.
In Q3FY25, the company reported a 42.8% YoY increase in net profit, reaching Rs 483.3 crore. A 31% rise in retail disbursements and a 17.5% increase in retail loan assets drove growth. The net NPA improved by 34 basis points YoY, reaching 0.8% in Q3FY25.
Girish Kousgi, MD & CEO, said, “We are confident of achieving our target of a Rs 1 lakh crore retail book by the end of FY27, with the affordable segment contributing 15%, or Rs. 15,000 crore; emerging markets contributing 25%, or Rs. 25,000 crore; and the remaining from the Prime business.”
Management aims to achieve an NIM above 4% and plans to expand into Tier 2 and Tier 3 cities, growing its network to 500 branches by FY27. It also projects its corporate loan book to reach Rs 7,000-8,000 crore by FY27 and expects the retail loan book to grow by 17-18% annually. Management plans to introduce Loan Against Property (LAP) as a separate segment from FY26.
Motilal Oswal reiterates its ‘Buy’ rating on PNB Housing with a target price of Rs 1,160. The brokerage expects retail loan CAGR of approximately 18% by FY27 and projects an improvement in NIM from FY26, driven by lower credit costs and recoveries from previously written-off loans.
5. Shaily Engineering Plastics:
This plastics and health products company has nosedived in share price over the past week, falling 20% after ending FY25 on a high note with a year gain of over 250%. The stock has been hit by US President Trump's tariff announcements on Wednesday.
Shaily's relatively new pharma product line has been key to its dramatic growth momentum in the past two years. While revenues for Shaily's consumer and industrial segments grew by 20% and 13% respectively YoY, its pharma segment has been the big outperformer for 9MFY24, growing at 57%. The company appears in a screener of stocks with high TTM EPS growth.
Shaily has ridden the massive growth wave in GLP weight-loss drugs, as a manufacturer of medical pens. The company has built a moat manufacturing insulin pens and auto injector pens (the latter is used to deliver doses of weight loss drugs). These pens are highly regulated, with a long approval process in the US and Europe. Shaily has received the requisite approvals and faces limited competition here.
The management identified this space early on, and the company’s UK R&D center has helped Shaily rapidly ramp up its innovation efforts over the past two years. In February, Managing Director Amit Sanghvi talked about the company's plans to grow aggressively in pen manufacturing, with a focus on auto-injectors. "From having about 35 million capacity right now, we're looking at adding another 50 million to 80 million over a short period of time", he said.
The new tariff regime announced by Trump however, may ruin the party. For Shaily’s clients, 60-70% of end-customers are in the US. Trump's ‘Liberation Day’ announcements are therefore a complicating factor for its business outlook.
Monarch Capital is among the brokerages with an accumulate call on Shaily (with a target price of Rs. 1,600). The analysts note that Shaily aims to increase its healthcare segment revenue contribution to 25% by FY27E vs. 18.6% currently.
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