NMDC, AB Capital, Raymond, CIL, Carysil, Siemens, Praj Industries: 7 stocks see brokerage initiations

Carysil, Raymond, Coal India, Siemens, Praj Industries, NMDC and Aditya Birla Capital have found a ‘buy’ rating from a host of brokerage firms, who have initiated coverage on that particular company.

Brokerages including Systematic Institutional Equities, Quantum Securities, HDFC Securities, UBS, and Emkay Global Services have launched their maiden reports in select stocks and see up to 52 per cent rise in these counters. Here’s what is making these brokerages positive on them:

Systematix Institutional Equities on Carysil
Rating: Buy | Target Price: Rs 705 | Upside: 27%
“We initiate coverage on Carysil with a ‘buy’ rating and a target price of Rs 705, based on 20x FY25E EPS of Rs 35. The scrip has corrected by 40 per cent since Apr 2022, on fear of global demand slowdown. Impacted by channel destocking, the company has been reporting weak performance since 2QFY23,” said Systematix Institutional Equities.

It expects a strong rebound 4QFY23 onwards, considering its strong order book and volume visibility with large global customers. Carysil aspires to become a global one-stop shop for all kitchen and bathroom lifestyle products. Regular capacity addition and working capital needs will likely limit OCF and EBITDA at 60 per cent level, healthy RoE will be maintained though, it said.

Emkay Global Services on Aditya Birla Capital
Rating: Buy | Target Price: Rs 200 | Upside: 28%
Emkay has a positive view he AB Capital is underpinned by three factors- the lending business (NBFC and HFC) has hit upon the right business model, with a right to win; the Life Insurance business has withstood regulatory shocks and now owns a diversified distribution channel, which will focus on driving growth beyond urban centers; the most vital trigger, in our view, remains the dynamism of the new management, which indeed intends to capitalize on its ‘low-cost liability’ edge and its right to win, together with shedding its ultra-conservatism on growth.

Despite the higher growth in insurance businesses putting some strain on reported profit, we see consolidated PAT clocking 30 per cent CAGR over FY22-25E to reach Rs 3,300 crore, it said. “We initiate coverage on Aditya Birla Capital with a ‘buy’ recommendation and March 24E TP of Rs 200 per share.”

Quantum Securties on Raymond
Rating: Buy | Target Price: Rs 1,987 | Upside: 52%
Raymond is a diversified group that is a leading name in the textile and apparel sectors, along with a growing presence in real estate, FMCG and engineering. Raymond is amongst India’s most trusted brands. Strong demand by ethnic wear, garments, shirting and branded apparel would help Raymond to clock 19.7 per cent CAGR revenue growth over FY22-24E, said Quantum.

“We also expect Raymond’s EBITDA margin is expected to witness 290 bps improvement over FY22-24E due to sharp growth in revenues and better margins from the garments, branded apparel and engineering segments. Raymond trades at a P/E of 12.9x FY24E PAT of Rs 634.7 crore. We recommend a ‘buy’ rating on Raymond, with a price target of Rs 1987, implying an annualized upside of 62 per cent from the current levels,” it said.

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HDFC Securties on Coal India
Rating: Buy | Target Price: Rs 263 | Upside: 17%
Coal India (CIL) remains a primary source of energy in India and demand for coal is likely to grow over the next few years as the economy is likely to grow. CIL is in a comfortable position to meet India’s growing demand, as a number of CIL projects are in the development stage and likely to start delivering in the next two-to-three years.

“It enjoys monopolistic status, healthy profitability, higher dividend payout and strong financial profile. Despite its near-monopoly status, the company’s stock is still trading below the IPO listing price. The stock might prove to be a good cyclical growth play. Dependence on coal is likely to increase in the near term. Investors could buy in the Rs 215-220 band and add more on dips in the Rs 193-197, with a target price of Rs 263,” it said.

UBS on Siemens
Rating: Buy | Target Price: Rs 3,900 | Upside: 21%
“We initiate on Siemens, convinced by its potential for a double-digit surprise in order inflows for FY22-27E, even on our above-consensus forecast; its $10bn-plus TAM, the largest among peers and skewed to high growth areas, such as low voltage and mobility; and its highly empowered management driving both organic and inorganic growth and leveraging SIEM’s digital prowess to lift shareholder returns,” said UBS.

Siemens’ long-term growth catalysts include the expansion of its digital-led services and exports, and channel-led product base, as well as growth at C&S. Its price target of Rs 3,900 is based on a 57x peak-cycle PE, as our FY24E earnings forecast does not fully capture the upside in new order growth in the next 6-12 months and low voltage exports business, it said with a target price of Rs 3,900.

Systematix Institutional Equities on Praj Industries
Rating: Buy | Target Price: Rs 458 | Upside: 32%
Praj Industries is a play on the rising demand for bioenergy driven by increasing awareness on climate change and strong global mandates. India’s Ethanol Blending Program (EBP) aims at achieving 20 per cent blending (E20) by 2025-26 from 10 per cent currently, said Systematix Institutional Equities with a target price of Rs 458 in its maiden report.

“New opportunities are ushering in the form of ethanol blending in diesel. The company is also scaling up its non-bioenergy business by establishing a strong foothold in modularisation business for its critical process equipment & skids segment; expanding offerings from its HiPurity business; and leveraging its multi-disciplinary engineering strengths and expertise in manufacturing to tap export opportunities,” it said.

Emkay Global Services on NMDC
Rating: Buy | Target Price: Rs 180 | Upside: 58%
NMDC spent Rs 20,000 crore in setting up a 3mtpa steel plant at Nagarnar which has not only been draining cash from the high-margin iron-ore business, but also impairing return ratios. Demerging the steel asset has been the right strategy, apart from unlocking value for shareholders, will also materially improve NMDC’s return profile, now that the big-ticket item has moved off its balance sheet, said Emkay Global.

“We value NMDC on FY25E EV/EBITDA multiple of 4 times, at fair value of Rs180/share, which implies FY25E P/E of 8.5 times and FCF yield of 12 per cent,. We initiate coverage on NMDC with a ‘buy’ rating,” it said. The brokerage cited disruption due to instability in the Chhattisgarh region and regulatory uncertainty as key downside risks.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)