A handful of stocks are on analysts’ radar following September quarter results. Some of the companies’ have beaten the consensus estimates by a wide margin. In other instances, stocks look reasonably valued, even as the Q2 results were mostly in line with expectations. Here are a couple of stocks that analysts are recommending investors to buy for long-term gains.
UPL | Prabhudas Lilladher | Target Rs 1,070
Prabhudas Lilladher noted that UPL has maintained its FY23 revenue and Ebitda growth guidance of 12-15 per cent and 15-18 per cent, respectively. The growth is seen largely driven by focus on differentiated solutions and new product launches. The company expects to reduce debt by $650 billion in FY23 against $400 million earlier. This would largely be due to the recent restructuring of business verticals, resulting into inflow of $259 million.
“We broadly maintain our FY23/24 estimates. We expect UPL to clock Revenue/PAT CAGR of 11 per cent/17 per cent over FY22-25E. We introduce and roll forward our valuations to FY25E. Maintain тАШBUYтАЩ with a revised target of Rs 1,070 from Rs 1,020 earlier, based on 14 times September FY24E EPS,” it said.
Adani Ports | Nuvama | Target Rs 956
Nuvama Institutional Equities said Adani Ports & Special Economic Zone (APSE) Q2 profit overshot the consensus estimate by 40 per cent, mainly due to a change in accounting approach leading to lower recognition of forex loss and consolidation of Gangavaram Port and the marine service company Ocean Sparkle.
“On the core, robust performance continues with higher value growth than volume growth driven by price hikes. Management remains upbeat on its overall guidance on the back of dry cargo volumes and business efficiencies, ” it noted adding that APSEZ continues to add new customers, which may boost H2 volumes.
“Its aggressive expansion in logistics is quite synergistic to the ports business,” it said while suggesting a target of Rs 956 on the stock.
Nykaa | HSBC | Target Rs 2,170
Foreign brokerage HSBC said the recent correction in shares of FSN E-Commerce Ventures (Nykaa) was due to the global tech sell-off on rising yields and more recently due to the imminent lock-in expiry on November 10. It said Nykaa’s valuation are now even more appealing and under-appreciates the structural growth opportunity in beauty and personal care.
The foreign brokerage said BPC and e-commerce are the perfect match and expects a 30 per cent CAGR for the BPC e-commerce market in the coming decade, followed by a subsequent decade of double-digit growth. HSBC expects revenue for Nykaa to double every 2-3 years in the coming decade.
Sun Pharma | Motilal Oswal | Target Rs 1,240
Motilal said Sun Pharma delivered a better-than-expected September quarter earnings, led by superior
execution in the specialty portfolio, US generics (excluding Taro), and the domestic formulation (DF) segment. The September quarter numbers, it said, were also boosted by benefits from the PLI scheme and a favourable currency movement. The brokerage continues to value the stock at 25 times one-year forward earnings to arrive at a target of Rs 1,240.
“We remain positive on the stock on the back of an increased prescription base for the Specialty portfolio, robust franchise building in Branded Generics, niche ANDA pipeline awaiting approval, and controlled cost,” it said.
Larsen & Toubro | Nomura India | Target Rs 2,425
As per Nomura India, Larsen & Toubro (L&T) delivered a robust quarter, led by execution and order inflows. But the company infra Ebitda margin was impacted by 80 bps due to challenges in a couple of projects, “which are now behind us.” The brokerage expects L&T’s Ebitda margins to rebound from the second half of the financial year as commodity prices have corrected sharply.
“Further, divestment of road concessions can act as further catalysts.┬аWe increase FY24 and FY25 EPS estimates by 6 per cent and 7 per cent, respectively. We value L&T on an SOTP basis on FY24 rolled forward to December 2024 to arrive at our new target of Rs 2,425, implying 20 per cent potential upside, and maintain our Buy rating,” it said.
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