At least five BSE-listed stocks are now tracked by a higher number of analysts than before, following initiation of coverage on them by individual broking firms in the last one week. The price targets on these stocks, namely FSN E-Commerce Ventures (Nykaa), Angel One, Kalyan Jewellers, Life Insurance Corporation of India (India) and Mahindra Lifespace Developers, suggest up to 69 per cent potential upsides.
Kalyan Jewellers | Upside potential: 25%
HSBC initiated coverage on this stock on October 3 with a ‘buy’ rating and a target of 125, suggesting a upside potential of 25 per cent over Tuesday’s closing of Rs 100.10. The scrip had climbed 6.26 per cent for the day.
HSBC said Kalyan plans to aggressively build out its jewellery stores in higher-margin markets outside its home base of South India. If executed well, this can trigger structural return on equity (ROE) expansion and result in stronger earnings growth trajectory. HSBC said the recent run-up in the jewellery stock price – 70 per cent rise since June 20 lows against Nifty50 index’s return of 9.8 per cent during the same period leaves the stock trading at FY24e PE of 18 times.
This, it said, in part factors in this expansion plan.
“But we believe consistent execution will continue to drive a further multiple expansion and lead to compounding returns over the next three years,” it said.
Angel One | Upside potential: 39%
Haitong Securities on October 3 initiated coverage on Angel One with an ‘outperform’ rating and a target of Rs 2,130, as it felt Angel’s new business model ensures a long runway for growth and profitability.
The target, at Tuesday’s closing price of Rs 1,532.80, suggested a 38.96 per cent upside potential.
Haitong Securities said Angel One is trading at 11 times FY25E P/E, which is in the attractive zone. “More importantly, the current market valuation of Angel One implies Rs 28,000 per NSE active client as of August which is at a reasonable discount to peers,” it said.
It said Angel One could post 18 per cent net profit CAGR over the period FY22-25, which should translate to average return on equity (ROE) of 38 per cent over the period FY23-25. Post FY25, it expects net profit to grow at 14 per cent CAGR over the period FY25-38 and sees average ROE at 33 per cent.
“In terminal value, we expect net profit growth of 4 per cent and ROE of 22 per cent,” it said.
Life Insurance Corp | Upside potential: 35%
YES Securities initiated coverage on this stock on September 30 with a ‘buy’ rating. Its target on the stock at Rs 850 suggests a 35 per cent potential upside over its Tuesday’s closing price of Rs 629.50.
LIC, it said, has nurtured an agency force whose productivity is far higher than that for private sector peers.
YES Securities said while the contribution of bancassurance is proportionately still low, LIC has assembled the largest bancassurance network in the industry. Focus hitherto on Par business led to several business model advantages for LIC, it said, adding that LIC has a sticky customer profile reflected in superior persistence and surrender outcomes.
Besides, “LIC is displaying a pivot towards shareholder focus as it diversifies into the higher-margin Non-Par segment and surplus distribution has already been changed incrementally in favour of
shareholders,” YES Securities said. LIC has also displayed reasonable expense control outcomes, it added.
Nykaa | Upside potential: 69%
Elara Securities has initiated coverage on this stock with a ‘buy’ and a target of Rs 2,211. This target suggests a 69 per cent potential upside over Tuesday’s closing price of Rs 1,308.
Elara said Nykaa, an omni channel play, is set to grow its Beauty and Personal Care (BPC) revenue at a higher 32.4 per cent growth in CY20-25E, even as India’s online BPC market likely posts a lower 17.3 per cent CAGR, in the same period. Nykaa may maintain its dominance with a 26.8 per cent market share in online BPC, led by high repeat customer base, it said.
“Fashion is also an emerging segment for Nykaa, with a 3.3 per cent market share in the online fashion space. Here too, Nykaa’s revenue CAGR may be 60.4 per cent in FY23E-25E, on a smaller base. India’s online penetration is lower at 8 per cent for BPC and 12 per cent for fashion, versus global counterparts. Thus, the scope for India to move to premiumisation/online shopping is immense,” it said.
Mahindra Lifespaces | Upside potential: 17%
Motilal Oswal Financial Services noted that despite being in real estate business for close to three decades, the reator’s lack of aggression has led to stagnant pre-sales of Rs 700-800 crore over the last seven years, lagging its peers in terms of growth.
“However, given the industry tailwinds and shift towards branded developers, Mahindra group is now gearing up to unlock the growth potential in its real estate vertical and has also undergone some key senior management changes. The management aims to grow its pre-sales by 2.5 times to Rs 2,500 crore in the next three years (FY25E) by scaling up launches and project additions,” Motilal Oswal said.
Mahindra Lifespace currently has 9msf of inventory across ongoing and upcoming projects, with a revenue potential of Rs 9,000 crore, Motilal said.
“It is also looking to unlock 68 acres on Ghodbunder Road (Thane), which should add 8-10msf to its project pipeline. Given the strong pipeline, we believe its FY25 pre-sales target can be achieved a year in advance,” it said.
The brokerage has a target of Rs 550 on the stock, which suggests a potential 17.49 per cent upside.