Stocks such as Va Tech Wabag, Just Dial, Archean Chemical Industries, Nazara Technologies, Venus Pipes & Tubes, The Phoenix Mills, Thermax and IndiaMart InterMesh have seen fresh interest from the various brokerage firms, who have initiated their coverage on the said companies.
The host of brokerages, including HDFC Securities, Antique Stock Broking, ICICI Securities, Elara Capital, IIFL Securities and Motilal Oswal Financial Services, suggest up to 65 per cent potential upside in these stocks. Here’s why these brokerages are positive on the stocks:
HDFC Securities on Va Tech Wabag
Rating: Buy | Target Price: Rs 367-401 | Upside Potential: 13-23%
The company recently has won a DBO order in Bangladesh worth Rs 800 crores fully funded by World Bank & AIIB, the scope of which includes design, engineering, supply, construction, installation and commissioning of the 200 MLD STP followed by operation & maintenance (O&M) for a period of 60 months, said HDFC Securities in its maiden report.
“It is diversifying its business by entering into Zero Liquid Discharge (ZLD) which is likely to witness steady growth over the years as authorities have tightened discharge monitoring and control. The ZLD system is more capex and highly Initial investment oriented. We are optimistic on the strong long-term outlook and revenue growth in the coming years for Wabag,” it said with a buy tag and target price of Rs 367 and Rs 401
Elara Capital on JustDial
Rating: Buy | Target Price: Rs 852 | Upside Potential: 42%
Justdial, a pioneer in local search and discovery business pan-India, set to script a revival post Covid-led loss. To juxtapose, from 31.7 per cent EBITDA margin in Q4FY20, the company dipped to a trough of in Q1FY22 led by a wipe-out during Covid, said Elara Capital in its initiating coverage report.
“We initiate coverage on Justdial with ‘buy’ on account of attractive valuations, strengthening fundamentals, hefty cash on balance sheet and strategic advantage from Reliance Retail parentage. We value Justdial via an average of P/E and DCF. For P/E valuation, we value Justdial at one-year forward target P/E of 28x to arrive at a target price of Rs 852,” it said.
ICICI Securities on Nazara Technologies
Rating: Buy | Target Price: Rs 700-800 | Upside Potential: 45-65%
“We initiate coverage on Nazara Technologies with ‘buy’ rating, given visibility of strong revenue growth in eSports and gradual profitability improvement in gamified early learning. The stock has corrected 70 per cent from its peak and is now trading at its all-time low of Rs 485. We have a target price of Rs 700 on the stock,” said ICICI Securities.
Nazara has Rs 660 crore in cash. It believes this could be used to acquire scale through acquisition in real money gaming, once regulatory clarity emerges. Nazara could benefit from inexpensive acquisition opportunities in the current liquidity situation. In case these triggers play out, It sees a bull case valuation of Rs 800 for March 2024, brokerage said in its maiden report.
Antique Stock Broking on Venus Pipes and Tubes
Rating: Buy | Target Price: Rs 750 | Upside Potential: 43%
Venus Pipes & Tubes is largely engaged in stainless steel tubular products in two broad categories- seamless tubes and welded tubes. These products have wide application in sectors such as chemicals, engineering, fertilizers, pharmaceuticals, power, food processing, paper, and oil & gas, said Antique Stock Broking in its maiden report on the stock.
“Venus’ ongoing expansion would raise its capacity to 33.6 ktpa along with backward integration of 9.6 ktpa We see rising exports and domestic sales aiding Venus’ top-line growth, while backward integration initiatives are expected to support higher margins,” it said with a buy rating and a target price of Rs 1,037.
IIFL Securities on Archean Chemical Industries
Rating: Buy | Target Price: Rs 750 | Upside Potential: 21%
Archean Chemical Industries (ACIL) is a leading specialty marine chemical manufacturer in India, mainly focused on bromine. ACIL substantially augmented its bromine capacity from 10ktpa to 28.5ktpa by end of FY21, and is on track to add a further 14ktpa to the same while also expanding its industrial salt production capacity, said IIFL Securities.
“The company is embarking into bromine-derivative performance products within the next two years, with an investment of Rs 250 crore. We initiate coverage on ACIL with a ‘buy’ recommendation and target price of Rs 750,” it said in its initiating coverage report.
Motilal Oswal Financial Services on The Phoenix Mills
Rating: Buy | Target Price: Rs 1,700-2,000 | Upside Potential: 31-54%
The Phoenix Mills opened its 11th mall in Ahmedabad in February 2023 and is on track to deliver the Pune and Bengaluru malls in 1QFY24. Healthy pre-leasing of its upcoming malls provides strong near-term visibility on rental growth, said Motilal Oswal Financial Services in its initiating coverage report.
“We value operational Retail and office assets at a cap rate of 7-9 per cent and upcoming assets using DCF with a terminal value calculated on steady-state rentals and discounting back to September 2024 at a WACC of 11.7 per cent; hotel assets are valued at 15-17.5x September 2024E EBITDA and a residential segment on NPV,” it said with a target price of Rs 1,700.
If we push up the valuation base at the end of FY25, taking into account stabilized rental run-rate for the upcoming malls and no pending capex, our valuation for the retail segment increases to Rs 29,000 crore from Rs 23,900 crore in the base case. Thus, our TP increases to Rs 2,000, indicating a 54 per cent upside potential, Motilal Oswal added.
Elara Capital on IndiaMart InterMesh
Rating: Buy | Target Price: Rs 5,700 | Upside Potential: 16%
IndiaMart is a market leader, enjoying a 60 per cent market share in B2B digital marketing or the classified industry. The company’s superior matchmaking engine, robust network and deep understanding of India’s online trade and commerce fortify its business moats, so as to leverage the structural opportunity in MSME digital adoption, said Elara Capital.
“Its leadership and strong business moats backed by a robust network effect and low digital penetration of MSMEs offer exciting growth prospects, long term. We initiate with ‘buy’ and a target price of Rs 5,700 based on an average of P/E and DCF, to capture both medium-term and long-term growth,” it said. “The key risk is unfavorable technology-led market disruption.”
HDFC Securities on Thermax
Rating: Add | Target Price: Rs 2,433 | Upside Potential: 8%
Thermax has been at the forefront of green technology for more than a decade. Its ordering from the green portfolio has expanded from 40 per cent in FY10 to 74 per cent in FY22. The lower carbon footprint target around the globe has allowed Thermax to position itself globally in clean water, air and energy products and solutions, said HDFC Securities.
It has streamlined its business segments and modified the business model, partnered with tech providers and strengthened its supply chain. Thermax stands to benefit from the investment in clean energy, sustainability, decarbonization, normalization of the international market and government impetus for cleaner air and water, it said with an ‘Add’ rating and target price of Rs 2,433.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
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