8 stocks where brokerages initiated coverage have up to 30% upside
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Newgen has an integrated software business of content and process which distinguishes it from peers. In addition, higher annuity revenues & exposure to BFSI will help the company in fending off macro issues, said the brokerage.
The company aspires to grow at 20% CAGR over the next few years. GSI has an aspiration of $500 million in 5 years, it said. "We have conservatively built 16% CAGR revenue growth over FY22-25E. We estimate profits to increase at 16% CAGR in FY22-25."
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The company has a strong growth history and best-in-class asset quality across various industry phases driven by excellent risk management techniques, said the brokerage firm.
"We believe that it will grow its loan book at 18-20% in the foreseeable future and maintain its robust asset quality. Given the strong business outlook, we ascribe an adjusted P/B multiple of 2.2x to FY24E adjusted book value," it added.
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Jubilant Foodworks is one of the fastest-growing companies in the QSR space and we believe the management team has built a robust foundation over the past years by strengthening its store operations, brand equity, supply chain and marketing, said Mirae Asset.
"The rapid digital transformation of the food services industry brought about by COVID-19 and consumers’ tech adoption along with market share opportunities given independent closures and industry fragmentation are the long-term drivers for the QSR players," he added.
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Sumitomo has all the right ingredients required for long-term investment. It has complete control over the entire value chain from R&D to manufacturing to distribution with four legs of growth to provide strong revenue visibility, said the brokerage.
Management has guided to maintain EBITDA margin, it added. "Our premium valuation multiple is with respect to strong moat created by the company over the years, revenue and margin visibility along with strong product pipeline and consistent performance."
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Standalone sales declined by 7% YoY led by volatility in PVC prices. Gross margins declined by 120bps on account of inventory losses of Rs 45 crore in the pipes segment. EBITDA margin decline was sharper at 520 bps led by higher employee cost, bathware launch and higher ad and marketing spends, said the brokerage.
"Long industry tailwind coupled with sound financial metrics keeps us bullish on Astral. On a high base of FY22, we expect Astral’s consolidated sales/EBITDA/PAT to grow at a CAGR of 18/15/14%, respectively with EBITDA margins of 16% over FY22-25E," it said.
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"Home First is among the fastest-growing affordable HFCs. We expect HFF to deliver 30% loan CAGR over FY22-25e by expanding distribution by 60% and leveraging superior productivity," said Jefferies.
This should drive 28% NII CAGR over FY22-25e despite some NIM pressure. Asset quality should improve further, driving lower credit costs. The brokerage expects EPS CAGR of 24% and ROE increase to 15% over FY22-25e, driving the re-rating.
The outstanding order book of GRIL mainly consists of Hybrid Annuity Model projects which will push the operating profit margins higher. At the same time, near-term growth could be lower as the appointed date for most HAM projects was announced in the current fiscal, said the brokerage.
Growth is expected to come back as HAM execution improves in FY24E, along with better margins. The ongoing CBI matter and any extension in the current 30-day disbarment order by the Ministry of Road Transport & Highways and NHAI can negatively impact our thesis, the impact of which cannot be estimated, it added.
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Syrma SGS Technology has established strong competitive advantages in the EMS industry. Syrma will gain from the strong growth opportunity in the EMS industry in India. "We model it to gain market share as well as wallet share in the PCBA and RFID segments," it added.
Its competitive advantages include strong wallet share gain across companies in multiple industries, large customers such as HUL and TVS which speak about the quality of Syrma’s products and services, the ability to offer ODM services and multiple differentiated products to cater to various requirements of customers, it added.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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