Fresh on the block! Brokerages initiate coverage on these 10 stocks this month

Domestic brokerage firm HDFC Securities initiated a buy rating on Century Ply with a target price of Rs 715, implying an upside potential of 38% from the current market price of Rs 518 per share.

“Century Ply is firing on all cylinders and is led by demand tailwinds. We expect it to grow faster vs the past, owing to aggressive expansion, which will speed up its market share gain across most of the home decor segments. We believe its large expansions in MDF and particle board will further diversify its revenue mix. These measures will support a valuation rerating,” HDFC Securities said.

HDFC Securities initiated a buy rating on Greenpanel with a target price of Rs 430, showing an upside potential of 33% from the current market price of Rs 322 per share.

“We like Greenpanel for its leadership positioning in the high-growth MDF, its superior margin and working capital profile. However, we remain cautious on expected medium-term margin volatility on account of supply influx (imports rebound and major capacity additions during FY24/25E),” it said.

HDFC Securities initiated coverage on Greenlam Industries with an add rating and target price of Rs 360, showing an upside potential of 9% from the current market price of Rs 331 per share.

“We like Greenlam for its leadership presence and robust earnings outlook (FY22-25E revenue/EBITDA CAGR estimated at 18/21%). We initiate coverage on the company with an add rating, valuing it at 16x its Mar’25E consolidated EBITDA (~10% premium to its five-year mean multiple),” it said.

Brokerage firm Kotak Institutional Equities initiated an add rating on Five Star Business Finance with a target price of Rs 700, indicating an upside of 10% from the current market price of Rs 636 per share.

"We believe Five Star’s smooth execution engine will deliver a high loan book CAGR of 30% in FY2023-25E in the highly profitable (8% RoA) niche small business loan segment in India. Income vagaries of the below prime, self-employed borrower segment drive high yields and early delinquencies for Five Star, though the company is able to curtail NPLs and eventual credit costs," Kotak said.

Citing rich valuation, domestic brokerage firm Institutional Equities initiated a reduce rating on Trent with a target price of Rs 1,320, which shows an upside of 6% from the current market price of Rs 1,249 apiece.

The brokerage firm said it likes Trent's ability to conceptualize and scale up new formats within short periods of time. It also forecasts a healthy revenue/EBITDA/PAT CAGR of 28/29/32% over FY2023-25E. However, rich valuations of the stock drive a reduce rating and SoTP-based fair value of Rs 1,320.

LKP Securities initiated a buy rating on CSB Bank with a target price of Rs 313, implying an upside potential of 29% from the current market price of Rs 244 per share.

“The bank is well equipped to report superlative return ratios (FY24E ROA/ROE of 2.1%/18.7%) driven by better operating performance, balance sheet growth and improving asset quality. The stock trades at 1.2xFY24E Adj. BVPS of Rs 209. We value the bank at 1.5xFY23E Adj. BVPS and arrive at a price target of Rs 313,” it said

Global brokerage firm Jefferies initiated a buy rating on Allcargo with a target price of Rs 500, implying an upside potential of 24% from the current market price of Rs 400 per share.

“Allcargo Logistics is a play on global trade and a leader in Less-than-Container-Load (LCL). FY23E-24E should see some normalization of gains made in FY21-22. Trading at a 7-year average of 13x, should see a re-rating on the back of PTL turnaround and demerger which would help it tide through the next 12 months till trade and EPS growth return. 14% FY24E-26E EPS CAGR, 18% ROE, and demerger should drive 24% upside,” Jefferies said.

Jefferies initiated a buy rating on Piramal Pharma with a target price of Rs 150, implying an upside potential of 29% from the current market price of Rs 116 per share.

“We estimate 11%/21% revenue/EBITDA CAGR over FY22-25E with reduced leverage from FY24. PPL trades at an attractive valuation of 13.3x/10.6x FY24/FY25 EV-EBITDA which is at a steep discount to comparable Indian peers. Given the gap in margin profile vs peers, we value the CDMO/ICH business at 20%/60% discount to peers whereas the CHG business is valued in line with peers to arrive at a SOTP-based price target of Rs 150,” Jefferies said.

ICICI Direct initiated a buy rating on Can Fin Homes with a target price of Rs 625, implying an upside potential of 15% from the current market price of Rs 543 per share.

“Consistent business growth with a focus on efficient operations coupled with relatively lower cost and strong underwriting to benefit earnings and return ratios. Anticipated healthy earnings growth at 17% CAGR in FY22-25E and RoA at ~1.8-1.9% are expected to drive valuations,” it said.

While initiating coverage on the PSU behemoth Life Insurance Company of India (LIC) with a buy rating, domestic brokerage firm Kotak Institutional Equities said the stock's valuations largely ignore its strengths. Signalling an upside of around 41% from the current market price of Rs 707, Kotak sees the stock's fair value at Rs 1,000.

"We initiate coverage on LIC with a buy rating and an FV of Rs1,000, reflecting 1.3X core EV December 2024E (2.1-3.2X for private peers) and a 50% haircut on equity unrealized gains. The margin expansion, driven by the shifting of product mix by its unparalleled agency force, should boost VNB growth, even as overall medium-term APE growth will likely be lower than private peers," Kotak said.

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