Three hot picks from Centrum Broking

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26 Aug, 2025 12:21

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Sidhhartha Khemka, Head, Equity Research (Wealth) at Centrum Broking recommends the following stocks: 

AIA Engineering Ltd   Rating: Outperformer  Target Price: Rs 1,662   CMP: Rs 1,451   Upside: 14.6 percent

AIA Engineering (AIAE), on a consolidated basis, for Q3FY17 reported good numbers on the back of better volume growth (mainly from the mining segment). Revenue and net profit grew 20 percent YoY to Rs 590 crore and 19 percent to Rs 120 crore, respectively. EBITDA margins contracted by 83 bps to 29.3 percent, owing to higher raw material prices (ferro chrome). Sales volume grew 28 percent YoY to 56,846 tonne. Net realizations declined by 7 percent YoY (up ~2 percent QoQ) to Rs 1,00,890 per tonne, due to change in product mix. The management expects FY17 volume at 210,000 tonnes and has maintained incremental volume growth of 120,000 tonnes over 3 years.  Given the good quality business, strong financials (High margins ~30 percent, RoE ~20 percent and RoIC ~40 percent) and healthy cash Rs 1,200 crore, we maintain our outperformer rating with a target price of Rs 1,662 (26x Sept’18E EPS).

Repco Home Finance     Rating: Accumulate  Target Price: Rs 754  CMP: Rs 642  Upside: 17.4 percent

Repco Home Finance (RHFL) reported good set of numbers with net interest income (NII) growing 16 percent YoY backed by 21 percent growth in loan book at Rs 8,656 crore. Pre-provisioning profit (PPP) grew 19 percent supported by 225 bps decline in cost-income ratio (CI%) to 16.8 percent and net profit grew 20 percent. In-line with the cyclical trend, on a QoQ basis, asset quality weakened with gross and net NPAs increasing 28bps to 2.65 percent and by 20 bps to 1.51 percent as on December 31, 2016. Considering, strong growth recovery (management guidance of +30 percent loan growth) from FY18 onwards along with healthy financials, we remain positive on RHFL from a long term perspective. Hence we Maintain our Buy recommendation with a target price of Rs 754, valuing the stock at 3.5x its September 18 ABV.

Ahluwalia Contracts (India) Ltd    Rating: Accumulate    Target Price: Rs 330     CMP: Rs 297       Upside: 11.1 percent

Ahluwalia Contracts (India) (ACIL), for Q3FY17, reported decent numbers. On the back of better execution during the quarter, revenue grew by 12 percent YoY to Rs358 crore. EBITDA margin expanded by 82 bps to 13.2 percent. Better operating performance and lower interest expense (down 10 percent) led to net profit growth of 23 percent to Rs 24 crore. So far in FY17, ACIL secured orders worth Rs 1,450 crore taking the order book to Rs 4,013 crore (as of December 16). Taking into account the, pick up in execution along with a healthy order book and bid pipeline, the management has guided for - a) revenue growth of 12-13 percent for FY17 and 15 percent + for FY18, b) margins of 13.5-14 percent for FY18 and 14 percent+ for FY19 and c) order inflows of Rs 1,600 crore for FY17 and Rs 1,600-Rs 2,000 crore for FY18. We believe that the stock would continue to remain an Outperformer given the government’s focus on social and urban infrastructure resulting in healthy order pipeline. Currently, ACIL trades at P/E of 16.1x on FY18E and 13x on FY19E. We value the stock at 16x Sept’18 EPS, giving us a target price of Rs 330. Other key positive for ACIL is the additional revenue from lease rentals from the Kota Project.