Diwali Picks | ONGC, Kaynes Tech, Eris Lifesciences, Nazara Technologies among Ashika Group's top picks

ONGC: The firm's competitive advantage stems from its vast proven reserves, accumulated over six decades, which provide a stable and abundant long-term source of hydrocarbons. ONGC is setting ambitious targets for a significant increase in oil and gas production by FY27, aiming for approximately 47.3 million metric tonnes of oil equivalent. Monetising new discoveries, securing premium gas prices for production from nomination field, and potential improvement in net realisations for crude oil are expected to enhance earnings. Moreover, the company’s long term strong production guidance further assures better performance in the future.

Kaynes Tech: A leading end-to-end and IoT solutions-enabled integrated electronics manufacturer in India, Kaynes Tech has capabilities across the entire spectrum of ESDM services. The company has an order book of Rs 5040.0 crore of which 60 to 70% is to be executed this year. It bagged multi-year contracts from large customers.
The company has new business of OSAT and PCB, which will meaningfully start contributing from FY27. It has signed 4 MoUs with customers in OSAT. The company is likely to get significant industrial export orders, and medical orders received so far are export oriented. One of the world’s leading medical providers has approved the company in US & Europe.

Eris Lifesciences: The pharma player ranks among the top 20 domestic formulation company in IPM list and gained 9 places since its IPO launched 7 years ago. Recently, it acquired Swiss Parenterals, which had FY23 revenue of Rs 280 crore with 37% EBITDA margin. Eris’ equity stake in Swiss Parenterals has been augmented to 70%. The company plans to strengthen the balance sheet by reducing the debt-to-EBITDA ratio to less than 2x within the next 18 months. For FY25, company is targeting revenue of Rs 3,000 crore, a growth of nearly 49% with EBITDA margin of 35%. By the end of FY25, company is expected to be Rs 2,600 crore or below and by FY26, the net debt is expected to come below Rs 2,000 crore. Hence, reducing debt levels to improve earnings growth in the next 2 years.

ISGEC Heavy Engineering: With increased government spending, policy reforms, and a rejuvenated private sector, the future looks promising for the company’s growth. ISGEC's vast production capabilities allow it to produce a wide variety of machinery and equipment, serving multiple industries. Consolidated order book in Q1FY25 stands at Rs. 7,741 crore, of which projects comprise 69% and manufacturing comprises 31%. Management has guided double digit revenue growth for the next two years in the standalone business with enough orderbook pipeline driven by the strong tailwind in the infrastructure sector. As ISGEC moves ahead, its emphasis on sustainability, operational efficiency, and customer-centric solutions will likely play a critical role in shaping its future trajectory.

Nazara Technologies: The gaming major is leading in e-sports domain in India and South Asia, through Nodwin. Nazara engages in sports enthusiasts in India and the United States with content platform, Sportskeeda. The company has multiple revenue generation models through Advertising, Subscriptions, Media Rights, In-App Purchases, Brand Sponsorships, and Platform Fees. The company is on acquisition spree. Its latest PokerBaazi acquisition is the best of the lot. PokerBaazi is the largest online poker platform in India with around 44% market share (FY23). Nazara has boosted its core gaming business with acquisition of Fusebox and Sportskeeda segment with Soap Central and Deltias Gaming website, both targeting developed markets.

EMS: The firm provides a range of services, including EPC and O&M in sewerage solutions, water supply systems, and wastewater schemes for government authorities and local municipal bodies. EMS order book stood at Rs 1,800 crore as of 1QFY25 (compared to Rs 1,625 crore order book at FY24) and has strong projects pipeline. EMS bid pipeline is about Rs 4,000 crore with a success rate of 10-20%. Order book is usually executable over 2-3 years. The company expects to maintain book-to-bill ratio of ~2.5x in FY25. The management is projecting a 30-35% revenue growth for FY25, driven by a robust order book of Rs. 1,800 crore and a solid pipeline of ongoing bids. EMS holds a key position in the sewerage sector, where, even in India’s Tier-1 cities, only about 30-40% of the sewerage network is currently established.

Axiscades Techonologies: The firm is well-placed in aerospace and defence and have very differentiated capabilities which allow the company to take advantage of the strong sentiments in these verticals. The company is well positioned as a fully integrated strategic technology R&D and defence company that delivers a broad spectrum of products and services from engineering, aerospace and space to defence. The company's strong presence in aerospace, defence and energy, together contributing about 60% of the company's revenues, continues to reflect a bullish outlook for the year. During 2QFY25, company's total order book is at USD 83 million with continued acquisition of new deals, both in engineering services and defence.