Reliance Industries: JM Financial Services predicts a 16.76 percent upside for the Reliance Industries stock with a target price of Rs 2,700 due to an expected strong compound annual growth rate (CAGR) of 14-15 percent in earnings per share (EPS) over the next four-five years. This growth is primarily attributed to the anticipated 10 percent increase in average revenue per user (ARPU) from Jio and the notable momentum in the retail business. Reliance Industries' commitment to maintaining a net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio below 1x provides further confidence to investors. The company's expansion in the petrochemicals sector enhances its potential for generating free cash flow, it says. Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
2/11
State Bank of India: The analyst report sees a 17.66 percent upside with a target price of Rs 665 for the State Bank of India stock due to its stable core fundamentals, strong CASA franchise, and digital banking platform, making it an attractive investment. Despite concerns about uneven monsoons and inflation, the bank's positive macroeconomic situation and stable financial backdrop aid the sentiment. Strong traction in retail and SME segments, a focus on overseas loan growth, and the resolution of management change uncertainty indicate growth opportunities and reduced overhang on the stock.
3/11
Larsen & Toubro: JM Financial Services has set a target price of Rs 3,430, up 17.21 percent from the CMP for L&T due to its position as India's largest EPC company, benefiting from government-funded infrastructure projects and strong order inflow from the Middle East. The positive earnings outlook is driven by strong order intake, improved execution, and reduced asset intensity, with a projected 27 percent EPS CAGR in the project management business for FY23-25 years. L&T's measures and a 19 percent YoY order inflow growth in FY23 enhance its investment appeal.
4/11
Hindustan Aeronautics: Analysts have predicted a 21.55 percent upside in the CMP of Hindustan Aeronautics (HAL) to a target price of Rs 2,230. The company is a dominant player in India's defence aerospace sector, which is leveraging its monopoly and the government's Make in India initiative. As the primary supplier of India's military aircraft, HAL has a significant advantage in the defence sector. Its strong technological capabilities, including advanced platforms like Tejas and Advanced Medium Combat Aircraft, contribute to its positive outlook. HAL's strong order book and pipeline of over Rs 2 trillion provide good earnings visibility, leaving it well-positioned to tap growth through its focus on R&D and recent pacts with GE Aerospace and Safran Aircraft Engines. HAL is also expanding internationally with its indigenous range of light combat aircraft. JMFS also pointed to risks such as stiff competition, order execution delays and slower fresh order intake.
Sun Pharmaceuticals: JM Financial Services has set a target price of Rs 1,300 for Sun Pharmaceuticals, reflecting a 16.57 percent increase from the current market price (CMP). The leading pharmaceutical company Sun is seeing significant growth in its specialty business owing to the success of important drugs including Levulan, Ilumya, and Cequa. Its strong outlook is supported by the company's strengthening balance sheet and capacity to maintain margins over 27 percent despite higher R&D expenses. Its worldwide specialist business is expected to contribute to total profitability by reaching $1 billion in FY24. JMFS' expectation that Deuruxolitinib will be filed in CY23 also contributes to the positive outlook. As the effects of sitagliptin's patent expiration in the base and NLEM normalise, Sun Pharmaceuticals expects the domestic market to rise by early double digits. Potential risks include shifts in the regulatory environment, possible erosion of prices, or any delays in launching of important new products.
6/11
Ashok Leyland: Ashok Leyland is expected to reach a price target of Rs 200, up 19.08 percent from its current market price, as per the JMFS report. The company is poised for substantial expansion in the domestic commercial vehicle (CV) sector based on favorable macroeconomic conditions and increased government expenditure on infrastructure. The company's strategic focus on augmenting its market share in the medium and heavy commercial vehicle (MHCV) segment, particularly in the northern and eastern markets, will be executed through the expansion of its network and addressing product gaps. With the anticipated increase in demand momentum and a robust MHCV demand projection for FY24, Ashok Leyland is projected to grow at the rate of 8-10 percent YoY, driven by government investments in infrastructure and strong replacement demand. The positive feedback received for the company's AVTR range of trucks along with its dedication towards cost-cutting measures, lower commodity prices and more operating leverage further augment its growth potential. Ashok Leyland is well-positioned to benefit from the expanding market as the current CV upcycle, supported by an expanding economy, continues into FY24 while maintaining its long-term goal of reaching a 35 percent market share in the MHCV space.
7/11
SJVN: One of the largest hydropower utilities of India, SJVN is expected to reach a target price of Rs 80, 14.86 percent higher than CMP. The company’s total generation is set to grow by 3x in FY26 owing to an installed hydro capacity of 1,912MW and underconstruction projects of 7,519MW (hydro, renewables & thermal power). The company is expanding its renewables portfolio, aiming to add 1.0-1.5GW capacity annually and it also registered a subsidiary, SJVN Green Energy Limited, in March 2022. Analysts are bullish on the stock as it aims to achieve 19GW of solar capacity by 2040, making up 39 percent of its total installed capacity. SJVN has signed a MoU with the Maharashtra government for 5,000MW renewable energy projects and has also secured several other renewable energy projects under TBCB.
8/11
Coforge: JM Financial Services has set a target price of Rs 5,920 for the stock, an 18.67 percent upside from the current market price of Rs 4,988.65. The company is strategically positioned to achieve substantial growth, with plans to double its annual revenue run-rate within the next five years. Coforge's focus on risk and compliance, card and payments in the BFS sector has led to significant success, as evidenced by its deal wins against larger industry players. The company has displayed consistent EOB growth and successful smaller deal wins, thus delivering profitable growth. Despite an anticipated seasonal dip in Q3, JMFS expects Coforge to witness rebound growth in Q4. While FY24E cc revenue growth has been moderated to 13.5 percent with FY24-25E EPS adjustments being made, Coforge maintains impressive earnings visibility, with a projected 24 percent EPS CAGR over FY23-26E. The report lists changed regulatory landscape, a sharp demand slowdown, and adverse forex fluctuations as potential risks.
Go Fashion India: JMFS sees a 23.24 percent upside in the Go Fashion (India) stock with a target price of Rs 1,540 due to its remarkable growth and durability making the company a leading player in the competitive bottom-wear market. Go Fashion's market domination comes as its revenue trajectory continuously exceeds that of its competitors. Analsyts believe that the company is well-positioned to increase gross margins owing to its improved product mix and stable raw material environment. In order to expedite store expansion starting in FY25, the company's business development initiatives are in progress, surpassing the present projection of 120 stores per year.
10/11
Sapphire Foods India: Analysts have predicted a target price of Rs 1560, up 21.54 percent from the CMP, for the Sapphire Foods India stock, which operates in the two subsegments- KFC and Pizza Hut in Quick Service Restaurant (QSR) space. The QSR industry is expanding in India and is expected to gain from favourable demographic factors and under-penetration of certain categories, which could eventually lead to a significant increase in the frequency of eat-out and order-in habits. Owing to the company's impressive execution, especially with the KFC subsegment, JMFS remains confident about a 5 to 7 percent same-store sales growth from the medium-term perspective while also banking on strong brand equity and edge over the competition.
11/11
Stylam Industries: Stylam Industrie is expected to reach a target price of Rs 2,070, up 21.55 percent from its current market price as epr the JMFS report. Due to its creative integration of high-value, value-added products, like high-gloss laminates with anti-fingerprint properties, which accounted for about 6 percent of its revenue in FY23, the company has become a standout in the decorative laminate market. Stylam has demonstrated a robust performance in gaining market share in both domestic and export markets, as seen in its revenue, EBITDA and PAT CAGRs of 23 percent, 26 percent and 37 percent, respectively, over the past five years. This comes against the background of a booming decorative laminate market, which is expected to reach $71 billion by 2030 from $45.55 billion in 2022. Analysts at JM Financials find Stylam Industries to be an attractive stock option due to its compelling mix of innovation, market expansion, and a favorable industry environment.
