Diwali Picks: Anand Rathi is betting on M&M, IDFC First Bank & more for glittering returns
Analysts at Anand Rathi like Mahindra & Mahindra, IDFC First Bank, TVS Motor Company, DLF, among 6 other stocks that serve as investment opportunities for the Diwali season of 2023.
Mahindra & Mahindra Limited (M&M): Anand Rathi's analysts have issued a "buy" rating for M&M with a target price of Rs 1,770, in comparison to the current market price of Rs 1,497. M&M possesses the largest market share in the domestic tractor market, accounting for approximately 43 percent, and stands as the world's leading tractor manufacturer in terms of volume. M&M has displayed a strong financial performance in the first quarter of the fiscal year 2024, exhibiting significant year-on-year growth in both net profit (60 percent) and revenue (19 percent), which reflects its robust market leadership. The company's strategic vision encompasses the introduction of electric vehicles, global expansion of its tractor offerings, and the maintenance of a resilient balance sheet thereby positioning it favourably for future growth as per the analysts' report.
2/6
TVS Motor Company Limited: Anand Rathi's "buy" rating on the TVS Motor Company Limited stock is accompanied by a target price prediction of Rs 1850 as against the CMP of Rs 1609. During FY23, TVS Motors achieved significant expansion in both the motorcycle and scooter segments, solidifying its standing in the market. Furthermore, TVS' Q1FY24 results exhibited remarkable year-on-year growth in revenue, EBITDA, and profit after tax. With a strategic focus on new product introductions in both the internal combustion engine (ICE) and electric vehicle (EV) segments, a strong emphasis on exports, premiumization, operational efficiency, controlled input prices, and price adjustments, analysts believe that TVS is positioned favourably for surpassing industry expectations and foreseeing substantial volume growth in both domestic and export markets.
3/6
IDFC First Bank Limited (IDFCFB): ARSSBL has assigned a 'buy' rating for IDFC First Bank Limited, with a target price of Rs 114, as against the current market price of Rs 83. IDFC Bank's CEO V. Vaidyanathan, who is known for his track record of delivering results, offers strong leadership as the bank maintains a robust asset quality, which is evidenced by a collection efficiency of 99.5 percent, resulting in minimal levels of SMA and a gross NPA of 2.03 percent and net NPA of 0.73 percent in the Retail, Rural, and SME segments. The revenue from fee-based businesses, such as credit cards and third-party distribution, is expected to experience robust growth in the foreseeable future as per the analysts' report. IDFC First Bank is well-positioned for both expansion and stability, with a target of achieving an ROE of 13-15 percent and an ROA of 1.4-1.6 percent by FY25.
4/6
DLF Ltd.: Anand Rathi upholds a 'buy' rating on DLF Limited, setting a target price of Rs 640, which is higher than the current market price of Rs 554. DLF, a highly regarded real estate developer, intends to make a comeback in the Mumbai market through a slum redevelopment project in Andheri West with a whopping 46 million square feet of upcoming projects and a rental portfolio of 42 million square feet. In addition, the company expects robust pre-sales amounting to over Rs 1,20,000 million for FY24. DLF's strategic manoeuvres and strong presence in the Delhi-NCR region position them favourably for significant growth, according to the analysts.
Syrma SGS Technology Limited (SYRMA): Anand Rathi upholds a 'buy' rating for Syrma with a target price of Rs 735, as against the CMP of Rs 612. SYRMA is an engineering and design company that has fortified its capabilities through the acquisition of a majority stake in Johari Digital Healthcare Limited (JDHL), which is expected to enhance EBITDA and contribute to top-line growth. The company has done a capex of Rs. 500 million in the Q1 FY24 and plans to spend Rs 2,000-2,500 million in total for FY24. SYRMA possesses a substantial order book valued at approximately Rs 35,000 million, with a focus on expanding into new business verticals. Anand Rathi predicts a strong Compound Annual Growth Rate (CAGR) for revenue (36 percent), EBITDA (50 percent), and Profit After Tax (PAT) (55 percent) over the period FY23-25 for the stock, supported by a growing customer base, technological innovation, and an increase in production capacity.
6/6
MTAR Technologies Limited (MTARTECH): Anand Rathi has issued a "buy" rating for MTAR Technologies Limited with a target price of Rs 2,970, as against the current market price of Rs 2,471. MTARTECH's Q1 FY24 results indicate a substantial year-on-year revenue growth of 68 percent, along with robust margins in terms of EBIDTA (22.6 percent) and PAT (13.3 percent) for the company. With a strong outlook for FY24, MTARTECH aims to achieve a revenue increase of 45-50 percent and an EBIDTA margin of 28 percent, while also harbouring long-term ambitions of reaching Rs 30,000 million in revenue by FY28. As the company expands its product portfolio, pursues defence contracts, and explores global facilities, it faces the challenges of working capital management and payment delays. Nonetheless, analysts believe that these endeavours contribute to the positive prognosis for the company's stock.
