Axis Securities has advised investors to buy Minda Corporation stock, while HDFC Securities has advised investors to buy APL Apollo Tubes stock and yes Securities has advised buying Nazara Technologies stock. The brokerages are positive on these stocks for the following reasons.
Markets are expected to remain calm on Tuesday, with SGX Nifty trends indicating a favorable outlook for Indian benchmark indices. On Monday, the BSE Sensex fell 127.31 points to 58,177.76, while the Nifty fell 13.95 points to 17,355.30.
Buy Minda Corporation with target price of Rs 148, says Axis Securities
Axis Securities has set a price target of Rs 148 on the stock, as against the current market price of Rs124, with a potential upside of 19%.
The Spark Minda group's flagship company, Minda Corporation has a strong presence in all categories, including 2W, CV, PV, and Aftermarket, which accounted for 52 percent, 21 percent, 11 percent, and 16 percent of its FY21 sales, respectively.
"We expect Minda Corp's profitability to improve over FY22-23E in the backdrop of its wide product basket, robust market share, consistent new product addition, and operating leverage. The company is expected to deliver excellent profitability growth by FY23E owing to the attributes such as improved content-per-vehicle as well as higher indigenous content. We value the company at 15x FY23E EPS to arrive at a target price of Rs 148, implying an upside potential of 19% from CMP," the brokerage has said.
According to the brokerage, the migration to BS6 will benefit Minda Corp significantly, as its wire harness product (25-30 percent market share) would likely see tremendous demand in terms of both value and volume. We like the company's growth storey, which is being driven by improving kit-per-vehicle value, exiting loss-making divisions, and the potential for an opportunistic inorganic acquisition by leveraging its cash-rich position.
Buy APL Apollo Tubes, says HDFC Securities
HDFC Securities has set a price target of Rs 2,226 on the stock, as against the current market price of Rs 1,865.
With a capacity of 2.6 million tonnes per annum (mtpa) and a pan-India presence, APL Apollo Tubes (APL) is India's foremost structural steel tube maker. APL's market share increased from 27% in FY16 to 50% in FY21, because to a robust distribution network, branding, customised and innovative product offerings, and capacity expansion.
"We expect APL's revenue/PAT to grow at CAGRs 20%/34% over FY21-24E, led by healthy volume growth, margin expansion, reduced working capital, and reduced debt. We thereby initiate coverage with a BUY rating and a TP of INR2,226/share (based on 35x FY24E EPS). The multiple of 35x is based on the APL's superior performance, operational efficiency and strong positive outlook going ahead," the brokerage said in its research report.
"APL has successfully gained the mindshare of fabricators and architects, making its steel tubes their first option for applications," according to the brokerage.
Buy Nazara Technologies with a target price of Rs 2,208, says Yes Securities
Yes Securities has set a price target of Rs 2,208 on the stock, as against the current market price of Rs 1,929.
Nazara is predicted to generate revenue of Rs11.4 billion in FY24, with a 36.0 percent CAGR from FY21 to FY24E. The stock could climb 20-50 percent from current levels due to the general gaming market craze, growing interest in platform businesses, and bright prospects for the gaming industry in India. In the next 12 months, our base case target price is up 23.8 percent.
"Given the long term uncertainty in this business, we initiate coverage with REDUCE Rating and target price of Rs 2,208 at EV/EBITDA(FY24E) of 25x, taking into account valuation multiples of global peers like Electronic Arts, Activision Blizzard, and Tencent Holding, (adjusted for 30% growth in Indian market compared to 12-15% growth in the US and Chinese gaming markets). The stock currently trades EV/EBITDA of 19.4x," the brokerage has said.
According to Yes Securities, the number of Mid/Hard Core gamers is predicted to expand to 120 million by FY25 from 35 million in FY21, driving ARPU growth (currently $9/pa) through In-App sales.
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article.