The benchmark indices gained on Tuesday, overcoming global market weakness, with advances led by IT companies and Reliance Industries. Axis Securities expects high returns from Camlin Fine Sciences, Hero Motocorp, and Praj Industries. These equities have good upside potential, according to the firm.
Praj Industries with target price of Rs 422
Praj Industries has received a 'Buy' recommendation from Axis Securities, with a target price of Rs. 422 per share. This indicates a nearly 22% gain from the previous trade price of Rs. 347.
Stalwart of Bio-Economy Revolution!
According to Axis Securities, Praj is well-positioned to benefit from a shift in global focus on the decarbonization theme due to key competitive strengths such as a) Market leadership position in domestic 1G Ethanol and frontrunner in 2G Ethanol, b) Capability to produce the highest yields of CBG vis-à-vis its peers by leveraging its proprietary RenGas technology, and c) Improvement in working capital.
Outlook & Valuation - Initiate with BUY
"We expect the company to report Revenue/EBITDA/PAT CAGR of 33%/37%/41% over FY21-FY23E driven by increase in orderbook, operational leverage and a debt free balance sheet. This will lead to a significant improvement in ROE/ROCE to 18.8%/24.8% in FY24 from 10.7%/14.7% in FY21 derived from 178% increase in the overall profitability," the brokerage has said.
The brokerage believes that Praj is expected to benefit significantly from the bio-economic revolution's many tailwinds, providing revenue visibility over the next 3-5 years.
Buy Hero Motocorp with target price of Rs 3,400
Hero Motocorp has received a 'Buy' recommendation from Axis Securities, with a target price of Rs. 3,400 per share. This indicates a nearly 16% gain from the previous trade price of Rs. 2932.
Diversification Strategy On Track; Structural Growth Drivers Remain Intact
Despite the negative impact of the Covid-19 outbreak, Hero Motocorp Ltd (HMCL) had a strong performance in FY21, maintaining its indisputable market leadership position in the sub125cc motorcycle sector.
Outlook & Recommendation
According to Axis Securities, due to the Covid-19-induced headwinds, HMCL has seen a drop in demand since March 21. However, we expect Hero's growth to pick up in the coming years. The demand is also projected to be bolstered by the fundamental transition away from shared mobility to personal mobility.
"We expect Hero to continue its dominance in the two-wheeler industry driven by the benefits of product premiumization, a strong foothold in the economy and executive motorcycle segments, and aggressive product offerings in the premium bikes and scooters segments. We maintain a BUY rating on the stock and revise our Target Price to Rs 3,400/share as we value the stock at 16x its FY24E EPS. TP implies an upside potential of 16% from current market Price, " the brokerage has said.
Buy Camlin Fine Sciences with target price of Rs 215
Axis Securities has given Camlin Fine Sciences a 'Buy' recommendation, with a target price of Rs. 215 per share. This represents an almost 21% increase over the previous trade price of Rs.178.
Novel Opportunities to Drive Topline Growth and Profitability
Camlin Fine Sciences Ltd. (CFS) had a strong year in FY21, thanks to the addition of new downstream products, increased capacity utilization at the Dahej plant, and a positive recovery in global economic activity in H2FY21.
Outlook & Recommendation
The company's growth prospects are bolstered by factors such as its strategic focus on expansion, global presence, predicted growth in the blends market, and rising global demand for vanillin. The organisation is in a great position to take advantage of expanding prospects in India and other international markets.
"We maintain a BUY rating on the stock with an unchanged TP of Rs 215/share valuing the stock at 17x FY24E EPS. Key risks - a) Slower-than-expected ramp-up in plant commissioning, b) Volatility in RM prices and Forex, c) COVID-led disruptions and business uncertainties," the brokerage has said in its latest research report.
The above stocks are picked from the brokerage report of Axis Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.