India Shelter, DCX Systems among 5 stocks that saw brokerage initiations with up to 97% potential upside

Select stocks including Aptus Value Housing Finance, DCX Systems, PG Electroplast, India Shelter Finance Corporation and Sastasundar Ventures have seen fresh interest from the various brokerage firms, who have recently initiated their coverage on these companies. Some of them had recently debuted on Dalal Street.

The host of brokerages including Kotak Institutional Equities, Chola Securities, Bonanza Portfolio, Systematix Institutional Equities and JM Financial have launched their maiden reports on these stocks. All of these stocks have 'buy' ratings on them with an upside potential of up to 97 per cent. Here's why these analysts are positive on them:

Chola Securities on DCX Systems
Rating: Buy | Target Price: Rs 379 | Upisde: 30%
DCX Systems has built a significant business moat around its operations, primarily through acquiring critical licenses and certifications that are essential for operating within the defense, aerospace, and electronics manufacturing sectors. This includes licenses for manufacturing and exporting items on the Munitions List to international defense entities, said Chola Securities.

"DCX Systems commands a competitive advantage, drawing on a diverse clientele across various sectors. Superior Return ratios, promising growth opportunities, and solid tie ups makes DCX systems a compelling story. Valuing DCX Systems at 60 per cent discount to the average multiple of its peer set; we arrive at a target price of Rs 379, likely over a period of 2 years," it said.

Bonanza Portfolio on Aptus Value Housing Finance
Rating: Buy | Target Price: Rs 400 | Upisde: 30%
Aptus Value Housing Finance is a play on the opportunity in affordable housing as well as small business lending. Aptus' superior yield profile and presence in relatively underpenetrated markets, sets it apart from other players in the segment. Its ability to manage asset quality across cycles despite relatively higher early delinquencies and ensuring minimal losses across cycles demonstrates the strength of Aptus’ business model, said Bonanza Portfolio.

"We expect Aptus to deliver 32 per cent CAGR in AUMs over FY23-25e though geographical diversification will be critical to ensure longer term growth. We estimate 22 per cent CAGR in earnings over FY24-25 for Aptus. While acknowledging that Aptus could deliver meaningfully higher through cycle profitability. We initiate coverage rating on Aptus with a 'buy' rating and a target price of Rs 400,"' it said.

JM Financial on PG Electroplast
Rating: Buy | Target Price: Rs 2,430 | Upisde: 47%
PG Electroplast (PGEL) was predominantly a plastic moulding player. However, in the last few years, it strategically shifted its focus to being an OEM/ODM solutions provider to consumer durables companies in India. It has added capacity for providing end-to-end solutions for air coolers, room air conditioners and washing machines; the company recently forayed into LED TVs, said JM Financial.

PGEL has PLI (product linked incentive) in ACs and IT hardware. Consequently, the product segment saw exponential revenue CAGR of 91 per cent over FY21-24E and the company gained significant market share. Over FY24-26E, we expect 9 per cent CAGR in the product segment. Overall, we expect revenue, Ebitda and PAT CAGR of 15 per cent, 16 per cent and 41 per cent, respectively over FY24E-26E. We initiate coverage with a 'buy' and a target price of Rs 2,430.

Kotak Institutional Equities on India Shelter Finance Corporation
Rating: Buy | Target Price: Rs 685 | Upisde: 10%
India Shelter, with its small base, focus on self-employed individuals in TierII/III cities and rapid footprint expansion is well-placed for sustaining high growth of 33 per cent in affordable housing finance. High yield in the self employed/LAP segment drives strong RoAs, despite higher but though improving opex ratios; lower leverage constraints RoE, said Kotak Institutional Equities.

'Newness of the setup (lower seasoning and vintage of management team) drives a lower multiple than peers. A lower PBR
multiple versus peers, despite higher growth, reflects India Shelter’s marginal lower RoE and newness of business such as lower seasoning, vintage of management team," Kotak added and initiated coverage with a fair value of Rs 685 and a 'buy' tag.

Systematix Institutiaonal Equities on Sastasundar Ventures
Rating: Buy | Target Price: Rs 596 | Upside: 97%
Sastasundar Ventures (SASV) is also investing in building a B2C diagnostics platform, which is in a nascent stage currently. SASV’s consolidated revenue grew at 40 per cent CAGR over the last 3 years to cross Rs 1,000 crore in annual revenue in FY23. FY24E too could surprise with 40 per cent growth to close at Rs 1,400 crore. SASV ventured into retailing/distribution of healthcare products in FY14 through sastasundar.com - an online pharmacy platform, said Systematix Institutional Equities.

"We initiate coverage on SASV as a preferred play on this trend; it is among the few large, organized pharma distributors in India. We expect it to deliver 36 per cent CAGR in revenue over FY23-26E. Target price of Rs 596 is based on 35 times FY26E Ebitda. A proprietary digital platform and supply chain infrastructure with efficiency at its core drives SASV distribution business," it said.