UBL, L&T Finance, DCB Bank among 7 stocks that saw brokerage initiations with up to 102% upside target

Select stocks including DCB Bank, United Breweries, Suprajit Engineering, Pitti Engineering, Arvind Fashions, ADF Foods and L&T Finance Holdings have seen fresh interest from the various domestic brokerage firms, who have recently initiated their coverage on these companies.

The host of brokerages including Keynote Capitals, Nuvama Institutional Equities, LKP Securities, Phillip Capital, Systematix Institutional Equities and Anand Rathi Research have launched their maiden reports on these stocks. Majority of these stocks have 'buy' ratings on them with an upside potential of up to 102 per cent. Here's why these analysts are positive on them:

Nuvama Institutional Equities on L&T Finance Holdings
Rating: Buy | Target Price: Rs 160 | Upside: 19%
L&T Finance Holdings (LTFH) aims to become a full-fledged retail NBFC by FY25. Retail’s share shall move up from 88 per cent in September 23 to 100 per cent by March 2025. Meanwhile, CEO-designate Mr Sudipta Roy, an ex-ICICI Bank retail veteran, is gearing up to beef up risk assessment and tug technological levers, said Nuvama in its maiden report on the stock.

Given its leadership in many retail segments, creditable management and successful rundown of wholesale loans a full three years ahead of schedule, LTFH is a compelling story set to turn in an RoA of 2.5 per cent by FY25E. This shall trigger the stock’s re-rating. Initiating LTFH at ‘BUY’ with a target price of Rs 160, valuing it at 1.6 times BV FY25E, it added.

Anand Rathi Research on ADF Foods
Rating: Buy | Target Price: Rs 300 | Upside: 25%
ADF Foods is a market leader in the prepared ethnic food segment with products spread across a wide range of categories from ready-to-eat to frozen foods and meal accompaniments. They have 8 brands catering to wider preferences of consumers. Its revenue and EBITDA increased by 18 per cent and 29 per cent CAGR from FY19 to FY23 on account of healthy product mix, operational efficiency and brand visibility, said Anand Rathi

"Healthy volume growth and margin expansion enabled them to be debt free in FY23 The rise in urban culture and fast-paced lifestyles has given a boost to processed foods. ADF Foods, with its strong portfolio, established distribution network backed by preferred brands are well placed to report profitability," it added while initiating coverage with a 'buy' rating and a target price of Rs 300.

Systematix Institutional Equities on Arvind Fashion
Rating: Buy | Target Price: Rs 515 | Upside: 41%
Arvind Fashion is a leading player in the lifestyle space, with a strong portfolio of fashion brands across categories and price points like US Polo Association, Arrow, Tommy Hilfiger, Calvin Klein, Flying Machine and Sephora. Its steadfast focus on achieving only profitable revenue growth may cause it to grow a tad slower than peers in the near-term, said Systematix in its maiden report.

"We expect the company to retain its top position among peers in terms of cash generation and EBITDA and PAT growth. Continued product innovation and increased marketing spends have helped the company in re-energizing and premiumizing its key brands. We have built in revenue, EBITDA and PAT CAGR of 12 per cent, 24 per cent and 96 per cent, respectively over FY23-25E, with 21.6 per cent RoCE for FY25E. We initiate coverage with a 'buy' rating and a target price of Rs 515," it said.

Phillip Capital on Pitti Engineering
Rating: Buy | Target Price: Rs 940 | Upside: 37%
Founded in 1983, Pitti Engineering is one of the leading manufacturers and exporters of electrical laminations from India and one of the leading suppliers to all motor manufacturers domestically. PEL also specializes in the manufacture of value-added motor/generator sub-assemblies and precision machined components for diverse sectors, said Phillip Capital.

"It has 10 per cent market share in electrical-steel lamination consumption; the second player is just one third of PEL’s revenue. Over FY18-23, revenue, EBITDA and PAT CAGR was 24 per cent, 23 per cent and 39 per cent. Citing strong industry tailwinds, capacity expansion and moving up in the value chain to improve profitability," it initiated coverage with 'buy' and target price of Rs 940.

LKP Securities on Suprajit Engineering
Rating: Buy | Target Price: Rs 488 | Upside: 27%
Suprajit Engineering is the market leader in domestic automotive cables, a leading player in global automotive and non-automotive cable space. The company has grown leaps and bounds through its organic and inorganic growth over the past years. It maintains a strong free cash flow generating model with nominal capex requirements along with a minimal net debt balance sheet, said LKP with a buy rating and a target price of Rs 488 on the stock.
 
"We are positive on SEL due to the positivity in the underlying domestic automobile industry, where SEL is a dominant player; synergies with LDC to help add new clients and products to its portfolio; new products to help drive content per vehicle; recovery in non-auto business and product portfolio expansion; the advantages of scale and India-based production," it said.

Nuvama Institutional Equities on United Breweries
Rating: Buy | Target Price: Rs 1,935 | Upside: 23%
Beer is among the most consumed alcoholic drinks in India, and United Breweries (UBL) dominates this market. Driving beer’s vogue is lower alcohol concentration, allowing it to garner favour as a healthier fill among stronger spirits, not to mention its rising acceptance in social settings. Supportive laws from a few state governments buttress its standing, said Nuvama.

India’s annual per capita beer consumption lags at a lowly 4.8 litres while the world gulps 32.5 litres on average. The appointment of new MD & CEO Mr Vivek Gupta uncorks a renewed steady push, it added while initiating coverage on the stock with a 'buy' rating and a target price of Rs 1,935. It has cited raw materials inflation, uptick in taxes, regulation as key risks for the company.

Keynote Capitals on DCB Bank
Rating: Buy | Target Price: Rs 250 | Upside: 102%
Incorporated in 1995, DCB Bank was formed through the merger of Ismailia Co-operative Bank and Masalawala Cooperative Bank. The Bank has achieved impressive growth, with a 19 per cent CAGR in its loan book and 20 per cent CAGR in Net Interest Income (NII), said Keynote Capital. It expects a reduction in the cost-to-income ratio and an improvement in asset quality.

"It underwent a strategic transformation, focusing on retail banking and shifting toward small ticket size loans and secured loans, particularly in Tier II-VI cities. DCB has also enhanced granularity on both the assets and liabilities front by reducing concentration risk. In FY23, it demonstrated robust performance, and we expect that momentum will sustain," it added with a buy tag and a target price of Rs 250.


Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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