CUB, Stylam Industries & Dalmia Bharat: What YES Securities says on these 3 stocks

YES Securities has maintained its 'Buy' call for City Union Bank (CUB) Ltd shares with a target price of Rs 195 on the back of 'positive' quarterly (Q2 FY25) results. "Whole bank advances grew 4.7 per cent/11.5 per cent QoQ/YoY. Owing to digital underwriting, for 75-80 per cent of MSME loans, the bank is now taking credit decisions in 3-4 days compared with 3 weeks earlier. Management stated that, for FY25, the bank is taking steps to touch banking industry growth. This would be a material improvement over the mid-single-digit growth observed for 2 years over FY23-24," the brokerage stated.

It also said the CUB management opined that system growth could be matched by growing traditional MSME loans without any material benefit from the new initiatives on retail lending, which would make some impact only in FY26.

"We maintain a 'BUY' rating on CUB with an unchanged price target of Rs 195. We value the bank at 1.4x FY26 P/BV for an FY25/26/27E RoE of 11.4/11.6/11.7 per cent," YES Sec added.

Separately, the domestic brokerage has upgraded Stylam Industries Ltd to 'Buy' from 'Neutral' with a revised target price of Rs 2,907 after strong Q2 FY25 earnings. 

"Stylam Industries reported a strong set of numbers for Q2 FY25, an all-round beat on our estimates. The company's revenue grew by 12 per cent YoY which was primarily driven by an 11 per cent improvement in ASP while total volumes remained flattish. Expansion in ASP was largely owing to better product mix. Exports, which constitute 72 per cent of sales, registered a stellar growth of 24.5 per cent YoY to Rs 188 crore (2-year CAGR stood at 7 per cent)," YES Securities noted.

"We remain confident in Stylam's growth plan and reckon the company's topline should grow by 16 per cent CAGR over FY24-FY27E on the back of expanding clientele base, company entering new geographies, and commencement of new plant which will bolster the growth trajectory. Incrementally, a higher focus on value-added products will enable the company to maintain 20 per cent operating margins. Hence, we expect EBITDA to grow by 16 per cent CAGR over FY24-FY27E. Owing to a healthy H1FY25, we have revised our FY25E/FY26E EPS est upwards by 8.5 per cent/9 per cent, respectively," it added.

For Dalmia Bharat Ltd, the brokerage has recommended an 'Add' rating, given the company's weak set of numbers in Q2 FY25. "Dalmia Bharat reported a weak set of numbers in Q2 FY25, one of the lowest EBITDA/tn in the last decades primarily due to lower-than-expected realization despite marginal cost savings. Revenue down by 2 per cent YoY (-15 per cent QoQ) is below 13 per cent our estimate – mainly due to lower-than-expected realization and volumes," it stated.

Our valuation multiple (13x Forward EV/EBITDA Sep'26E) and rating remained unchanged (ADD) with a target price of Rs 2,129, YES Securities added.