IKIO, Ethos, Traxcn, Sonata among 7 stocks that saw brokerage initiations with up to 58% potential upside

Select stocks including The Anup Engineering, IKIO Lighting, Sonata Software, Cyient, Ethos, Tracxn Technologies and Shriram Finance have seen fresh interest from the various domestic and global brokerage firms, who have recently initiated their coverage on these companies.

The host of brokerages including Anand Rathi Shares, Mirae Asset Capital, IDBI Capital, Axis Securities, Ventura Securities and Bonanza Portfolio have launched their maiden reports on these stocks. All of these stocks have 'buy' ratings on them with an upside potential of up to 58 per cent. Here's why these analysts are positive on them:

Anand Rathi Shares on The Anup Engineering
Rating: Buy | Target Price: Rs 3,568 | Upside Potential: 19%
Commencing its venture in 1962, The Anup Engineering has transformed into a key player in the heavy engineering sector over the course of nearly six decades. Throughout its journey, the company has been a trailblazer, introducing numerous innovative processes and products. It also holds the distinction of being the first to establish dish end manufacturing in the seventies, said Anand Rathi.

"We are of the opinion that the company is well-positioned to benefit from the robust capital expenditure cycle in the industries it operates, including petrochemicals, oil and gas, and green hydrogen initiatives. Also, the company is well positioned to take advantage of the export markets as well as diversification of its products," it added with a 'buy' tag and target price of Rs 3,568.

Bonanza Portfolio on Shriram Finance
Rating: Buy | Target Price: Rs 3,000 | Upside Potential: 30%
"Shriram Finance is the largest NBFC in India with an AUM of more than Rs 2 lakh crore. We believe that Shriram Finance appears cyclically well-positioned for business growth. The company is a leader in used CV financing with more than 25 per cent market share. The merger has diversified the product portfolio, creating new growth and profit pools," said Bonanza Portfolio.

It expects better growth prospects, healthy margins, and lower credit cost for the company. Valuation remains inexpensive for Shriram Finance considering its strong fundamentals and ability to generate consistent ROA of 3.5 per cent and ROE of 15 per cent. There is still scope for valuation catch-up compared to its peers, it added with a 'buy' rating and a target price of Rs 3,000.

Ventura Securities on Tracxn Technologies
Rating: Buy | Target Price: Rs 182 | Upside Potential: 58%
Tracxn Technologies, a player in the market intelligence domain for private companies, operates on a SaaS model. It is renowned for its extensive global database and tailor-made features, helping clients to identify and monitor businesses across various sectors and regions. Tracxn has a significant user base of 3420 spread across 1258 client accounts over 50 countries, said Ventura.

"Operating in India, Tracxn benefits from considerably lower operational costs compared to its international peers. Strong revenue visibility along with the benefits of operating leverage is expected to deliver margin expansion and improve key metrics," it added with a 'buy' rating on the stock with a target price of Rs 182 in its IC report on the stock.

Axis Securities on Ethos
Rating: Buy | Target Price: Rs 3,050 | Upside Potential: 29%
Axis Securities is initiating coverage on Ethos with a 'buy' recommendation and a price target of Rs 3,050. "Our confidence in Ethos's promising future is grounded in the company's robust and consistent performance over the past several quarters. This trend is expected to persist, supported by consistent strong same store sales growth and an improving EBITDA margins."

This performance is attributed to the company's continued focus on store expansion and an increased emphasis on growing its exclusive brands portfolio, resulting in an overall average selling price (ASP) increase of 2.2 times from Rs 84,200 in FY20 to Rs 187,500 in H1FY24, it added. "We anticipate robust CAGR growth for the company in terms of revenue and PAT over FY23-26E."

IDBI Capital on Sonata Software
Rating: Buy | Target Price: Rs 915 | Upside Potential: 20%
IDBI Capital initiated coverage on Sonata Software with a 'buy' rating and a target price of Rs 915. New CEO has enabled the company to drive strong financial performance over the past few quarters. Sonata’s focus on investing in sales and marketing, account mining & hunting and strong platformation framework are expected to be key long term growth drivers, it said.

"This has led to the company aspiring to double its international services revenues by FY27E from FY23. We believe the company could achieve the same by FY26E. Considering this we expect overall revenue and PAT to grow over FY23-FY26E. Further, strength in digital, traction in large deals, tier 1 hires & partnerships has prompted us to have a positive view on Sonata," it added.

Mirae Asset Capital on Cyient
Rating: Buy | Target Price: Rs 2,710 | Upside Potential: 23%
Cyient has strategically revamped its operating model to achieve sustainable growth in revenue and improve margins. With these initiatives, the company has built a diverse portfolio, strengthened its core, targeted high-growth areas, and ingrained itself in the revenue cycle of its client, Mirae Asset said in its maiden report on the stock.

"Higher offshoring, better pricing, pyramid balancing, and operating efficiencies are the key margin levers to drive its margin improvement in the medium-term.  We initiate the coverage on the stock with a buy rating. We prefer Cyient because of improving earnings outlook, high customer stickiness, domain expertise and healthy cash conversions," it added with a target of Rs 2,710.

Anand Rathi Shares on IKIO Lighting
Rating: Buy | Target Price: Rs 390 | Upside Potential: 17%
Incorporated in 2016, IKIO is an Indian manufacturer of light emitting diode (LED) lighting solutions. It is focused on sustainability and providing low energy LED products to help India meet its sustainability goals. The company is primarily an original design manufacturer and design, develop, manufacture and supply products to customers who then further distribute these products, said Anand Rathi.

"We believe that IKIO’s Revenue, Ebitda and PAT is expected to grow at a CAGR of 22 per cent, 27 per cent and 29 per cent, respectively over FY23-25E. On the valuation front, the stock is trading at 30 times FY25E EPS. We initiate the coverage with a 'buy' rating on this stock by assigning 36 times of FY25E earnings with a target price of Rs 390," it said.

 

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