KFin Tech, Ugro Capital, Sonata among 6 stocks that saw brokerage initiations with up to 40% potential upside

Select stocks including Jupiter Life Line Hospitals, Campus Activewear, Sonata Software, Ugro Capital, Eureka Forbes, KFin Technologies, Inox Wind and Metro Brands have seen fresh interest from the various domestic brokerage firms, who have recently initiated their coverage on these companies.

The host of brokerages including Prabhudas Lilladher, Kotak Institutional Equities, IDBI Capital, Centrum Broking, Ventura Securities and ICICI Securities have launched their maiden reports on these stocks. Majority of these stocks have 'buy' ratings on them with an upside potential of up to 40 per cent. Here's why these analysts are positive on them:

Prabhudas Lilladher on Jupiter Life Line Hospitals
Rating: Buy | Target Price: Rs 1,310 | Upside Potential: 15%
We initiate coverage on Jupiter Life Line Hospitals with 'buy' rating and TP of Rs 1,310. It is a key multispecialty tertiary and quaternary healthcare services in the Mumbai metropolitan area and western region of India with a total bed capacity of 1,194 hospital beds. Its operational efficiency has been strong in competitive markets of MMR, said Prabhudas Lilladher.

"It reported revenue and EBITDA CAGR of 24 per cent and 35 per cent over FY20-23. Given expansion plans, scale up in occupancy and improving margins, business is expected to aid growth momentum over the medium term in our view. We believe strategic greenfield expansions in densely populated micro-markets of western regions augur well to drive sustainable growth," it said.

Kotak Institutional Equities on Campus Activewear
Rating: Add | Target Price: Rs 290 | Upside Potential: 7%
Campus, the largest Indian S&A footwear brand, offers a wide range of trendy and quality lifestyle/sports footwear at affordable price points. We attribute its success to a fashion-forward approach with agility at scale, design/manufacturing/distribution strengths, and a smart scale-up on marketplaces, said Kotak.

Looking beyond the near-term volatility, we expect growth to pick up starting FY2025E, driven by a recovery in demand as inflationary headwinds abat; better management of channel conflicts; renewed thrust on the economy/mid segments; and a step-up in brand-building investments, it added while initiating coverage with an 'add' rating a target price of Rs 290.

IDBI Capital on Sonata Software
Rating: Buy | Target Price: Rs 915 | Upside Potential: 18%
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. This has led to the company aspiring to double its international services revenues by FY27E from FY23, said IDBI Capital.

"We believe the company could achieve the same by FY26E. Considering this we expect overall revenue and PAT to grow at a CAGR of 23 per cent & 24 per cent over FY23-FY26E. Further, strength in digital, traction in large deals, tier 1 hires & partnerships has prompted us to have positive view on Sonata," it said initiating coverage on with a 'buy' rating and a target price of Rs 915

Centrum Broking on Ugro Capital
Rating: Buy | Target Price: Rs 395 | Upside Potential: 45%
Centrum's positive stance is underpinned by large TAM in MSME lending; strong productivity metrics reflecting scalability of business model; efficient systems and processes for comfort on asset quality; capital efficient colending/co-origination aiding AUM growth and profitability; and improvement in RoA/RoE profile as mix of high yield book rises and operating leverage, said Centrum.

"Ugro Capital is a tech enabled NBFC with exclusive lending focus on MSME segment. We expect AUM and EPS CAGR at 42 per cent and 67 per cent, respectively over FY24-26E with RoA and RoE of 3.6 per cent and 14.4 per cent, respectively in FY26E. We initiate coverage on Ugro Capital with a 'buy' rating and a target price of Rs 395," it said.

Kotak Institutional Equities on Eureka Forbes
Rating: Buy | Target Price: Rs 670 | Upside Potential: 17%
Eureka Forbes is poised to benefit from growth in India’s water purifier market, driven by a strong unmet need among consumers, low penetration rates and fresh focus from management after the ownership change, said Kotak Institutional Equities in its IC report on the stock.

"We see potential for high margins and strong ROCE and FCF, given EFL’s asset-light business model, high-margin service revenue pool, and a likely shift toward a rental offering. We estimate a 34% CAGR in pre-ESOP EBITDA over FY2023- 26E. Valuations are not cheap, but draw support from strong FCF and growth potential," it added with a fair value target of Rs 670.

Ventura Securities on KFin Technologies
Rating: Buy | Target Price: Rs 704 | Upside Potential: 40%
KFin Tech is a technology driven financial services platform providing comprehensive end-to-end services and solutions. The company is showcasing a compelling investment opportunity, supported by significant growth in its domestic investor solution sector, an expanding presence in international markets, and a dominant role in the issuer solution domain, said Ventura.

The integration of technology played a pivotal role in this advancement, enabling the development of products and platforms and reducing operational costs by minimizing opex. This technological leverage not only elevates client interaction but also boosts revenue from current clients and augments KFin's operational profitability, it said with a buy rating and a target price of Rs 704.

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ICICI Securities on Inox Wind
Rating: Buy | Target Price: Rs 425 | Upside Potential: 5%
INOX Wind, a wind turbine supplier, is rebuilding its business. That said, we note that policy discontinuity in the wind sector did put INOX a bit under the weather between FY18-FY22. However, wind OEMs are now set to reap the benefits with a string of positive policy changes, said ICICI Securities in its IC report on the stock.

"Aided by a newly re-laid policy pitch, the company is priming itself by monetising its assets and reducing external debt. Under a grid dominated by renewables, wind has its place owing to complementarity with other RE resources. Consequently, we expect wind capacity addition to rise. INOX is poised to see its earnings rebound," it said while initiating coverage with a buy and a target price of Rs 425.

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Kotak Institutional Equities on Metro Brands
Rating: Reduce | Target Price: Rs 1,250 | Upside Potential: -7%
Metro Brands is India’s leading footwear retailer with best-in-class growth and unit economics. The company is well-placed to deliver 18 per cent and 19 per cent revenue and PAT CAGR  over FY2023-26E, driven by 10-13 per cent store CAGR of Metro and Mochi, partly aided by under-penetration and scaleup of Fila, said Kotak with a 'reduce' rating a target price of Rs 1,250.
 

(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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