Mazagon, APL Apollo, Sheela Foams & Landmark Cars among 7 stocks that saw brokerage initiations

Select popular stocks such as Mazagon Dock Shipbuilders, Kirloskar Pneumatic, Tarsons Products, APL Apollo Tubes, Sheela Foams, Nuvoco Vistas Corporation and Landmark Cars have seen fresh interest from the various domestic brokerage firms, who have recently initiated their coverage on the said companies.

The host of brokerages, including HDFC Securities, Monarch Networth Capital, LKP Securities, Anand Rathi Shares and Stock Brokers, Keynote Capital, Arihant Capital Markets, Axis Capital have launched their maiden records recently. Here's why these brokerages are positive on the stocks:

Arihant Capital on Nuvoco Vistas Corporation
Rating: Buy | Target Price: Rs 444 | Upside Potential: 25%
Nuvoco Vistas is trading at EV/EBITDA multiple of 10.6 times and 8.6 times to its FY24E & FY25E which we feel is an attractive valuation considering its strong brand, size, and position in East India. Going forward, macroeconomic indicators exhibited a positive outlook due to strong housing demand and government-led infrastructure development projects, said Arihant Capital.

"It managed to command a 6 per cent YoY increase in realizations in Q4FY23 as compared to an industry rise in realizations of 3 per cent YoY. The company’s focus on internal levers and operational efficiency coupled with stabilizing fuel costs will help in margin improvement. We value the stock at an EV/EBITDA multiple of 10.2 times to arrive at a target price of Rs 444 with a 'buy' tag," it said.

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Keynote Capital on Sheela Foams
Rating: Buy | Target Price: Rs 1,311 | Upside Potential: 11%
Established in 1971, Sheela Foam is the largest manufacturer of polyurethane foams in the Asia Pacific. With a strong foothold in India, the company has secured a dominant position in key industries like mattresses, automotive, footwear, lingerie, and furniture by FY23. The Company's future growth is anchored to multiple drivers, said Keynote Capitals.

The growth drivers include emerging Indian B2B opportunities, B2C and D2C product launches, expansion in the Australian furniture and mattress industry, and increased exports from Spain to the USA. To leverage the prospects, the company laid capex worth Rs. 3.5 Bn, guided to be operational by H1 FY24, it said in its maiden report with a 'buy' rating and a target price of Rs 1,311.

Anand Rathi Shares and Stock Brokers on APL Apollo Tubes
Rating: Buy | Target Price: Rs 1,500 | Upside Potential: 15%
Despite the Covid-19 pandemic, APL Apollo's EBITDA margin remains intact which shows its resilience and competitive edge over its peers. With new initiatives and commencement of projects like launching specialized products, capacity expansion and leveraging distribution network, said Anand Rathi in maiden report.

"We believe that the company will continue its strong momentum. The Revenue, EBITDA and PAT is expected to grow at a CAGR of 33 per cent,32 per cent and 38 per cent, respectively, from FY23 to FY25E. We initiate the coverage with a 'buy' rating on this stock by assigning 33.8 times of FY25E earnings with a target price of Rs 1,500," it said.

LKP Securities on Tarsons Products
Rating: Buy | Target Price: Rs 770 | Upside Potential: 39%
Tarsons Products is a leading producer and supplier of laboratory plasticware with more than three decades of experience. It is engaged in the design, development, manufacturing and marketing of consumables, reusables and others. Its products are used by key end-user markets like academic & research institutes, pharma, and diagnostic players with a diversified product portfolio with over 1,700 SKUs across 300 products, said LKP Securities.

"We are expecting Tarsons revenue, EBITDA and PAT to grow at 25.9 per cent, 28.6 per cent and 32.3 per cent, respectively CAGR over FY23-25E owing to broadening addressable market, market share gains, enhanced product mix post capex, pricing and distribution advantage over large MNCs players," it said with a buy tag and a target price of Rs 770.

Monarch Networth Capital on Kirloskar Pneumatic
Rating: Buy | Target Price: Rs 800 | Upside Potential: 20%
"We initiate coverage on Kirloskar Pneumatic, India’s fourth largest air compressor player and a market leader in CNG compression packages and reciprocating compressors, with a 'buy' and target price of Rs 800. A comparatively new top management’s determination and dominating presence in an oligopolistic industry exudes a high degree of confidence, said Monarch."

"With multiple stars aligned for it, the company is well-poised to deliver significant value and rise above competition on the back of a discernible inflection in growth trajectory both; OPM slated to leapfrog further with major business and structural changes planned; and an robust balance sheet, debt-free status, good return ratios, high asset turnover and enviable free cash flow generation," it said.

HDFC Securities on Mazagon Dock Shipbuilders
Rating: Buy | Target Price: Rs 1,131-1,231 | Upside Potential: 17%
Indian Navy’s major projects in the pipeline are next generation destroyers, next generation frigates, conventional submarines and next generation corvettes. Mazagon is India’s only shipyard to engage in building destroyers and conventional submarines for the Indian Navy. The upcoming bids from the Defence ministry could improve the order book and revenue visibility, said HDFC Securities.

Compared to its two PSU peers, it scores better in terms of PAT margins and RoE, while its valuation is lower. Investors can buy in the Rs 1009-1050 band and add more on dips to Rs. 923-941 band. Base case fair value of the stock is Rs 1131 and the bull case fair value of the stock is Rs 1231 over the next two to three quarters, it added in its IC report.

Axis Capital on Landmark Cars

Rating: Buy | Target Price: Rs 810 | Upside Potential: 12%
"We believe Landmark is a great proxy play for PVs in India, owing to management’s solid execution capability, a strong market position, particularly in the luxury segment, being highly correlated with the premiumization trend, having diversified revenue streams able to absorb shocks in new-vehicle sales, and solid financial position," said Axis Capital.

The improving share of MB (higher growth) and its ROTF model, a pick-up in other brands, and the premiumization trend should drive growth for the company. We build in revenue and EPS CAGR of 14 per cent and 29 per cent, respectively over FY23-26, and initiate coverage of the stock with a 'buy' rating and a DCF-derived target of Rs 810, it said.

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