Sona BLW, Amber Enterprises, Gateway Distriparks, Supreme Industries, TVS Motor: Should you buy, hold or sell?

A host of brokerages have come out with updates on a handful of stocks post December quarter results. They included Sona BLW Precision (Sona Comstar), Supreme Industries, Amber Enterprises, Gateway Distriparks and TVS Motor. Analysts said Gateway Distriparks' numbers were a bit weak and that Amber Enterprises' numbers were a mixed bag. Sona BLW Precision (Sona Comstar), Supreme Industries and TVS Motor reported better than expected results, they said. Except for Sona Comstar, the rest of four stocks received 'buy' recommendations from select brokerages. 

Sona BLW Precision | Kotak Institutional Equities | Add | Target Rs 500

Kotak Institutional Equities said Sona BLW Precision (Sona Comstar) December quarter Ebitda came in 9 per cent above its estimates on account of cost-control measures. We expect revenue ramp-up from new order wins to happen gradually given multiple challenges in developed geographies. But medium-term growth prospects remain strong led by higher mix of the BEV segment and increase in content per vehicle led by newer product launches, it said.

"While the near term may remain challenging given a looming slowdown risk in developed geographies, medium-term growth prospects remain strong owing to a robust order book, especially in differential assembly and traction motor segments, higher mix of the BEV segment and increase in content per vehicle led by newer product launches. Also, we expect the margin trajectory to continue to improve led by increase in mix of differential assembly, operating leverage benefits and forex gains," it said.

Amber Enterprises | YES Securities | Buy | Target Rs 2,564

YES Securities said Amber Enterprises delivered better than expected revenue growth while missing the margin estimates on back of higher raw material expenses and change in product mix. The company management is targeting to maintain its market share at around 26 per cent of the manufactured products and improve upon it.

A strong growth potential and enhanced capabilities in existing business, increased traction in new businesses like wearables and hearables and opportunities in exports should drive Amber's revenues in medium term, YES Secuirties said.

"Increased capex spends, and lower profitability will impact its return rations in near term," YES Securities said but noted that the management is confident of improving RoCE in next couple of years. For now, the brokerage has maintained its positive stance on the stock.

Supreme Industries | Nuvama Institutional Equities | Buy | Target Rs

Supreme Industries posted strong results, beating Nuvama's and consensus estimates. The performance was led by strong volume growth in pipes. While the industrial segment’s performance was broadly in line, packaging witnessed weakness on increased competition, Nuvama Institutional Equities said. The company management has raised outlook, with 25 per cent volume growth in FY23 from 20 per cent earlier. Nuvama Institutional Equities said it is sticking with our thesis of volume growth and remained positive on the stock. Tweaking its valuation framework to factor in mid-term growth, it it assign 34 times P/E to the stock, a 15 per cent premium to five-year average. It increased its target price for the stock to Rs 2,856 from Rs 2,817 earlier.

Gateway Distriparks | Kotak Institutional Equities | Buy | Target Rs 90

Gateway Distriparks' results were impacted by the overall decline in EXIM volumes on the weak global macroeconomic situation, said Kotak Institutional Equities. But company has maintained its market share in key regions, it said.  Kotak said incremental volumes from new ICDs at Kashipur and Jaipur will start getting reflected from FY2024 and FY2025. For now, it has cut its EPS estimates to bake in lower volumes and defer benefits from DFC and revised its fair value on the stock to Rs 90 from Rs 95 earlier.

"We value Gateway Distriparks' rail business to 10 times EV/Ebitda, at a 35 per cent discount to Concor. Here we factor in the scenario of Adani Ports taking over Concor and offering end-to-end solutions to customers, thereby posing a threat to GRFL’s market share. Key risks to our investment thesis would come from Adani taking over Concor and offering end-to-end solutions to customers, thereby posing a threat to GRFL’s market share," it said.

TVS Motor | Nirmal Bang Institutional Equities | Buy | Target Rs 1,197

Nirmal Bang Institutional Equities said TVS Motor's Q3 revenue was ahead its estimate by 4 per cent. It said volume for TVS Motor declined 14 per cent QoQ due to challenges associated with the export markets. While the realisation improved 6 per cent QoQ on the back of mix improvement and price hikes, gross margin improved by 70bps QoQ to 24.5 per cent, it noted.

"TVS clocked a market share of 14.5 per cent in EVs in 3QFY23 and EVs contributed 10 per cent to scooter volume. The company also highlighted that it plans to launch an Electric 3W in the coming months. We expect TVS to continue to outperform the 2W industry growth with a volume CAGR of 13 per cent over FY22-FY25E. We also factor in margin expansion of 120bps from the current level till FY25, owing to RM cost tailwinds and product premiumisation. We see TVS as the technology leader among its listed peers. Building in the strong prospects for the EV business, we maintain BUY on TVS," it said.

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