Aadhar Housing. BUY. Target Price: ₹550. Upside: 27%.
The brokerage stated that Aadhar Housing Finance is a large affordable housing finance company. It has ₹21,100 crore of AUM in FY24. The company holds a 7 per cent market share in the affordable segment. The company has a long track record. It possesses a well-diversified geographical presence and customer base. The company’s strategy focuses on multipronged expansion and appraisal. This approach is expected to drive a 21 per cent AUM CAGR from FY24 to FY27. Stable margins and improving leverage will push RoEs back to the high teens, it noted. As per the brokerage, Aadhar Housing stands out among its peers due to its larger balance sheet. It has a longer operating history. The AUM is geographically diverse with no state contributing more than 15 per cent. The company has also demonstrated strong asset quality over the years, it added.
Axis Bank is a BUY. Target Price is ₹1,500. There is an Upside of 26%.
The brokerage noted that Axis Bank’s business execution aligned with expectations. The GPS strategy drives this execution and aims at building a strong franchise. Regarding deposits, management maintained its view. They believed that granular and focused initiatives will enable the bank to grow faster over time. This growth would surpass the industry average. As for loan mix, the bank plans to continue building a profitable portfolio. It is confident in delivering better risk-adjusted growth, it stated.
Fiem Industries is recommended as a BUY. The target price is ₹2,140, with an upside of 34%.
Kotak Securities highlighted Fiem as a leading tier-1 manufacturer of automotive lighting and rearview mirrors, primarily catering to two-wheeler OEMs. The brokerage noted that Fiem is well-positioned to benefit from the recovery in the two-wheeler industry. It has a strong presence among key players in this segment. It is also well-represented among two-wheeler EV manufacturers. The rising adoption of LED lighting in the automotive industry is expected to drive revenue growth for Fiem. This is because LED-based lamps offer higher content per vehicle compared to halogen lamps. The company is also using its expertise in LED automotive lighting. It is utilizing its robust R&D to tap into the four-wheeler segment. This segment presents significant medium-term growth opportunities, it added.
Kotak Securities expects Fiem’s revenue to grow healthily over FY24-25E. Earnings are projected to rise at a 19 per cent CAGR from FY24 to FY27E. Additionally, the brokerage emphasised Fiem’s debt-free balance sheet and robust cash flow generation.
Gravita India | ADD | Target Price: ₹2,800 | Upside of 17%
Gravita India is the market leader in India’s growing recycling industry. It has a particular focus on lead recycling. The company has a wide operational footprint, both in India and overseas. The brokerage highlighted that the organised segment’s market share is expected to expand significantly. This growth is supported by regulatory tailwinds. Gravita is positioned to capture this opportunity. Additionally, penalties imposed on battery OEMs for missing recycling obligations are seen as a positive catalyst for the recycling industry. Gravita is increasing its recycling capacity by about 72 percent. The target is approximately 500 kilotons per annum (ktpa) by FY27E, according to the brokerage.
The report highlighted that the company is diversifying into new recycling segments. These include rubber, paper, steel, copper, and lithium. These segments are expected to drive revenue growth. Kotak Securities projected that Gravita’s earnings per share will grow by 31.8 per cent in FY25E and 31.6 per cent in FY26E.
Godrej Agrovet has a target price of ₹850 with an upside potential of 11%.
Kotak Securities noted mixed near-term trends but a promising long-term outlook for Godrej Agrovet. The brokerage highlighted subdued prices in the animal feed and downstream businesses. However, it emphasised strength in Astec’s product pipeline. They found this pipeline promising. It expects a benefit from palm oil duties starting in Q3FY25. Godrej’s ability to attract talent is expected to support rapid growth in Astec’s CDMO segment.
Consolidated earnings for Q1FY25 showed strong growth at a healthy double-digit pace year-on-year. Kotak Securities finds the acquisition of the 49 per cent minority stake in Godrej Tyson Foods Ltd (GTFL) beneficial. It views it as incrementally positive. The brokerage expects healthy earnings growth in FY26. It maintained an “ADD” rating. A 15X EV/EBITDA multiple is assigned to standalone crop protection after the recent stock rally.
JB Chemicals is recommended as a BUY. The target price is ₹2,255, indicating an upside of 18%.
The brokerage highlighted that JB Chemicals is primarily focused on domestic formulations. It has a significant presence in export formulations. The company also has a growing CMO business. Kotak observed that the share of domestic formulations and CMO in overall sales increased. It rose from around 55 per cent in FY2020 to 67 per cent in FY24.
The company also boasts a strong CMO track record and global leadership in lozenge manufacturing. Kotak noted that JB’s domestic business benefits from a healthy mix of legacy and acquired brands. These brands are expected to drive growth. It forecasts JB Chemicals to achieve 14 per cent CAGR in revenue. They expect 19 per cent CAGR in EBITDA and 22 per cent CAGR in PAT over FY24-27E.
SH Kelkar. BUY. Target Price: ₹400. Upside potential is 30%.
Kotak Securities noted that S H Kelkar (SHK) is a flavours and fragrances (F&F) supplier. It has begun to make inroads into the global market. The company is well-positioned for double-digit revenue growth. SHK is still a small player compared to global majors. However, its technical capabilities are strong. It has persevered over the years to see initial success. The company benefits from secular growth in the F&F market. It is gaining market share. This growth is supported by its established and long-lasting relationships, it added.
It further pointed out that a significant order win from Unilever has further strengthened confidence in SHK’s management guidance. The F&F industry has high entry barriers. There is potential for margin expansion through higher-margin geographies and operating leverage. Kotak sees a long runway for growth.
Zomato | BUY | Target Price: ₹315 | Upside: 18.5%
Zomato held a gross merchandise value (GMV) market share of around 52 per cent in CY23. In comparison, Swiggy held 48 per cent. It also had a wider geographical presence, operating in 750 cities versus Swiggy’s 660 cities. Blinkit, Zomato’s rapidly evolving business, is experiencing high growth, expanding into new cities and adding new categories continuously. Kotak Securities expects Zomato to achieve a 44 per cent revenue CAGR over FY24-27E. The company also expects a significant improvement in its EBITDA margin during the same period.