SBI, Adani Power and more: Ventura Securities lists 11 stock picks for 2024
“Volatility” sums up the last two trading sessions at Dalal Street. But given the overbought technical conditions, analysts say this shouldn’t be surprising. The Nifty 50 finished Tuesday at 21,665.80, down 76 points, or 0.35%, while the Sensex closed 379 points, or 0.53%, lower at 71,892.48.
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On Monday, January 1, the Nifty 50 closed at 21,741.90, up 11 points, or 0.05%, while the Sensex closed 32 points, or 0.04%, higher at 72,271.94.
As one of the best-performing stock indexes worldwide in 2023, the domestic benchmark indices, Nifty 50 and Sensex saw a gain of about 20%, marking their second-best year since 2017. In spite of concerns about valuation, small- and mid-caps gained roughly 55.62% and 46.57% in 2023, respectively, outpacing the blue-chip indexes.
Many experts and industry observers predicted that the Indian financial markets’ bull run would likely last until 2024 as long as foreign interest is strong and there is significant buying in both the debt and equity markets.
Stock picks for 2024 by Ventura Securities:
Let’s take a look at the top 11 picks of the year 2024 listed by the brokerage house.
Kfin Technologies Ltd
According to the brokerage house, the stock is trading at an FY26 P/E of 23.9X, with the current market price (CMP) of ₹481 and the FY26 target earnings per share (EPS) of ₹20.1. With a price target of ₹704 (35X FY26 P/E), the brokerage recommends BUY, implying a 45.7% gain over the following 24 months.
The brokerage report states that Kfin Technologies is growing its market share abroad. In the last three years, the company has grown into Canada, Malaysia, the Philippines, Singapore, Hong Kong, and Thailand.
Additionally, Kfin Technologies’ issuer solution business helps businesses get funding from primary and secondary markets. Kfin Technologies, which has a commanding market share (NSE500 47.3%, mainboard IPO size 57.0%, and mainboard IPO clients 26.3% in FY23), is well-positioned to benefit from the rising activity surrounding security issuance in both primary and secondary markets.
“Over FY23-26E, KFINT’s revenue/ EBITDA/ net earnings are expected to grow at a CAGR of 15.8%/ 18.4%/ 20.5% to ₹1,118 cr/ ₹490 cr/ ₹343 cr respectively, while EBITDA and net margins are expected to improve by 288bps to 43.9% and 346bps to 30.6% respectively,” said the brokerage.
Lloyds Metals & Energy Ltd
The brokerage house stated in its report that the stock is trading at an FY26 P/E of 7.8X at the CMP of ₹600 and the FY26 target EPS of ₹77.4. The brokerage has recommended BUY, with a price target based on DCF of ₹1,040 (13.4X FY26 P/E), indicating a potential upside of 73.3% over the next 24 months.
The brokerage projects that the company will produce 162.5 lakh tonnes of iron ore at a compound annual growth rate (CAGR) of 65.4% over FY23–26E, while its DRI volumes will rise at a CAGR of 47.9% to 6.6 lakh tonnes. It is anticipated that greater iron ore extraction, DRI facility expansion, and the start of new wire rod, pellet, and hot metal facilities will improve financial performance in FY26.
“The company’s revenue/EBITDA/ adjusted net profit (adjusted for exceptional non cash item of ₹1,194 cr reported in Q1FY23 towards the OFCD issuance) are expected to grow at a CAGR of 45.3%/ 81.0%/ 62.8% to INR 10,396 cr/ INR 4,804 cr/ ₹3,905 cr, respectively, by FY26E, while EBITDA and adj net margins are expected to improve by 2233bps to 46.2% and 1087bps to 37.6%, respectively,” the brokerage said.
The brokerage initiated coverage on Adani Power Ltd at the CMP of ₹523 per share (16.7x FY26 EV/EBITDA), with a price target of ₹707 per share (22x EV/EBITDA), signifying a 35% gain over the future 24 months.
The brokerage stated that while the focus of growing generation capacities is on renewable energy (RE), the growing gap between peak supply and demand suggests that base load capacity—which is supplied by traditional fossil fuels—needs to be increased. The largest private pure play thermal power company, Adani Power, has well-aligned plans for capacity expansion to close the gap.
“Over FY23-26, we expect APL’s revenue/EBITDA to grow at 7%/12% CAGR to ₹47,000 cr / INR 14,080 cr, while the EBITDA margins are expected to improve by 400bps. Improvement in domestic coal availability and expected rise in PLF could improve operating profitability. However, PAT is expected to decline at a CAGR of 5% to ₹9,229 cr and PAT margins are expected to decline by 810bps due to the full utilisation of carry-forward losses in FY24/25,” the brokerage said.
Eris Lifesciences Ltd
With a price target of ₹1,366 (35.0X FY26 P/E), the brokerage has initiated coverage with a BUY at the CMP of ₹910 (23.3X FY26 P/E), indicating an upside of 50.1% over the next 24 months.
The brokerage claims that the recent investment of ₹170 crore in a manufacturing facility in Ahmedabad, Gujarat, effectively doubles the capacity now in place, a development that is expected to drive growth well into FY27.
“Over FY23-26, we are expecting the company revenue and EBITDA to grow at a CAGR of 15.7% to ₹2,608 cr and 19.2% to ₹908 cr respectively and EBITDA margin is expected to improve by 297bps to 34.8%,” the brokerage said.
Long-term prospects for Zomato Ltd. are positive due to the brokerage. A duopoly between Zomato and Swiggy is expected to continue to dominate the market, with little threat from competitors like Amazon and inferior offerings from direct ordering firms like DotPe Thrive and ONDC, among others. This is because Indian cities have small networks.
With an upside potential of 25.8%, the brokerage suggests buying at the current price of ₹124 with a target price of ₹156 per share.
State Bank of India Ltd (SBI)
SBI posted its highest-ever half-yearly profit of ₹35,742 crore for H1FY24, according to the brokerage’s report, which said the bank performed extraordinarily well. The icing on the cake was that the asset quality significantly improved along with this growth, with GNPA/NNPA coming in at 2.55%/0.64%. Among the big banks, SBI is the brokerage’s top choice because of its strong earnings growth and comparatively low valuation.
“We initiate coverage with a BUY for a SOTP based target of INR 943 (1.7x FY26 Price/Adj. BV) representing an upside of 61.2% from the CMP of ₹589 over the period of 24 months.
Risk to our estimates: (1) Slower than expected economic growth, (2) Steep rise in interest cost & (3) Deterioration in asset quality,” the brokerage said.
IRCTC Ltd
At the CMP of ₹888 per share (47.38X FY26 P/E), the brokerage has recommended a BUY rating for the stock. The price target of ₹1,176 per share (60X FY26 P/E) represents an upside potential of 32.4% over the next 24 months.
“Over FY23-26E, we are expecting the company’s revenue/EBITDA/PAT is expected to grow at a CAGR of 16.2%/ 16.7%/ 28.8% to ₹5,561 cr/ ₹2,030 cr/ ₹1,568 cr respectively, while EBITDA and PAT margins are expected to improve by 47bps to 36.5% and 747bps to 28.2% respectively,” the brokerage said.
Aurionpro Solutions Ltd
With a DCF-based price objective of ₹2,887, which represents an upside of 32.6% over the next 24 months, the brokerage has started covering the stock with a BUY. The brokerage states that the risks are a shift in senior management and a downturn in the economy.
“Over FY23-26, we are expecting the company’s revenue/EBITDA/PAT to grow at a CAGR of 31.7%/31.8%/33.4% to ₹1,506 cr/ ₹328 cr/ ₹243 cr respectively, while EBITDA and PAT margins are expected to improve by 1bps to 21.8% and 60bps to 16.1% respectively,” the brokerage said.
Sadhana Nitro Chem Ltd
With the approval to start producing 36,000 tonnes of para-aminophenol (PAP), Sadhana Nitro has gained a key position under the Center’s Production-Linked Incentive (PLI) programme. Based on current production levels, the company plans to increase to 36000 TPA by FY26 of PAP, according to the brokerage’s report.
The brokerage states that the company plans to increase production from 3000 TPA to 36000 TPA by PAP FY26. To reach this goal, roughly 300–350 crores of capital expenditure are being invested.
“Over FY23-26E, we are expecting revenue/ EBITDA/ PAT to grow at a CAGR of 73.7%/101.6%/203.1% to INR 751 cr/ INR 174 cr/ INR 89 cr, while EBITDA and PAT margins are expected to improve by 830bps to 23.1% and 970bps to 11.9% respectively by FY26E.
Taking the above things into consideration, we have initiated coverage with a BUY price objective of ₹148 representing an upside of 70.1% over the next 24 months,” the brokerage said.
Intellect Design Arena Ltd
With a price target of ₹1,039 per share (28.6X FY26 P/E), the brokerage has started covering the stock with a BUY call at the CMP of ₹837 per share (32.7X FY24 P/E), indicating an upside potential of 23.9% over the next 24 months.
“Over FY23-26E, Intellect’s revenue/ EBITDA/ net earnings are expected to grow at a CAGR of 11.6%/ 15.3%/ 16.7% to ₹3,460 cr/ ₹775 cr / ₹495 cr respectively. EBITDA margins are expected to improve by 270bps to 22.7% due to higher margins from the new products and an increase in recurring revenue. Net margins are expected to improve by 230bps to 14.3% due to better utilisation of investments made and improving EBITDA,” the brokerage said.
According to the brokerage’s report, the stock is trading at 9.5X FY26 P/E at the CMP of ₹318 and FY26 target EPS of ₹33.6. With a price target of ₹386 (12.0X FY26 P/E), the brokerage has recommended a BUY rating, indicating a potential upside of 21.4% over the next 24 months.
“Over FY23-26E, we are expecting the company’s revenue/ EBITDA/ PAT to grow at a CAGR of 9.0%/ 10.2%/ 10.6% to ₹44,191 cr/ ₹23,450 cr/ ₹14,211 cr, while EBITDA and PAT margins are expected to improve by 173bps to 53.1% and 133bps to 32.2% respectively,” the brokerage said.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 02 Jan 2024, 05:34 PM IST
